Chalmers Hardenbergh v. Patrons Oxford Insurance Company

Citations: 2013 ME 68; 70 A.3d 1237; 2013 Me. LEXIS 67Docket: Docket Cum-12-387

Court: Supreme Judicial Court of Maine; July 16, 2013; Maine; State Supreme Court

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Patrons Oxford Insurance Company appealed a summary judgment from the Superior Court, which determined that the company had a duty to defend Chalmers Hardenbergh under his homeowners insurance policy against a third-party lawsuit. Patrons Oxford argued that the lawsuit fell under the policy's exclusion for 'business pursuits,' thereby negating their duty to defend. The Maine Supreme Judicial Court agreed with Patrons Oxford, vacating the lower court's judgment and remanding the case for entry of summary judgment in favor of the insurance company.

Hardenbergh held a homeowners insurance policy with Patrons Oxford, which included a duty to defend against personal injury claims, specifically those involving libel, slander, or defamation. However, the policy explicitly excluded coverage for injuries arising from the insured's business activities. 

The underlying lawsuit, filed by Pan Am Systems, Inc. and others, alleged that Hardenbergh, along with his corporation and a publication he owned, published false and defamatory statements about Pan Am in various newsletters and online. The complaint detailed the nature of the publications and asserted that Hardenbergh was the principal of the publication. 

After Patrons Oxford declined to defend Hardenbergh, he sought a declaratory judgment in the Superior Court affirming the insurer's duty to defend and also claimed damages for his defense costs. Patrons Oxford moved to dismiss Hardenbergh's complaint while also filing for summary judgment. Notably, during the proceedings, the U.S. District Court dismissed the original complaint against Hardenbergh but permitted an amended complaint to be filed.

In July, the Superior Court granted Hardenbergh's motion for summary judgment while denying Patrons Oxford's motions to dismiss and for summary judgment. The court found that Patrons Oxford had a duty to defend Hardenbergh regarding the original Pan Am complaint, interpreting the complaint's "including, but not limited to" language as potentially encompassing statements made by Hardenbergh in his individual capacity, which fell outside the policy’s "business pursuits" exclusion. The court did not consider whether there was a duty to defend against the amended Pan Am complaint.

Patrons Oxford appealed, arguing that it had no duty to defend Hardenbergh against the Pan Am lawsuit. The court first examined whether the appeal was moot due to the dismissal of the original complaint and the filing of an amended one. It determined the appeal was not moot because Hardenbergh claimed to have incurred costs defending against the original complaint, maintaining a substantial controversy.

Patrons Oxford contended that the trial court should have found no duty to defend against the original complaint since the allegations fell within the policy's "business pursuits" exclusion. The appellate review of the trial court's summary judgment is de novo, focusing on whether the allegations in the complaint could potentially fall within the coverage of the policy. An insurer can refuse to defend if the allegations entirely fit a policy exclusion. The analysis begins with the insurance policy’s language, interpreting it with its plain meaning and favoring coverage in cases of ambiguity.

Patrons Oxford is obligated to defend Hardenbergh against claims of libel, slander, or defamation unless those claims arise from Hardenbergh's business pursuits, which are not covered by the policy. While the term 'business pursuits' is not defined in the policy, 'business' is described as including trade, profession, or occupation. Consequently, the term 'business pursuits' is interpreted to refer to activities related to one’s trade or profession. The original complaint against Hardenbergh includes allegations of defamation based solely on statements published in Atlantic Northeast Rails. The complaint clarifies that all actionable statements were made in this trade publication, where Hardenbergh serves as editor, publisher, owner, and principal. Given that the defamatory statements arose from his activities related to a trade publication, they fall under the 'business pursuits' exclusion. Therefore, Patrons Oxford is not required to defend Hardenbergh against the complaint, and the trial court's grant of summary judgment to Hardenbergh was erroneous; summary judgment should have been granted to Patrons Oxford.

Judgment has been vacated and the case is remanded for the entry of a summary judgment in favor of Patrons Oxford, stating that Patrons Oxford has no duty to defend Hardenbergh in relation to the original Pan Am complaint. The legal representatives for both parties are identified, with James M. Bowie and Hillary J. Bouchard for Patrons Oxford, and Jeffrey T. Edwards and Jonathan G. Mermin for Chalmers Hardenbergh. During oral arguments, the same attorneys represented their respective clients. The court notes that the parties do not dispute the Superior Court's finding that Hardenbergh's claim for declaratory relief regarding indemnification in the underlying action is premature and therefore omitted from consideration. Furthermore, the court refrains from addressing Patrons Oxford's potential duty to defend against the amended Pan Am complaint, as this issue was not reviewed by the Superior Court and is not properly before the current court.