Brazas Sporting Arms, Inc. v. American Empire Surplus Lines Insurance

United States Court of Appeals
For the First Circuit
____________________

No. 99-2055

BRAZAS SPORTING ARMS, INC.,

Plaintiff, Appellant,

v.

AMERICAN EMPIRE SURPLUS LINES
INSURANCE COMPANY,

Defendant, Appellee.

____________________

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF MASSACHUSETTS

[Hon. Michael A. Ponsor, U.S. District Judge]

____________________

Before

Torruella, Chief Judge,

Lynch and Lipez, Circuit Judges.

_____________________

John G. Bagley, with whom Egan, Flanagan and Cohen, P.C. was on
brief, for appellant.
James F. Kavanaugh, Jr., with whom Conn, Kavanaugh, Rosenthal,
Peisch & Ford, L.L.P. was on brief, for appellee.

____________________

July 13, 2000
____________________
 TORRUELLA, Chief Judge. This is primarily a declaratory

judgment action in which a firearms distributor sought a determination

that it was entitled to defense and/or indemnity from its insurance

carrier under its general liability policies for civil actions brought

by or on behalf of gunshot victims on a general theory that several

firearm distributors had negligently, willfully, knowingly, and

recklessly flooded the firearms market. The district court granted

summary judgment in favor of the insurance carrier holding that the

"products-completed operations hazard" exclusion provision applied to

the civil actions, thereby precluding coverage. See Brazas Sporting

Arms, Inc. v. American Empire Surplus Lines Ins. Co., 59 F. Supp. 2d

223, 225-26 (D. Mass. 1999). Because we agree with the district

court's interpretation of the exclusion provision, and for the

additional reasons discussed below, we affirm the grant of summary

judgment.

BACKGROUND

Between 1992 and 1997, appellee American Empire Surplus Lines

Insurance Company, a Delaware corporation, issued three identical

"commercial general liability" policies to appellant Brazas Sporting

Arms, Inc., a Massachusetts corporation. Brazas's policies contained

the following endorsement that altered the standard policy agreement:

"This insurance does not apply to 'bodily injury' or 'property damage'

included within the 'products-completed operations hazard.'" Products-

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completed operations hazard includes "all 'bodily injury' and 'property

damage' occurring away from premises you own or rent and arising out of

'your product' or 'your work' except: (1) Products that are still in

your physical possession; or (2) Work that had not yet been completed

or abandoned." "Your product" is defined as,

a. Any goods or products, other than real
property, manufactured, sold, handled,
distributed or disposed of by:

(1) You;

(2) Others trading under your name; or

(3) A person or organization whose business or
assets you have acquired . . . .

. . .

'Your Product' includes:

a. Warranties or representations made at any time
with respect to the fitness, quality, durability,
performance or use of 'your product'; and

b. The providing of or failure to provide
warnings or instructions."

"Your work" means:

a. Work or operations performed by you or on
your behalf . . . .

. . .

'Your work' includes:

a. Warranties or representations made at any time
with respect to the fairness, quality,
durability, performance or use of 'your work';
and

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 b. The providing of or failure to provide
warnings or instructions.

In 1995, Brazas discovered that it had been named as a

defendant in litigation pending in the Eastern District of New York.

It subsequently learned that it was named as a defendant in an

additional law suit. Both lawsuits charged Brazas and various other

manufacturers and dealers of handguns, as well as industry trade

groups, with liability for contributing to market overflow.

Specifically, the lawsuits alleged that:

Defendants have knowingly produced and
distributed handguns in excess of the reasonable
demand by responsible consumers in the lawful
national handgun market, and they have knowingly
failed or refused to take any meaningful steps to
regulate and control the distribution and sale of
their guns by retail dealers. Their willfully
negligent conduct - individually and as an
industry - has created and supplied an unlawful
national market in firearms, the source of the
handguns that killed and wounded plaintiffs and
their loved ones.

Notably, the lawsuits did not identify any particular guns sold by

Brazas as the cause of injury to any particular plaintiffs. By the

time the district court entered judgment, one of the cases had gone to

trial, and Brazas had eventually been dismissed. See Hamilton v. Accu-

Tek, No. C.V. 95-0049 (E.D.N.Y. 1995). Brazas has incurred in excess

of $75,000 in defense costs in connection with the litigation.

At least some of the claims alleged in the lawsuits occurred

during the effective period of the American Empire policies. However,

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upon notice, American Empire denied coverage and refused to defend

Brazas. As a result, Brazas brought this declaratory judgment action

in the United States District Court for the District of Massachusetts

under that court's diversity jurisdiction pursuant to 28 U.S.C. § 1332.

Brazas also brought a claim under the Massachusetts consumer protection

statute, Mass. Gen. Laws ch. 93A, § 11. The parties filed cross

motions for summary judgment. Brazas appeals from the district court's

grant of summary judgment for American Empire and the denial of

Brazas's motion for partial summary judgment on its duty to defend

claim.

DISCUSSION

I. The Policy Coverage Claim

We review de novo the district court's interpretation of the

insurance contracts. See Fed. R. Civ. P. 56; Merchants Ins. Co. of New

Hampshire, Inc. v. United States Fidelity & Guar. Co., 143 F.3d 5, 6-8

(1st Cir. 1998); GRE Ins. Group v. Metropolitan Boston Hous.

Partnership, Inc., 61 F.3d 79, 81 (1st Cir. 1995). Under Massachusetts

law, we construe an insurance policy under the general rules of

contract interpretation. See Merchants, 143 F.3d at 8 (citing Hakim v.

Massachusetts Insurers' Insolvency Fund, 675 N.E.2d 1161, 1164 (Mass.

1997)). We begin with the actual language of the policies, given its

plain and ordinary meaning. See GRE Ins. Group, 61 F.3d at 81 (citing

cases). In so doing, we "consider 'what an objectively reasonable

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insured, reading the relevant policy language, would expect to be

covered.'" Id. (quoting Trustees of Tufts Univ. v. Commercial Union

Ins. Co., 616 N.E.2d 68, 72 (Mass. 1993)).

As a liability insurer in Massachusetts, American Empire has

a duty to defend Brazas if the allegations in the New York litigation

are "reasonably susceptible" to an interpretation that they state a

claim covered by Brazas's policy. Merchants, 143 F.3d at 8 (quoting

New England Mut. Life Ins. Co. v. Liberty Mut. Ins. Co., 667 N.E.2d

295, 297 (Mass. App. Ct. 1996) (internal quotations omitted)); see also

Mt. Airy Ins. Co. v. Greenbaum, 127 F.3d 15, 18 (1st Cir. 1997)

(quoting Sterilite Corp. v. Continental Cas. Co., 458 N.E.2d 338 (Mass.

App. Ct. 1983)). Under Massachusetts law, the duty to defend is

broader than, and independent of, the duty to indemnify. See

Merchants, 143 F.3d at 8 (citing Boston Symphony Orchestra, Inc. v.

Commercial Union Ins. Co., 545 N.E.2d 1156, 1158 (Mass. 1989));

Millipore Corp. v. Travelers Indem. Co., 115 F.3d 21, 35 (1st Cir.

1997) (citing same). That is, the obligation to defend turns on the

facts alleged in the complaint rather than the facts proven at trial.

See Millipore, 115 F.3d at 35; see also GRE Ins. Group, 61 F.3d at 81.

A liability insurer has no duty to defend a claim that is

specifically excluded from coverage, but the insurer bears the burden

of establishing the applicability of any exclusion. See Mt. Airy, 127

F.3d at 19 (citing Great Southwest Fire Ins. Co. v. Hercules Bldg. &

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Wrecking Co., 619 N.E.2d 353 (Mass. App. Ct. 1993)); GRE Ins. Group, 61

F.3d at 81 (citing Camp Dresser & McKee, Inc. v. Home Ins. Co., 568

N.E.2d 631, 633 (Mass. App. Ct. 1991)). Consistent with the

Massachusetts general rule favoring insureds in policy interpretation,

any ambiguities in the exclusion provision are strictly construed

against the insurer. See Mt. Airy, 127 F.3d at 19 (citing Sterilite,

458 N.E.2d 338); GRE Ins. Group, 61 F.3d at 81; see also Hakim, 675

N.E.2d at 1165 (holding that "[t]his rule of construction applies with

particular force to exclusionary provisions"). Ambiguity exists when

the policy language is susceptible to more than one rational

interpretation. See Merchants, 143 F.3d at 8 (citing Boston Symphony

Orchestra, 545 N.E.2d at 1169); Mt. Airy, 127 F.3d at 19 (citing

Jefferson Ins. Co. of New York v. Holyoke, 503 N.E.2d 474 (Mass. App.

Ct. 1987)). But it does not follow that ambiguity exists solely

because the parties disagree as to the provision's meaning. See

Continental Cas. Co. v. Canadian Universal Ins. Co., 924 F.2d 370, 374

(1st Cir. 1991).

Before the district court, and on appeal, American Empire's

position is that the products-completed operations hazard exclusion

excludes coverage for all injuries arising from Brazas's products, off

premises, regardless of the circumstances. Brazas contends that such

a reading of the exclusion provision would render the general liability

policy meaningless. Brazas challenged summary judgment on two grounds:

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(1) the products-completed operations hazard exclusion was intended to

apply to defective products only, and (2) the New York civil actions do

not actually allege injuries from Brazas's products, but rather

injuries caused by the company's business management and strategy,

thereby rendering the exclusion provision inapplicable.

The district court rejected the appellant's arguments. The

court held that the language of the exclusion provision did not support

a reading that would limit the exclusion to injuries from defective

products. Additionally, the court concluded that "[o]nly by a

distortion of language and logic can plaintiff suggest that the

injuries sued upon do not 'arise from' the distribution of Brazas

products, off Brazas premises." Brazas, 59 F. Supp. 2d at 226. We

take up each of the appellant's arguments in turn.

A. Defective Products

The appellant posits that the "pivotal issue" of the case is

"whether the exclusion is meant to bar more than product liability

claims."1 Appellant's Brief at 15. It suggests that in the scheme of

1 The parties and the case law use the terms "products liability" and
"defective products" interchangeably in the context of the products-
completed operations hazard exclusion. However, these terms are not
coterminous, and it is at least arguable that the New York law suits
are a variety of a products liability action. Because such an
understanding of products liability is antithetical to the appellant's
argument, for purposes of this discussion, we will assume that the New
York cases are not products liability actions. And to avoid further
confusion, we will only use the term defective products for the
remainder of this opinion.

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the commercial general liability policy as a whole the general risks of

doing business should be protected, and, therefore, the exclusion

provision should be limited to defective products claims. Moreover,

the appellant argues, a reasonable insured would interpret the

provision as applying to defective products only.

Unfortunately, we have no guidance from Massachusetts courts

on this issue. Indeed numerous other courts have read similar

exclusion provisions to be defective products exclusions,2 but there is

contrary authority from courts finding such a reading to be beyond the

text of the exclusion.3

2 See, e.g., Scarborough v. Northern Assurance Co. of America, 718 F.2d
130, 136 (5th Cir. 1983) (negligent failure to warn); Farm Bureau Mut.
Ins. Co. of Arkansas, Inc. v. Lyon, 528 S.W.2d 932, 934 (Ark. 1975)
(negligent sale of gun powder to minors); McGinnis v. Fidelity & Cas.
Co. of New York, 276 Cal. App. 2d 15, 17-18 (Cal. Ct. App. 1969)
(negligent sale of gun powder to minors); ADA Resources v. Don Chamblin
& Assocs., 361 So.2d 1339, 1343 (La. Ct. App. 1978) (sale of defective
joint fits within exclusion provision); Lessak v. Metropolitan Cas.
Ins. Co. of New York, 151 N.E.2d 730, 734-35 (Ohio 1958) (negligent
sale of BB gun to minor); Hartford Mut. Ins. Co. v. Moorhead, 578 A.2d
492, 495-96 (Pa. Super. Ct. 1990) (negligent failure to warn); General
Ins. Co. of America v. Crawford, 635 S.W.2d 98, 102 (Tenn. 1982)
(negligent sale of products); Colony Ins. Co. v. H.R.K., Inc., 728
S.W.2d 848, 851 (Tex. App. 1987) (wrongful death action arising out of
suicide with gun sold by insured).
3 See, e.g., Cobbins v. General Accident Fire & Life Assurance Corp.,
290 N.E.2d 873, 877 (Ill. 1972) (negligent sale of fireworks to minor);
Pennsylvania Gen. Ins. Co. v. Kielon, 492 N.Y.S.2d 502, 503-04 (N.Y.
App. Div. 1985) (negligent sale of gunpowder to minor).

We agree with the appellant that two of the cases upon which the
district court and the appellee rely, Rhinebeck Bicycle Shop, Inc. v.
Sterling Insurance Co., 546 N.Y.S.2d 499 (N.Y. App. Div. 1989), and New
York Casualty Insurance Co. v. Halley Electric Co., 539 N.Y.S.2d 204,

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 We agree with the district court that the latter line of case

law is more persuasive. First, we observe that many of the courts that

have held that a products-completed operations hazard exclusion

provision was, in effect, a defective products exclusion were

considering provisions that contained materially different language

from the provision in American Empire's policies. Second, and more

significant, in order to limit the American Empire exclusion provision

to defective products, we would need to read into the text a

requirement that is simply not there. The products-completed

operations hazard includes in plain and unambiguous language "all

'bodily injury' and 'property damage' occurring away from premises you

own or rent and arising out of 'your product.'" Where, as here, the

language of the exclusion provision is unambiguous, the text should be

given its plain meaning. In this case, the plain meaning of the

exclusion is that it applies to all product-related injuries. See

Cobbins, 290 N.E.2d at 877. Although we take into account the likely

understanding of a reasonable insured, we may not read into the

provision a condition or language that is not present. See Hakim, 675

N.E.2d at 1164-65. Nor are we sure that in the context of Brazas's

205 (N.Y. App. Div. 1989), are inapposite. In those cases, the
plaintiffs alleged injuries that resulted from negligent assembly or
manufacture -- i.e. defective products -- and therefore, the fact that
those courts applied the product hazard exclusion under those
circumstances sheds no light on the applicability of the provision to
a negligent sale type of case.

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actual business as a distributor, rather than a manufacturer, a

reasonable insured would read the exclusion to refer to defective

products. Consequently, we are convinced that the exclusion clause

does not limit itself to injuries that arise out of defective products.

B. "Arising out of"

The second issue -- whether the New York civil actions state

claims for injuries that "arise out of" Brazas products -- is a much

closer case. We have before us Brazas, an insured who purchased a

commercial general liability policy, arguably with the intent of

covering the general risks of doing business. See Western Alliance

Ins. Co. v. Gill, 686 N.E.2d 997, 1000-01 (Mass. 1997). However, an

exclusion provision in the policy explicitly denies coverage for all

injuries "arising out of" the insured's products, products which are

inherently dangerous. Subsequently, a civil action is brought for

wrongful injuries allegedly resulting from Brazas's saturation of the

market with its products. However, the plaintiffs, who were directly

injured by products from that market (or an underground market),

through intervening intentional wrongdoing, do not claim that any of

Brazas's products were involved in their specific injuries. We must

therefore determine whether it is legally significant that the

underlying civil action alleges that the injury was caused by the

appellant's conduct and not the appellant's products.

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 On the one hand, Massachusetts case law instructs that the

term "arising out of" should be broadly construed and additionally

directs our attention to the source of the underlying injury rather

than the theory of liability alleged in the complaint. See, e.g.,

Bagley v. Monticello Ins. Co., 720 N.E.2d 813, 816-17 (Mass. 1999). On

the other hand, at least some Massachusetts courts recognize a separate

injury arising out of the insured's negligence independent of the

proximate cause of harm, see, e.g., Worcester Mut. Ins. Co. v. Marnell,

496 N.E.2d 158, 161 (Mass. 1986), which taken together with

Massachusetts general policy favoring insureds in interpreting

insurance contracts, see GRE Ins. Group, 61 F.3d at 81, suggests a

narrow reading of the exclusion provision. Traditional considerations,

such as parties' expectations, see Western Alliance, 686 N.E.2d at

1000-01, shed no further light on the issue because neither party would

have foreseen this type of lawsuit when they entered into the policy

agreement.

Faced with these conflicting principles of construction, and

in the absence of a definitive answer from Massachusetts courts, we

focus our inquiry on the text of the exclusion provision. The

products-completed operations hazard exclusion applies to "all 'bodily

injury' . . . arising out of '[Brazas's] product.'" Under

Massachusetts law, "arising out of" "indicates a wider range of

causation than the concept of proximate causation in tort law."

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Rischitelli v. Safety Ins. Co., 671 N.E.2d 1243, 1245 (Mass. 1996),

quoted in Merchants, 143 F.3d at 9; see also Mt. Airy, 127 F.3d at 20;

Bagley, 720 N.E.2d at 816. In other words, it falls somewhere between

proximate and "but for" causation -- an intermediate causation

standard. See Merchants, 143 F.3d at 9-10; Rischitelli, 671 N.E.2d at

1245; see also Bagley, 720 N.E.2d at 816 (observing that many cases

interpret the term as much more analogous to "but for" causation). It

is generally understood to mean "originating from," "growing out of,"

"flowing from," "incident to," or "having connection with." See

Merchants, 143 F.3d at 9; Mt. Airy, 127 F.3d at 20; New England Mut.

Life Ins. Co., 667 N.E.2d at 298 (citing Webster's Third New

International Dictionary 117 (1981)); see also Continental Cas. Co. v.

City of Richmond, 763 F.2d 1076, 1080 (9th Cir. 1985) (listing similar

variations of "arising out of" to illustrate that phrase is broader

than "caused by").

In interpreting the phrase "arising out of" in the context

of the case at hand, we are compelled by Massachusetts law to consider

the "source from which the plaintiff's personal injury originates

rather than the specific theories of liability alleged in the complaint

[of the underlying civil action]." Bagley, 720 N.E.2d at 817 (quoting

New England Mut. Life Ins. Co., 667 N.E.2d at 299). Thus, in this

case, firearms were the immediate source of the plaintiffs' injuries,

and the fact that the plaintiffs, to reach the deep pockets of the

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firearms industry, contrived a theory of liability that targeted Brazas

for its alleged participation in flooding the firearms market cannot

affect the application of the exclusion provision. See id. at 816-17;

United Nat'l Ins. Co. v. Parish, 717 N.E.2d 1016, 1018-19 (Mass. App.

Ct. 1999).

The appellant correctly asserts that under Massachusetts law

an act of negligence can create a separate legal injury that does not

arise out of the product. However, the primary cases upon which the

appellant relies for this proposition, Rischitelli v. Safety Insurance

Co., 671 N.E.2d 1243 (Mass. 1996), and Worcester Mutual Insurance Co.

v. Marnell, 496 N.E.2d 158 (Mass. 1986), are readily distinguishable.

In Rischitelli, the plaintiff was the victim of road rage --

after a car accident, he was physically attacked by the driver of the

other car. As an insured under a standard automobile insurance policy,

the plaintiff sought to recover benefits. The policy afforded coverage

for "'bodily injury . . . arising out of the ownership, maintenance or

use of an auto.'" Rischitelli, 671 N.E.2d at 1245. Although the issue

before the court related to policy coverage rather than to an exclusion

provision, the court's construction of the expression "arising out of"

is duly applicable to this case. The court recognized that the phrase

did not "refer to all circumstances in which the injury would not have

occurred 'but for' the involvement of a motor vehicle." Id. Instead,

it observed, cases fall along a continuum depending on the causal

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connection between the injury and the automobile. See id. at 1245.

For instance, under a standard auto policy there was no coverage when

a plaintiff tripped on a rope that fell off a truck or when a plaintiff

was shot by the insured while seated in his automobile, but the sexual

assault of a school bus passenger by the bus driver involved an injury

arising from the use of a motor vehicle. See id. (citing Perry v.

Chipouras, 66 N.E.2d 361 (Mass. 1946), Sabatinelli v. Travelers Ins.

Co., 341 N.E.2d 880 (Mass. 1976), and Roe v. Lawn, 634 N.E.2d 117

(Mass. 1994)). In these cases, the intervening act of violence broke

the chain of causation between the operation of the vehicles and the

injuries only where the violence was merely incidental to the use of

the vehicle. Consequently, the Rischitelli court concluded that the

battery was sufficiently independent of the motor vehicle accident that

the losses the plaintiff sustained arose from the intentional

wrongdoing of the other driver and not from the use of an automobile.

See id. at 1246.

A variation of this independent causation analysis aided the

court in Worcester Mutual Insurance Co. In that case, the underlying

complaint alleged that the insureds' negligent supervision of a party

held at their residence was the proximate cause of an automobile

accident that killed the plaintiff's intestate. See 496 N.E.2d at 159.

The insureds sought coverage for the wrongful death action under their

homeowners' insurance policy, but the policy had an exclusion for

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bodily injury arising out of the ownership or use of a motor vehicle.

See id. The court concluded, however, that negligent supervision "is

separate and distinct from the use or operation of an automobile." Id.

at 161. The court reasoned that the allegations in the complaint,

namely, that the insureds had failed to prevent their son from

drinking, related solely to activities that took place in the home and

that, therefore, the insureds could reasonably expect to be protected

by their homeowner's policy. See id.

The court's reasoning in Worcester would at first glance seem

to control the outcome in this case -- the New York civil actions

accuse Brazas of making bad business decisions, conduct which takes

place on Brazas's premises, and, therefore, Brazas could reasonably

expect protection under its comprehensive general liability policy.

However, unlike the circumstances in Worcester and Rischitelli, here

the two sources of injury are interdependent. Brazas's alleged

misconduct is the over-distribution of firearms and the proximate cause

of the plaintiffs' injuries are firearms, whereas in Worcester, the

parents' negligent supervision of their son derived from their illegal

and unsupervised provision of alcohol, not the automobile that was

ultimately the cause of the wrongful death. As the Worcester Court

explained, alternatively, a claim for negligent entrustment (of the

automobile), conduct which still occurred in the home, would

necessarily have been within the exclusion provision. See id. at 245-

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46. Similarly, in Rischitelli the battery and the car accident were

separate and distinct events; the car accident merely preceded, and set

the context for, the battery. In contrast, Brazas's conduct, along

with the New York plaintiffs' claims, indisputably derived from

firearms. In other words, the company, in distributing its firearms,

is allegedly negligent precisely because it created the risk of the

exact kind of injuries suffered by the New York plaintiffs. See United

Nat'l Ins. Co., 717 N.E.2d at 1018-19; New England Mut. Life Ins. Co.,

447 N.E.2d at 298-99; see also Continental Cas. Co., 763 F.2d at 1080-

81.

Because the New York law suits concern off-premises conduct

arising out of (not merely incidentally related to) firearms products,

Brazas is not entitled to defense or indemnity coverage as a result of

the products-completed operations hazard exclusion.

II. Unfair Trade Practice Claim

This Court can quickly dispose of Brazas's additional claim

that American Empire violated the Massachusetts consumer protection

statute, Mass. Gen. Laws ch. 93A, § 11, because it is nothing more than

a reconfiguration of its coverage claim. Moreover, Brazas fails to

direct the Court to any evidence that would create a genuine issue of

fact to support this claim.

The Massachusetts consumer protection statute provides a

right of action to anyone who suffered a loss of money or property as

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a result of an unfair or deceptive business practice. See Brown Daltas

& Assocs. v. General Accident Ins. Co. of America, 844 F. Supp. 58, 67

(D. Mass. 1994), rev'd on other grounds, 48 F.3d 30 (1st Cir. 1995).

It generally protects consumers from unfair business practices that are

"immoral, unethical, oppressive, or unscrupulous; or within the bounds

of some statutory, common-law or other established concept of

unfairness." Ellis v. Safety Ins. Co., 672 N.E.2d 979, 986 (Mass. App.

Ct. 1996).

In this vein, Brazas contends that American Empire violated

the Massachusetts law that established the rules of fairness as to an

insurer's claims handling procedures, Mass. Gen. Laws ch. 176D, §

3(9)(a), (n), and thereby violated chapter 93A. Specifically, the

appellant charges American Empire with (1) misrepresenting pertinent

policy provisions and (2) failing to provide a reasonable explanation

of the basis for denial of coverage. As an initial matter, a violation

of chapter 176D is not automatically actionable under chapter 93A, §

11, which provides a cause of action for business plaintiffs injured by

unfair trade practices. See Polaroid Corp. v. Travelers Indem. Co.,

610 N.E.2d 912, 197 (Mass. 1993); cf. Mass. Gen. Laws ch. 93A, § 9(1)

(establishing right of action for consumer plaintiffs for violations of

ch. 176D, § 3(9)). That said, conduct that violates ch. 176D may

independently be an unfair trade practice actionable under ch. 93A, §

11. See Kiewit Constr. Co. v. Westchester Fire Ins. Co., 878 F. Supp.

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298, 301-02 (D. Mass. 1995). But we need not get distracted by the

interrelationship of the two statutes because the appellant utterly

fails to develop this claim.

At its core, the appellant's misrepresentation argument is

that American Empire issued a policy called a "general liability"

policy, which, based on the broad scope of the products-completed

operations hazard exclusion, is in fact only a premises liability

policy. Brazas does not allege, or point to any evidence, indicating

that American Empire made any misrepresentations when it issued the

policy, but argues only that the policy itself, in its own terms,

misrepresents its coverage -- that is, a comprehensive liability policy

would cover the New York civil actions because they arise from the

general risks of doing business. Despite the appellant's claim to the

contrary, this convoluted argument does not in itself create an issue

of fact. We held above that the exclusion provision was not ambiguous

and that, consequently, a reasonable insured would have understood that

product-related injuries like those at issue in the New York civil

actions would be excluded from coverage. Thus, as a matter of law the

policies are not misleading.

The appellant's claim that American Empire violated chapter

176D because it did not provide a reasonable explanation for the denial

of coverage is likewise unavailing. Again, Brazas does not point to

any deficiency on the part of American Empire in its correspondence

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with Brazas. Instead, Brazas argues that the explanation was

inadequate because American Empire "chose to read the allegations in

the underlying New York actions in the manner most favorable to its

position." Appellant's Brief at 27. Not only has the appellant failed

to articulate a tenable theory under chapter 176D, § 3(9), without

offering any legal support, but, more important, we have concluded that

American Empire properly denied coverage and did not owe Brazas a duty

to defend. Where as here, the insurer properly denied coverage, there

can be no violation of chapter 176D. See Spurlin v. Merchants Ins. Co.

of New Hampshire, 866 F. Supp. 57, 62 (D. Mass. 1994).

As the appellant has failed to persuade the Court that

American Empire engaged in any conduct that rose to the level of

unfairness as a matter of law, summary judgment was appropriate. See

Brown Daltas & Assocs., 844 F. Supp. at 67-68.

CONCLUSION

Because we conclude that the allegations raised in the New

York action arise out of Brazas's products and fall directly within the

products-completed operations hazard exclusion in the general liability

policy, we hold that American Empire could reasonably have concluded

that the New York action was outside the scope of coverage and, thus,

that it owed Brazas no duty to defend. For similar reasons, this Court

holds that the appellant's consumer protection claim is baseless.

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Thus, we affirm the district court's grant of summary judgment in favor

of American Empire.

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