Merchants Insurance v. Guaranty Co.,
Case Date: 05/01/1998
Court: United States Court of Appeals
Docket No: 97-2056
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For the First Circuit ____________________ No. 97-2056 MERCHANTS INSURANCE COMPANY OF NEW HAMPSHIRE, INC., Plaintiff - Appellee, v. UNITED STATES FIDELITY AND GUARANTY CO., Defendant - Appellant. ____________________ APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MASSACHUSETTS [Hon. Joseph L. Tauro, U.S. District Judge] ____________________ Before Selya, Circuit Judge, Coffin, Senior Circuit Judge, and Shadur, Senior District Judge. _____________________ James R. Loughman, with whom Donovan & O'Connor was on brief for appellant. Nina E. Kallen, with whom Neville & Kelley was on brief for appellee. ____________________ May 1, 1998 ____________________ SHADUR, Senior District Judge. United States Fidelity and Guaranty Co. ("USF&G") appeals the order of the United States District Court for the District of Massachusetts granting a Fed. R. Civ. P. ("Rule") 56 summary judgment motion filed by Merchants Insurance Company of New Hampshire, Inc. ("Merchants") and denying the corresponding cross-motion filed by USF&G. Merchants had brought a diversity-of-citizenship action, pursuant to the Declaratory Judgment Act (28 U.S.C. 2201), seeking a declaration that it was entitled to contribution from USF&G for the attorneys' fees and expenses incurred in defending and settling a personal injury action brought against Merchants' insured D'Agostino Associates, Inc. ("D'Agostino"). We affirm. Facts In 1992, general contractor D'Agostino entered into a contract with two Massachusetts towns to remove and replace a bridge. In connection with that project D'Agostino hired subcontractor Great Eastern Marine Service, Inc. ("Great Eastern"). Although Merchants had already issued a commercial general liability policy to D'Agostino, the subcontract required Great Eastern to list the general contractor as an additional insured on its own commercial general liability insurance policy issued by USF&G. Of particular importance here, the additional insured endorsement ("Endorsement") provided D'Agostino with coverage "but only with respect to liability arising out of 'your work' for that [added] insured by or for you." In part that language is clear indeed: "You" means Great Eastern, while D'Agostino is "that [added] insured." We will later address the meaning of the potentially more murky aspect of the Endorsement--what is intended by its "arising out of" phrase. On October 28, 1992, Great Eastern's employee Daniel Woundy ("Woundy") sustained serious injuries while working at the job site when a D'Agostino employee accidentally caused Woundy's arm to become pinned between two pieces of demolition equipment. Almost a year later Woundy and his wife (collectively "Woundys") brought suit against D'Agostino, alleging that his physical injuries and her loss of consortium were "a direct and proximate result" of the general contractor's negligence. USF&G then refused Merchants' demand to defend that underlying action, explaining that the Endorsement did not afford D'Agostino coverage for its own negligence. On March 25, 1995 Merchants settled Woundys' claims against D'Agostino for $250,000, an amount to which USF&G did not object. Merchants had also incurred attorneys' fees and expenses aggregating $28,297.21. Shortly thereafter Merchants brought this federal court action against USF&G to seek contribution for half of the total amount it had incurred in defending and settling Woundys' personal injury and loss of consortium claims. After the district court ruled in Merchants' favor on the parties' cross-motions for summary judgment, this appeal followed. Standard of Review We review the district court's grant of summary judgment de novo (Vartanian v. Monsanto Co., 131 F.3d 264, 266 (1st Cir. 1997)). Familiar Rule 56 principles impose on a party seeking summary judgment the burden of establishing the lack of a genuine issue of material fact (Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986)). As we stated in Woods-Leber v. Hyatt Hotels of P.R., Inc., 124 F.3d 47, 49 (1st Cir. 1997)(citations and internal quotation marks omitted): The genuineness requirement signifies that a factual controversy must be sufficiently open-ended to permit a rational factfinder to resolve the issue in favor of either side. The materiality requirement signifies that the factual controversy must pertain to an issue which might affect the outcome of the suit under the governing law. For Rule 56 purposes we read the record in the light most favorable to the non-moving party, drawing all reasonable inferences in its favor (Reich v. John Alden Life Ins. Co., 126 F.3d 1, 6 (1st Cir. 1997)). In that regard "[a]n inference is reasonable only if it can be drawn from the evidence without resort to speculation" (Mulero-Rodr |