2021-0280, Cincinnati Specialty Underwriters Insurance Company v. Best Way Homes, Inc. & a.

Cincinnati Specialty Underwriters Insurance Company (CSU). Blodgett argues Superior Court (Delker, J.) granting summary judgment in favor of the plaintiff, DONOVAN, J. D efendant Russell Blodgett appeal s an order of the

Inc., filed no brief. John J. Cronin III, PC, of Bennington, for defendant Best Way Homes,

Rousseau on the brie f and orally), for defendant Russell Blodgett. Van Dorn, Curtiss, Rousseau & Ross, PLLC, of Lebanon (Cristina

Poulin, on the brief and orally), for the plaintiff. Getman, Schulthess, Steere & Poulin, P.A., of Manchester (Christopher J.

No. 2021 - 0280 Hillsborough - n orth ern j udicial d istrict

page is: https://www.courts.nh.gov/our - courts/supreme - court a.m. on the morning of their release. The direct address of the court’s home reporter@courts.state.nh.us. Opinions are availabl e on the Internet by 9:00 to press. Errors may be reported by email at the following address: editorial errors in order that corrections may be made before the opinion goes Hampshire, One Charles Doe Drive, Concord, New Hampshire 03301, of any Readers are requested to notify the Reporter, Supreme Court of New 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 al General Liability

Blodgett’s brief and appendix is granted. CSU’s motion to strike evidence not part of the summary judgment record contained in 1

Liability of at least: Insurance written on an “occurrence” basis with Limits of or damage verifying valid Commerci contractors and subcontractors in force at the time of the injury 1. Obtain a formal written contract with all independent

must do all of the following: As a condition to and for coverage to be provided by this policy, you

to include the following language: A. Section IV – Commercial General Liability Conditions is amended

period. The p olicy also contained an exclusionary provision, which provided: bodily injuries caused by an “occurrence” that happened during the policy was in effect from June p. 2 29, 2016 to June 29, 2017. The CSU policy covere d of construction, Best Way was the named insured under the CSU policy, which negligent hiring and supervision. At the time of the injury, but not at the time warn, and remove hazards, as well as a separate cl aim against Best Way for homeowner for negligence and against Best Way for negligent failure to in spect, injuries. In April 2020, Blodgett initiated a laws uit alleging claims against the as he was descending it, causing him to fall approximately ten feet and suffer the property. Blodgett was injured when the staircase separated from the deck In 2017, the homeowner hired Blodgett to perform plumbing services at

t o Bob Wood Construction, which completed the project in p. 2 2012. agreement, Best Way subcontracted the construction of the deck and staircase constructing a deck with an attached staircase. Pursuant to an oral to perform renovations at his residence (the property). The project included contractor. In May 2012, Best Way entered into a contract with a homeowner CSU’s insured, defendant Best Way Homes, Inc. (Best Way), is a general The following facts are undisputed or otherwise supported by the record.

underlying litigation. According ly, w e affirm. CSU has no duty or obligation to defend or indemnify its insured in the We conclude that, pursuant to the policy’s clear and unambiguous language, resulting from Blodgett ’s fall from a n alleged negligently constructed staircase. Blodgett ’s damages in a separate personal injury action against CSU’s insured liability policy issued by CSU clearly and unambig uously excluded coverage for that the trial court erred by concluding that the terms of a commercial general vided to you by any independent, or their equivalent.

hiring did not arise out of the work of the subcontractor and thus we re not because: (1) the claims asserted against Best Way for neg ligent supervision and argued, among other thi ngs, that CSU was not entitled to summary judgment terms of the exclusionary provision. In response, Blodgett and Best Way the claims against Best Way were excluded from coverage by the unambiguous set forth in the exclusionary provision. CSU argued that, as a matter of law, the subcontractor and thus did not satisfy the conditions precedent to cov erage judgment, arguing that Best Way did not obtain a formal writ ten contract from with respect to Blodgett’s negligence claims. CSU also moved for summary declaration that it had no duty or obligation to defend or indemnify Best Way In October 2020, CSU filed a petition for declaratory judgment, seekin g a

(Emphasis added; bolding in original.)

met. or su bcontractors unless all of the above conditions have been operations performed for you by any independent contractors liability or any damages arising out of operations or completed This insurance will not apply to any loss, claim or “suit” for any

the completion of the formal written contract. coverage must be maintained for a minimum of two years after (7/04 edition) Completed operations provided by endorsement CG 20 10 (7/04 edition) and CG 20 p. 3 37 contractor or subcontractor must be primary and must be subcontractor. Coverage pro and completed operations of any independent contractor or advertising injury” arising out of or caused by any operations of “bodily injury”, “property damage”, and “personal and their Comme rcial General Liability Policy for damages because subcontractors have named you as an additional insured on 3. Verify in the contract that your independent contractors and

or omissions of any independent contractor or subcontractor. present ed, arising from the negligent or intentional acts, errors actions, costs, including attorney fees for any claim or lawsuit indemnify and hold you harmless from any and all liability, loss, contractors and subcontractors have agreed to defend, 2. Obtain a formal written contract stating the independent

c. $2,000,000 Products - Completed Operations aggregate. b. $2,000,000 general aggregate, per project basis; and a. $1,000,000 each “occurrence”; p. 4 4

insurer, in order to honor the insured’s reasonable expectations. Id. langua ge favors the policy holder, the ambiguity will be construed against the in its appropriate context. Id. If one of the reasonable meanings of the whether an ambiguity exists, we look to t he claimed ambiguity and c onsider it Metro. Prop. & Cas. Ins. Co., 171 N.H. 682, 686 (2019). When determining insured can have no reasonable expectation that coverage exists. Santos v. on coverage must be stated in such “clear and unambiguous terms” that the Co. v. Concor d Gen. Mut. Ins. Co., 151 N.H. 6 p. 4 49, 653 (2005). Any limitation proving that the exclusion applies. RSA 491:22 - a (2010); Progressive N. Ins. The insurer asserting an exclusion of coverage bears the burden of

unambiguous, we accord the language its natural and ordinary meaning.” Id. construed objectively, and [when] the terms of a policy are clear and and ordin ary meaning o f the policy’s words in context.” Id. “P olicy terms are ultimately an issue of law for the court to decide.” Id. “We look to the plain interpretation of insurance policy language, like any contract language, is This appeal requires that we interpret the parties’ insurance policy. “The

application of the law to the facts de n ovo. Id. grant of summary judgment is proper. Id. We review the trial court’s fact, and if the moving party is entitled to judgment as a matter of law, the Mut. Ins. Co., 151 N.H. 71, 72 (200 p. 4 4). If there is no genuine issue of material in the light most favorable to the non - moving party. See Peerless Ins. v. V t. the affidavits and other evidence, and all inferences properly drawn from them, When reviewing a trial court’ s grant of summary judgment, we consider

precluded coverage for Blodgett’s injuries. This appeal followed. As a result, the court determined that the policy’s exclusionary provision failure to comply with the terms of the exclusionary provision prejudiced CSU. untimely notice of the claims, CSU was not required to prove that Best Way’s late notice context.” The court concluded that, because CSU did not allege that “New Hampshire does not require a showing of prejudice outside of the subcontractor.” Wi th respect to the prejudice argument, the court determined negligence claims alleged against Best Way absent the alleged negligence of the provision. The court reasoned that “there would be no damages under the subcontractor ’s work and, therefore, were subject to the policy’s exclusionary further found that “all claims in the underlying action” ar o se o ut of the unambiguous” and that Best Way failed to comply with those terms. The court found that the terms of the policy’s exclusionary provision were “clear and The trial court granted CSU’s motion for summary judgment. The court

subcontractor. prejudice as a result of Best Way’s failure to obt ain a written contract with the precluded from coverage by the exclusionary pro vision; and (2) CSU suffered no p. 5 5

met.” T he exc lusionary provision includes three clear and unambiguous “[t]his insurance will not apply... unless all of the above conditions have been Turning to the language of the exclusionary provision, it states that

injury” or “property damage” that “occur[red] during the policy period.” undisputed that the CSU policy is an occurrence policy, which cove red “bodily during the policy period....” (quotation and brackets omitted)). Here, it is 96 (1999) (“An occurrence policy covers all claims based on an event occurring covered loss.” Id.; see Bianco Prof. Assoc. v. Home Ins. Co., 144 N.H. 288, 29 p. 5 5 bodily injury or property damage takes place must respond to an otherwise occurrence - based contracts, the contract or contracts in effect at the time the contract inception da tes, but can be earlier.” Id. By contrast, “[u]nder (2021). “Most claims - made contracts have retroactive dates, which often are Schulze, Allocation of Losses in Complex Insurance Coverage Claims § 2:3 the timing of bodily injury or property damage.” Scott M. Seaman & Jason R. the insurance contract must respond to an otherwise covered loss, rather t han claimant first makes a claim against the policyholder that determines whether claims - made policy. “Under claims - made contracts, it is the time that the We begin by noting the difference betwee n an occurrence policy and a

policy existed. We disagree. policyholder as inapplicable to work completed by a subcontractor before the this language is ambiguous and should be interpreted in favor of the minimum of two years, not indefinitely.” Alternatively, Blodgett argues that requirement... that completed operations coverage be maintained for a period. He argues that this interpretation is “further supported by the as a re sult of a subcontractor’s work performed durin g the policy’s coverage — indicates that the exclusionary provision applies only to damages that occur injury or damage.” He argues that this language — written in the present tense with all independent contractors and subcontractors in force at the time of the exclusionary provision requiring Best Way to “[o]btain a formal written contract To support his argument, Blodgett points to the language in the

in this case. before the policy became effective — the exclusionary provision does not apply the subcontractor constructed the stairs in 2012 — approximately four years occurred before the policy’s effective date. He therefore argues that, because its terms, the exclusionary provision does not apply to negligent acts that coverage in this case. Blodget t asserts that, b ased upon the plain meaning of Nonetheless, Blodgett argues that the exclusionary provision does not preclude requirements for coverage set forth in the p olicy’s exclusionary provision. On a ppeal, Blodgett does not dispute that Best Way failed to satisfy the

having a temporal reference. have construed the conditions precedent of the exclusionary provision as 171 N.H. at p. 6 686, no reasonable person in the position of the insured could damages. Therefore, when considered in the appropriate context, see Santos, precedent at the time it seeks coverage in order for the policy to cover the period. Rather, it merely indicates that the insured must meet the conditions resulting from the subcontractor ’s work performed during the policy’s coverage language does not m ean that the exclusionary provision is limited to injuries to the claim.” Id. That the conditions precedent employ present tense must have satisfied the preconditions to coverage in order for coverage to apply pr ovision as having “no temporal reference” and meaning “simply that [CSU] We similarly interpret the present tense language in the excl usionary

American Capacity Ins. Co., 99 Cal. Rptr. 3d at 241. subcontracts were already in existence at the policy’s inception.” North perfor med on its behalf by an independent contractor whether or not the times [the insured] sought coverage for operations performed or to be court concluded that the endorsement in the insurance policy applie d at “all Co. v. Essex Ins. Co., 119 Cal. Rptr. 2d p. 6 62 (Ct. App. 2002)). Accordingly, the coverage in order for coverage to apply to the claim.” Id. (citing Scottsdale Ins. meant simply that the insured must have satisfied the preconditions to the language used in the conditions precedent had “no temporal reference and omitted). Relying upon prior case law, t he court determined that the tense of Capacity Ins. Co., 99 Cal. Rptr. 3d 225, 241 (Ct. App. 2009) (quotations certificate of insurance from each independent contractor. North American insured “will receive” and “will obtain” a hold harmless agreement and a similar conditions precedent, which stated that as a condition of coverage the Claremont Liab ility I nsurance Co., the California Court of Appeal interpreted effective date of the policy. In North American Capacity Insurance Co. v. provision in the CSU policy from applying to work completed prior to the language in the three conditions precedent precludes the exclusionary W e ar e unpersuaded by Blodgett’s argument that the present tense

noting that the provision was “subject to only one reasonable interpretation”). requiring the insured to meet “three explicit, unambiguous conditions” and 1049, 1055 & n. 5 (E.D. Wash. 2018) (interpreting the exclusionary provision as by CSU. See Cincinnati Specialty U/W Ins. v. Milionis Const., 352 F. Supp. 3d same conclusion when interpreting a nearly identical insurance policy issued States District Court for the Eastern District of Washington, has reached the creat e conditions precedent”). Indeed, at least one other court, the United “provisions which commence with words such as... ‘on condition that’... contract wit h the subcontractor. See Santos, 1 p. 7 71 N.H. at p. 6 688 (holding that conditions precedent to coverage, each of which required a formal written 7

against Best Way. See Philbrick, 156 N.H. at 393. Accordingly, we conclude a causal connection between the subcontractor’ s work and Blodgett’s claims the staircase — flow from the subcontractor ’s alleged negligence and establish including those based upon its subsequent omissions after the construction of negligence of the subcontractor. As such, the claims against Best Way — observed, there would be no claims against Best Way but for the alleged construction of the staircase that led to its collapse. A s the trial court physical injuries — arose from the subcontractor’s allegedly negligent We ar e unpersuaded. Ultimately, the damages alleged by Blodgett — his

supervision. negligen t failure to warn, inspect, and remedy, as well as negligent hiring and ca usal connection between the subcontractor ’ s work and the claims for Blodgett maintain s that these subsequent independent omissions sever the Way for failing to inspect the staircase, warn the owner, or remedy the defect. act, whereas Blodgett’s claims arise from multiple acts and omissions by Best Philbrick and Merrimack are distinguishable because they involved one causal N.H. 389, 393 (200 p. 7 7). Blod gett conten d s that our previous holdings in operations of the subcontractor. Philbrick v. Liberty Mut. Fire Ins. Co., 156 from an act excluded under the policy,” that being in this instance the (quotation omitted). Here, “the focus is upon whether the alleged harm arose Merrimack School Dist. v. Nat’l School Bus Serv., 140 N.H. 9, 13 (1995) out of” broadly to mean “originating from or growing out of or flowin g from.” As the trial court noted, we have consistently construed the term “arising

ambiguity should be construed in the insured ’s favor. We disagree. creates ambiguity with respect to the provision’s application and that such subcontractor. Alternatively, Blodgett argues that the phrase “arising out of” Best Way’s independent actions an d omissions, not the work performed by the negligence claims against Best Way. In his view, these claims are based upon exclusionary provision demonstrates that the provision does not apply to his Blodgett further argues that the phrase “arising out of” in the

occurred prior to the policy’s effective da te. policy, regardless of whether the acts or omissions that caused the damages unambiguously applies whenever Best Way seeks coverage under the CSU (Emphase s added.) Accordingly, we conclude that the exclusionary provision contractors or subcontractors” unless all of the conditions have been met. operations or completed operations performed for you by any independent “t o any loss, claim or ‘suit’ for any liability or any damages arising out of Specifically, the exclusionary provision states that the CSU policy will not apply provision applies to negligent acts committed before the policy’s inception. the conditions precedent — written in the past tense — indicates that the Moreover, other language in the exclusionary provisi on not included in p. 8 8

(“[W]e confine our review to only those issues that the defendant has fully briefed.”). argument in his brief, we decline to address it. See State v. Blackmer, 149 N.H. 47, 49 (2003) policy illusory. Because Blodgett fails to develop or identify any factual or legal support for this At oral argument, Blodgett argued that this interpretation is impractical and renders the CSU 2

that insured submit to examination under oath); see also Int’l Surplus Lines prove that it was prejudiced by insured’s failure to comply with a requirement Ins. Co., 151 N.H. 643, 647 - 49 (2005) (holding that insurer was not required to applied this rule outside of the notice context. See Krigsman v. Progressive N. is sue in this case, and Blodgett has not identified any cases in which we have the insurer must show prejudice to deny coverage.”). However, notice is not at Bianco Prof. Assoc., 144 N.H. at 295 (“Generally, if an insured gives late notice, unless the insurer demonstrates that the late notice was prejudicial. See, e.g., coverage based upon the insured’s failure to provide timely notice of t he claim We have held that, under certain circumstances, an insurer cannot deny

subcontractor would have expired by the time Blodgett sustained his injuries. a written contract from the subcontract or, any coverage afforded by the completion of the project. Therefore, in his view, even if Best Way had obtained required subcontractor s to maintain insurance coverage for two years following claims. Blodgett point s to the fact that the exclusionary provision only obligated to defend and indemnify Best Way with respect to his negligence Best Way’s failure to comply with the exclusionary provision and thus CSU is Finally, Blodgett argue s that CSU suffered no prejudice as a result of

the language “arising out of” in the policy. Id. at *2 - 4. any event, the court applied Texas law, not New Hamps hire law, in construing any work on the staircase after the subcontractor completed the project. I n This case is distinguishable, however, because Best Way itself did not perform subcontractor installed and which caused the claimant’s injuries. Id. at *4. independent acts; i.e., removing and reinstalling the same cabinets that the not arise out of the subcontractor’s work, but, rather, arose out of the insured’s *1 - 4. The court concluded that the negligence claims against the insured did Cincinnati Specialty Underwriters Insurance Company, 2019 WL 6699 p. 8 818 at subcontractor, the exclusionary provision did not preclude coverage. that, although the insured did not execute a written contract with the interpreted a nearly identical insurance policy issued by CSU and concluded In that case, the United States District Court for the Eastern District of Texas LLC, No. 6:18 - CV - 00161 - JDK, 2019 WL 6699818 (E.D. Tex. June 28, 2019). Ins urance Co mpany v. Preferred Wright - Way Remodeling and Construction, Blodgett counter s by p ointing to Cincinnati Specialty Underwriters

the exclusion ary provision precludes coverage in the underlying litigation. 2 that all claims against Best Way arose out of the work of the subcontractor and p. 9 9

the lack of insurance coverage. harmless, indemnity and defense obligations that CSU could have relied upon, notwithstanding We note that, even if prejudice w ere an issue, the exclusionary provisions included hold 3

concurred. M AC DONALD, C.J., and HICKS, BASSETT, and HANTZ MARCONI, JJ.,

N.H. 680, 688 (2018). notice of appeal, but did not brief, are deemed waived. State v. Bazinet, 170 summary judgment in favor of CSU. Any issues that Blodgett raised in his For the foregoing reasons, we affirm the trial court’s order granting

failure t o execute a written contract was prejudicial. 3 Accordingly, we conclude that CSU was not required to show that Best Way’s pursuant to exclusionary provision that “contain[ed] no notice requirement”). that insurer was not required to show prejudice in order to deny coverage Ins. Co. v. Mfgs. & Merchants Mut. Ins. Co., 140 N.H. 15, 22 (1 p. 9 99 5) (holding