USCA1 Opinion

UNITED STATES COURT OF APPEALS

FOR THE FIRST CIRCUIT
____________________

No. 95-1678

JUSTIN L. WYNER, ET AL.,

Appellants,

v.

NORTH AMERICAN SPECIALTY INSURANCE COMPANY,

Appellee.

____________________

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF MASSACHUSETTS

[Hon. Reginald C. Lindsay, U.S. District Judge]

___________________

____________________

Before

Torruella, Chief Judge,

___________

Aldrich, Senior Circuit Judge,

____________________

and Selya, Circuit Judge.

_____________

_____________________

Eric F. Eisenberg, with whom

_________________

Joel Lewin and Hinckley, Allen

__________
_______________

& Snyder were on brief for appellants.

________

Edward S. Ronan, with whom Ronan, Riley & Dever, P.C. was on
_______________
__________________________
brief for appellee.

____________________

March 21, 1996

____________________

TORRUELLA, Chief Judge.

TORRUELLA, Chief Judge.
___________

Appellants Justin L. Wyner, et

__

al.
___

(collectively, "the

Landlords"),

order affirming the bankruptcy

appeal

a district

court

court's grant of summary judgment

for appellee North American

Specialty Insurance Co. ("NASIC") on

the

the language of

Landlords' claims that

an insurance policy

issued to its tenant Wursthaus, Inc. ("Wursthaus") indicates that

the policy covers

alleged damage by

owned by the Landlords.

Wursthaus to real

property

We affirm.

I. BACKGROUND
I. BACKGROUND
______________

On

Chapter

11

operates a

January

29,

1993,

Wursthaus

filed

petition

with

the

bankruptcy

court.

restaurant in

voluntary

Wursthaus

Cambridge, Massachusetts, in

space it

has

leased from the Landlords ("the leased property").

On March

26,

1993, Wursthaus

filed

an Adversary

Complaint against

the

Landlords

in the

income

due

leased

property.

bankruptcy

to the

Landlords'

court, claiming

loss of

construction in

and

business

around the

The Landlords filed an Answer and Counterclaim

on May 24, 1993, denying the allegations and counterclaiming that

Wursthaus damaged the

leased property.1

On June

3, 1993,

the

Landlords filed a third party complaint against NASIC, Wursthaus'

insurer, seeking a declaratory judgment that Wursthaus' insurance

____________________

After NASIC's summary judgment motion, the Landlords submitted

an affidavit, discussed

infra, which claimed damage to

_____

portion of the building than just the leased property.

a larger

-2-

policy

("the

policy")

may

be

reached

and

applied

for

the

Landlords' benefit.2

NASIC

answered

November 16,

1993,

Landlords on

all

complaint

moved

for

three counts

against NASIC.

Landlords produced

the

third

party

summary

of

judgment

the Landlords'

In opposition

an affidavit

complaint,

to

of Richard H.

and

against

third

this motion,

on

the

party

the

Ember ("Ember"),

the trustee

of a trust

three-story building

property.3

In

that owns

("the building")

that

building

Wursthaus.

against

that

"premises"

are

not

In contrast to

NASIC,

the

of the

the leased

Ember Affidavit"),

Ember

altered and damaged portions of

owned,

rented,

or

occupied

by

the Landlords' third party complaint

Ember

as including

building leased to

that contains

affidavit ("the

stated that Wursthaus improperly

the

the majority interest

more

affidavit

described

than

the

the Wursthaus.

just

The

the

portion

damaged

of

bankruptcy court

the

noted

____________________

The policy included both

commercial

general

a property insurance

liability

portion

("CGL

portion and a

portion").

Landlords argued before the bankruptcy court that it should

been

able to recover under

either portion.

The

have

However, on appeal

the Landlords have failed to argue, beyond a passing reference in

a footnote, that the bankruptcy court erred in its interpretation

of the property insurance portion.

waived their

Therefore, the Landlords have

legal and factual arguments

regarding the property

insurance portion, see Citizens Awareness Network, Inc. v. United

___ ________________________________
______
States Nuclear Regulatory Comm'n, 59
__________________________________
1995) (stating that

"[i]t is

F.3d 284,

not enough to

294 (1st

mention a

Cir.

possible

argument in the most skeletal way, leaving the court to . . . put

flesh on its bones"),

and we construe their

appeal as based

on

the bankruptcy court's interpretation of the CGL portion.

As

the

bankruptcy

comprises several older

court

noted,

this

property

buildings that over the years

actually

have come

to be treated as a single building with several street addresses.

-3-

that

the

Landlords

"sought

"premises" "to include

whether the Ember

sought.4

summary

ruled

The

the

the entire building," but

bankruptcy

court

March 18,

based on its finding

Landlords.

expand"

definition

granted

1994.

NASIC's

expansion

motion

The bankruptcy

that the policy

of

did not decide

Affidavit properly accomplished the

judgment on

does not

to

for

court so

issued to Wursthaus

cover damage by Wursthaus to real property owned by the

On

June 14,

1995, the district

court affirmed

the

bankruptcy court's decision in a one-sentence order.

In this

appeal, the Landlords claim

court erred by affirming

for NASIC.

the bankruptcy court's summary judgment

The Landlords

proceeds of the policy.5

that the district

also

seek to

reach

and apply

the

II. DISCUSSION
II. DISCUSSION
_______________

A. Standard of Review
A. Standard of Review
______________________

In

reviewing

district

court's

affirmance

bankruptcy court's grant

of summary judgment, we apply

decisional

the bankruptcy

standards as

court and

of

the same

the district

____________________

We

do

not consider

amended the

whether

Landlords' complaint,

the Ember

Affidavit

properly

since the resolution

of this

issue would not affect the outcome under our analysis.

On November

NASIC summary
the

14, 1994, after the bankruptcy court

judgment on the Landlords'

Landlords and Wursthaus

filed with

had granted

third party complaint,

the bankruptcy

court a

Joint Motion to Approve Partial Settlement and the Disposition of

Remaining Claims.
that

it wishes

In this
to dismiss

income against the

they

were

to

motion, the debtor

its complaint

Landlords, and the

prevail

on

appeal,

Wursthaus states

for loss

of business

Landlords stated that

it

would

pursue

if

their

counterclaim against

Wursthaus only

to the extent

of available

insurance proceeds.

-4-

court before us.

with a

material

view

fact

We examine a grant of summary judgment de novo,

__ ____

to whether

there

and whether

judgment as a matter of

law.

is a

the moving

genuine

party

Fed. R. Civ. P.

issue as

to

is entitled

any

to a

56(c); Den Norske

__________

Bank AS v. First Nat'l Bank of Boston, No. 95-1682, slip

_______
___________________________

op. at

7, ___

F.3d ___,

___ (1st

Cir. 1996).

Once the

moving party

(NASIC) makes this showing, the party bearing the ultimate burden

of proof

(the Landlords)

cannot rest on

must proffer sufficient competent

mere allegations,

but

evidence upon which a rational

trier of fact could find in its favor.

Id. at 7.
___

Whether or not

contractual ambiguity exists is generally a matter of law for the

court.

See Smart
___ _____

v. Gillette Co. Long-Term Disability Plan, 70

_______________________________________

F.3d 173, 178 (1st Cir. 1995).

an

argument between parties

contract is

summary

typically an

judgment is

If such ambiguity

about the

meaning of

argument about

normally unwarranted

is found, then

an ambiguous

material fact,

unless the

and

extrinsic

evidence presented about the parties' intended meaning is so one-

sided that

no reasonable

person could

decide to

the contrary.

Den Norske Bank AS, slip op. at 7.

__________________

all

genuine

factual

inferences, in

party against

disputes,

the light most

whom

summary

Nonetheless,

and

any

we must resolve

competing

favorable to

rational

the Landlords,

judgment entered.

Id.;
___

the

Byrd
____

v.

Ronayne, 61 F.3d 1026, 1030 (1st Cir. 1995).

_______

B. Interpretation of the Policy

B. Interpretation of the Policy
________________________________

We agree

neither the

with

the bankruptcy

Landlords nor NASIC dispute,

-5-

court's finding,

which

that Massachusetts law

applies.

It

is well established

general

rules

of

interpretation of an

Inc.
____

contract

that under Massachusetts

construction

insurance policy.

apply

law,

to

the

Save-mor Supermarkets,
_______________________

v. Skelly Detective Serv., Inc., 268 N.E.2d 666, 669 (Mass.

____________________________

1971); Edward Rose Co. v. Globe & Rutgers Fire Ins. Co., 160 N.E.
_______________
_____________________________

306,

308

(Mass.

1928).

approaches to argue

claims

against

capitalization

appeal,

that summary

NASIC.

and

On

the

Landlords take

judgment was

First, they

use

the

argue

of certain

improper on

that the

terms

in

two

its

scheme of

the

policy

indicate

either: (a)

caused

to

policy

did not

that the

the Landlords'

clearly

policy contained

whether the

policy

(b)

and explicitly

covered damage

found by its terms

to

building; or

contractual ambiguity

Landlords' building.

cover damage

policy covered

Second,

damage Wursthaus

that, even

cover such

damage, the

germane to the

caused by

they argue

insured,

reading

covered,

and would

the

contracts should not

that

policy's

therefore

that

the policy,

an objective

be misleading and that

be unrealistically limited.

and

language, would

violate public

issue of

Wursthaus to

to unambiguously exclude coverage,

the extent

if the

the

if

would not

reasonable

expect

policy that

to

be

such

coverage should not

See Kates v. St. Paul Fire & Marine

___ _____
______________________

Ins. Co., 509 F. Supp. 477, 491

_________

(D. Mass. 1981).

The Landlords

contend that if we accept any of these arguments, we must reverse

the lower courts' summary judgment.

1.
1.

The Policy's Language

The Policy's Language

-6-

The

finding

Landlords argue

that the policy did

that

the lower

courts erred

not explicitly cover

in

damage to the

building,

and concluding

address such

that

coverage.

the policy

did not

In particular, the

Landlords challenge

the bankruptcy court's conclusion that, while the

the policy does apply

specific

including

property damage

the Landlords within

court

concluded

policy

as "any

that since

and

to property

the term "you."

the term

Named Insured,"

"ADDITIONAL INSURED"6

CGL portion of

to certain property damage, it

exclusion for

"you"

and the

contains a

"you own,"

The bankruptcy

is defined

Landlords are

(under

in the

both an

an

endorsement

modifying the CGL portion)

under the CGL portion of

the policy,

the plain

language of

and unambiguous

"an insured"

ambiguously

this exclusion bars

the

Landlords from asserting coverage.

The

Landlords

contend

that

the

bankruptcy

court

erroneously failed to differentiate between the expressly defined

term "Named

Landlords

Insured" used in

were

Specifically,

the

included

as

Landlords

attempt

"Named Insured" from the

the

group of

the policy and

those to

be

to

covered as

part of

capitalization is

crucial;

the term

entity to

a more

those "insured."

that the

INSURED."

distinguish

in various places in the

"an insured," "any insured," and

Landlords,

"ADDITIONAL

act of generically adding an

defined category referred to

the

an

the fact

broadly

policy as

According

to

"Named

Insured" is

term

"ADDITIONAL

____________________

The

pertinent

endorsement contains

INSURED" in full capitalization.

-7-

the

capitalized throughout the Policy,

and "any

insured" are not similarly

the Landlords

"ADDITIONAL

attempt to draw

INSURED,"

"Named Insured," which

the

Landlords emphasize

which

while "insured," "an insured"

capitalized.

a distinction

they

concede

between the

includes them,

they deny applies to them.

the usage

Additionally,

of "you" and

terms

and

To this end,

"your," noting

that the Business and Personal Property Coverage Form states that

"[t]hroughout this policy the words 'you' and 'your' refer to the

Named Insured shown in

the Declarations and any other

person or

organization, while the

that the

Common Policy

"Named Insured" is

Declarations page

"Wursthaus, Inc. &

states

Wursthaus, Inc.

DBA Cardullo's Gourmet Shop."7

In

contrast,

properly found

Named

that

Insured shown

modifies

the

policy

INSURED"

under

the

CGL

in

the

portion,

contention that such

below

"you" as

"the

and an

endorsement

as an

"ADDITIONAL

and

unambiguous

Landlords

the

courts

plain

for damage to property "you

Furthermore, NASIC

language,

the

policy defined

the Declarations,"

to add

CGL

that

bars the Landlords from asserting

portion.

contractual

argues

because the

language of the exclusion

or occupy"

NASIC

coverage under the

argues that,

Massachusetts

case

own, rent

law

along with

the

supports

its

exclusions apply not only to named insureds

(such as Wursthaus), but also to additional insureds (such as the

Landlords).

See
___

Massachusetts Turnpike Authority

_________________________________

v.

Perini
______

____________________

Cardullo's Gourmet

Shop is a small gourmet

store operated by

Wursthaus near its restaurant.

-8-

Corp.,
_____

208 N.E.2d

807,

812

(Mass.

1965).

In

Massachusetts
_____________

Turnpike Authority, the Supreme Judicial Court noted that

__________________

[t]he naming of additional

not extend the nature of

the substantive

coverage originally given

but

merely gives

to

insureds does

by the

policy

other persons

the

same protection afforded to the principal

insured.

Id., 208 N.E.2d at

___

Indem. Co., 315 F.2d

__________

NASIC,

or

. .

813 (citing Sonoco Products Co.

___________________

126, 128 (10th Cir.

1963)).

v. Travelers
_________

According

to

with respect to the exclusion for property "you own, rent

occupy" originally agreed to by Wursthaus, "the same policy .

covers the added insured,"

the Landlords.

See
___

Sonoco, 315
______

F.2d at 128.

We

agree

with these

cases

property "you own, rent or occupy"

that

the exclusions

for

extend to the Landlords as an

additional insured.

The purpose of provisions to add insureds is

"to extend the policy coverage to others

. . . not to change the

nature of th[e] coverage nor to change declarations nor to remove

exclusions."

Id.
___

Where,

additional

insured

nature

coverage,

altered,

of

we

see no

as here, the

contains

no language

declarations or

reason

endorsement naming

suggesting

exclusions

to deviate

from

that

were

the

the

thereby

the "well-settled

[rule] that the policy does not extend any greater coverage to an

additional insured."

Id.
___

However, the fact that the exclusions for property "you

own, rent or

insured

occupy" extend

to the Landlords

as an

additional

does not, in and of itself, dispense with the Landlords'

capitalization

argument.

Although

we

cannot conclude,

after

-9-

finding that the policy's exclusions apply to the Landlords, that

the capitalization

scheme indicated

could benefit from the scope of

clearly that

the Landlords

coverage, if we were to find the

contract ambiguous, we would have to reverse the district court's

grant

of summary

determine

judgment

for NASIC.

As

result, we

must

whether the capitalization and usage arguments suffice

to show contractual ambiguity under Massachusetts law.

"The first

must be

to read

ordinary

applying

this

contract

conversational

approach to the question

insurance policy

--

to

language of

normal reasoning

inquire

the policy

or

of interpretation

as one

what

would read

the

simplified,

would mean

analysis."

any

to a

Nelson v.
______

reader

Cambridge
_________

Mutual Fire Ins. Co.,

____________________

572 N.E.2d 594, 673 (Mass. App. Ct. 1991);

Commerce Ins. Co. v.

__________________

Koch, 522 N.E.2d 979,

____

1988).

"[A]n

controversy

ambiguity

exists

between

interpretation contrary to

New York v. Holyoke, 503

________
_______

Rather, "[i]t

is

not

created

parties,

the other's."

980 (Mass. App. Ct.

simply

each

favoring

an

Jefferson Ins. Co. of

______________________

N.E.2d 474, 476 (Mass. App.

must be shown that

because

Ct. 1987).

reasonably intelligent persons

would

differ as

proper one."

to which

one of

two or

more meanings

is the

Id. (citing Ober v. National Cas. Co., 60 N.E.2d 90

___
____
_________________

(1945)).

Applying

Massachusetts

show

these

law, the

contractual

standards,

we

conclude

Landlords' arguments

ambiguity,

let

benefitting the Landlords' claims.

-10-

alone

that

under

do not

suffice to

outright

coverage,

First, we find that,

in the

face

of

the

express

capitalization

in

the

exclusion

policy

pointed

would

to

not

by

NASIC,

lead

the

reasonably

intelligent persons to conclude that the exclusions did not apply

as

stated.

argument

At least

for

contradicted

ambiguity

by

one Massachusetts

contingent

inclusion of

court has

on the

of

one term

clearer

provisions.

In

Nelson v. Cambridge Mutual Fire Ins. Co., 572

______
________________________________

N.E.2d 594,

596

(Mass. App. Ct. 1991),

premises"

in

other,

usage

rejected an

the court found that the

an exclusionary

clause,

despite

term "residence

the lack

pertinent definition, did not lead to legal ambiguity.

found that

of

The court

no trial was merited on the issue of whether a rented

home was covered in addition to a separate owned home, since

the

declarations page included

the policyholder's name.

the address of

Id.
___

the owned home

Furthermore, in

under

the absence

of

directly conflicting word meanings, see Quincy Mut. Fire Ins. Co.
___ _________________________

v. Abernathy, 469 N.E.2d 797, 799 (Mass. 1984) (finding ambiguity

_________

regarding

covered

scope

of

"accident[s]"

coverage

but

liability for "bodily injury .

for reckless

where

acts

exclusion

where

clause

policy

disclaims

. . which is expected . .

. from

the standpoint

of the Insured"), Massachusetts

courts appear to

find ambiguity

in insurance contracts somewhat

sparingly.

e.g., Ober, 60 N.E.2d

____ ____

"theatre"

at 91 (finding no ambiguity as

would encompass a

admission is

restaurant or night

charged, but where free

See,
___

to whether

club "where no

entertainment is furnished

in connection with the

serving of food or

Jefferson Ins. Co. of New York, 503 N.E.2d

________________________________

other refreshments");

at 476

(concluding

-11-

there

was no

ambiguity in contract,

since exclusion

of claims

arising from events in

which the injured party was in "the care,

custody or control" of

police department covered situation where

injury

was suicide).

Under these rigorous standards, and in the

face of the clear

inclusion

pattern

language of the exclusions and

the Landlords'

as an "Additional Insured," neither the capitalization

nor

Insured" and

the

usage

distinction between

"Additional Insured"

the

referred to by

terms

"Named

the Landlords

can suffice to create legal ambiguity.

Additionally, the Landlords point to

provision

'your'

that "[t]hroughout

this

the CGL portion's

policy the

words 'you'

and

refer to the Named Insured shown in the declarations, and

any other person

under this

or organization qualifying

policy"; from this provision,

as a Named

Insured

the Landlords conclude

that they are not covered by the term "you" under this provision.

Thus,

does

they contend, ambiguity results.

We disagree.

Not only

the Landlords' argument hinge on the "Named Insured" versus

"ADDITIONAL

INSURED" distinction that

we have already rejected,

but in fact,

the subsequent

that

words 'we,'

"[t]he

providing this insurance."

of

sentence in the

'us' and

'our'

were

distinction

defined

between

as

refer to

the company

the

Named

Wursthaus and

the

be to find that "you" and

Insured

Reasonable Expectations
Reasonable Expectations

-12-

not

Landlords,

Wursthaus and NASIC.

2.
2.

states

Thus, the ordinary and common reading

the language in this context would

"your"

CGL policy

to

draw

but between

The Landlords also argue that the policy,

unambiguously

extent

that

policy's

exclude coverage,

an

objective,

reasonable

insured,

such

an approach

to

of

While the

whether to

an insurance

policy, see Bond Bros., Inc. v. Robinson, 471 N.E.2d

___ _________________
________

(Mass.

the

According to the

left open the question of

the interpretation

to the

reading

such a result would violate public policy.

Supreme Judicial Court has

found to

cover damage

language, would expect to be covered.

Landlords,

take

would not

if

1332, 1336

1984) (noting that "we have not yet explicitly adopted [a

'reasonable expectations'] approach

insurance

policy");

Markline Co.

to the interpretation of

v.

Travelers

Ins. Co.,

an

424

____________

___________________

N.E.2d 464, 465 (Mass. 1981), even if such an approach definitely

applied,

the Landlords would not

benefit.

The

CGL portion can

reasonably be expected to cover both Wursthaus

and the Landlords

for

Crane Service &

_________________

claims of

third

parties.

See,
___

e.g.,
____

Equipment Corp. v. United States Fidelity & Guar. Co., 496 N.E.2d
_______________
__________________________________

833, 834 (Mass. Ct. App. 1986) (stating that, in

broad

purpose of the

policy, so

far as it

comprehensive general

related to

other people's property").

themselves

collectively

damaged by

Wursthaus, and

the policy.

that case, "the

liability insurance

property, was to

cover .

. .

Of course, the Landlords might regard

as

owning

"other

people's

therefore entitled to

property"

recovery under

However, the exclusions applicable to them, referred

to in

the discussion

belief

unreasonable.

Finally,

we find

of contractual

See,
___

that the

e.g.,
____

ambiguity,

Nelson, 572
______

Landlords'

render such

N.E.2d

citation to

at 596.

Allstate v.
________

-13-

Quinn Constr. Co., 713

__________________

inapposite.

In

F. Supp. 35,

Allstate, the
________

40-41 (D. Mass.

court found

1989), is

an exception

to an

"owned property" exclusion

policy

"does

not

in a comprehensive general

bar recovery

of

the

costs

liability

of cleaning

up

environmental contamination which presented a demonstrated danger

to

the

property

subsequently

(D.

Mass.

of

another."

Id.
___

at

41.

Allstate
________

was

vacated on other grounds, see id., 784 F. Supp. 927

___ ___

1990), and

concerns of

at any

rate,

would appear

public policy regarding neighboring

to implicate

property owners

not alleged to be at stake here.

III. CONCLUSION
III. CONCLUSION
________________

The

Landlords

capitalization and the

insurance

points are

have

system by

policy that gives rise

pointed

to

the

scheme

of

which terms were

used in

the

to this case.

These drafting

coherent enough that they suggest that the Landlords'

argument is not irrational.

However, in the face

of explicitly

worded endorsements and exclusions, they cannot rise to the level

of

contractual

Similarly, the

ambiguity

as

found

by

Massachusetts

Landlords' public policy based

courts.

arguments are not

convincing.

For the foregoing reasons, the judgment is affirmed.

________

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