Insurance – Duty to defend – Malicious prosecution

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Where the plaintiff holder of a personal umbrella policy brought suit claiming that the defendant insurer breached its duty to defend the plaintiff in a civil suit, judgment was properly awarded to the insurer on the ground that the allegations in the civil suit against the plaintiff “are not reasonably susceptible of an interpretation that they state or roughly sketch a claim covered by the policy terms within the coverage period.”

Affirmed.

SJC’s analysis

“For the period from March 15, 2000, through March 15, 2001, the defendant, Commerce Insurance Company (Commerce), insured the plaintiff, George H. Billings (Billings), under a personal umbrella liability policy (policy). The policy provided that, if a suit was brought against Billings for damages because of ‘personal injury’ caused by ‘an “occurrence” to which this policy applies,’ Commerce would provide a defense of the suit at its expense. The policy defines ‘[p]ersonal injury’ to include ‘malicious prosecution[,] [l]ibel, slander or defamation of character.’ …

“On January 9, 1998, before Commerce insured Billings under the policy, Billings and others filed a civil action in the Superior Court (1998 action) against, among others, the trustees of the Peterson 1990 Real Estate Trust (trust), seeking to annul a decision of the zoning board of appeals of Falmouth regarding the issuance of a building permit on one lot within a thirty-three acre parcel owned by the trust, to enjoin construction on eight other lots within the parcel, and to enjoin the building commissioner from issuing any building permits for thirteen of the lots. On April 7, 2000, while Billings was insured by Commerce under the policy, the 1998 action was dismissed after the parties reported the action settled but failed to file the settlement agreement within the period prescribed by the court.

“On December 14, 2000, Scott M. Peterson and Eric M. Peterson, individually and as trustees of the trust, filed a civil action in the Superior Court against the plaintiffs in the 1998 action, including Billings, alleging, among other claims, malicious prosecution and intentional infliction of emotional distress (2000 action). The malicious prosecution claim was based on the filing of the 1998 action; the intentional infliction of emotional distress claim allegedly arose from the conduct of Billings and his codefendants in filing that action and in ‘spreading rumors that the [Petersons] would fill the wetlands and build [sixteen] houses in the marsh.’

“After the 2000 action was filed, Billings forwarded a copy of the complaint to Commerce and asked Commerce to defend him in the action. Commerce declined to provide a defense, contending that ‘there is no allegation in the [c]omplaint of an offense which was committed during the coverage period‘ (emphasis in original). At his own expense, Billings retained an attorney to litigate the 2000 action. In December, 2005, a jury returned a verdict in favor of Billings and the other defendants.

“On January 26, 2006, Billings filed this declaratory judgment action against Commerce, seeking a declaration that it had a duty to defend him in the 2000 action, as well as actual and punitive damages under G.L.c. 93A for Commerce’s alleged unfair insurance practices in violation of G.L.c. 176D, section3(9). A judge in the Superior Court allowed Commerce’s cross motion for summary judgment as to all of Billings’s claims, concluding that Commerce did not owe Billings a duty to defend the 2000 action, and denied Billings’s motion for summary judgment. Billings appealed, and we transferred the appeal to this court on our own motion.

“The appeal poses two issues. First, where, as here, a civil action is filed against a policyholder alleging a claim of malicious prosecution, and coverage under the liability policy is based on the date of the ‘occurrence’ rather than the date of the claim, is the date of the ‘occurrence’ when the underlying, allegedly malicious action is filed or when that action is terminated? We join the majority of courts that have adjudicated this issue in concluding that the ‘occurrence’ is the filing of the malicious action, not its termination.

Second, is the allegation in the complaint that Billings and the other defendants were ‘spreading rumors that the [Petersons] would fill the wetlands and build [sixteen] houses in the marsh’ reasonably susceptible of an interpretation that states or roughly sketches a claim for damages because of ‘personal injury’ arising from ‘[l]ibel, slander or defamation of character’; and, if so, did the claim occur within the policy period? We conclude that, in the circumstances of this case, the allegation is reasonably susceptible of an interpretation that roughly sketches a claim for libel, slander, or defamation, but it is not reasonably susceptible of an interpretation that any defamatory statement occurred during the policy period.”

Billings v. Commerce Insurance Co. (Lawyers Weekly No. 10-189-10) (14 pages) (Gants, J.) (SJC) Case heard by Quinlan, J., on motions for summary judgment. Thomas C. Kenny for the plaintiff; John F. Hurley Jr., of Pojani, Hurley, Ritter & Salvidio, for the defendant; John Murphy, for American Insurance Association, amicus curiae, submitted a brief (Docket No. SJC-10656) (Nov. 4, 2010).