United States District Court, D. Massachusetts
REPORT AND RECOMMENDATION
H. Hennessy United States Magistrate Judge.
action currently addresses the extent of liability coverage
under an insurance policy. Plaintiff/counterclaim defendant
Direnzo Towing and Recovery, Inc. (“Direnzo”)
seeks to reach and apply insurance proceeds from
Defendant/counterclaimant OOIDA Risk Retention Group, Inc.
(“RRG”), Defendant Owner-Operator Independent
Drivers Association, Inc. (“OOIDA”), and
Defendant Owner-Operator Services, Inc. (“OOSI”)
for towing, recovery, storage, and remediation services
Direnzo allegedly provided in connection with a February 2014
motor vehicle accident involving Defendants' insured,
Kings Trucking Corp. (“Kings”). See
generally Docket #1-1. Direnzo obtained a default
judgment against Kings in Worcester County Superior Court in
the amount of $167, 700.95 plus interest and costs. See
id. at ¶¶ 46-51; Docket #14 at 2. The parties
have advanced competing declaratory judgment claims seeking
to resolve whether an insurance contract between one or more
of the defendants and Kings (“the insurance
contract” or “the insurance policy”)
requires that one or more of the defendants provide indemnity
in this action. See Docket #1-1 at 13-14
(Direnzo's claim); Docket #7 at 10-15 (RRG's
counterclaim). Direnzo also has advanced non-declaratory
claims; but per District Judge Hillman's scheduling
order, those other claims are not before the Court.
See Docket #26.
Judge Hillman has referred Defendants' motion for summary
judgment, Docket #49, to me for a report and recommendation.
See Docket #69 (order of reference). Defendants do
not specify whether they seek summary judgment on
Direnzo's declaratory claim, their own declaratory
cross-claim, or both, but they do request “a judgment
in their favor that they have no duty to indemnify
Direnzo” for Direnzo's claims against Kings.
See Docket #49. Direnzo has opposed the motion,
see Docket #70, and Defendants have submitted a
reply, see Docket #75. In Direnzo's opposition
brief, Direnzo requests “[i]n addition, or in the
alternative, ” that the Court declare Direnzo is
entitled to payment from one or more of the defendants.
Docket #70 at 21.
light of the parties' submissions, and for the reasons
that follow, I find that the insurance contract covers most,
but not all, of Direnzo's costs. I further find that
Defendants' motion is premature as to Direnzo's Reach
and Apply claims, Chapter 93A claim, and claims against OOSI
and OOIDA. I therefore RECOMMEND that Defendants' motion
be GRANTED IN PART AND DENIED IN PART as set forth below.
otherwise noted, the following facts in the summary judgment
record are not in dispute.
insurer, issued commercial automobile liability insurance
policy number PL199515386A (the “policy” or the
“insurance contract”) to Kings, effective from
October 26, 2013 through October 26, 2014. PSOF at 2; DSOF
¶ 1. RRG and Direnzo have no contractual
relationship, nor has Kings assigned Direnzo any contractual
rights. PSOF at 3-4; DSOF ¶¶ 26-27. The parties
dispute whether OOSI and OOIDA were parties to the insurance
contract, but they agree that RRG issued Kings's policy.
of the policy is in the record. In relevant part, the policy
provided coverage for “all sums an ‘insured'
legally must pay as damages because of . . . ‘property
damage' to which this insurance applies caused by an
‘accident' and resulting from the ownership,
maintenance or use of a covered ‘auto'.
[sic]” Docket #75-3 at 5; see PSOF at 2; DSOF
¶ 1. “‘Property damage' means damage to
or loss of use of tangible property.” Docket #75-3 at
policy imposed certain duties on Kings in the event of an
accident, claim, suit, or loss. Among these, if Kings
sustained “a ‘loss' to a covered
‘auto' or its equipment, ” Kings was required
to “[t]ake all reasonable steps to protect the covered
‘auto' from further damage” and to
“keep a record of [its] reasonable expenses for
consideration in the settlement of the claim.” Docket
#75-3 at 10-11. However, an adjacent provision prohibited
Kings from assuming any obligation, making any payment, or
incurring any expenses “without [the insurer's]
prior written consent, except at the
‘insured's' own cost.” Id.
policy also contained an endorsement known as Form MCS-90
(the “MCS-90 endorsement”). PSOF at 3; DSOF
¶ 24. That endorsement provided, again in relevant part,
[T]he insurer (the company) agrees to pay, within the limits
of liability described herein, any final judgment recovered
against the insured for public liability resulting from
negligence in the operation, maintenance or use of motor
vehicles subject to the financial responsibility requirements
of Sections 29 and 30 of the Motor Carrier Act of 1980 . . .
. It is understood and agreed that no condition, provision,
stipulation, or limitation contained in the policy, this
endorsement, or any other endorsement thereon, or violation
thereof, shall relieve the company from liability or from the
payment of any final judgment, within the limits of liability
Docket #75-3 at 1; see PSOF at 3; DSOF ¶ 24.
The MCS-90 endorsement defined “Public Liability”
as “liability for bodily injury, property damage, and
environmental restoration.” Docket #75-3 at 1.
from these grants of coverage, the policy also contained
several exclusions relevant to this motion. One, labeled the
“contractual” exclusion, disclaimed
“[l]iability assumed under any contract or
agreement”; but this exclusion did not apply to
liability that the insured “would have in the absence
of the contract or agreement.” Id. at 7. A
second provision, labeled the “care, custody or
control” exclusion, barred coverage for
“‘property damage' to or ‘covered
pollution cost or expense' involving property owned or
transported by the ‘insured' or [in] the
‘insured's' care custody or control.”
Id. at 8. And provision labeled “no benefit to
bailee” stated that the insurer “will not
recognize any assignment or grant any coverage for the
benefit of any person or organization holding, storing or
transporting property for a fee regardless of any other
provision of this Coverage Form.” Id. at 12.
“Property” is not defined in the insurance
Motor Vehicle Accident
February 28, 2014, a tractor-trailer owned by Kings crashed
while travelling eastbound at Exit 11 of Interstate 290 in
Worcester, Massachusetts. PSOF at 2; DSOF ¶ 6;
see Docket #72 at 3. While the record does not
resolve what caused the accident, a police report stated that
the vehicle's driver contributed to the accident by being
“[f]atigued/asleep.” Docket #72 at 1. At the
request of the Worcester Police Department, see
Docket #7-2 ¶ 3 (an affidavit of Direnzo's president
submitted by Defendants in support of the instant motion),
Direnzo dispatched workers to the accident scene and provided
towing, recovery, storage, and remediation services, PSOF at
2; DSOF ¶ 7.
workers observed significant damage at the accident scene.
Kings's tractor-trailer appeared to have breached a guard
rail, run down a slope between the highway and its off-ramp,
and crashed onto Southbridge Street. Docket #50-1 at 32
(Direnzo's report on its response to the accident,
appended to Direnzo's state-court complaint in this
action). The tractor and trailer had separated, turned over,
and sustained heavy damage, with parts, including the
vehicle's front axle, broken off and lying on Southbridge
Street. Id. The trailer's brakes were locked in
the park position. Id. at 33. Containers of orange
juice were ejected from the cargo trailer, littered the
scene, and leaked onto the roadway, as did gasoline, engine
oil, antifreeze coolant, and battery acid from the vehicle.
Id. at 32. The orange juice froze onto the road
surface due to severely cold weather. Id. A street
light was shorn from its mountings, resulting in exposed live
powerlines that rested on the same location as the trailer.
Id. at 32. A guardrail and multiple crash
attenuating barrels also were damaged. Docket #72 at 3. A
police report described the tractor-trailer as a “total
remediated these conditions and recovered the
tractor-trailer. See Docket # 50-1 at 32-33. Its
workers used “Speedy dry” to contain the fluid
leaks. Id. at 32. They drained fuel tanks on the
damaged vehicle and disconnected and removed the leaking
batteries. Id. They then set about clearing the
wreckage from the scene, which required the use of winches
and other heavy machinery. Id. at 33. They arranged
for the streetlight's power source to be cut off in order
to safely recover the trailer. Id. at 32-33. The
also had to cage the trailer's breaks and remove a break
canister before the trailer could be towed. Id. at
33. The trailer's roof had to be removed to ensure it
would not fall from Direnzo's tow truck while the trailer
was in transit to Direnzo's facility. Id. Aside
from a damaged recovery strap, Direnzo did not suffer any
damage to its own property. PSOF at 2; DSOF ¶ 7-8;
see Docket #50-1 at 33. It eventually towed
Kings's tractor-trailer from the accident scene to a
secure facility. PSOF at 2; DSOF ¶ 7-8.
record includes an invoice from Direnzo to Kings evidencing
that at the accident scene Direnzo performed services valued
at approximately seventy-six thousand dollars. See
Docket #50-1 at 31. Interest accumulated on the costs Direnzo
incurred, and Direnzo also charged Kings three hundred
dollars per day for the ongoing storage of Kings's
tractor-trailer at Direnzo's facility. See
Docket #12 at 4; Docket #50 at 10 n.3.
2014, Direnzo sued Kings, Tropicana Products, Inc., and
Sargent Trucking LLC in Worcester Superior Court for payment
for the costs it incurred to tow, recover, and store
Kings's tractor-trailer and to remediate the accident
scene. PSOF at 3; DSOF ¶ 10. Direnzo's claims in that
action sounded in contract and quasi-contract and comprised
counts of unjust enrichment, breach of contract, quantum
meruit, breach of the covenant of good faith and fair
dealing, and violation of Massachusetts General Laws Chapter
93A. PSOF at 3; DSOF ¶¶ 11-12. In December 2014, on
Direnzo's motion, Kings was defaulted. PSOF at 3; DSOF
¶ 13. An “Affidavit as to Damages” in
support of Direnzo's motion for default stated that
Kings's final balance to Direnzo totaled $167, 700.95.
PSOF at 3; DSOF ¶ 14. Direnzo's motion for
assessment of damages against Kings described that amount as
a “sum certain” evidenced by an invoice itemizing
the services Direnzo performed. PSOF at 3; DSOF ¶ 15.
2015, the Superior Court allowed Direnzo's motion for
assessment of damages on Direnzo's claims for unjust
enrichment, quantum meruit, breach of contract, and
breach of the covenant of good faith and fair dealing. PSOF
at 3; DSOF ¶ 17. The court awarded Direnzo “the
single amount of $167, 700.95 together with interest and
costs, ” as reflected in Direnzo's invoice to
Kings. PSOF at 3; DSOF ¶ 17. The court did not award
judgment on Direnzo's Chapter 93A claim.
initiated the instant action by suing Defendants in Worcester
Superior Court in November 2015, seeking damages under a
variety of theories as well as declaratory relief
establishing that Defendants' insurance contract with
Kings requires Defendants to provide indemnity. See
Docket #12 at 2-15. Defendants removed the action to this
Court two months later, see Docket #1 at 1, and RRG
then advanced a counterclaim seeking a declaratory judgment
of no coverage for Direnzo's alleged damages,
see Docket #7 at 10-16. In response, Direnzo
unsuccessfully moved to dismiss RRG's counterclaim.
See Docket #19; Docket #26. In his order denying
dismissal, District Judge Hillman instructed the parties to
proceed with discovery only as required to prosecute motions
for summary judgment on their declaratory judgment claims.
Docket #26. That order remains in effect: discovery
respecting Direnzo's non-declaratory claims has not taken
filed the instant motion on July 25, 2017, Docket #49,
together with a supporting memorandum, Docket #50, and
affidavit, Docket #51. Direnzo submitted an opposition with
supporting exhibits on November 3, 2017. Docket #70. And
Defendants filed a reply brief with additional exhibits on
November 30, 2017. Docket #75.
STANDARD OF REVIEW
judgment is appropriate when “the movant shows that
there is no genuine dispute as to any material fact and the
movant is entitled to judgment as a matter of law.”
Fed.R.Civ.P. 56(a). Once a party properly supports its motion
for summary judgment, the burden then shifts to the
non-movant, who “may not rest on mere allegations or
denials of his pleading, but must set forth specific facts
showing there is a genuine issue for trial.”
Barbour v. Dynamics Research Corp., 63 F.3d 32, 37
(1st Cir. 1995) (quoting Anderson v. Liberty Lobby,
Inc., 477 U.S. 242, 256 (1986)). Moreover, the Court is
“obliged to view the record in the light most
favorable to the nonmoving party, and to draw all reasonable
inferences in the nonmoving party's favor.”
LeBlanc v. Great Am. Ins. Co., 6 F.3d 836, 841 (1st
Cir. 1993). In so doing, the Court must ignore mere
“conclusory allegations, improbable inferences, and
unsupported speculation.” Sullivan v. City of
Springfield, 561 F.3d 7, 14 (1st Cir. 2009) (quotation
omitted). If the summary judgment movant “has had an
adequate opportunity to show that there is a genuine issue
and that his opponent is not entitled to judgment as a matter
of law, ” the Court may enter summary judgment in the
non-movant's favor sua sponte. Nat'l
Expositions, Inc. v. Crowley Maritime Corp., 824 F.2d
131, 133-34 (1st Cir. 1987) (quoting 10A C. Wright, A. Miller
& M. Kane, Federal Practice and Procedure §
2720, at 34 (1983)) (emphasis omitted) (collecting cases);
see Fed.R.Civ.P. 56(f)(1).
interpretation of an insurance contract and the application
of policy language to known facts present questions of law
for the judge to decide.” OneBeacon Am. Ins. Co. v.
Commercial Union Assurance Co. of Can., 684 F.3d 237,
242 (1st Cir. 2012) (citations omitted); accord New Fed.
Mortg. Corp. v. Nat'l Union Fire Ins. Co. of Pittsburgh,
PA, 543 F.3d 7, 11 (1st Cir. 2008) (applying
Massachusetts law). The Court must assign the insurance
contract's terms their ordinary meanings and
“consider what an objectively reasonable insured,
reading the relevant policy language, would expect to be
covered.” Gandor v. Torus Nat'l Ins. Co.,
140 F.Supp.3d 141, 144-45 (D. Mass. 2015) (quoting A.W.
Chesterton Co. v. Mass. Insurers Insolvency Fund, 838
N.E.2d 1237, 1250 (Mass. 2005)) (citing Finn v. Nat'l
Union Fire Ins. Co. of Pittsburgh, Pa., 896 N.E.2d 1272,
1277 (Mass. 2008)). “Under Massachusetts law, the
insured bears the burden of demonstrating that a claim falls
within a policy's affirmative grant of coverage.”
OneBeacon Am. Ins. Co., 684 F.3d at 242 (citing
Markline Co. v. Travelers Ins. Co., 424 N.E.2d 464,
465 (Mass. 1981)). Conversely, “[i]t is the
insurer's burden to show the applicability of a
particular exclusion.” New Fed. Mortg. Corp.,
543 F.3d at 11 (citing Hanover Ins. Co. v. Talhouni,
604 N.E.2d 689, 692 (Mass. 1992)).
law generally requires that an ambiguity in an insurance
contract be construed against the drafter, which invariably
is the insurer. E.g., Utica Mut. Ins. Co. v.
Herbert H. Landy Ins. Agency, Inc., 820 F.3d 36, 42 (1st
Cir. 2016) (quoting Metropolitan Prop. & Cas. Ins.
Co. v. Morrison, 951 N.E.2d 662, 671 (Mass. 2011)). This
principle applies in full measure to actions, like this one,
in which a non-party to an insurance contract seeks recovery
directly from an insurer pursuant to Massachusetts's
“reach and apply” statute. See,
e.g., Bagley v. Monticello Ins. Co., 720 N.E.2d
813, 816 n.2 (Mass. 1999) (quoting Barnstable County Mut.
Fire Ins. Co. v. Lally, 373 N.E.2d 966, 968 (Mass.
1978)); Bulyga v. Underwriters at Lloyd's,
London, 297 N.E.2d 68, 70 (Mass. App. Ct. 1973)
(citations omitted). However, when “specific policy
language is controlled by statute or prescribed by another
authority, ” ambiguities are not automatically resolved
in favor of the insured. Utica Mut. Ins. Co. v. Herbert
H. Landy Ins. Agency, Inc., 820 F.3d 36, 42 (1st Cir.
2016) (quoting Mass. Insurers Insolvency Fund. v.
Smith, 458 Mass. 561, 565 (2010)); see Cardin v.
Royal Ins. Co. of Am., 476 N.E.2d 200, 203 (Mass. 1985).
Defendants' Choice-of-Law Argument is Waived
initial matter, Defendants argue in their reply brief that
New Jersey law, not Massachusetts law, should govern the
interpretation of the insurance contract. See Docket
#75 at 6-9. I find that Defendants have waived this
choice-of-law argument by failing to assert it in their
opening brief. See Butler v. Deutsche Bank Trust. Co.
Ams., 748 F.3d 28, 36-37 (1st Cir. 2014) (collecting
cases) (noting that choice-of-law arguments are waived if
“not timely presented before the district
court”); see also Gov't Emps. Ins. Co. v.
Barron Chiropractic & Rehab., P.C., No.
1:16-cv-10642-ADB, 2017 WL 3526255, at *15 n.13 (D. Mass.
Aug. 16, 2017) (citing NExTT Sols., LLC v. XOS Techs.,
Inc., 113 F.Supp.3d 450, 458 (D. Mass. 2015))
(“[A]rguments raised for the first time in the reply
brief are considered waived.”). I also note that until
Defendants submitted their reply on the instant motion, both
sides operated under the presumption that Massachusetts law
governs in this case. See Docket #68 at 4 n.2.
Indeed, Defendants' opening brief in support of this
motion relies on Massachusetts law and offers no suggestion
that New Jersey law should apply instead. See
generally Docket #50. I therefore will apply
Massachusetts law in this Report and Recommendation. Cf.
OneBeacon Am. Ins. Co., 684 F.3d at 241 (quoting
Artuso v. Vertex Pharms., Inc., 637 F.3d 1, 5 (1st
Cir. 2011)) (applying Massachusetts law because the parties
did so in their legal arguments and noting that “[a]
diversity court is free to honor the parties' reasonable
agreement regarding which state's law applies”).
resolved this preliminary question, I now address whether the
insurance contract covers Direnzo's claims.
Direnzo's Declaratory Claim
seek a judgment establishing that the insurance contract does
not cover Direnzo's costs. I begin by addressing the
underlying insurance policy, first by analyzing its
“property damage” clause and then by discussing
various exclusions and conditions it contains. I then turn to
the MCS-90 endorsement appended to the policy.
“Property Damage” Clause Covers Direnzo's
Damages for Costs for Towing, Remediation, and Recovery, but
Not for Storing Kings's Tractor-Trailer
insurance contract provides coverage for “all sums an
‘insured' legally must pay as damages because of
‘bodily injury' or ‘property damage' to
which this insurance applies caused by an ‘accident'
and resulting from the ownership, maintenance or use of a
covered ‘auto'. [sic]” Docket #75-3 at 5. The
parties dispute whether this language covers the costs
Direnzo incurred as a result of the accident.
opening brief argues that “[r]ecovery, towing, and
storage services do not constitute ‘property damage,
'” and urges that Direnzo's remedy lies against
Kings rather than Kings's insurer. See Docket
#50 at 10-12. In opposition, Direnzo points to several
Massachusetts cases holding that insurance policies for
“property damage” cover remediation of damage to
the property of a third party. See Docket #70 at
11-13. Defendants argue in reply that the contract's