You only get the insurance you ask for

During the renovation of a historic Masonic temple in Quincy, Massachusetts, workers set off a fire that nearly burned the structure to the ground. At the time of the fire. Jay Patel, the president and sole owner of Dipika, Inc. (Dipika), was the holder of a purchase and sale agreement to purchase the temple. Among other things, the Supreme Court was asked to rule on whether Dipika’s alleged liability as a result of the fire was covered by its general liability insurance, which only named Patel’s hotel as insured.

IN Masonic Temple Association of Quincy, Inc. v. Jay Patel & another; Leo Martin and other third-party defendants (and two accompanying cases, No. SJC-13109, Massachusetts Supreme Court, Norfolk (April 27, 2022) resolved the dispute.

BACKGROUND

In the face of economic pressure, members of the Quincy Rural Masonic Lodge decided to sell their Masonic Temple or Temple, a 1926 neoclassical building located on Hancock Street in Quincy. The ownership of the property was owned by an affiliated charity. Masonic Temple Association of Quincy, Inc. (Masons). Masons entered into a purchase and sale agreement with Grossman Munroe Trust (Grossman Trust), according to which Grossman Trust would develop the building into two condominium units. The basement unit would be retained by the Freemasons to use as their lodge, while the Grossman Trust would become the owner of the two-story building upstairs.

Halfway through the renovation, Grossman Trust concluded that the project was not financially profitable and awarded Patel its interest in the purchase and sale agreement. Neither the purchase and sale agreement nor the assignment reference Dipika. Patel was the president and sole owner of Dipika, which operated a Super 8 motel in Weymouth. Patel also had previous experience, separate and distinct from his interest in Dipika, and owned and operates several other hotels. He intended to convert the condominium upstairs in the Masonic Temple into a “boutique hotel”.

During Patel’s administration of the renovation, the Freemasons asked him to provide them with proof of insurance for the work. In response, Patel contacted Roblin Insurance Agency, Inc. (Roblin), which had acted as Dipika’s agent in the acquisition of its existing commercial property and general liability insurance for the Weymouth Super 8 motel from Union Insurance Company (Union). On July 25, 2013, Patel sent a voice message to Dipika’s Roblin account manager, stating, “I have to make a name, a loss payer for Quincy Masonic Temple Associates, and this is something I need right away.” A minute later, he even sent an e-mail to Roblin stating, “I need to clear [sic] for dipika inc name quincy masonic temple association loss payer. ”

Roblin responded to Patel’s email within half an hour and sent an insurance policy for Dipika’s current insurance. A Roblin account manager also followed up the next day, sending an email to Patel asking, “What’s the relationship between the Quincy Masonic Temple Association and Dipika? Are they asking you for a certificate?” Patel received that message but never responded.

Elden

Several months later, two workers were on site cutting metal when a fire broke out. The damage was extensive; the Freemasons, through their public adjuster, filed a claim for their property insurance of over $ 12 million, of which only half was paid out. Shortly after the fire, Patel Union announced and requested coverage under the Dipika policy.

Union and Roblin filed claims for summary judgment against the Freemasons, Dipika and Patel. A judge of the Supreme Court granted summary judgment in favor of Union and Roblin on all counts.

DISCUSSION

Dipika’s policy contains a commercial real estate part and a commercial general liability part. The disagreement is about whether the insurance applies to these losses. At the heart of the parties’ dispute over the scope of the coverage is the designation of the insured named as “Dipika Inc. dba Super 8.”

According to Dipika and the Masons, the name of the insured named clarifies that Dipika “dba Super 8” only clarifies that the Weymouth Super 8 business was part of the broader Dipika coverage. The Union’s position is that the identification of the insured named as “Dipika Inc. dba Super 8” means that the insurance only covers liability arising from Dipika’s business that does business as Super 8.

The interpretation of an insurance is a matter of law. If the language is clear and unambiguous, courts must give effect to that language, without taking into account the underlying intentions of the parties.

While “dba Super 8” may not be crucial in itself, its simple meaning is not an important consideration in the court’s analysis. Here, the common understanding of the phrase “doing business as a Super 8” suggests that the insurance only covers liability that arises from Dipika’s business that it undertakes do business like a Super 8. For example, the policy statements are given Dipika’s “business description” as “Motel”.

Every phrase and clause must be assumed to have been used constructively and must be given meaning and effect. Conversely, the interpretation of the Freemasons and Dipika demands that the court make “dba Super 8” completely redundant, which it cannot do.

ENDORSEMENTS

The Freemasons and Dipika also claim that two recommendations for the commercial general liability policy extend the coverage to include the fire losses in the Masonic Temple, and point to schemes that apply the recommendations to “ALL PROJECTS” and “ALL PLACES.” The recommendations unequivocally increase the maximum dollar amount that can be recovered under the policy in certain circumstances, but – just as unequivocally – they do not affect which losses are covered in the first place.

A careful reading of the recommendations reveals that they do not extend the scope of coverage to events that are not otherwise covered. Rather, the recommendations work exactly as they are advertised in their titles: they create separate general aggregate boundaries for events at different locations or involve different construction projects.

The recommendations do not affect, either in plain language or implicitly, what losses are covered in the first place, and therefore do not extend the coverage to cover the losses of the Masonic temple.

DUTY OF DEFENSE

Dipika claimed that, regardless of the final decision on compensation. The Union was at least obliged to defend it against fire-related lawsuits.

Although an insurer’s obligation to defend is independent of, and broader than, its obligation to reimburse, Union had no obligation to defend. The actual allegations against Patel concern all the fires in the Masonic temple. When matched with the terms of the policy unequivocally does not extend the coverage to Dipika’s activities at the temple – the accusations can reasonably not even give a rough outline of a statement.

DIPIKAS CLAIMS AGAINST ROBLIN

Dipika insists that, if it could not recover from the Union, its losses should instead fall on Roblin. However, all of Dipika’s claims against Roblin suffer from the same basic shortcoming: they are all based on Patel requesting further insurance for Dipika from Roblin. But even seen in the light that was most favorable to Dipika, Patel’s request to add the Freemasons as a “loss payer” was not a request for insurance. Brokers have an obligation to obtain insurance coverage that their client asks them to obtain. Roblin cannot be held responsible for failing to take out insurance when there was no comprehensible request for it.

THE WALLERS ‘CLAIMS AGAINST ROBLIN

The Freemasons claimed claims for misleading representations and negligence against Roblin, provided that Roblin sent the insurance certificate to Patel.

In connection with a liability insurance such as Dipikas, an insurance certificate is simply a form that is filled in by an insurance broker or agent at the request of a policyholder to document that an insurance has been written. The unilateral certificate submitted to Patel carefully describes his general commercial liability policy, lists the Freemasons as “certificate holders” and states on its front page: “This certificate is issued only as a matter of information and gives no rights to the Certificate Holder…”

In summary, the ruling was in favor of Union and Roblin, and the rejection of the Freemasons’ motion to change their complaint was correct. The judgments are therefore upheld. The judgments on dismissal in the two partner cases are also upheld.

The only interpretation that appropriately makes sense to the insurer’s and the insured’s choice to include the “dba Super 8” language when designating the named insured is that they only intended to insure against the risks of loss that the Super 8 motel stands for. infront of. A professional like Mr. Patel, who owned and operated several commercial properties, should have understood the need to insure against the risks he faced when rebuilding a structure and the seller’s need for proof that he had insurance that protects against the risk of loss faces a structure under Construction. He failed to get that coverage and tried to put the blame for his mistake on his agent and his motel’s insurer. It did not work.

(c) 2022 Barry Zalma & ClaimSchool, Inc.

Barry Zalma, Esq., CFE, now limits his internship to the position of insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He practiced law in California for more than 44 years as a lawyer for insurance coverage and claims management and more than 54 years in the insurance industry. He is available at http://www.zalma.com and zalma@zalma.com.

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