2005-230, MERCHANTS MUTUAL INS. CO. v. LAIGHTON HOMES, LLC & a.

The plaintiff, Merchants Mutual Insurance Company

orally), for defendant Laighton Homes, LLC. Gawryl & MacAllister, of Nashua (Jared O’Connor on the brief and

Ann Dempsey on the brief, and Mr. Rehnborg orally), for the plaintiff. Errors may be reported by E-mail at the following address: Wiggin & Nourie, P.A., of Manchester (Gordon A. Rehnborg, Jr. and Mary

MERCHANTS MUTUAL INSURANCE COMPANY

errors in order that corrections may be made before the opinion goes to press. No. 2005-230 Hampshire, One Noble Drive, Concord, New Hampshire 03301, of any editorial Rockingham Readers are requested to notify the Reporter, Supreme Court of New ___________________________

THE SUPREME COURT OF NEW HAMPSHIRE

page is: http://www.courts.state.nh.us/supreme. a.m. on the morning of their release. The direct address of the court's home reporter@courts.state.nh.us. Opinions are available on the Internet by 9:00

well as formal revision before publication in the New Hampshire Reports. NOTICE: This opinion is subject to motions for rehearing under Rule p. 2 22 as 2

as a whole. the general contractor for workers’ compensation benefits. the position of the insured based upon a more than casual reading of the policy

material fact and the moving party is entitled to judgment as a matter of law. company’s liability when the policy language is clear and unambiguous. See

Id. We enforce a policy provision that limits the insurance

both the subcontractor and the general contractor, and the employee also sued construe the language of an insurance policy as would a reasonable person in IV (1999). The employee subsequently brought a negligence action against motions for summary judgment, contract language, is ultimately an issue for the court to decide. Id. We from bringing a common law action against the subcontractor. RSA p. 2 281-A:7, defaulted. Merchants Mutual and the general contractor filed cross- The interpretation of the language of an insurance policy, like any general contractor’s claims. The subcontractor failed to appear and was was not obligated to defend or indemnify the subcontractor against the of the law to the facts de novo. Id. The facts before us are uncontested and we review the trial court’s application D’Amour v. Amica Mut. Ins. Co., 153 N.H. __, __, 891 A.2d 534, 536 (2006).

Summary judgment is appropriate only when there is no genuine issue of

contractor. dispute. The trial court granted summary judgment to the general the general contractor. agreeing that there were no facts in have been determined in the employee’s underlying negligence action against carry workers’ compensation insurance. The employee was thus not precluded negligence action against the general contractor. Neither liability nor damages

compensation benefits owed to the employee, subcontractor and the general contractor, seeking a determination that it Mutual then brought a petition for declaratory judgment against the under this policy. Merchants Mutual denied coverage. Merchants of the general contractor’s indemnity claims from Merchants Mutual CGL policy with Merchants Mutual. The subcontractor sought coverage At the time of the employee’s injury, the subcontractor carried a

worksite. At the time the employee was injured, the subcontractor did not indemnity for its liability in the event that the employee prevails in his was injured in the course of his employment at the general contractor’s see RSA p. 2 281-A:18, it sought (subcontractor). On September 30, 2003, an employee of the subcontractor subcontractor. While it did not seek indemnification for the workers’ The general contractor then brought cross-claims against the

(1999).

subcontractor defendant Daniel Hardy d/b/a Flawless Finishes The record reflects the following facts. The general contractor hired as a p. 3 3

law.” 9A Russ & Segalla, obligation of the insured under a workers’ compensation law or any similar

and an employer’s liability exclusion.

who must pay damages because of the injury.

exclusion “exempts coverage for bodily injury to an employee arising out of and other capacity; and supra § 129:10, at 129-2 p. 3 3. The employer’s liability

A workers’ compensation exclusion “expressly excludes coverage for any American Family Mut. Ins. Co. v. Tickle, 99 S.W. p. 3 3d 25, 29 (Mo. Ct. App. 2003). on Insurance law or any similar law., § 129:10, at 129-23, § 129:11, at 129-25 (3d ed. 2005); see also

CGL policies typically include both a workers’ compensation exclusion business . . . .

(2) To any obligation to share damages with or repay someone else

insurance applies. . . . (1) Whether the insured may be liable as an employer or in any

This exclusion applies:

compensation, disability benefits or unemployment compensation. . . .

(b) Performing duties related to the conduct of the insured’s

(a) Employment by the insured; or

(1) An “employee” of the insured arising out of and in the course of:

to pay as damages because of “bodily injury” . . . to which this e. . . . “Bodily injury” to:

d. . . . Any obligation of the insured under a workers’

. . . . This insurance does not apply to:

. . . .

We will pay those sums that the insured becomes legally obligated

The Merchants Mutual CGL policy provides:

Catholic Med. Ctr. v. Executive Risk Indem., 151 N.H. 699, 701 (2005). the policy contains an ambiguity and will be construed against the insurer. reasonable interpretation is possible, and an interpretation provides coverage, Deyette v. Liberty Mut. Ins. Co., 1 p. 4 42 N.H. 560, 561 (1997). If more than one 4

an indemnity action all damages, whether or not covered by workmen’s effectively conveys to a reasonable person in the position of the insured that in however, went on to say, “[W]e do not find that the language of exclusion ‘j’ covered by a standard [WCEL] Policy.” Id. (quotation omitted). Poirier, ‘j’] is to avoid duplication of coverage with respect to the subject matters District’s indemnity claims, Poirier recognized that “[t]he objective of [exclusion In determining whether exclusion “j” applied to the Nashua School

Mutual’s CGL policy. workers’ compensation insurance similar to exclusion “d” in Merchants separate workers’ compensation exclusion for claims compensable under injury.” Id. Poirier does not indicate whether the CGL policy contained a the insured to indemnify another because of damages arising out of such that were not compensable under workers’ compensation insurance. of and in the course of his employment by the insured or to any obligation of the Nashua School District for damages arising out of the employee’s death excluded coverage for “bodily injury to any employee of the insured arising out applies.” Id. at p. 4 427. However, the CGL policy contained exclusion “j,” which obligated to pay as damages because of bodily injury to which the insurance on behalf of [the subcontractor] all sums which he should become legally Under the terms of the CGL policy in Poirier, the insurer agreed “to pay

determine its obligation to indemnify the subcontractor. Id. employee. Id. The insurer then brought a declaratory judgment action to subcontractor for indemnification for all damages that it may have owed the Nashua School District instituted a third-party action against the

received workers’ compensation benefits, but brought a separate action against (WCEL) insurance, as well as CGL insurance. Id. The employee’s estate The subcontractor carried workers’ compensation and employer’s liability liability exclusion. employee of the subcontractor was fatally injured during the restoration. Id. hired a subcontractor to restore a building. Poirier, 120 N.H. at p. 4 424. An We begin by reviewing Poirier. In Poirier, the Nashua School District

contractor’s claims. that exclusion “e” did not clearly and unambiguously apply to the general contractor’s indemnity claims against the subcontractor; and (2) by holding p. 4 422, 428 (1980), in ruling that exclusion “e” did not apply to the general respects: (1) by misinterpreting Royal Globe Insurance Co. v. Poirier, 120 N.H. On appeal, Merchants Mutual argues that the trial court erred in two

is a workers’ compensation exclusion and exclusion “e” is an employer’s supra § 129:11, at 129-2 p. 5 5. In the Merchants Mutual CGL policy, exclusion “d” duties relating to the conduct of the insured’s business.” 9A Russ & Segalla, in the course of employment by the insured or during the performance of 5

Circuit noted in a factually similar case, “[i]n Poirier, it is uncertain whether opinion that Poirier squarely controls the outcome in this case. As the Fifth We disagree with the general contractor that it is clear from the Poirier [WCEL] policy to a CGL policy.” coverage. general contractor’s indemnity claims and that Merchants Mutual must provide that we must therefore conclude that exclusion “e” is ineffective against the of exclusion “j” in Poirier, Poirier “dictates the outcome of this case.” It argues in the Merchants Mutual CGL policy is substantively identical to the language It argues that, under are indistinguishable from the facts in Poirier and the language of exclusion “e” compensable under the employer’s liability section of a standard WCEL policy. third party indemnity claims. It contends that, because the facts in this case language of exclusion “j” was ineffective to exclude the Nashua School District’s By contrast, the general contractor argues that Poirier held that the

procure [WCEL] coverage does not, and cannot, transfer the obligation from a employer’s liability exclusion, because the “fact that [the subcontractor] did not procure employer’s liability insurance does not affect the applicability of the insurance. Merchants Mutual asserts that the subcontractor’s failure to to indemnify the general contractor under the terms of the CGL policy. covered by CGL insurance since they were compensable under WCEL contractor’s indemnity claims. The trial court thus required Merchants Mutual Poirier, we must conclude that these claims cannot be

contractor’s indemnity claims in this case were the type of claims that were be covered under a CGL policy. Merchants Mutual argues that the general contends that a claim which is compensable under a WCEL policy cannot also distinct purposes with respect to coverage.” Accordingly, Merchants Mutual that “the core holding in Poirier [is] that a CGL Policy and [WCEL] Policy serve Poirier. While it does not ask us to overrule Poirier, it urges us to recognize under the workmen’s compensation policy.” On appeal, Merchants Mutual argues that the trial court misinterpreted

an employer’s liability exclusion, it is ineffective against the general Poirier, it concluded that because exclusion “e” in Merchants Mutual’s policy is against a third party indemnity claim.” Relying upon its interpretation of “[t]he holding in Poirier is that an employer’s liability exclusion is ineffective the Poirier policy as an employer’s liability exclusion. In its order it stated that The trial court in this case reviewed Poirier and identified exclusion “j” in

“many damages claimed against the [Nashua School District] . . . not covered result, Poirier required the insurer to indemnify under the CGL policy the that are compensable under a workmen’s compensation policy.” Id. As a “exclusion ‘j’ does no more than exclude from liability coverage those damages compensation, are excluded.” Id. at 428. Thus, Poirier concluded that language of exclusion “e” clearly and unambiguously applies to third-party

p. 6 with or repay someone else who must pay damages because of the injury”

employee’s employment by the insured. The “any obligation to share damages unambiguously applies to claims for bodily injury damages that arise out of an course of” his or her “employment by the insured.” This language clearly and

coverage of claims for “bodily injury” to an employee “arising out of and in the

applies to the general contractor’s claims.

employment. We need not, however, determine whether party indemnity claims for bodily injury arising out of and in the course of

The language of exclusion “e” in the Merchants Mutual policy excludes unambiguously excludes third-party indemnity claims, Pearson 937 F.2d at 403-04.

exclusion “e” in the Merchants Mutual CGL policy to determine whether it and Pearson and follow their analysis by examining the plain language of separate exclusions, neither of which is ambiguous. We thus agree with Kasler decided. Suffice it to say that the CGL policy before us clearly contains two genesis of the action is an employee’s work-related bodily injury.” Poirier was wrongly obligation to defend . . . in third-party indemnification suits where . . . the language of exclusion “j” did not clearly and unambiguously apply to thirdstrongly suggest that they would not follow Poirier ’s conclusion that the

More fundamentally, by finding that the employer’s liability exclusion

work-related injury.” Pearson, 937 F.2d at 404. indemnification claim that is based on damages arising out of an employee’s exclusion and held that it “is unambiguous and . . . excludes coverage for an Kasler, Pearson considered the plain language of the employer’s liability

employer’s liability exclusion “unambiguously discharges [the insurer] from its the CGL policy. Kasler, 906 F.2d at 199-200. Kasler determined that the it, Kasler considered the plain language of the employer’s liability exclusion in Given the uncertainty about the applicability of Poirier to the facts before compensation exclusion] of the [applicable CGL] policy.” with the general contractor’s assertion that Poirier squarely controls this case. We agree with Kasler and Pearson that Poirier is unclear, and thus disagree and why Poirier concluded that the language of exclusion “j” was ambiguous. Poirier held that exclusion “j” was simply a workers’ compensation exclusion “j” and no separate workers’ compensation exclusion, this would explain why Kasler and Pearson is that, if the CGL policy in Poirier contained only exclusion Co., 937 F.2d 401, 404 (8th Cir. 1991). The assumption underlying both Kasler and found Poirier “[not] controlling.” Pearson Services Inc. v. INA Ins. Poirier “[not] controlling.” Id. at 200. Similarly, t he Eighth Circuit relied upon Ins. Co. v. Kasler Corp., 906 F.2d 196, 199 n.2 (5th Cir. 1990). It thus found

insurer from coverage of workers’ compensation claims, similar to the [workers’ the applicable policy also contained an express exclusion discharging the p. 7 7

owed to the third party.” 9A Russ & Segalla,

Supp. 2005); 9A Russ & Segalla, supra § 129:11, at 129-2 p. 7 7 n.4. Injury or Death of Employee of Insured, 34 A.L.R.3d 1397, 1420-22 (1970 & Liability Policy, Other than Automobile Liability, Excluding from Coverage § 132.5, at 64 n.141; Annotation, Construction and Application of Provision of and enforceable.” 21 Holmes, supra § 132.5, at 67; see also 21 Holmes, supra 27. “The [employer’s liability exclusion] . . . is generally clear, unambiguous,

exclusion typically precludes coverage of any amount the insured employer the insured employer. Under these circumstances, the employer’s liability damages from a third party, the third party will often seek indemnification from employee is injured in the course of his employment and is [entitled to] Holmes’ Appleman on Insurance § 132.5, at 62 (2d ed. 2002). “Where an the CGL policy excludes employers liability coverage.” 21 E.M. Holmes, Appleman on Insurance states, “To prevent possible duplication of coverage, Our conclusion is also consistent with learned treatises. Holmes’

believe that it excludes only direct actions by employees”). “[t] he plain meaning of the language would lead an insured reasonably to exclusion “j” in Poirier did not cover third party indemnity actions because (D. Utah 198 p. 7 7) (citing Poirier, court held that an exclusion identical to insurance policy and clause . . . .”) (quotation and citation omitted); see Overthrust Constructors, Inc. v. Home Ins. Co., 676 F. Supp 1086, 1089 ambiguity here would . . . defeat the use of plain English language in this expressly excluded by [the employer’s liability exclusion in] the policy”). But (N.J. Super. Ct. App. Div. 1964) (holding that “the third-party [claim] . . . was Hackensack Water Co. v. General Accident, Etc., Corp., 202 A.2d 706, 708 excludes employee’s injuries arising out of employment from coverage); virtually every other jurisdiction that has considered this issue. Cir. 1990) (holding that the employer’s liability exclusion “unambiguously” employment”); Fidelity and Guar. Ins. v. City of Kenner, 894 F.2d 782, 785 (5th arising out of bodily injury to an employee sustained in the course of of and in the course of the employee’s employment by the insured. relieve [the insurer] of liability when an insured . . . was sued . . . for damages (holding that “[t]he plain meaning of the [employer’s liability] exclusion was to Bros., Inc. v. Utica First Ins. Co., 768 N.Y.S.2d 479, 481 (N.Y. App. Div. 2003)

liability exclusion] in clear and unmistakable language . . . . To divine “[c]overage for [third-party indemnity] claims is excluded [by the employer’s State Ins. Fund v. INA, 60 p. 7 7 N.E.2d 795, 797 (N.Y. Ct. App. 1992) (holding that

This interpretation of the exclusionary language is consistent with

contractor’s claims for indemnification of bodily injury damages that arose out indemnity claims. We thus find that exclusion “e” applies to the general p. 8 8

general contractor’s claims. language of exclusion “e” discharges Merchants Mutual from coverage of the general contractor’s indemnity claims. Accordingly, we conclude that the plain

BRODERICK, C.J., and DALIANIS and GALWAY, JJ., concurred.

erred by not ruling that the exclusion clearly and unambiguously applied to the In light of the plain language of exclusion “e,” we hold that the trial court