Dawn M. Harlor v. Amica Mutual Insurance COmpany , 150 A.3d 793 ( 2016 )

MAINE SUPREME JUDICIAL COURT Reporter of Decisions
Decision: 2016 ME 161 Docket: Kno-15-282
Argued: March 3, 2016
Decided: November 3, 2016
Panel: SAUFLEY, C.J., and ALEXANDER, MEAD, GORMAN, JABAR, HJELM, and HUMPHREY, JJ.
Majority: SAUFLEY, C.J., and MEAD, GORMAN, JABAR, HJELM, and HUMPHREY, JJ.
Concurrence: ALEXANDER, J.
DAWN M. HARLOR
v.
AMICA MUTUAL INSURANCE COMPANY
JABAR, J.
[¶1] Dawn M. Harlor appeals from a summary judgment entered by the
Superior Court (Knox County, Billings, J.) in favor of Amica Mutual Insurance
Company on Harlor’s complaint that Amica breached Harlor’s homeowner’s
insurance policy by failing to defend Harlor in a lawsuit against her. Because
the suit against Harlor included allegations that could potentially result in an
award of damages covered by Harlor’s homeowner’s policy, Amica was bound
to provide Harlor a defense. We therefore vacate the judgment and remand
for the entry of a summary judgment in favor of Harlor on her claim for
breach of contract relating to the duty to defend and remand for further
proceedings on Harlor’s claim for indemnification.
2
I. BACKGROUND
[¶2] The relevant facts are not in dispute. In March 2013, Jon and
Winifred Prime brought suit against Harlor. The suit arose from a dispute
between the parties over the Primes’ right to use a dock according to an
easement Harlor had granted to the Primes. The Primes alleged that, acting
according to an agreement with Harlor, they made certain improvements to
the dock that resulted in the removal of a restriction on the size of the boats
they were allowed to maintain at the dock. The Primes alleged that when
Harlor later sold the dock, she obtained—through false statements and undue
pressure—the Primes’ agreement to a “Confirmation of Easement” that may
not have reflected the removal of the boat size restriction. The Primes further
alleged that, following Harlor’s sale, Harlor refused to confirm the Primes’
right to use the dock for larger boats and made false statements regarding the
Primes’ right to use the dock. Harlor’s actions, the Primes alleged, resulted in
uncertainty regarding the easement and prevented the Primes from selling
property that benefitted from the easement.
[¶3] The Primes brought a complaint against Harlor, seeking damages
for slander of title, interference with an advantageous relationship, unjust
enrichment, fraud, and negligent misrepresentation, and seeking through
3
separate counts a declaratory judgment and punitive damages. The crux of
the suit was a determination as to whether, by the terms of the agreement
between Harlor and the Primes, the Primes’ improvements to the dock
removed the boat size restriction contained in the easement.
[¶4] At all relevant times, Harlor was insured by Amica under a
homeowner’s insurance policy that provided that Amica would defend Harlor
against claims that may result in covered damages. Harlor notified Amica of
the Primes’ suit and requested that Amica provide a defense. In April 2013,
Amica denied Harlor’s request based on its conclusion that the suit could not
result in covered damages.
[¶5] Harlor settled the suit with the Primes and brought suit against
Amica. Harlor sought a declaratory judgment that Amica had been obligated
to provide Harlor with a defense to the Primes’ suit and claimed a breach of
contract based on Amica’s failure to defend her. Both parties moved for
summary judgment. The court granted Amica’s motion, concluding that any
damages that might have resulted from the suit against Harlor would not be
covered by Harlor’s policies and consequently did not give rise to a duty to
defend.1
1 The trial court relied on Langevin v. Allstate Insurance Company, in which we held that an
insurer did not have a duty to indemnify an insured for emotional distress damages under a policy
4
II. DISCUSSION
[¶6] On appeal, Harlor argues that Amica had a duty to tender her a
defense because the Primes’ claim for interference with an advantageous
relationship created a potential that the Primes could have proved facts at
trial that would have established liability covered by Harlor’s insurance
policy. She also contends that Amica is liable for the attorney fees she
incurred in the underlying action with the Primes and in this declaratory
judgment action, as well as the amount that she paid to settle the underlying
claim.
A. An Insurer’s Duty to Defend
[¶7] Whether an insurer has a duty to defend an insured is a question
of law. York Ins. Grp. of Me. v. Lambert, 1999 ME 173, ¶ 4, 740 A.2d 984. As
with summary judgment review in other contexts, here we consider de novo
whether the trial court erred in granting summary judgment to Amica on
Harlor’s claim that Amica breached its duty to defend. See Hardenbergh v.
Patrons Oxford Ins. Co., 2013 ME 68, ¶ 12, 70 A.3d 1237. Because the relevant
facts are not in dispute, we review the summary judgment for errors of law,
restricting coverage to claims for “bodily injury.” 2013 ME 55, ¶ 18, 66 A.3d 585. As discussed
below, however, the duty to defend is broader than the duty to indemnify, and Langevin does not
aid in a determination of whether an insurer has a duty to defend. See Mitchell v. Allstate Ins. Co.,
2011 ME 133, ¶ 10, 36 A.3d 876.
5
including errors in the interpretation of the insurance policy. See Howe v.
MMG Ins. Co., 2014 ME 78, ¶ 5, 95 A.3d 79; Langevin v. Allstate Ins. Co., 2013
ME 55, ¶ 7, 66 A.3d 585. We therefore independently examine the language of
the policy at issue to determine the scope of coverage, and then consider the
general allegations of the Primes’ complaint “to determine whether it falls
within the scope of the policy’s coverage.” Hardenbergh, 2013 ME 68, ¶ 14,
70 A.3d 1237.
[¶8] To determine whether an insurer has a duty to defend, a court
considers and compares two documents: the insurance policy and the
underlying complaint against the insured. Irving Oil, Ltd. v. ACE INA Ins.,
2014 ME 62, ¶ 12, 91 A.3d 594. An insurer has a duty to defend an insured
when the complaint, read broadly in conjunction with the policy, reveals the
existence of any legal or factual basis that could potentially be developed at
trial and result in an award of damages covered by the terms of the policy.2
Howe, 2014 ME 78, ¶¶ 6, 10, 95 A.3d 79; L. Ray Packing Co. v. Commercial
Union Ins. Co., 469 A.2d 832, 833 (Me. 1983). Although courts “do not
speculate about causes of action that were not stated[,] . . . our rules of notice
2 “We have previously noted that the duty to indemnify is more narrow than the duty to defend.
Whereas the duty to defend depends only upon the facts alleged in the complaint, the duty to
indemnify depends upon the facts proved at trial.” Union Mut. Fire Ins. Co. v. Topsham, 441 A.2d
1012, 1016 n.2 (Me. 1982).
6
pleading favor a broad construction of the duty to defend.” York Golf & Tennis
Club v. Tudor Ins. Co., 2004 ME 52, ¶ 8, 845 A.2d 1173 (citations omitted).
“The facts alleged in the complaint need not make out a claim that specifically
and unequivocally falls within the coverage. Rather, where the events giving
rise to the complaint may be shown at trial to fall within the policy’s coverage,
an insurer must provide the policyholder with a defense.” Mitchell v. Allstate
Ins. Co., 2011 ME 133, ¶ 10, 36 A.3d 876 (quotation marks omitted) (citations
omitted). We have explained the comparison test and its “low” threshold for
triggering an insurer’s duty to defend, Irving Oil, 2014 ME 62, ¶ 12, 91
A.3d 594, as a test and a threshold designed to “discourage mini-trials on the
issue of the duty to defend,” Me. Bonding & Cas. Co. v. Douglas Dynamics, Inc.,
594 A.2d 1079, 1080 (Me. 1991); see Lambert, 1999 ME 173, ¶ 5, 740 A.2d
984 (“We see no reason why the insured, whose insurer is obligated by
contract to defend him, should have to try the facts in a suit against his insurer
in order to obtain a defense.” (quotation marks omitted)).
B. Harlor’s Homeowner’s Policy
[¶9] Harlor’s homeowner’s insurance policy included the following
coverage for personal liability:
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If a claim is made or a suit is brought against an insured for
damages because of bodily injury . . . caused by an occurrence to
which this coverage applies, we will:
1. Pay up to our limit of liability for the damages for which an
insured is legally liable. Damages include prejudgment
interest awarded against an insured; and
2. Provide a defense at our expense by counsel of our choice,
even if the suit is groundless, false or fraudulent. We may
investigate and settle any claim or suit that we decide is
appropriate. Our duty to settle or defend ends when our
limit of liability for the occurrence has been exhausted by
payment of a judgment or settlement.
[¶10] The policy defined “occurrence” in relevant part as “an accident,
including continuous or repeated exposure to substantially the same general
harmful conditions, which results, during the policy period in . . . [b]odily
injury.” The term “bodily injury” was defined as “bodily harm, sickness or
disease, including required care, loss of services and death that results.”
[¶11] Referencing the personal liability provision of her homeowner’s
policy, Harlor argues that Amica was required to defend her because the
Primes could potentially have recovered damages for emotional distress and
bodily harm caused by such distress on their claim of interference with an
advantageous relationship.
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C. Duty to Defend Claim of Interference with an Advantageous
Relationship
[¶12] To establish a claim of interference with an advantageous
relationship, the Primes would have had to prove “the existence of a valid
contract or prospective economic advantage, interference with that contract
or advantage through fraud or intimidation, and damages proximately caused
by the interference.” Barnes v. Zappia, 658 A.2d 1086, 1090 (Me. 1995).
Generally, a plaintiff claiming tortious interference alleges that the defendant
interfered with a contract or prospective economic advantage involving the
plaintiff and someone other than the defendant. See generally Currie v. Indus.
Sec., Inc., 2007 ME 12, 915 A.2d 400; Rutland v. Mullen, 2002 ME 98, 798 A.2d
1104; Petit v. Key Bank of Me., 688 A.2d 427 (Me. 1996); MacKerron v. Madura,
445 A.2d 680 (Me. 1982), superseded by statute, P.L. 1987, ch. 740, § 8
(effective Aug. 4, 1988) (codified at 14 M.R.S.A. § 8111(1)(E)
(1980 & Supp. 1988)); see also 3 Dan B. Dobbs, The Law of Torts § 616 at 498
(2d ed. 2011).
[¶13] At the outset, we disagree with the concurring opinion’s
proposition that Maine law demands that the fraud or intimidation required
as an element of a tortious interference claim must be directed at an identified
third party, not at the plaintiff. We have never announced such a limitation on
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Maine’s common law, and we decline to do so now. As the First Circuit has
noted, in Massachusetts, a plaintiff can make out a claim for this tort by
alleging either (a) that the defendant interfered with the plaintiff’s
advantageous relationship with a third party by committing fraud or
intimidation against the third party or (b) that the defendant interfered with
the plaintiff’s relationship with a third party by committing fraud or
intimidation against the plaintiff. See, e.g., O’Donnell v. Boggs, 611 F.3d 50, 54
(1st Cir. 2010) (interpreting Massachusetts tort law); Restatement (Second) of
Torts §§ 766A, 766B (Am. Law Inst. 1979).
[¶14] Here, the Primes claimed in their complaint that Harlor
interfered with the Primes’ prospective advantageous relationship with
potential buyers by committing fraud and intimidation against the Primes.
This claim requires us to consider, as we do below, whether the Primes’
complaint alleged facts that could give rise to the type of damages that would
invoke Amica’s duty to defend Harlor pursuant to Harlor’s insurance policy.
[¶15] We have not previously spoken definitively on the availability of
emotional distress damages on a claim of interference with an advantageous
relationship and, because the issue here is Amica’s duty to defend, we need
not do so now. See Gagnon v. Turgeon, 271 A.2d 634, 635 (Me. 1970) (holding
10
that a party who interferes with an advantageous relationship “is liable in
damages for such injuries as naturally result therefrom”); Restatement
(Second) of Torts § 774A(1)(c) (Am. Law Inst. 1979) (“One who is liable to
another for interference with a contract or prospective contractual relation is
liable for damages for . . . emotional distress or actual harm to reputation, if
they are reasonably to be expected to result from the interference.”); see also
Lambert, 1999 ME 173, ¶ 7, 740 A.2d 984 (“allegations of the interference
with an expectancy of inheritance claim carry the possibility of an award for
emotional distress”).
[¶16] Although the Primes’ claim for interference with an advantageous
relationship did not specifically include allegations of emotional distress or
bodily injury, or a request for money damages for the same, the comparison
test transcends the specific factual allegations and forms of relief requested in
the complaint. “‘Precision’ . . . is not necessary for determining a duty to
defend. The correct test is whether a potential for liability within the coverage
appears from whatever allegations are made.” Travelers Indem. Co. v.
Dingwell, 414 A.2d 220, 226 (Me. 1980). Moreover, “the fact that the
complaint itself did not request monetary damages, in its prayers for relief,
does not end the matter. A court can grant relief to a plaintiff that is not
11
requested in a complaint if the plaintiff is entitled to the relief and the
judgment is not granted by default.” York Golf & Tennis Club, 2004 ME 52, ¶
12, 845 A.2d 1173. We accordingly look to the general allegations for the
particular claims asserted in the underlying complaint to determine whether
they could potentially support an award of covered damages for bodily injury
caused by emotional distress, resulting from an “occurrence” within the
meaning of Harlor’s homeowner’s insurance policy.
[¶17] In their complaint, the Primes asserted that Harlor “interfered
with [their] attempts to sell their real estate through bad faith conduct,
fraud[,] . . . intimidation, . . . [and] misrepresentations with respect to both the
status of [their] easement and with respect to the Confirmation of Easement.”
The Primes further asserted that they were “damaged by [Harlor’s] fraudulent
interference in that they have been unable to sell their property.”
[¶18] The Primes’ allegations regarding the damages flowing from
Harlor’s allegedly tortious conduct arguably constitute an “accident or
occurrence” within the meaning of the personal liability provisions of Harlor’s
homeowner’s policy. See Vigna v. Allstate Ins. Co., 686 A.2d 598, 600 (Me.
1996) (“The ‘accidental’ nature of an event for purposes of a standard liability
insurance contract . . . does not derive from the voluntariness of the act, but
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rather from the unintentional nature of the consequences flowing from the
act.”). Because the Primes’ allegations of Harlor’s allegedly tortious actions—
specifically, interference with the Primes’ prospective advantageous
relationship with potential buyers through intimidation and fraud—could
have resulted in harm to the Primes, including bodily harm due to emotional
distress, Harlor could have been found liable for a type of damages covered by
the personal liability provisions of her homeowner’s policy.3
[¶19] Comparing the general allegations of the Primes’ complaint with
the terms of Harlor’s homeowner’s policy, there was a possibility that the
Primes could have established that they suffered bodily injury as a result of
emotional distress caused by Harlor’s actions. See Douglas Dynamics, 594
A.2d at 1081. Amica was therefore bound by the terms of its insurance
contract with Harlor to provide her a defense to the Primes’ suit, and it
breached that contractual obligation by failing to do so.4
3 Although we have never affirmatively announced that emotional distress bodily harm is a
recoverable damage of this tort, neither have we declared that it is not recoverable.
4 “Because an insurer has a duty to defend if any cause of action alleged in a complaint could fall
within the policy’s liability coverage, we need not consider whether other theories of liability set
forth in the [Primes’] complaint . . . would have independently given rise to a duty to defend.”
Mitchell, 2011 ME 133, ¶ 21, 36 A.3d 876 (citation omitted).
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D. Whether Amica is Liable for Harlor’s Settlement
[¶20] Having determined that Amica breached its duty to defend, we
now consider the proper measure of Harlor’s damages. Although Amica
concedes that its breach of the duty to defend would render it liable for the
attorney fees that Harlor incurred in the underlying action with the Primes
and in the instant action for a declaratory judgment,5 it argues that it is not
liable for Harlor’s payment to the Primes in settlement because that payment
does not establish that the Primes actually sustained an injury covered by
Harlor’s homeowner’s policy. Harlor argues that her settlement costs should
be awarded as consequential damages for Amica’s breach of the duty to
defend, and that Amica, by breaching that duty, lost the right to hold Harlor to
the burden of proving that she was liable for damages covered by her
homeowner’s policy.
[¶21] “Standard . . . liability insurance policies are contracts between an
insurer and an insured: In each, the insurer makes promises, and the insured
pays premiums, the one in consideration for the other, against the risk of
5 In a declaratory judgment “action pursuant to Title 14, chapter 707 to determine an insurer’s
contractual duty to defend an insured under an insurance policy, if the insured prevails in such
action, the insurer shall pay court costs and reasonable attorney’s fees.” 24-A M.R.S. § 2436-B(2)
(2015). An insurer’s breach of the duty to defend damages the insured “not only in the amounts the
insured has expended in defending the underlying claim but also in the amount of reasonable costs
the insured has incurred in protecting its contractual right to defense.” Union Mut. Fire Ins. Co., 441
A.2d at 1017.
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loss.” Aerojet-Gen. Corp. v. Transp. Indem. Co., 948 P.2d 909, 919 (Cal. 1997).
An insurer’s unjustified refusal to defend its insured constitutes a breach of
the insurance contract, and the insured’s claim for relief is analyzed pursuant
to principles of contract damages. Elliott v. Hanover Ins. Co., 1998 ME 138, ¶
11, 711 A.2d 1310. An award of damages to the insured for breach of an
insurer’s duty to defend should therefore place the insured “in a position
equally as good as the insured would have occupied had the insurance
contract been fully and properly performed from the beginning.” Foremost
Ins. Co. v. Levesque, 2007 ME 96, ¶ 10, 926 A.2d 1185 (quotation marks
omitted).
[¶22] An insurer’s breach of the duty to defend does not, when
analyzed pursuant to ordinary principles of contract law, necessarily warrant
an award of damages to the insured in reimbursement of a judgment or
settlement related to the ultimate question of the insured’s liability. We “have
repeatedly stated that an insurer’s duty to indemnify is independent from its
duty to defend.” Elliott, 1998 ME 138, ¶ 11, 711 A.2d 1310. In evaluating an
insurer’s liability for a settlement that potentially involves both covered and
uncovered claims following the insurer’s breach of the duty to defend, we are
15
mindful of the distinction between that duty and the narrower duty to
indemnify.
[¶23] “[S]tandard . . . liability insurance policies provide that the
insurer has a duty to indemnify the insured for those sums that the insured
becomes legally obligated to pay as damages for a covered claim.” Aerojet-
Gen. Corp., 948 P.2d at 919. This duty “runs to claims that are actually
covered, in light of the facts proved.” Id. An insurer’s contractual duty to
indemnify is thus “limited to so much of the judgment or settlement as was
fairly allocable to the claims that were covered by the policy.” Charter Oak
Fire Ins. Co. v. Hedeen & Cos., 280 F.3d 730, 738 (7th Cir. 2002) (quotation
marks omitted) (alteration omitted). This narrow duty to reimburse the
insured for liability for covered damages is unaltered by a breach of the
independent duty to defend. See Esicorp, Inc. v. Liberty Mut. Ins. Co.,
193 F.3d 966, 970-71 (8th Cir. 1999) (concluding that a breach of the duty to
defend does not expand the duty to indemnify); Ala. Farm Bureau Mut. Cas. Ins.
Co. v. Moore, 349 So. 2d 1113, 1116 (Ala. 1977) (same). To award to the
insured the entire settlement as consequential damages after a breach of the
duty to defend, when some claims against the insured were for covered
damages and others were for uncovered damages, would “improperly
16
enlarge[] the bargained-for coverage.” Elliott, 1998 ME 138, ¶ 11, 711 A.2d
1310 (quotation marks omitted).
[¶24] For these reasons, we have held that an insurer does not, by
breaching the duty to defend, lose the right to assert noncoverage as a defense
to a claim for indemnification brought by the insured. Id. However, we have
also held that if an insurer wrongfully declines to defend a claim, it assumes
the burden of proving noncoverage.6 Id.; accord Liquor Liab. Joint
Underwriting Ass’n v. Hermitage Ins. Co., 644 N.E.2d 964, 968 (Mass. 1995);
Sentinel Ins. Co. v. First Ins. Co., 875 P.2d 894, 914 (Haw. 1994) (recognizing a
presumption of coverage following the insurer’s breach of the duty to defend);
Isaacson v. Cal. Ins. Guar. Ass’n, 750 P.2d 297, 308 (Cal. 1988) (same).
[¶25] If the insurer can demonstrate that the liability of the insured is
entirely uncovered by the insured’s policy, the insurer is not liable for any
obligations incurred by the insured in a settlement. McNicholes v. Subotnik,
12 F.3d 105, 108 (8th Cir. 1993); Afcan v. Mut. Fire, Marine & Inland Ins. Co.,
595 P.2d 638, 647 (Alaska 1979). However, “[i]t is not uncommon for a
lawsuit against an insured to assert some claims that are covered by the
insurance policy and others that are not.” Liberty Mut. Ins. Co. v. Metro. Life
6 By contrast, when an insured brings an action for breach of an insurer’s contractual obligation
of indemnity, the burden of demonstrating coverage lies with the insured. Pelkey v. GE Capital
Assurance Co., 2002 ME 142, ¶¶ 8, 10, 804 A.2d 385.
17
Ins. Co., 260 F.3d 54, 63 (1st Cir. 2001). “When the insured settles a claim
after the insurer has breached its duty to defend, it is clear the insurer
remains obligated to reimburse the insured for any settlement obligation
covered by the liability policy.” Royal Ins. Co. of Am. v. Kirksville Coll. of
Osteopathic Med., 304 F.3d 804, 806-07 (8th Cir. 2002). Therefore, a
“settlement encompassing both covered and noncovered claims must be fairly
apportioned between the two.” Id. at 807 (quotation marks omitted). The
burden of establishing an appropriate apportionment of liability between
covered and uncovered claims falls on the insurer. See Liberty Mut. Ins. Co.,
260 F.3d at 63. If the insurer cannot meet this burden of proof, it may be held
liable for the entire settlement. See Liquor Liab. Joint Underwriting Ass’n, 644
N.E.2d at 969 & n.6.
[¶26] Here, further proceedings are necessary to determine whether
and to what extent Amica is required to indemnify Harlor for the amount that
she paid to settle the underlying action with the Primes.
The entry is:
Summary judgment in favor of Amica vacated.
Remanded for the entry of summary judgment
in favor of Harlor, declaring that Amica
breached its duty to defend, and for further
proceedings regarding Amica’s duty to
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indemnify Harlor for any or all of the sum that
she paid to settle the underlying action.
ALEXANDER, J., concurring.
[¶27] I concur in the result to vacate the trial court’s decision, but,
respectfully, I do not concur in the Court’s reasoning, and I write to ensure
that the Court’s analysis is not over-read. This action involves a standard
contract dispute. The Court’s opinion, based entirely on the law regarding the
duty to defend, should not be read to support any interpretation of law
beyond what is necessary to decide this case. In other words, it should not be
read to allow every two-party contract dispute to include a tortious
interference with an advantageous relationship claim with a potential for
recovery of emotional distress damages.
I. CASE HISTORY
[¶28] For purposes of this duty to defend action, there is no dispute
about the essential facts. Dawn Harlor and the Primes had an agreement
allowing the Primes to use Harlor’s dock, subject to a boat size limit. The
Primes made some improvements to Harlor’s dock that, the Primes
contended, was consideration for an agreement by Harlor to allow larger
boats to use the dock.
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[¶29] The Primes’ complaint alleged that when Harlor later sold the
dock, she refused to honor the terms of the agreement regarding
improvements to the dock and made false statements to obtain the Primes’
agreement to a written “Confirmation of Easement” that may not have
reflected the removal of the boat size restriction. The Primes further alleged
that following Harlor’s sale of the dock, Harlor refused to confirm the Primes’
right to use the dock for larger boats and made false statements regarding the
Primes’ right to use the dock. Harlor’s actions, the Primes alleged, resulted in
uncertainty regarding their right to use the dock and prevented the Primes
from selling their property with value added from the enhanced use easement
that the Primes alleged was established by contract.
II. THE TORTIOUS INTERFERENCE CLAIM
[¶30] We have outlined the elements of a claim for tortious
interference with a contract or advantageous relationship, including the
essential fraud or intimidation elements, in numerous opinions dating back
nearly 120 years. Our first opinion recognizing an action for tortious
interference with a contract—there a contract for employment—was Perkins
v. Pendleton, 90 Me. 166, 38 A. 96 (1897). In Perkins, after an extensive review
20
of precedents from other jurisdictions, we approved a tortious interference
action, using language similar to language we use today.
[W]herever a person, by means of fraud or intimidation, procures,
either the breach of a contract or the discharge of a plaintiff, from
an employment, which but for such wrongful interference would
have continued, he is liable in damages for such injuries as
naturally result therefrom . . . .
Id. at 176, 38 A. at 99.
[¶31] Later opinions addressing the elements of a claim for tortious
interference with a contract or advantageous relationship include: Currie v.
Industrial Security, Inc., 2007 ME 12, ¶¶ 31-34, 915 A.2d 400; Rutland v.
Mullen, 2002 ME 98, ¶¶ 13-15, 798 A.2d 1104; James v. MacDonald, 1998 ME
148, ¶¶ 6-7, 712 A.2d 1054; Petit v. Key Bank of Me., 688 A.2d 427, 430
(Me. 1996); Barnes v. Zappia, 658 A.2d 1086, 1090 (Me. 1995); Pombriant v.
Blue Cross/Blue Shield of Maine, 562 A.2d 656, 659 (Me. 1989); MacKerron v.
Madura, 445 A.2d 680, 683 (Me. 1982); Taylor v. Pratt, 135 Me. 282, 284,
195 A. 205, 206 (1937).
[¶32] In each case from Perkins forward, the plaintiff had a contractual
relationship with or anticipated a beneficial economic relationship with an
identified third party. The relationships with the identified third parties
included: employment, personal or professional services, or a contract or
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anticipated contract for purchase or sale of goods or services. The plaintiff’s
action was then brought against the defendant for alleged interference with
the plaintiff’s contractual or anticipated beneficial economic relationship with
the identified third party.
[¶33] In Currie, we outlined the elements of a tortious interference
claim as follows: “Tortious interference with a prospective economic
advantage requires a plaintiff to prove: (1) that a valid contract or prospective
economic advantage existed; (2) that the defendant interfered with that
contract or advantage through fraud or intimidation; and (3) that such
interference proximately caused damages.” 2007 ME 12, ¶ 31, 915 A.2d 400 (quoting Rutland v. Mullen, 2002 ME 98, ¶ 13, 798 A.2d 1104).
[¶34] Our precedents advise that a person engages in fraud when that
person (here, allegedly, Harlor): (1) makes a false representation; (2) of a
material fact; (3) with knowledge of its falsity or in reckless disregard of
whether it is true or false; (4) for the purpose of inducing another to act or to
refrain from acting in reliance on it; and (5) the third person (here, a
prospective purchaser unknown to Harlor) justifiably relies on the
representation as true and acts upon it, damaging the plaintiff (here, the
Primes). Petit, 688 A.2d at 430. There is no allegation that Harlor directly
22
communicated with any prospective purchaser. Harlor, never having known
or communicated with prospective purchasers, could not have committed the
fraud element of the Primes’ claim.
[¶35] Our precedents advise that a person engages in intimidation
when that person (here, allegedly, Harlor): (1) communicates a statement or
threat to a third person (here, a prospective purchaser unknown to Harlor);
(2) that suggests adverse physical, economic, or emotional consequences to
the third person; (3) for the purpose of inducing the third person to act or fail
to act regarding the plaintiff (here, the Primes); and (4) the third person acts
based on the statement or threat, damaging the plaintiff. See Currie, 2007 ME
12, ¶¶ 31-33, 915 A.2d 400. In Pombriant, we held that intimidation exists
wherever a defendant has procured a breach of contract by “making it clear”
to the third party with whom the plaintiff had contracted that the only manner
in which that party could avail itself of a particular benefit of working with the
defendant would be to breach the third party’s contract with plaintiff.
562 A.2d at 659.
[¶36] Harlor, never having known or communicated with prospective
purchasers, could not have committed the intimidation element of the Primes’
tortious interference claim. On the facts established by the pleadings, there
23
was no basis in law for the Primes to maintain a tortious interference claim
against Harlor.
III. THE DUTY TO DEFEND OBLIGATION
[¶37] To determine whether there is a potential for insurance coverage,
we compare the underlying complaint with the coverage provided “in the
insurance policy.” Mitchell v. Allstate Ins. Co., 2011 ME 133, ¶ 9, 36 A.3d 876.
An insurer has a duty to defend only “if there is any potential that facts
ultimately proved could result in coverage,” Id. ¶ 10 (emphasis in original),
irrespective of whether the insurer is ultimately required to indemnify the
insured, York Ins. Group of Me. v. Lambert, 1999 ME 173, ¶ 8, 740 A.2d 984.
[¶38] The Primes and Harlor were engaged in an ordinary contract
dispute over whether the Primes’ improvements to the dock entitled them to
the benefit of a bargain that expanded their right to use the dock. Emotional
distress damages are generally not recoverable for breach of contract claims,
because recovery is limited to those harms that were reasonably anticipated
by the parties at the time the contract was formed and would be expected to
flow naturally from breach of the contract. Rubin v. Matthews Int’l Corp.,
503 A.2d 694, 696 (Me. 1986).
24
[¶39] Exceptions to this rule exist only when breach of the contract
results in bodily harm, or when severe emotional distress is “a particularly
likely result of a breach,” such as “contracts for the carriage and proper
disposition of dead bodies and . . . contracts for the delivery of messages
concerning death.” McAfee v. Wright, 651 A.2d 371, 372-73 & n.4 (Me. 1994).
See also In re Hannaford Bros. Co. Customer Data Sec. Breach Litig., 2010 ME
93, ¶ 15, 4 A.3d 492 (“[E]motional distress suffered as a result of breach of
contract is ordinarily not recoverable unless it is accompanied by physical
injury or it results in serious emotional disturbance due to the nature of the
contract.” (citing Marquis v. Farm Family Mut. Ins. Co., 628 A.2d 644, 651
(Me. 1993) and other precedents)).
[¶40] Here, the Primes did not seek emotional distress damages. Thus,
Amica has no duty to indemnify for any amounts paid in the settlement.
However, the Primes did include a tortious interference claim in their
complaint.
[¶41] I concur that a duty to defend exists based on the potential for
recoverable damages. Likewise, I concur that courts should not engage in
fact-finding when determining whether an insurer has a duty to defend its
insured. An insurer has a duty to defend a baseless claim, if covered by the
25
terms of its homeowner’s policy, because the alternative may leave the
homeowner defenseless and subject to default for that baseless claim.
[¶42] But that duty to defend does not extend to other associated
claims not covered by the homeowner’s policy. Here, because the tortious
interference claim was asserted, Amica had a limited duty to appear and
defend the action as long as it included the tortious interference claim, but
with a reservation of rights that did not obligate Amica to defend or indemnify
the other, valid contract claims that apparently led Harlor to settle the action
with the Primes.
[¶43] I agree with the trial court that there was no meaningful
possibility—in fact no possibility at all—that the underlying suit could result
in damages covered by the Amica policy. The best practice would have been
to separate out consideration of the tortious interference claim and have the
court proceed to determine Amica’s responsibility to defend that claim,
presumably by a quick and successful motion to dismiss.
[¶44] Any remand should limit the separate duty to indemnify to this
narrow assessment of responsibility for attorney fees and costs of defense. It
should not seek assessment of responsibility to defend the entire
contract-based suit, and it should not change our law to remove the necessity
26
of identifying a third party whose relationship was interfered with in a
tortious interference claim.
On the briefs:
James D. Poliquin, Esq., Norman, Hanson & DeTroy, LLC, Portland, for
appellant Dawn M. Harlor
Martica S. Douglas, Esq., Douglas, Denham, Buccina & Ernst, Portland,
for appellee Amica Mutual Insurance Company
At oral argument:
Benjamin N. Donahue, Esq., Norman, Hanson & DeTroy, LLC, Portland,
for appellant Dawn M. Harlor
Martica S. Douglas, Esq., for appellee Amica Mutual Insurance Company
Knox County Superior Court docket number CV-2013-30
FOR CLERK REFERENCE ONLY