BOISE CASCADE CORP. v. RELIANCE NATIONAL INDEMNITY CO.

99 F. Supp.2d 87 (2000) | Cited 0 times | D. Maine | April 28, 2000

MEMORANDUM OF DECISION AND ORDER

The Amended Complaint (Docket No. 28) sets forth three counts againstthree Defendants. By Count I, Boise Cascade Corporation, Inc. ("Boise" or"Plaintiff") alleges breach of contract by Reliance National IndemnityCompany, Inc. ("Reliance"). In Count II, Boise seeks reformation of aninsurance policy issued by Reliance. In Count III, Boise alleges breachof contract by Koch Engineering Co., Inc. ("Koch") or BallardInternational Corp., Inc. ("Ballard"). Currently before the Court arethree summary judgment motions. Koch has moved for summary judgment withrespect to Count III ("the Koch Motion") (Docket No. 22). Boise has movedfor summary judgment with respect to Count I ("the Boise Motion") (DocketNo. 19). Reliance has moved for summary judgment with respect to Counts Iand II ("the Reliance Motion") (Docket No. 25). For the reasons thatfollow, the Court will grant the Koch Motion, deny the Boise Motion, andgrant in part and deny in part the Reliance Motion.

I. BACKGROUND

A. The Underlying Litigation

In early September 1995, Marvin Woodbury, Michael Ross, James Quinn,and Lewin Dodge ("the Koch employees") were working at the Boise Cascademill in Rumford, Maine. Plaintiffs Statement of Material Facts ("PSMF")(Docket No. 20) ¶ 3. The Koch employees were tasked with inspectingand repairing tile-lined tanks used in the papermaking process. While atthe mill, the Koch employees were allegedly injured when they wereexposed to "poisonous and toxic gasses." Plaintiffs Complaint (DocketNo. 1) at Exhibits A, B. In 1997, the Koch employees filed suit againstBoise ("the underlying litigation").1Id. The complaint in the underlying litigation alleged, in pertinentpart, the following:

13. As a direct and proximate result of Defendant Boise Cascade's negligence as set forth above and in other respects as will be shown at the trial of this matter, Plaintiff Marvin Woodbury was seriously and permanently injured, was and will be prevented from carrying out his usual duties, suffered and will suffer great and permanent pain of body and mind, has suffered and will suffer permanent disability, loss of function and loss of enjoyment of life, was and will be obligated to expend monies for medical and hospital care, has suffered and will continue to suffer a great and permanent loss of earnings and earning capacity, and has suffered and will continue to suffer emotional distress and damages in other respects which will be shown at the trial of this matter.2

Id.3

Statements by Boise employees indicate that the Koch employees wereexposed to chlorine gas that escaped into their work area as a result oferrors by Boise employees. Reliance Statement of Material Facts ¶¶37-38; Exhibit No. 54; Miscellaneous Document No. 6.4 Aninvestigation by the Occupational Safety and Health Administration lendsfurther support to this conclusion. Miscellaneous Document No. 11.

B. The Contract Between Koch and Boise

The Koch employees were working at Boise under contract. The actualterms of the contract, however, are in dispute. On June 28, 1995, StephenClarke, a Koch official, provided Boise with a quote for the repairs tothe tile-lined tanks. Exhibit No. 9. The written quote included thefollowing language: "The attached Field Service Group Standard Terms andConditions are made part of this proposal" ("the Koch standard terms").Id. In response to Koch's quote, on August 1, 1995, Boise sent a purchaseorder to Koch, which included Boise's standard terms and conditions onthe reverse ("the Boise standard terms"). Exhibit No. 11. The Boisestandard terms indicated that its terms would be the controllingterms.5 Id. Furthermore, the Boise standard termsrequire a seller who is to perform work at Boise to carry certain insurancecoverage and toname Boise as an additional insured on the seller's liability insurancepolicy.6 Id. On August 7, 1995, Clarke signed the acknowledgment copyof the Boise purchase order and mailed it to Boise with a cover letter.Exhibit No. 11; Stephen Clarke Dep. at 56-57. Next to Clarke's signatureon the acknowledgment copy was the language "I (WE) Knight/Ballard KECIhereby accept this PURCHASE ORDER solely on the terms & Conditions setforth herein."7 Affidavit of Marine Eastman and attachment. The coverletter from Clarke indicated that "THE ACCEPTANCE OF THIS PURCHASE ORDERIS BASED ON THE ATTACHED TERMS AND CONDITIONS." Exhibit No. 11. Inaddition to the acknowledgment copy of the Boise purchase order, anothercopy of the Koch standard terms was enclosed with the letter. Exhibit11; Clarke Dep. at 56.

C. The Reliance Policy

From December 1, 1994, through December 1, 1995, Koch was covered by acommercial general liability insurance policy issued by Reliance ("theReliance policy"). Exhibit No. 23. Endorsement No. 14 to the Reliancepolicy states the following:

ADDITIONAL INSURED/NAMED INSURED ENDORSEMENT

A. ADDITIONAL INSUREDS/NAMED INSUREDS SHALL INCLUDE ANY COMPANY, JOINT STOCK COMPANY, JOINT VENTURE, TRUST OR OTHER LEGAL ENTITY, OR INTEREST THEREIN, HERETOFORE, NOW OR HEREAFTER CONSTITUTED FOR WHICH ANY NAMED INSURED IS RESPONSIBLE:

1. TO ARRANGE INSURANCE, OR

2. TO ADD AS AN ADDITIONAL INSURED, OR

3. TO ADD AS AN ADDITIONAL NAMED INSURED, BUT ONLY TO SUCH EXTENT (SUBJECT TO ALL OTHER PROVISIONS OF THE POLICY) AND FOR SUCH LIMITS OF LIABILITY AND FOR SUCH COVERAGES AS THE NAMED INSURED, BEFORE LOSS, HAS AGREED:

A. BY CERTIFICATE OF INSURANCE TO PROVIDE OR, TO THE EXTENT WHICH A COURT MAY HOLD, AFTER LOSS, THAT THE NAMED INSURED IS OBLIGATED TO PROVIDE OR,

B. IN THE ABSENCE OF A CERTIFICATE OF INSURANCE, BUT CONTRACT OR AGREEMENT TO PROVIDE FOR SUCH INTEREST

B. SUCH INSURANCE AS IS PROVIDED UNDER THIS PROVISION SHALL BE PRIMARY INSURANCE, PROVISIONS OF THIS POLICY TO THE CONTRARY NOTWITHSTANDING, IF THE NAMED INSURED HAS AGREED TO PROVIDE PRIMARY INSURANCE.

C. IN THE ABSENCE OF SPECIEIC OBLIGATIONS TO THE CONTRARY WHICH MAY BE CONTAINED IN ANY CONTRACT OR AGREEMENT INTO WHICH THE NAMED INSURED MAY HAVE ENTERED, THE INCLUSION OF OTHER PERSONS OR ORGANIZATIONS INCLUDING JOINT VENTURES, PARTNERSHIPS, TRUSTEES OR ESTATES AS ADDITIONAL INSURED HEREUNDER SHALL BE LIMITED TO THEIR LIABILITY FOR THE CONDUCT OF THE NAMED INSURED.

Exhibit No. 23, Endorsement No. 14. The Reliance policy also includes a"TOTAL POLLUTION EXCLUSION ENDORSEMENT," which reads, in relevant part,as follows:

This Insurance does not apply to:

f. (1) "Bodily injury" or "property damage" which would not have occurred in whole or part but for the actual, alleged or threatened discharge, dispersal, seepage, migration, release or escape of pollutants at any time.

Pollutants means any solid, liquid, gaseous or thermal irritant or contaminant including smoke, vapor, soot, fumes, acid, alkalis, chemicals and waste. Waste includes materials to be recycled, reconditioned or reclaimed.

Reliance Statement of Material Facts ¶ 4 and second unnumberedattachment. Finally, the Reliance policy includes Exclusion 2(e), whichstates:

2. Exclusions.

This insurance does not apply to:

e. Employer's Liability "Bodily Injury" to

(1) An "employee" of the insured arising out of and in the course of:

(a) Employment by the insured; or

(b) Performing duties related to the conduct of the insured's business;

Reliance Statement of Material Facts, first unnumberedattachment.

D. Certificate of Insurance

The Boise standard terms require the seller to provide Boise with acertificate of insurance. Exhibit No. 11. Apparently Koch did not provideBoise with a certificate naming Boise as an additional insured on orabout August 7, 1995, when Clarke signed and returned the Boise purchaseorder. However, on January 17, 1995, several months prior to theacknowledgment of the Boise purchase order, a "CERTIEICATE OF INSURANCE,"("the January 17, 1995 certificate") along with an attached endorsemententitled "ADDITIONAL INSURED," ("the attached endorsement") was issued toBoise. Exhibit No. 2; Becci Biagini Dep. at 60-62. The January 17, 1995,certificate listed Reliance as the insurance company, Ballard as theinsured, and Boise as the additional insured. Exhibit No. 2. At the topof the January 17, 1995, certificate is the following language:

THIS CERTIFICATE IS ISSUED AS A MATTER OF INFORMATION ONLY AND CONFERS NO RIGHTS UPON THE CERTIFICATE HOLDER. THIS CERTIFICATE DOES NOT AMEND, EXTEND OR ALTER THE COVERAGE AFFORDED BY THE POLICIES BELOW.

Exhibit No. 2. Near the bottom of the Certificate is typed "BOISE CASCADECORP., ITS DIRECTORS, OFFICERS AND AGENTS ARE NAMED AS ADDITIONALINSUREDS PER ATTACHMENT." Id.

The attached endorsement, which again listed Boise as an additionalinsured, was not a Reliance form. Exhibit No. 2; Marla Donovan Lang Dep.at 68-69.Theattached endorsement, captioned "ADDITIONAL INSURED (Owners orContractors)," indicates that the named additional insured (Boise) iscovered only "with respect to liability arising out of the negligent actsor omissions of Named Insured in connection with operations performed forthe additional insured by the Named Insured . . . ." Exhibit No. 2. Theattached endorsement goes on in section 1.(b) to state "[t]his insurancedoes not apply to[] bodily injury or property damage arising out of anyact or omission of the additional insured or any of his employees." Id.

E. Insurance Demand

In response to the underlying litigation initiated by the Kochemployees, on October 28, 1997, Boise wrote to Reliance, demanding thatReliance defend and indemnify Boise in the underlying litigation, as anadditional insured on Reliance Policy No. MGA 0105968-02. PSMF ¶ 5.On November 19, 1997, Boise sent another letter to Reliance outliningBoise's position on its entitlement to a defense, specifically referringto the Boise purchase order. Id. ¶ 7. Additionally, Boise invitedReliance to participate in a mediation session with the Koch employeesand later invited Reliance to comment on the proposed settlement figuresresulting from the mediation session. Id. ¶¶ 9, 11. On December 2,1997, Reliance responded by letter to Boise that Reliance had concludedthat it had neither a duty to defend nor a duty to indemnify Boise in theunderlying litigation. Id. ¶ 8; Exhibit No. 3. Boise eventuallysettled all of the claims in the underlying litigation without comment orobjection from Reliance. PSMF ¶ 12. The total amount of thesettlements is $416,250. Id.

Boise initiated the pending three-count Complaint in this matter onJuly 14, 1998

(Docket No. 1). Count I alleges that Reliance breached its contractualduty to defend and indemnify Boise in the underlying litigation. Count IIseeks to reform the alleged insurance contract between Boise and Relianceto require Reliance to defend and indemnify Boise in the underlyinglitigation. Finally, Count III alleges that Koch breached its contractualobligation to name Boise as an additional insured on its insurancepolicy. Initially Reliance and Koch were the only Defendants in thisaction, but by an Amended Complaint, Plaintiff added Ballard as anadditional Defendant (Docket No. 28)8

II. DISCUSSION

A. Standard

Summary judgment is appropriate when the record shows that there is nogenuine issue as to any material fact and that the moving party isentitled to summary judgment as a matter of law. See Fed.R.Civ.P. 56(c). Once the moving party has come forward identifying those portions of"the pleadings, depositions, answers to interrogatories, and admissionson file, together with affidavits, if any" which "it believes demonstratethe absence of a genuine issue of material fact," the adverse party mayavoid summary judgment only by providing properly supported evidence ofdisputed material facts that would require trial. Celotex Corp. v.Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 2551-52, 91 L.Ed.2d 265(1986).

The trial court must "view the entire record in the light mosthospitable to the party opposing summary judgment, indulging allreasonable inferences in that party's favor." Griggs-Ryan v. Smith,904 F.2d 112, 115 (1st Cir. 1990). The court will not, however, pay heedto"conclusory allegations, improbable inferences [or] unsupportedspeculation." Medina-Munoz v. R.J. Reynolds Tobacco Co., 896 F.2d 5, 8(1st Cir. 1990). The role of the trial judge at the summary judgmentstage "is not . . . to weigh the evidence and determine the truth of thematter, but to determine whether there is a genuine issue for trial."Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249, 106 S.Ct. 2505,2511, 91 L.Ed.2d 202 (1986).

In addressing each motion for summary judgment, the Court will applyMaine law. A federal court exercising diversity jurisdiction must applythe choice-of-law rules of the state in which it sits. See Maine SurgicalSupply Co. v. Intermedics Orthopedics, Inc., 756 F. Supp. 597, 600(D.Me. 1991) (citations omitted). Under Maine law, "the rights and dutiesof the parties with respect to an issue in contract are to be determinedat the forum level by the local law of the state which, with respect tothat particular issue, has the most significant relationship to thetransaction and the parties." Baybutt Construction Corp. v. CommercialUnion Ins., 455 A.2d 914, 918 (Me. 1983), overruled on other grounds,Peerless Ins. Co. v. Brennon, 564 A.2d 383 (Me. 1989). In this case,Maine law is applicable because the subject matter of the contractbetween Koch and Boise was work to be performed in Maine. Additionally,the potentially insured risk — activity on Boise's property— was located in Maine. Baybutt, 455 A.2d at 919 ("[I]t may beassumed that [the parties] entered into the insurance contract with theexpectation and implied intent that the local law of the state where therisk is to be located would be applied to determine issues that may ariseunder the contract.").9

B. The Koch Motion for Summary Judgment

Koch has moved for summary judgment on Count III of the AmendedComplaint, which alleges that Koch breached its contractual duty to nameBoise as an additional insured on Koch's liability policy. Koch'sarguments fall into two general categories. First, Koch argues that theBoise standard terms are not part of the contract between Koch andBoise, such that Koch has no contractual obligation to name Boise as anadditional insured — because such a duty could arise only if theBoise standard terms control. In the alternative, Koch argues that evenif the Boise standard terms control, as a matter of law, the language isnot sufficiently specific and clear evidence of a mutual intention forKoch to insure Boise for Boise's negligence.

Turning first to Koch's arguments that address contract formation, itis important to recall that for the purposes of the Koch Motion, Kochbears the burden of demonstrating to the Court the absence of a genuineissue as to the material facts, and facts will be viewed in the lightmost favorable to the nonmoving party, Boise.

Both Boise and Koch agree that they formed a contract for the repair oftanks in Rumford, but they vehemently disagree as to the terms of thecontract. Koch posits two factual scenarios whereby the Boise standardterms are not part of the contract and whereby Koch would have no duty toname Boise as an additional insured. First, Koch argues that the estimateit provided to Boise, which had the Koch terms attached, constituted avalid offer which created in Boise the power to accept. Koch continues byarguing that Boise accepted Koch's offer when Boise sent to Koch a Boisepurchase order that expressly referenced the Koch estimate. Under thisconstruction, Koch concludes that, by means of the Boise purchase order,which referenced the Koch estimate, Boise accepted Koch's standard termswhich had been attached to the estimate. Therefore, Koch argues, Koch'sstandard terms control the contract and, accordingly,Koch has no duty to name Boise as an additional insured.

Typically, estimates are not treated as offers, but, instead, they areusually understood to be invitation to offers or the initiation ofnegotiation. See 17A Am. Jur.2d Contracts § 45. Under somecircumstances, however, an estimate can serve as an offer creating in therecipient the power of acceptance. Id. But to treat an estimate as anoffer, the language of the estimate, and the context of the estimate inthe negotiations between the parties "must be so definite as toconstitute a clear meeting of the minds." Taft-Peirce Manufacturing Co.v. Seagate Technology, Inc., 789 F. Supp. 1220, 1223 (D.R.I. 1992)."[W]hether a price quote may be considered an offer in any given case isa question of fact dependent on the nature of the particular acts orconduct and the circumstances surrounding the transaction." MauriceElec. Supply Co., Inc. v. Anderson Safeway Guard Rail Corp.,632 F. Supp. 1082, 1087 (D.D.C. 1986).

In response to this argument, Boise points to its purchase order as theoffer, and Koch's signing and returning to Boise the acknowledgment copyof the purchase order as acceptance of the Boise standard terms. "It isthe submission of a purchase order by a buyer in response to a pricequote that usually constitutes the offer." Id. Indeed, Boise rightlypoints out that the purchase order is the only document signed by bothBoise and Koch. If Koch truly believed at the time that the estimate wasthe offer and the purchase order was the acceptance, why would Koch signand return the acknowledgment copy of the Boise purchase order?

Koch has failed to meet is burden of demonstrating that there is nogenuine issue of material fact with respect to its position that the Kochestimate was an offer. A reasonable person could conclude from the recordthat the estimate was not an offer, and a jury could reasonably concludethat the Boise purchase order represents the entire contract between theparties. Because Koch has not satisfied its burden, it is not entitled tosummary judgment under this theory.

Koch's second contract formation argument is similarly unsuited forsummary judgment. Koch advances the theory that the documents shuttledbetween the parties demonstrate the absence of a meeting of the mindssuch that the contract was formed by the actions, rather than the words,of the parties. This proposition necessarily requires an inquiry into theintent of the contracting parties. Generally speaking, when the intent ofthe parties is at issue, summary judgment is not appropriate. See e.g.,St. Agatha Federal Credit Union v. Ouellette, 1998 ME 279, 722 A.2d 858;Tondreau v. Sherwin-Williams Co., 638 A.2d 728 (Me. 1994). Koch'sargument regarding a lack of a meeting of the minds again does notentitle it to summary judgment as to Count III.

As a rule, contested issues surrounding contract formation are reservedfor the fact-finder. See Bourque v. Federal Deposit Ins. Corp.,42 F.3d 704, 708 (1st Cir. 1994); Ismert and Assoc., Inc. v. New EnglandMut. Life Ins. Co., 801 F.2d 536, 540-41 (1st Cir. 1986). While there areexceptions to the rule, this case is not one of them.

Koch's final argument in support of its motion for summary judgmentsupposes that even if the Boise standard terms are controlling, suchterms do not require Koch to insure Boise for Boise's negligence becausethe Boise standard terms lack the requisite specificity and clarity. Kochconcludes that, as a matter of law, it does not have a duty to insuredamages arising out of Boise's negligence.

Koch points to a series of cases that stand for the proposition thatcontractual language that seeks to indemnify a party for its own acts ofnegligence must be expressed "clearly and unequivocally" in the terms ofthe contract. See Emery Waterhouse Co. v. Lea,467 A.2d 986, 993 (Me.1983).This rule has been extended beyond indemnification claims to includecontractual requirements to name a party as an additional insured. SeeFowler v. Boise Cascade Corp., 739 F. Supp. 671, 675-76 (D.Me. 1990)(Fowler I), aff'd 948 F.2d 49 (1st Cir. 1991) (Fowler II). The Fowler Iand Fowler II decisions are particularly relevant here because Boise hasmade no indemnification claim against Koch, but in Count III, Boise hasalleged that Koch breached a contractual duty to provide insurancecoverage for Boise.

In Fowler I, this Court, interpreting Maine law, concluded that therewere statutory and common law principles requiring that insuranceprocurement clauses "should be strictly read if they are claimed to beoperative to waive an employer's immunity under the Workers' CompensationAct or if they are invoked to require a party to indemnify against itsown negligence." Fowler I, 739 F. Supp. at 676. In doing so, this Courtdetermined that these two rules of interpretation, which are well-settledwith respect to indemnification claims, applied equally to insuranceprocurement clauses. Id.

Applying the rules of Fowler I to the case at bar, the Court beginswith a straightforward factual analysis. For the purposes of thisargument, Koch assumes that the Boise standard terms are the controllingcontractual terms. The Boise standard terms include "an express waiver ofimmunity under any applicable Workers' Compensation laws." Exhibit No. 11¶ 9. Accordingly, a strict reading of the Boise standard termsreveals an express waiver sufficient to satisfy the first Fowler Istandard with respect to waiver of workers' compensation immunity.10

The second requirement set forth in Fowler I with respect to insuranceprocurement clauses is not so easily resolved in this case."Indemnification clauses that purportedly indemnify a party againstinjuries caused by that party's own negligence "are looked upon withdisfavor by the courts, and are construed strictly . . . .'" Fowler I, 739F. Supp. at 675 (quoting Emery, 467 A.2d at 993).

It is only where the contract on its face by its very terms clearly and unequivocally reflects a mutual intention on the part of the parties to provide indemnity for loss caused by negligence of the party to be indemnified that liability for such damages will be fastened on the indemnitor, and words of general import will not be read as expressing such an intent and establishing by inference such liability.

Emery, 467 A.2d at 993 (emphasis added). In Fowler I, this Courtconcluded that the rule set forth by the Maine Law Court in Emery withrespect to indemnification applies equally to insurance procurementclauses. See Fowler I, 739 F. Supp. at 676.

Koch posits that because Boise is seeking coverage for its ownnegligence, Fowler I requires that the Boise standard terms be readstrictly, and should require insurance only for Boise's negligence if the"very terms clearly and unequivocally reflect[] a mutual intention on thepart of the parties" to do so. Emery, 467 A.2d at 993. Koch concludes thatbecause the Boise standard terms do not contain such language, it isentitled to summary judgment. Boise counters by arguing that it has notbeen established that Boise is the sole negligent party in the underlyinglitigation, such that a strict reading of the Boise standard terms is notrequired. Alternatively, Boise argues that even if a strict constructionis appropriate, the language of the Boise standard terms is sufficient tomeet the requirements set forth in Emery and Diamond, as collected inFowler I.

Turning first to Boise's factual counter argument, Koch mustdemonstrate the absence of a genuine issue of material fact with respectto Koch's assertion that Boise seeks to recover for its own negligence.In support of the proposition that Boise was the sole negligent party inthe events that spawned the underlying litigation, Koch points to severaldocuments in the record. First, Koch points to the Occupational Safetyand Health Administration investigation which confirms what Boise admits— that the plaintiffs in the underlying litigation were injuredwhen they were exposed to chlorine gas unintentionally released by Boiseemployees. Exhibit No. 49; Miscellaneous Document No. 11. Additionally,Koch relies on an internal memorandum prepared by Boise's legaldepartment in regard to the underlying litigation. Exhibit No. 54. Underthe heading "LIABILITY ANALYSIS," the memorandum indicates that "ourinvestigation over the last two years has failed. to turn up any factswhich provide a solid defense to defeat these claims." Exhibit No. 54 at2.11 Boise counters by suggesting that "[i]t is a perfectlylegitimate conclusion on the record that the primarily negligentindividuals were the Koch supervisors who failed to require that theiremployees follow established safety protocols for this areas of theMill." Boise's Memorandum in Opposition to Koch's Motion for SummaryJudgment (Docket No. 34) at 13 (emphasis added). Yet the only recordsource that could remotely support this assertion states:

Boise does not agree that the injuries to these employees were not caused by the negligence of Koch in failing to have its employees follow established safety protocols. Koch has not asserted, or provided record support for the contention that Koch was not negligent in this latter respect.

Plaintiff Boise Cascade's Response to Koch's Statement of Material Facts¶ 32. Boise has not provided this Court with a single record citationin support of its proposition that Koch employees were negligent in theevents leading to the underlying litigation. Boise's effort to place theburden on Koch to prove that its employees were not negligent isimproper. These documents, coupled with the inability of Boise to pointto any evidence in the record to the contrary, demonstrate that there isno genuine issue of fact regarding Boise's sole negligence in the eventsthat generated the underlying litigation. Boise's suggestion that theKoch employees were negligent is the type of "unsupported speculation"that will not defeat a motion for summary judgment. See Medina-Munoz, 896F.2d at 8. Accordingly, as Koch argues, a strict reading of the Boisestandard terms, as set forth in Emery, is required.

Boise's final counter argument strikes at the heart of the Law Court'sdecision in Emery. Boise contends that the express waiver of the workers'compensation immunity in the Boise standard terms serves to satisfy therequirements of Emery. In other words, Boise suggests that the workers'compensation waiver acts as an express agreement by Koch to insure Boisefor Boise's own negligence. This is true, according to Boise, becauseKoch's employees could sue Boise only for some allegedly negligent act byBoise. Therefore, Koch's agreement to waive itsworkers' compensation immunity implicitly included an agreement by Kochto insure Boise for its negligent acts that injured Koch employees.

The Court rejects Boise's argument. While it may be true that a wavierby Koch of its workers' compensation immunity — in the form of theBoise standard terms — implies an agreement to insure Boise forBoise's negligence, the Court reads Emery to require more. The Maine LawCourt's decision in Emery dictates a requirement of an explicit agreementto insure a party for its own negligence. Emery, 467 A.2d at 993.Indeed, the Law Court expressly rejected the possibility of establishingan agreement to insure a party for its negligence by "inference." Id.Furthermore, Boise's argument essentially seeks to merge the statutoryrequirement that workers' compenseciation immunity waivers must beexplicit, set forth in Diamond, with the distinct common lawrequirement, set forth in Emery, that contracts to insure a party for itsown negligence must also be explicit. Such a merger would be entirelyinconsistent with this Court's decisions in Fowler I and Gatley v. UnitedParcel Service, Inc., 662 F. Supp. 200 (D.Me. 1987).12 Furthermore,Boise has not cited, nor has the Court discovered, any other source ofMaine law that supports Boise's contention that the distinct requirementsestablished by the Law Court in Diamond and Emery can be collapsed intoeach other — such that the satisfaction of the rule in Diamondserves, by implication, to satisfy the rule in Emery. Therefore, theCourt rejects Boise's argument. The language in the Boise standard termsfails to meet the requirements plainly set forth in Emery. Accordingly,Koch's Motion for Summary Judgment with respect to Count III will begranted.13

C. The Boise Motion for Summary Judgment

Plaintiff Boise has moved for summary judgment with respect to Count Iof the Amended Complaint. Count I alleges that Reliance breached its dutyto defend Boise in the underlying litigation. As a remedy, the BoiseMotion argues that Boise is entitled to the cost of defending theunderlying litigation, the money paid to settle the claims in theunderlying litigation, and the costs of this litigation.14

Under Maine law, the duty to defend is determined by the familiarcomparison test, under which the court compares the allegations of theunderlying complaint with the provisions of the insurance policy. SeeMaine State Academy of Hair Design, Inc. v. Commercial Union Ins. Co.,699 A.2d 1153, 1156 (Me. 1997); N E Properties, Inc. v. Chicago TitleIns. Co., 660 A.2d 926, 927 (Me. 1995); Mullen v. Daniels, 598 A.2d 451,453 (Me. 1991). The question of whether an insurer has a duty to defendan insured is a question of law. See Commercial Union Ins. Co. v. RoyalIns. Co., 658 A.2d 1081, 1082 (Me. 1995) (citing Baywood Corp. v. MaineBonding & Cas. Co., 628 A.2d 1029, 1030 (Me. 1993)).

In a typical duty-to-defend case, the terms of the insurance policy arewell settled such that the dispute focuses on the language of thecomplaint. Specifically the cases tend to address whether the complaintcan be read in such a way as to obligate the insurers under the policy.See e.g., Foundation for Blood Research v. St. Paul Marine and Fire Ins.Co., 1999 ME 87, 730 A.2d 175 (1999); Endre v. Niagara Fire Ins. Co.,675 A.2d 511 (Me. 1996). Here however, the Court cannot reach thecomparison test, which, as a pure question of law, is well suited forsummary judgment, because it has not yet been established whetherReliance is the "insurer" of Boise. Reliance undeniably has a contractualrelationship with Koch whereby Koch is the insured and Reliance is theinsurer. But Boise and Reliance have no such direct contractualrelationship. Reliance can be Boise's "insurer" only if the terms of thecontract between Koch and Boise create an insurer/insured relationshipbetween Reliance and Boise. As the Court indicated above, the terms ofthe contract between Koch and Boise cannot be determined for the purposeof summary judgment.15 It follows, necessarily, that the existence ofa contractual relationship between Reliance and Boise also cannot bedetermined for the purpose of summary judgment. From that, it logicallyfollows that the Court cannot apply the comparison test at this timebecause the threshold issue as to whether Reliance is an insurer of Boisecannot be determined.

Couched in contractual terms, recalling that at its core Count Ialleges a breach of contract, it is axiomatic that prior to prevailing ona breach of contract claim, the complainant must first establish theexistence of a valid contract. Here Boise is alleging that Reliancebreached its contractual duty to defend. The Court is unable to find, asa matter of law, that Reliance breached a contractual duty without firstbeing satisfied that a contractual relationship existed.16

The many Maine Law Court decisions addressing the comparison testevidence a strong policy bias of resolving duty-to-defend issues promptlyand without fact-finding. In particular, the Maine Law Court hasexplained:

If we were to look beyond the complaint and engage in proof of actual facts, then the separate declaratory judgment actions . . . would become independent trials of the facts which the [insured] would have to carry on at his expense We see no reason why the insured, whose insurer isobligated by contract to defend him, should have to try the facts in a suit against his insurer in order to obtain a defense.

Travelers Indem; Co. v. Dingwell, 414 A.2d 220, 227 (Me. 1980). ThisCourt's conclusion that additional fact-finding is necessary in this casebefore the comparison test may be applied is entirely consistent with themeritorious policy objectives set forth by the Law Court in Dingwell.First, without some factual predicate to establish a contractualrelationship between Boise and Reliance, the Court cannot assume thatthese parties are, respectively, an insured and an insurer as thecomparison test requires. Furthermore, at this time, it has not beenestablished that Reliance is an "insurer [that] is obligated by contractto defend" Boise. Id. Finally, the additional fact-finding required inthis case is not the type eschewed by the Maine Law Court's rigorousadherence to the comparison test. The additional fact-finding needed heresurrounds the formation of the contract between Koch and Boise, and nofact-finding relative to the underlying litigation will be requiredbefore the Court applies the comparison test.17

Accordingly, Boise has failed to meet its burden of showing the absenceof genuine issues of material fact such that the Court may grant itsMotion. Specifically, a genuine issue remains as to whether a contractualrelationship between Boise and Reliance exists. Therefore, Boise's Motionwill be denied.

D. The Reliance Motion for Summary Judgment

Reliance has moved for summary judgment with respect to Count I andCount II of the Amended Complaint. Count I alleges Reliance breached itsduty to defend and indemnify Boise in the underlying litigation. Count IIseeks reformation of the Reliance policy covering Boise.

Turning first to Reliance's position regarding Count I, to the extentthat Reliance's arguments that it has no duty to defend or indemnifyBoise with respect to the underlying litigation are predicated onconclusions regarding the terms of thecontract between Koch and Boise, those arguments fail as a predicate forsummary judgment. They fail for the same reasons that Boise's Motion forSummary Judgment fails. As discussed in Part II B and Part II C above,there are unresolved factual disputes surrounding the formation of thecontract between Koch and Boise. Accordingly, any of Reliance's argumentsfounded on particular contractual language fail to earn Reliance summaryjudgment as to Count I. To that end, Reliance's argument based on theincorporation by reference of the January 17, 1995, certificate into thecontract between Koch and Boise several months later fails. The questionof whether the January 17, 1995, certificate is incorporated by referenceinto the contract between Koch and Boise is disputed factually andcannot, therefore, be the basis for summary judgment on Count I in favorof Reliance.

There is, however, a subset of Reliance's arguments, with respect toCount I, that the Court must analyze. Specifically, the Court willconsider those of Reliance's arguments that posit that application of thecomparison test demonstrates that Reliance has no duty to defend Boise,even if it is assumed that the contract between Koch and Boise was formedin a manner most favorable to Boise. The Court identifies three ofReliance's arguments that could defeat Count I even assuming thebest-case factual scenario for Boise with respect to contract formation.First, Reliance contends that Exclusion 2e to Section 1, Coverage A ofKoch's insurance policy precludes a duty to defend when compared with thecomplaints in the underlying litigation. Next, Reliance argues that theTotal Pollution Exclusion endorsement to Koch's insurance policy, whencompared with the complaint in the underlying litigation, bars recoveryby Boise. Finally, Reliance argues that either the per-occurrencedeductible or the exhaustion of the policy's aggregate bars recovery byBoise. All three of these arguments flow from the language of theReliance policy and are not predicated on any particular factualconclusion relative to the formation of a contract between Boise andKoch, except to assume that Boise is an additional insured on Koch'sinsurance policy. Accordingly, the Court will consider these argumentsregardless of the Court's analysis in Part II B and Part II C above.

Reliance begins by arguing that Exclusion 2(e) eliminates any duty todefend under the comparison test. Exclusion 2(e) reads as follows:

2. Exclusions.

This insurance does not apply to:

e. Employer's Liability "Bodily Injury" to

(1) An "employee" of the insured arising out of and in the course of:

(a) Employment by the insured; or

(b) Performing duties related to the conduct of the insured's business.

Reliance Statement of Material Facts, first unnumbered attachment.Reliance contends that this exclusion serves to bar Boise's coverage withrespect to the underlying litigation. Specifically, Reliance avers thatcoverage is excluded for bodily injury to employees of Koch — theinsured.

Reliance's invocation of Exclusion 2(e) fails. Assuming, again, thatKoch has a duty to name Boise as an additional insured, for the purposesof Exclusion 2(e), Boise — not Koch — is "the insured." TheKoch employees are not employees of "the insured," Boise, such thatExclusion 2(e) does not apply in this case. Reliance's effort to readExclusion 2(e) as "an employee of an or any insured" is inconsistentwith Maine law. See Johnson v. Allstate Ins. Co., 1997 ME 3, 6-7,687 A.2d 642, 644 (in insurance policy an insured is the equivalent of"any" insured and both are distinct from "the" insured).

Reliance next points to another policy exclusion that it argues deniesBoise's coverage for the claims arising out of theunderlying litigation. The Total Pollution Exclusion in the policy statesthat:

This Insurance does not apply to:

f.(1) "Bodily injury" or "property damage" which would not have occurred in whole or part but for the actual, alleged or threatened discharge, dispersal, seepage, migration, release or escape of pollutants at any time.

Pollutants means any solid, liquid, gaseous or thermal irritant or contaminant including smoke, vapor, soot, fumes, acid, alkalis, chemicals and waste. Waste includes materials to be recycled, reconditioned or reclaimed.

Reliance Statement of Material Facts ¶ 4 and second unnumberedattachment. Reliance argues that because the injuries suffered by theKoch employees were the result of a chlorine gas leak, the TotalPollution Exclusion eliminates any duty on the part of Reliance to defendor indemnify Boise.

Subsequent to the submission of this motion, the Court of Appeals forthe First Circuit decided Nautilus Ins. Co. v. Jabar, 188 F.3d 27 (1stCir. 1999). Construing insurance policy language identical to this TotalPollution Exclusion, the Nautilus court affirmed the lower court'sfinding that this language was ambiguous as a matter of Maine law. Seeid. at 29-30. This is true because "an ordinarily intelligent insuredcould reasonably interpret the pollution exclusion clause as applyingonly to environmental pollution."See id. at 30. Because the provision isambiguous as a matter of law, it will be construed in favor of theinsured.18 See id. at 31 (citing Geyerhahn v. United States Fidelity& Guaranty Co., 724 A.2d 1258, 1261 (Me. 1999)). Accordingly, Reliance isnot entitled to summary judgment on Count I based on the Total PollutionExclusion.

Finally, with respect to Count I, Reliance argues — in two briefparagraphs — that either the policy's deductible or the policy'saggregate limit precludes any duty on the part of Reliance to defendBoise. The court find both arguments to be without merit. With respect tothe policy's $3 million deductible, there is some dispute as to whetherit applies to Boise, as an additional insured, at all.19 The Courtneed not explore that point, however. It is enough that the amount ofdamages was impossible to determine when Boise sought a defense fromReliance. While perhaps unlikely, it is not inconceivable that fourplaintiffs seeking damages for injuries from exposure to chlorine gascould recover over $3 million. That Reliance now knows the claims settledfor significantly less does not entitled Reliance to summary judgmentwith respect to Count I.

Reliance's argument with respect to policy limits is equallyunpersuasive. Reliance contends it had no duty to defend Boise becausethe policy's $7.5 million aggregate limit had been exhausted on June 10,1997. First, Boise responds that, despite extensive efforts duringdiscovery in this case, information regarding exhaustion of the aggregatelimit was not provided by Reliahce to Boise until June 3, 1999, one dayprior to the deadline for filing summary judgment motions in this case. Itis undisputed that Reliance did not rely on the aggregate limit when itdeclined to defend Boise. Miscellaneous Exhibit 1H. Indeed, Reliance nowcontends that because such information was maintained by anothercompany, Reliance could not confirm that the aggregate limit wasexhausted on June 10, 1997, until nearly two years after that date. Thecomparison testrequires the insurer to decide whether or not to defend based on theinformation it has at that time. Cf Maine Mut. Fire Ins. Co. v. Gervais,1999 ME 134, 745 A.2d 360, 362. Reliance did not — indeed, Relianceapparently could not — rely on exhaustion of the policy aggregatewhen it declined to defend Boise. This tardy justification for denying adefense to Boise in the underlying litigation fails. Because the Court isunpersuaded by any of Reliance's arguments, the Court will denyReliance's Motion for Summary Judgment with respect to Count I of theAmended Complaint.20

In addition to its motion with respect to Count I, Reliance seekssummary judgment with respect to Count II of the Amended Complaint. ByCount II, Boise seeks to reform the insurance policy by which Relianceinsures Boise if it is determined that the Reliance policy does not coverBoise with respect to the underlying litigation. Reliance offers twogrounds upon which it is entitled to summary judgment on Count II.First, Reliance contends that because Boise is not a party to theinsurance contract between Reliance and Koch, Boise lacks standing toseek reformation of that contract. Alternatively, Reliance argues thateven if Boise does have standing, there is no evidence supporting mutualmistake on the part of Reliance and Koch — a necessary prerequisiteto the remedy of reformation.

Count II of the Amended Complaint reads as follows:

If the insurance policy issued by Reliance covering Boise as an additional insured does not, as actually written, provide Boise with defense and/or indemnification for the [underlying litigation], Boise is entitled to reformation of that policy to provide Boise with the coverages consistent with the contractual insurance procurement obligations . . . under the contract between Koch . . . and Boise.

Amended Complaint ¶ 28. Taken alone, this language from the AmendedComplaint is unclear to the extent that it refers to the "insurancepolicy issued by Reliance covering Boise . . . ." Taking the facts in thelight most favorable to Boise, the Boise standard terms place acontractual duty upon Koch to name Boise as an additional insured onKoch's insurance policy, which is issued by Reliance. Even from thisbest-case factual scenario, Reliance can hardly be said to have issued aninsurance policy specifically covering Boise, as the Amended Complaintsuggests.

In Boise's Memorandum in Opposition to Defendant Reliance's Motion forSummary Judgment (Docket No. 35), Boise clarifies its claim forreformation. Specifically, Boise indicates that it does not seek toreform any portion of the Reliance policy. Boise Cascade's Memorandum inOpposition to Defendant Reliance's Motion for Summary Judgment at 21.Instead, Boise seeks to reform the January 17, 1995, certificate providedby Koch to Boise, so that the certificate actually provided would be thesame as the certificates Koch had provided to Boise prior to theJanuary 17, 1995, certificate. Id. Although the Boise standard terms— if they are the contract terms — required Koch to provide acertificate to Boise evidencing that Koch had named Boise as anadditional insured — which the Boise standard terms also require— it is undisputed that Koch never sent Boise a certificate withrespect to this contract.

As the Court now understands Count II, Boise seeks to reform theJanuary 17, 1995, certificate, not the Koch insurance policy issued byReliance. Under this theory, Reliance's argument that Boise lacksstanding to seek reformation is without merit. By Count II, Boise seeksto reform the January 17, 1995, certificate which — potentially— is part of the contract between Boise and Koch. Assuming for themoment that the January 17, 1995, certificate is part of the contractbetween Boise and Koch, obviously Boise would have standing to seekreformation of that certificate. Reliance, however, offers an alternativeargument for summary judgment with re Ect to Count II as it has now beenrecast by Boise. Reliance contends that the January 17, 1995, certificateis not part of the contract between Boise and Koch because it was issuedseveral months prior to the formation of this contract, and, therefore,the January 17, 1995, certificate is incapable of being reformed.

Reformation is an equitable remedy whereby a court may, in essence,rewrite the terms of a contract to conform with the mutual intent of theparties. The need for reformation arises where the contracting partiesreach an agreement, but the contract language fails to record theagreement accurately. In other words, a court may reform a contract ifthe parties made a mutual mistake. See Yaffie v. Lawyers Title Ins.Corp., 1998 ME 77, 710 A.2d 886, 888. Reliance contends that any mutualmistake between Boise and Koch with respect to the contract formedsometime in August 1995 could not possibly relate to the January 17,1995, certificate issued several months earlier.

The Court can conceive of at least one factual scenario in whichreformation of the January 17, 1995, certificate could conceivably beappropriate. If, at the time the contract between Boise and Koch wasformed, both parties intended the January 17, 1995, certificate to beincorporated by reference into the contract, and both parties mistakenlybelieved that the January 17, 1995, certificate was the same as thecertificates Koch had previously issued to Boise, then reformation of theJanuary 17, 1995, certificate to read like the previously issuedcertificates could be an appropriate equitable remedy. However, even ifBoise were able to prove a mutual mistake by clear and convincingevidence — as is required under Maine common law — in orderto be entitled to reformation, the mistake "must be material to thetransaction," and it must "touch the subject matter of the bargain andnot merely be collateral to it." See id. (quoting Poling v. Northup,652 A.2d 1114, 1116 (Me. 1995)); Interstate Indus. Uniform Rental Servicelnc. v. Couri Pontiac, Inc., 355 A.2d 913, 918 (Me. 1976). The Court issatisfied that even if Boise were able to prove by clear and convincingevidence that Boise and Koch labored under a mutual mistake regarding thecontents of the January 17, 1995, certificate relating to insurancecoverage, the Court finds as a matter of law that such a mistake wascollateral to the subject matter of the bargain — to have Kochinspect and repair a tile-lined tank used in the papermaking process. SeeInterstate Indus. Uniform Rental Service, Inc., 355 A.2d at 917-18(holding that whether mutual mistake is collateral, to the contract is amatter of law for the court to decide). Accordingly, Boise cannot obtainreformation of the January 17, 1995, certificate, and Reliance's Motionfor Summary Judgment with respect to Count II will be granted.21

III. CONCLUSION

Accordingly, it is ORDERED that Koch's Motion for Summary Judgment withrespect to Count III be, and it is hereby, GRANTED. It is furtherORDERED that Boise's Motion for Summary Judgment with respect to Count Ibe, and it is hereby, DENIED. It is further ORDERED that Reliance'sMotion for Summary Judgment with respect to Count I be, and it ishereby, DENIED, and with respect to Count II be, and it is hereby,GRANTED. Finally it is ORDERED that summary judgment in favor of Kochwith respect to Count II be, and it is hereby, GRANTED sua sponte.

1. Woodbury, Ross, and Quinn commenced one action, while Dodge laterinitiated a separate action against Boise. PSMF ¶¶ 1, 2.Subsequently, the two suits were consolidated. Id. ¶ 4

2. Immediately prior to this paragraph, the complaint alleged thefollowing:

11. Defendant Boise Cascade had a duty to provide Plaintiff Marvin Woodbury with a safe place within which to perform his work, and a duty to use reasonable care so as to avoid unreasonable risk of injury to Plaintiff Marvin Woodbury.

12. Defendant Boise Cascade breached said duty by:

a. Negligently and carelessly failing to keep the premises provided for the use of lawful visitors, including Plaintiff Marvin Woodbury, in a reasonably safe condition.

b. Negligently and carelessly allowing its premises provided for the use of lawful visitors, including Plaintiff Marvin Woodbury, to exist in a dangerous and defective condition; and

c. Negligently and carelessly failing to warn lawful visitors, including Plaintiff Marvin Woodbury, of the unsafe and dangerous condition of the premises. Plaintiff's Complaint at Exhibits A, B.

3. Although this quoted language refers only to Woodbury, it isessentially identical in each complaint filed by the Koch employeesagainst Boise. PSMF ¶¶ 3-4.

4. The parties have submitted joint exhibits for the purposes of thesemotions for summary judgment. These exhibits are in two volumes, onetitled "Exhibits" and another titled "Miscellaneous."

5. Specifically, the Boise standard terms state:

2. Controlling Terms: Buyer objects to the inclusion of any different or additional terms by Seller in Seller's acceptance of this PO. If Seller includes or attaches any different or additional terms in Seller's purported acceptance . . . a contract of sale will result upon the terms and conditions as stated herein, without inclusion of any different or additional terms and conditions.

Exhibit No. 11.

6. Again, the Boise standard terms state: 9. Site Work. If Seller isto perform any work . . . at the office or on property of Buyer, Sellershall carry at Seller's own expense: . . . (b) Contractor's ComprehensiveGeneral Liability Insurance, with limits for bodily injury and propertydamage of not less than $1,000,000 per occurrence, which policy shallinclude premises and operation coverage, blanket contractual coverage,Owner's and Contractor's protective coverage, and completed operationscoverage. . . . Seller shall, prior to commencing work, provide Buyer withcertificates evidencing all such coverages in insurance companiesacceptable to Buyer. Such certificates shall (a) . . . name Buyer, itssubsidiaries, affihates, directors, officers, and employees andadditional insured with respect to liability, or any claims ofliability, arising out of the work performed by Seller that affords theadditioyial insureds the same coverage as if the additional insureds werethe named insured. Exhibit No. 11.

7. The underlined portion of the quote was handwritten by Clarke on ablank space in the form.

8. At some point during the time period relevant to this and theunderlying litigation, Ballard was apparently either acquired by ormerged with Koch. At various times during the course of this litigation,the parties have made much of the distinction between Ballard and Koch.For the purposes of resolving these motions for summary judgment, theCourt is unpersuaded that any distinction between Ballard and Koch is ofmoment. Throughout the remainder of this opinion, the Court refers toBallard and Koch collectively as "Koch."

9. Furthermore, none of the parties have suggested that the law of anyjurisdiction other than Maine should be applied, and each party hasrelied on Maine law in its briefing.

10. The requirement that a contractual waiver of an employer'sworkers' compensation immunity could be achieved only by clear andspecific language was established by the Maine Law Court in Diamond Int'lCorp. v. Sullivan and Merritt, Inc., 493 A.2d 1043, 1048 (Me.1985).

11. Boise offers vague arguments suggesting that these two documentsare inadmissible evidence and should, therefore, be disregarded by theCourt, apparently on the ground that it is not established that whomeverdrafted these documents did so on the basis of personal knowledge. Withrespect to the OSHA report, the Court is satisfied that it would beadmissible under Federal Rule of Evidence 803(8). As to the memorandumprepared by Boise's legal department, the statement "our investigationover the last two years has failed to turn up any facts which provide asolid defense to defeat these claims" strongly implies that the declarantpredicates his or her statement on personal knowledge. More to the point,Boise offers no evidence contradicting, in this record, the propositionthat its employees alone acted to accidently release the chlorine gasthat injured the Koch employees.

12. Gatley is the factual counterpart to Fowler I. Whereas in FowlerI, the contract failed to expressly waive workers' compensation immunityor expressly evidence a mutual intent to insure a party for its ownnegligence, in Gatley, the contract included express and distinctlanguage satisfying each requirement. Gatley, 662 F. Supp. at 201-02. Inboth Gatley and Fowler I, this Court treated each of these requirementsseparately. Accordingly, the Court is unwilling to adopt Boise's positionthat a waiver of workers' compensation immunity can satisfy therequirements of Emery.

13. By this analysis, the Court does not suggest that Koch had no dutyto insure Boise under the Boise standard terms. If the Boise standardterms control, Koch may have had a duty to name Boise as an additionalinsured on its insurance policy. However, as this Court decided in FowlerI, the duty to provide insurance generally is distinct from the duty toprovide coverage for an insured's negligence. This distinction wasproperly recognized by the Court of Appeals for the First Circuit in itsdecision affirming this Court's opinion in Fowler I. See Fowler II, 948F.2d at 54-55 and n. 1. While Koch may have had a duty to procureinsurance for Boise under the Boise standard terms, those terms do notcreate a duty for Koch to indemnify Boise for its negligence.

14. Although not necessary to resolve Boise's Motion, the Court notesthat, as part of its Motion, Boise argues that if Reliance is found tohave breached a duty to defend, then Boise is entitled to have the costsincurred in defending the underlying litigation, as well as thesettlement amounts, paid by Reliance. In support of the argument thatReliance must pay the settlement costs as a result of breaching the dutyto defend, Boise relies on this Court's decision in Anderson v. VirginiaSurety Co., Inc., 955 F. Supp. 182 (D.Me. 1998). In Anderson, this Courtheld that an insurer who breached a duty to defend was not entitled tolitigate the duty to indemnIfy where the underlying litigation hadalready been settled and that settlement was reasonable and made in goodfaith. Id. at 189-90.

The Maine Law Court, however, has expressly rejected this Court'sanalysis in Anderson. In Elliott v. Hanover Ins. Co., 1998 ME 138,711 A.2d 1310, the Law Court held that "[a]n insurer that breaches itsduty to defend therefore is not estopped from asserting noncoverage as adefense in a subsequent action brought by the insured or the insured'sassignee." Id. at 1313. Immediately following this quoted language, theMaine Law Court expressly rejected this Court's approach in Anderson. Idat n. 3. The Maine Law Court did note, however, that the insurer wouldbear "the burden of proving that the claim was not within the policy'scoverage when it wrongfully declines to defend a claim." Id. at 1313-14.Apparently, in a case such as this, if Reliance is found to have breachedthe duty to defend, the Elliott standard will require litigation of manyof the legal issues raised but not decided by the underlying litigationwhich was settled long ago. This may be necessary because the duty toindemnify could turn on such facts as whether or not Koch employees "werecontributorily negligent, facts apparently not determined as part of thesettlement. While the valid policy reasons for not revisiting thepreviously settled underlying litigation are obvious (see, e.g., TravelersIndem. Co. v. Dingwell, 414 A.2d 220, 227 (Me. 1980)), the Court has nochoice but to apply the rule set forth in Elliott, should it bedetermined at a later date that Reliance breached a duty to defend Boisein the underlying litigation.

15. In Part II B, supra, the Court set forth why Koch could notdemonstrate that its terms control the contract between Koch and Boisefor the purposes of summary judgment. The same conclusion applies here,even though here, under Boise's Motion for Summary Judgment, the factsmust be viewed in the light most favorable to Koch and Reliance —not in favor of Boise as was the case in Part II B. Indeed, Viewing thefacts in favor of Koch and Reliance, Boise cannot demonstrate that theBoise standard terms contrdlled the contract between Boise and Koch.Taking the facts most favorably to the nonmoving parties, Koch's estimate— and the accompanying terms — would be the offer accepted byBoise's purchase order. Boise cannot, for the purposes of its summaryjudgment motion, demonstrate that the Boise standard terms were the solecontrolling terms of the contract between Boise and Koch.

16. In its Motion, Boise contends that the contractual dispute betweenit and Koch need not be reached if the Court first finds Reliance hasbreackled its duty to defend. If the Court so finds, noise continues,Boise will voluntarily dismiss any claims against Koch because Boise willhave achieved a judgment against Reliance for the defense and settlementof the underlying litigation. While such a direct route to the resolutionof this dispute is undoubtedbly enticing, the Court simply cannot assuniea contract exists and then proceed to consider the issue of breach.Furthermore, as discussed above, even if Boise eventually prevails on itsbreach of a duty-to-defend claim against Reliance, such a judgment wouldnot resolve the duty to indemnify, such that additional litigation wouldbe necessary to resolve Boise's entitlement to the amounts it paid tosettle the underlying litigation. See Elliott, 1998 ME 138, 711 A.2d at1313-14.

17. Indeed, if it is later determined that there is no contractualduty between Reliance and Boise, the Court will never reach thecomparison test.

18. For the purposes of this argument, Boise is presumed to be theinsured rather than the potential insured.

19. At his deposition, James Fitzpatrick, designated by Reliance inresponse to a notice of deposition per Fed.R.Civ.P. 30(b)(6), impliedthat the policy deductible does not apply to an additional insured likeBoise. Fitzpatrick Dep. at pp. 16-17.

20. Although it would appear at first blush that the logic by whichKoch obtains summary judgment on Count III would also apply to Reliance'sefforts to obtain summary judgment with respect to Count I, a closerexamination reveals the fallacy of this proposition. Koch's successfulargument does not require a finding that Koch had no duty to name Boiseas an additional insured. Instead, Koch obtains summary judgment on thegrounds that there is no genuine issue of material fact that the injuriessustained by the Koch employees resulted from Boise's negligence, andthat any contract between Koch and Boise failed to specificallymemorialize a mutual intent that Koch would insure Boise for Boise'snegligence. It may very well be that Koch had an obligation to name Boiseas an additional insured. Accordingly, Reliance may have had a derivativeduty to defend. That the current record does not generate a genuine issueof material fact with respect to Boise being the sole negligent cause ofthe injuries to the Koch employees could conceivably provide Reliancewith a winning argument with respect to its duty to indemnify Boise. Italone does not, however, absolve Reliance from the broader duty to defendBoise.

21. Although Count II dows not specifically identify against whichDefendant it seeks recovery, the analysis regarding materiality works infavor of both Defendants. Koch did not move for summary judgment withrespect to Count II — presumable because Koch did not believe Boisesough relief against Koch by Count II. Accordingly, the court will grantsua sponte summary judgment in favor of Koch with respect to CountII

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