Hansen v. Sentry Insurance Company

United States Court of Appeals
For the First Circuit

No. 13-1940

MARK A. HANSEN,

Plaintiff, Appellant,

v.

SENTRY INSURANCE COMPANY,

Defendant, Appellee.

APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW HAMPSHIRE

[Hon. Joseph A. DiClerico, Jr., U.S. District Judge]

Before

Torruella, Circuit Judge,
Souter, Associate Justice,*
Thompson, Circuit Judge.

Todd A. Sullivan, with whom Hayes Soloway, P.C. was on brief,
for appellant.
Michael F. Aylward, with whom Morrison Mahoney LLP was on
brief, for appellee.

June 25, 2014

*
The Hon. David H. Souter, Associate Justice (Ret.) of the
Supreme Court of the United States, sitting by designation.
 THOMPSON, Circuit Judge. Some years ago, Appellant Mark

Hansen served as a vice president of Wilcox Industries Corp.

("Wilcox") before striking out on his own and founding his own

company, Advanced Life Support Technologies, Inc. ("ALST").

Although his departure may have been amicable at first, it did not

remain so for long. Wilcox sued Hansen in the New Hampshire

district court for, allegedly, poaching its customers and spreading

false, damaging information about its products.

Hansen, who had not purchased liability insurance to

cover his new business, found himself face-to-face with the

prospect of funding his legal defense and satisfying any judgment

against him out-of-pocket. Necessity being the mother of

invention, Hansen hit upon an ingenious solution to his conundrum--

or so he thought. He demanded that Wilcox's insurer, appellee

Sentry Insurance Company ("Sentry"), defend and indemnify him

against his former employer's claims. Sentry declined, and this

coverage action followed.

Although Hansen crafts some creative arguments, a da

Vinci he is not. We conclude Sentry does not owe any duty to

defend or indemnify Hansen against Wilcox's claims. Accordingly,

we affirm the district court's grant of Sentry's motion for summary

judgment.

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 I. BACKGROUND

Because the contours of our analysis are governed in

large part by the allegations in Wilcox's November 28, 2011,

complaint against Hansen (the "Underlying Complaint"), we set forth

those allegations, supplemented as necessary with uncontested

evidence adduced during discovery in the underlying litigation.

Wilcox is a New Hampshire corporation that designs,

manufactures, and sells "tactical equipment" to the United States

military and other federal and local government agencies. One of

the products it has manufactured over the past decade-plus is a

self-contained breathing apparatus (think of SCUBA gear used on

land) originally referred to as SCOUT but known today as PATRIOT.

According to the Underlying Complaint, PATRIOT utilizes highly-

specialized technology and offers features not available in

competing products.

Hansen entered the picture in 2003, when Wilcox hired him

as a consultant. He began working full-time directly for Wilcox in

March of 2005, and served as one of Wilcox's vice presidents until

leaving Wilcox's employ on June 15, 2007. As a vice president,

Hansen had access to confidential information regarding Wilcox's

development of the next-generation PATRIOT, along with knowledge of

Wilcox's current and potential customers, and its marketing

strategies. He also signed a Nondisclosure and Nonsolicitation

Agreement in which he agreed that he would not disclose Wilcox's

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"confidential information," including "all tangible and intangible

trade secrets, proprietary information, inventions, discoveries,

processes, methods, formulas," and the like.

Although their employer-employee relationship ceased in

June 2007, Hansen's involvement with Wilcox continued, as Wilcox

hired him and ALST as consultants. In this role, Hansen was

expected to market PATRIOT to potential new customers and provide

post-sale support and training to PATRIOT customers. Wilcox also

paid him to attend internal meetings regarding the next-generation

PATRIOT. His consulting role again provided Hansen with access to

Wilcox's confidential and proprietary information, up to the time

he and Wilcox parted ways in February 2009. As the Underlying

Complaint puts it, during this time Hansen "referred to himself to

Wilcox's customers as President of ALST, and marketed his own

products and company to these customers."

The gravamen of the Underlying Complaint is Wilcox's

claim of unfair competition against Hansen. According to the

Underlying Complaint, Hansen used his knowledge of Wilcox's trade

secrets and proprietary information to develop his own competing

self-contained breathing device, "SHIELD", which he based on

Wilcox's technology and unique product features. Hansen then began

selling SHIELD through ALST. More than that, Wilcox claims, Hansen

used his knowledge of Wilcox's customer base to go out and,

essentially, steal Wilcox's customers. The Underlying Complaint

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specifically alleges that Hansen signed a contract with the Los

Angeles County Sheriff's Department for the manufacture and sale of

SHIELD, despite his knowledge that Wilcox had been in the middle of

marketing PATRIOT to that very department. Wilcox goes on to

assert that this is not the only example of Hansen's unfair

competition.

The Underlying Complaint sets forth a panoply of counts

against Hansen and ALST: breach of contract; breach of the implied

covenant of good faith and fair dealing; common law and statutory

unfair competition; misappropriation of trade secrets; breach of

fiduciary duty; unjust enrichment; and intentional interference

with contractual relations. Count VIII is especially significant

to the insurance coverage issues we address here, as it states that

"Hansen is . . . making harmful false statements about Wilcox and

its technology while marketing his own products to Wilcox

customers."1

Wilcox filed the Underlying Complaint on or about

November 28, 2011. Hansen tendered his defense to Wilcox's

insurer, Sentry, which insured Wilcox under a Commercial General

Liability Policy effective from November 2, 2006, to November 2,

2007 (the "Policy"). Sentry denied coverage on March 13, 2012.

Sentry said it did not have to defend or indemnify Hansen because

1
As we will explain, Count VIII is important because it is
the only one setting forth allegations potentially covered by
insurance.

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(among other reasons) the Policy only covered Hansen during the

time he was a Wilcox officer or employee, while the Underlying

Complaint sought to recover damages Wilcox suffered after June 15,

2007, Hansen's last day as a Wilcox employee. Hansen did not

immediately pursue his coverage claims request against Sentry.

Discovery proceeded in the usual course, and Wilcox's

CEO, James Teetzel, was deposed on June 5, 2012. Hansen's counsel

asked Teetzel about the dates on which Hansen made false and

disparaging statements about Wilcox, and Teetzel initially

responded with uncertainty. But after some follow-up questions,

Teetzel testified Hansen "absolutely" made derogatory statements

about Wilcox and its products during the time Hansen served as vice

president. Teetzel also testified that Wilcox filed suit against

Hansen in part because of these statements, but primarily because

of Hansen's "disregard to trade secrets that Wilcox owns."

During the course of his deposition, Teetzel detailed

Hansen's personal business activities. Teetzel testified that

Hansen formed ALST during the time he worked for Wilcox, and that

through ALST Hansen "[sold] other products that are completely

unrelated to the PATRIOT line." These unrelated products included

things like "jump bottles for skydiving and oxygen consoles for

holding oxygen for -- it's like a large reservoir of oxygen for

skydivers to jam before they jump out of an aircraft." According

to Teetzel, ALST's logo is "a guy jumping out of a plane," and on

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at least one occasion while "on [Wilcox's] payroll or as a

consultant he showed up with that logo that he has on his shirt."

Armed with Teetzel's deposition testimony, Hansen renewed

his coverage demand on August 14, 2012. Hansen said that this

testimony now made him eligible for insurance coverage, as it

showed Wilcox was actually claiming that he made derogatory

statements about Wilcox during the course of his employment there.

Sentry disagreed and again denied coverage. Key to its denial this

time was its position that Hansen still failed to qualify for

coverage because, in making such disparaging statements, Hansen was

not "carrying out his duties as an executive officer of Wilcox or

otherwise acting" on Wilcox's behalf or to further its interests.

Sentry's continued denial precipitated this suit.

Grounding federal jurisdiction on diversity pursuant to 28 U.S.C.

§ 1332, Hansen seeks a declaration (under state and federal law)

that Sentry owes a duty to defend and indemnify him with respect to

the Underlying Complaint. He also asserts that Sentry's denial of

coverage constitutes a breach of contract.

After dismissing the state law declaratory judgment claim

as untimely, the district court concluded that Hansen does not

qualify as an "insured" given the nature of the allegations against

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him, and granted Sentry's motion for summary judgment. This appeal

followed.2

II. DISCUSSION

A. Standard of Review

The parties, quite rightly, do not dispute that the

substantive law of New Hampshire applies to the coverage issues in

this diversity case. See EnergyNorth Natural Gas, Inc. v. Century

Indem. Co., 452 F.3d 44, 48 (1st Cir. 2006) (applying New Hampshire

law). Neither party argues that this matter involves a federal

question.

In New Hampshire "[t]he interpretation of insurance

policy language is a question of law," Town of Londonderry v. N.H.

Mun. Ass'n Property Liability Ins. Trust, Inc., 667 A.2d 1024, 1025

(N.H. 1995), and engenders de novo review on appeal, Ross v. Home

Ins. Co., 773 A.2d 654, 656 (N.H. 2001) (internal quotation mark

omitted) ("The interpretation of insurance policy language is

ultimately a question of law for this court to decide."). To the

extent the district court made factual findings, we defer to them

"unless they are 'lacking in evidential support or tainted by error

of law.'" Raudonis v. Ins. Co. of North America, 623 A.2d 746, 747

(N.H. 1993) (quoting Gelinas v. Metropolitan Prop. & Liability Ins.

Co., 551 A.2d 962, 966 (N.H. 1988)).

2
The parties tell us that the underlying litigation has since
been settled. This does not affect our coverage analysis.

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B. Timeliness of the Action

The parties expend significant energy arguing over

whether the district court erred when it dismissed Hansen's state-

based declaratory judgment count as time-barred. Under New

Hampshire law, a declaratory judgment action to determine insurance

coverage must be "filed within 6 months after the filing of the

writ, complaint, or other pleading initiating the action which

gives rise to the question." See N.H.Rev.Stat. Ann. § 491:22(III).

Hansen admits that he failed to file his coverage action

within six months of the Underlying Complaint. However, and

necessarily conceding the correctness of Sentry's initial denial of

coverage, he claims to fall within an exception to the six-month

limit because "the facts giving rise" to the coverage dispute were

"not known to, or reasonably discoverable by" him until Teetzel

testified that Hansen made disparaging statements about Wilcox

while a vice president. See id. (providing that the six-month

limitations period "shall not apply where the facts giving rise to

such coverage dispute are not known to, or reasonably discoverable

. . . until after expiration of such 6-month period"). Hansen then

argues that this action is timely because he filed suit within a

"reasonable time" after Teetzel's deposition. See Binda v. Royal

Ins. Co., 744 A.2d 634, 636 (N.H. 2000) (imposing requirement that

action be filed "within a reasonable time frame" after discovery of

facts giving rise to coverage dispute). Sentry argues that even if

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the coverage dispute did not become apparent until Teetzel's

deposition, Hansen was not reasonable in waiting almost six full

months after the deposition to file suit.3

We decline to decide this issue, as Hansen's coverage

claim fails on its merits in any case. Accordingly, we will simply

assume that Hansen's complaint was timely under New Hampshire law

and proceed from there.

C. Coverage Analysis

i. Policy Language

To set the stage for the rest of our discussion, we begin

with a run-down of the Policy language relevant to this appeal.

The Policy is an occurrence policy effective November 2,

2006, through November 2, 2007. See Policy Declarations. The sole

"Named Insured" is Wilcox. Id. The Policy defines the term "you"

to mean the Named Insured only. Id., Commercial General Liability

Coverage Form. "Insured" is broader though, and includes the Named

3
The parties appear to agree that even if we find the state
law claim untimely, Hansen's claim based on the federal declaratory
judgment act survives because the federal statute does not have an
analagous six-month limitations period. See 28 U.S.C. § 2201.
This is rather flummoxing: we are sitting in diversity to
adjudicate state law claims, and there is no indication that this
case involves any federal question that would support an
independent federal cause of action appropriate for declaratory
relief. "Federal jurisdiction does not lie simply because relief
is requested under the federal Declaratory Judgment Act." Colonial
Penn Group, Inc. v. Colonial Deposit Co., 834 F.2d 229, 232 (1st
Cir. 1987). Although it may be tempting to delve into whether
Hansen's federal claim could survive in the absence of his state
declaratory judgment claim, because Hansen's claims fail on their
merits we need not do so.

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Insured along with its "'executive officers' and directors . . . ,

but only with respect to their duties as your [i.e., Wilcox's]

officers or directors." Id., Section II(1)(d). Thus, pursuant to

the Policy's plain and unambiguous language, Hansen is insured by

the Policy only with respect to his duties as a Wilcox vice

president, and only up through the date of his termination (i.e.,

June 15, 2007).

We must also determine whether any of the Policy's

specific coverages may apply to the allegations in the Underlying

Complaint. Hansen contends Sentry owes a duty to defend him

pursuant to Coverage B, Personal and Advertising Liability. We

have reviewed the Underlying Complaint and the Policy, and we

concur that this is the only potentially applicable coverage.

Coverage B provides, in pertinent part:

a. We will pay those sums that the insured
becomes legally obligated to pay as damages
because of ‘personal and advertising injury’
to which this insurance applies. We will have
the right and duty to defend the insured
against any ‘suit’ seeking those damages.
However, we will have no duty to defend the
insured against any ‘suit’ seeking damages for
‘personal and advertising injury’ to which
this insurance does not apply . . . .

b. This insurance applies to ‘personal and
advertising injury’ caused by an offense
arising out of your business but only if the
offense was committed in the ‘coverage
territory’ during the policy period.

Policy, Coverage B(1) (emphases added).

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 Notably, the Policy first refers to liabilities of the

"insured," which (as we established above) includes Wilcox's

"executive officers" in certain circumstances. However, the Policy

goes on to immediately limit Coverage B to personal and advertising

injury "arising out of your business." Recalling that the Policy's

reference to "you" means Wilcox only, this qualifying language

unambiguously establishes that Coverage B is only available when a

Wilcox officer, in the course of his duties for Wilcox, becomes

liable for "personal and advertising injury" arising out of

Wilcox's business.

But what exactly is "personal and advertising injury"?

The Policy defines it as

injury, including consequential 'bodily
injury', arising out of one or more of the
following offenses: . . .

d. Oral or written publication of material
that slanders or libels a person or
organization or disparages a person’s
or organization’s goods, products or
services . . . .

Policy, Section V(14).4

Having gone through the provisions important to our

analysis, we can move on to address Hansen's specific coverage

arguments.

4
The Policy defines six other "offenses," none of which have
any applicability here.

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 ii. Framing the Issues

Hansen alleges that the Underlying Complaint, when

coupled with Teetzel's deposition testimony, triggers Sentry's duty

to defend him. In his view, he qualifies for coverage because (1)

Wilcox alleges that it was damaged, at least in part, by Hansen's

actions while he was a vice president, thereby rendering the Policy

applicable, and (2) the alleged acts were undertaken with respect

to his duties as a vice president, meaning that he falls within the

definition of an "insured." In insisting that the alleged

statements were made during the Policy period, Hansen relies on

Teetzel's deposition testimony in which Teetzel stated as much.

With respect to his second point, Hansen argues it is

theoretically possible that he could have made statements that

harmed Wilcox while he was fulfilling his duties as a vice

president. By way of example, he posits that Wilcox's Underlying

Complaint "could have been alleging that Hansen, during a visit to

one of [Wilcox's] customers, was servicing the [PATRIOT] and

marketing his [own products that did not compete with Wilcox

products] while making one of the alleged harmful false

statements." Under this scenario, Hansen believes that any harmful

statements he may have made would have been "in connection with"

his duties as vice president. He also suggests that any

misrepresentation can only have been negligent, as he does not

believe he ever made any harmful, false statements about Wilcox.

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 For its part, Sentry first contends that the Underlying

Complaint alleges that Hansen only made disparaging statements

after he left Wilcox's employment. It then argues that Teetzel's

deposition testimony is "equivocal" and, therefore, does not

establish that Hansen made disparaging statements during his

service as vice president. In the absence of alleged damages

occurring during the Policy period, Sentry asserts, the Policy does

not apply to any of the alleged acts, and there is no duty to

defend or indemnify.

Should this not carry the day, Sentry goes on to argue

that even if we conclude that Hansen is alleged to have made

derogatory remarks while working for Wilcox, the crux of the

Underlying Complaint is Wilcox's claim that Hansen intentionally

breached his fiduciary duties as a corporate officer. According to

Sentry, Hansen's willful misconduct eliminates all possibility that

he was acting "with respect to" his duties as a Wilcox vice

president when he disparaged Wilcox and its products. And, because

the Policy covers corporate officers only "with respect to" their

duties as officers of Wilcox, Sentry would have us find that

Wilcox's allegations of intentional misconduct relieve it of its

duties to defend and indemnify Hansen in the underlying litigation.

We discuss these arguments in turn.

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 iii. Did any alleged damages occur during the Policy period?

We must first address Sentry's argument that Wilcox

failed to allege Hansen made disparaging statements about it or its

products during the time of his employment. Given that Hansen only

potentially qualifies for coverage while he worked for Wilcox, this

issue is potentially dispositive.

Our review of the record indicates that the evidence in

this regard is not one-sided. Although the Underlying Complaint

does not provide a definitive timeframe in which such statements

were allegedly made,5 Teetzel was much less uncertain at his

deposition. Although Teetzel initially balked at assigning a

timeframe to Hansen's alleged statements, he eventually testified

that Hansen "absolutely" made disparaging statements about Wilcox

while serving as its vice president.6

5
Indeed, because Hansen maintains that the coverage dispute
was not evident until after Teetzel's deposition, he necessarily
concedes that the Underlying Complaint does not, standing alone,
allege that Wilcox was damaged during the Policy period.
6
We note that Sentry submitted an affidavit from Teetzel,
along with another Wilcox officer, Timothy West, in connection with
its motion for summary judgment. Teetzel's affidavit states that
although he testified from his "general knowledge" at his
deposition, he "did not have personal knowledge of [Hansen's]
statements." He further states that his understanding is that
Hansen "was making these remarks while acting as a consultant for
Wilcox, but not during his time as Vice President for Wilcox."
Similarly, West avers that he too is not aware of any instance in
which Hansen made such statements about Wilcox during his
employment.
Even if we were to assume these post-deposition affidavits had
any value whatsoever at the summary judgment stage, still they
would not erase Teetzel's deposition testimony that Hansen

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 Because Hansen is opposing Sentry's summary judgment

motion, it is axiomatic that, as the nonmoving party, we view all

issues of fact in the light most favorable to his claims. See

Fed. R. Civ. P. 56. Though Sentry now asserts that Teetzel did not

actually testify that Hansen harmed Wilcox while he was a vice

president, a jury could conclude that he had. Thus, viewing

Teetzel's testimony in the light most favorable to Hansen, we

conclude for summary judgment purposes that Wilcox claims Hansen

made some false and derogatory remarks about Wilcox while he was

still its vice president. This means that the underlying

litigation seeks recovery for damages which, at least in part,

occurred during the Policy period.

Having reached this conclusion, the question to be

resolved becomes whether Sentry owes a duty to defend and indemnify

Hansen from and against claims by Wilcox that Hansen made false,

derogatory statements about Wilcox and its products while serving

as a Wilcox vice president. Put in different terms, we ask whether

the Policy applies to such allegations and, if it does, whether

Hansen falls within the definition of an "insured" given Wilcox's

allegations against him.

"absolutely" made such statements while a Wilcox vice president.
Accordingly, they do nothing to dispel the question of fact as to
when Hansen may have made disparaging statements.

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 iv. General Principles of Insurance Policy Interpretation

For the next stage of our journey, we will return to the

Policy provisions we set forth earlier, but first we discuss the

basic principles of insurance policy interpretation in New

Hampshire. "'The fundamental goal of interpreting an insurance

policy . . . is to carry out the intent of the contracting

parties.'" Great American Dining, Inc. v. Philadelphia Indem. Ins.

Co., 62 A.3d 843, 846 (N.H. 2013) (omission in original) (quoting

Bates v. Phenix Mut. Fire Ins. Co., 943 A.2d 750, 752-53 (N.H.

2008)). An insurer seeking to avoid coverage "bears 'the burden of

proof concerning the coverage.'" EnergyNorth, 452 F.3d at 48

(quoting N.H.Rev.Stat. Ann. § 491:22-a); see also U.S. Fidelity &

Guar. Co. v. Johnson Shoes, Inc., 461 A.2d 85, 87 (N.H. 1983) ("The

burden of establishing noncoverage is upon the insurer.").

In reviewing an insurance policy, we "look to the plain

and ordinary meaning of the policy's words in context." Great

American Dining, 62 A.3d at 846. We apply "an objective standard,"

id., to "'construe the language of an insurance policy as would a

reasonable person in the position of the [putative] insured based

on a more than casual reading of the policy as a whole,'" Raudonis,

623 A.2d at 747 (quoting Niedzielski v. St. Paul Fire & Marine Ins.

Co., 589 A.2d 130, 133 (N.H. 1991)). If we find that a policy's

language supports more than one reasonable interpretation, at least

one of which would provide coverage, "the policy contains an

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ambiguity and will be construed against the insurer." Great

American Dining, 62 A.3d at 846 (internal quotation mark omitted);

see also Broom v. Cont'l Cas. Co., 887 A.2d 1128, 1133 (N.H. 2005)

(If there is any "doubt as to whether the complaint against the

insured alleges a liability of the insurer under the policy, the

doubt must be resolved in the insured's favor.").

This case requires us to determine, above all, whether

Sentry owes Hansen a duty to defend. In New Hampshire, an

insurer's "'obligation to defend its insured is determined by

whether the cause of action against the insured alleges sufficient

facts in the pleadings to bring it within the express terms of the

policy, even though the suit may eventually be found to be without

merit.'" White Mtn. Cable Const. Co. v. Transamerica Ins. Co., 631

A.2d 907, 909 (N.H. 1993) (quoting Johnson Shoes, 461 A.2d at 87).

We are not shackled to the allegations precisely as they are

alleged in the complaint: we may "inquire into the underlying

facts," Ross, 773 A.2d at 657, and we may examine each individual

count to determine its "purpose," see White Mtn. Cable, 631 A.2d

at 910. An "'insurer's obligation is not merely to defend in cases

of perfect declarations, but also in cases where by any reasonable

intendment of the pleadings liability of the insured can be

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inferred.'" Ross, 773 A.2d at 658 (quoting Green Mtn. Ins. Co. v.

Foreman, 641 A.2d 230, 232 (N.H. 1994)).7

As we previously noted, the Policy provides coverage if

the Underlying Complaint seeks damages arising out of "personal and

advertising injury." To fall within the terms of the Policy, an

allegation that an executive officer is liable for "personal and

advertising injury" must allege injury that (1) arose out of

Wilcox's business, and (2) was caused by the officer in the course

of his duties as a Wilcox officer. Wilcox's allegations fall short

on both scores.

v. Do the alleged damages "arise out of" Wilcox's business?

We consider first whether the Underlying Complaint

alleges damages arising out of Wilcox's business. Wilcox alleges

Hansen intentionally made false statements about Wilcox and its

products as part of his attempts to steal Wilcox's customers and

bring them over to his company, ALST. The Underlying Complaint

explicitly claims that Hansen made such statements in furtherance

7
Hansen also claims that Sentry owes him a duty to indemnify.
This involves a separate inquiry, as an insurer's "'duty to defend
is distinct from, and broader than, the duty to indemnify.'" Great
American Dining, 62 A.3d at 854 (quoting 14 L. Russ & T. Segalla,
Couch on Insurance 3d § 200:1 at 200-6 (2007)). It is "'the facts
actually established in the underlying suit [that] control the duty
to indemnify.'" Id. (quoting Julio & Sons Co. v. Travelers Cas.
and Sur. Co., 591 F.Supp.2d 651, 657 (S.D.N.Y. 2008)). Logically
then, our inquiry focuses first on whether Sentry has a duty to
defend. If we find Sentry has no duty to defend, it follows that--
being narrower than the duty to defend--it has no duty to indemnify
either.

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of his own business interests, not Wilcox's. Teetzel's deposition

testimony is consistent with the Underlying Complaint's allegations

and does nothing to alter the thrust of Wilcox's claims against

him. In fact, Hansen does not dispute Teetzel's testimony that

Hansen engaged in activities on behalf of ALST during his

employment with Wilcox, and that he went so far as to wear clothing

emblazoned with ALST's logo while ostensibly engaged in consulting

work for Wilcox. Accordingly, we apply the plain and ordinary

meaning of the Policy's terms, and conclude that the underlying

litigation seeks recovery of damages arising out of Hansen's and

ALST's business, not Wilcox's.

This conclusion is fatal. Damages arising out of

anything other than Wilcox's business are simply not covered by the

Policy. No reasonable person in Hansen's position could believe

from a more than casual reading of its provisions that the Policy

provided coverage for damages arising out of Hansen's or ALST's

business. See Great American Dining, 62 A.3d at 846. Therefore,

Wilcox's allegations as set forth in the Underlying Complaint and

testified to by Teetzel do not trigger Sentry's duty to defend.

vi. Does the Underlying Complaint allege that Wilcox's damages
were caused by Hansen acting in the course of his duties as a
Wilcox officer?

Even if we concluded (which we don't) that Wilcox's

damages "arose out of" its business rather than Hansen's, this

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would not avail Hansen. Before explaining why this is so, a short

primer on New Hampshire's corporate fiduciary law is in order.

It has long been recognized in New Hampshire that a

corporate officer owes fiduciary duties to the corporation he or

she serves. Rosenblum v. Judson Engineering Corp., 109 A.2d 558,

562 (N.H. 1954); N.H.Rev.Stat.Ann. § 293-A:8.42(a) (requiring

corporate officers to act "in good faith," "with the care that a

person in a like position would reasonably exercise under similar

circumstances," and "in a manner the officer reasonably believes to

be in the best interests of the corporation"). Corporate officers

may pursue independent business opportunities, "but when they do

so, they are subject so far as the corporate interest is concerned

to the rules which apply generally to persons standing in a

fiduciary relation." Rosenblum, 109 A.2d at 562. To that end, a

corporate officer has an overarching "duty of 'reasonably

protecting and conserving the interests of the corporation,'" id.

(quoting Beaudette v. Graham, 165 N.E. 671, 673 (Mass. 1929)), and

a showing of bad faith is not necessary to show a breach of

fiduciary duty, id. at 563. Thus, under New Hampshire law, a

corporate officer violates his fiduciary duty when he acts in a way

that is contrary to, or harmful of, the corporate interest,

regardless of whether or not he has acted in bad faith.

With this legal backdrop in place we turn our attention

to Wilcox's specific allegations against Hansen in the Underlying

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Complaint, keeping in mind that the Policy only covers Wilcox's

corporate officers as "insureds" when they act in connection with

their duties as corporate officers. We inquire, therefore, whether

Wilcox claims that it was injured by any of Hansen's acts made in

connection with his position as vice president.

Looking to the Underlying Complaint, we observe first

that Count VIII (the one alleging Hansen made disparaging remarks

about Wilcox) is styled as a claim for intentional interference

with contractual relations. While we do not give this label

dispositive effect, we do consider it probative of the count's

"purpose," see White Mtn. Cable, 631 A.2d at 910, which is to

recover damages for harm Hansen intentionally caused Wilcox.

Moving on to the substance of Count VIII's allegations,

we find that Wilcox claims Hansen competed directly and unfairly

with it, and that he utilized proprietary information he obtained

while a Wilcox vice president to poach its existing and potential

customers. The Count explicitly alleges that Hansen is "offering

service contracts to existing Wilcox customers," and that he "is

also making harmful false statements about Wilcox and its

technology while marketing his own products to Wilcox customers."

The other counts set forth allegations that Hansen breached his

written nondisclosure agreement, utilized Wilcox's proprietary

information and intellectual property to develop his own products,

misappropriated trade secrets, and entered into direct and unfair

-22-
competition against Wilcox. Wilcox further alleges that Hansen's

use of Wilcox's proprietary information and intellectual property

is "willful and knowing," and that his misappropriation of trade

secrets is "willful and malicious."

The evidence adduced in discovery (at least that which

was brought to our attention) confirms this is the nature of

Wilcox's claims against Hansen.8 Indeed, Teetzel's deposition

testimony is fully consistent with the Underlying Complaint's

allegations that Hansen held himself out to Wilcox's customers as

president of ALST as part of his efforts to secure business

opportunities for his own company. Nothing to the contrary appears

in the record.

Thus, in both form and substance, Wilcox alleges that it

has been harmed by Hansen's intentional acts--misappropriation of

trade secrets, unfair competition, and disparaging and false

remarks--committed while he was a Wilcox vice president and with

the goal of gaining business for ALST. These alleged acts are

directly contrary to Wilcox's interests and, if proven, would

constitute obvious breaches of his fiduciary duty under New

Hampshire law. An intentional breach of fiduciary duty clearly

8
Thus, while Hansen spends time in his brief speculating that
he may have negligently made statements harmful to Wilcox as part
of his duties as vice president, this is not what the Underlying
Complaint alleges, nor does anything that emerged in discovery
indicate that Wilcox is attempting to hold Hansen liable for
anything other than intentional acts.

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falls outside the scope of Hansen's duties as a Wilcox vice

president.

As we have explained, and pursuant to the Policy's

unambiguous terms, Hansen only qualifies as an insured "with

respect to" his duties as a vice president. See Policy, Section

II(1)(d). No reasonable person in Hansen's position, upon a more

than causal reading of the Policy, could expect that damages to

Wilcox caused by its own vice president through intentional acts

antithetical to Wilcox's interests would be covered. We find,

therefore, that Hansen is not an insured with respect to any of the

acts alleged in the Underlying Complaint or reflected in the

discovery record.

vii. Recap

Summing up, we find that Sentry has demonstrated that,

even if Wilcox's allegations against Hansen are proven true, all of

its claims fall outside the Policy's coverage. Thus, Sentry has no

duty to defend Hansen in the underlying litigation. And because

the duty to defend is broader than the duty to indemnify, it

follows that Sentry owes no duty to indemnify either. Further, in

light of our conclusion that Sentry does not owe Hansen a duty of

defense and/or indemnification, there is no evidence in the record

that would permit a reasonable jury to find that Sentry breached

any contract with Hansen. Accordingly, Sentry is entitled to

summary judgment on that claim as well.

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 III. CONCLUSION

Hansen's coverage theory, however creative, is ultimately

without merit. The Policy simply does not provide coverage to

Hansen when Wilcox--the company he served as a vice president--

claims that it suffered damages as a result of Hansen's harmful and

intentional acts. These allegations, if proven, would constitute

a breach of Hansen's fiduciary duties to Wilcox and are beyond the

scope of Hansen's duties as an executive officer. Therefore, they

fall outside the Policy's coverage.

Accordingly, we affirm the district court's judgment in

its entirety.

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