United States Court of Appeals
For the First Circuit
No. 11-1316
VALLEY FORGE INSURANCE CO.; AMERICAN CASUALTY OF READING, PA,
Plaintiffs, Appellees,
v.
CAROL FIELD; THE CARSON CENTER FOR HUMAN SERVICES, INC.,
Defendants,
DAVID MURPHY, as Guardian of the Child's Estate,
Defendant, Appellant.
No. 11-1337
VALLEY FORGE INSURANCE CO.; AMERICAN CASUALTY OF READING, PA,
Plaintiffs, Appellees,
v.
DAVID MURPHY, as Guardian of the Child's Estate,
Defendant,
CAROL FIELD; THE CARSON CENTER FOR HUMAN SERVICES, INC.,
Defendants, Appellants.
APPEALS FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Michael A. Ponsor, U.S. District Judge]
Before
Lynch, Chief Judge,
Howard and Thompson, Circuit Judges.
Robert J. Gilbert, with whom Rickey G. Glover and Gilbert &
Renton LLC were on brief, for appellant David Murphy.
James P. Hoban, Thomas J. Conte, Lynette Paczkowski, and
Bowditch & Dewey, LLP, on brief for appellants The Carson Center
for Human Services, Inc., and Carol Field.
Michael P. Tone, with whom Kimberly E. Rients Blair, Wilson,
Elser, Moskowitz, Edelman & Dicker, Amy E. Goganian, and Goganian
& Associates, LLC, were on brief for appellees.
February 22, 2012
LYNCH, Chief Judge. An eleven-year-old child (the child)
suffered from long-term horrific abuse and on September 11, 2005,
was beaten nearly to death by her adoptive mother and stepfather.
The child's legal guardian, David Murphy, brought suit in the
Superior Court of the Commonwealth of Massachusetts against several
defendants including the Carson Center for Human Services, Inc.
(Carson Center), and one of its employees, licensed social worker
Carol Field, whose patient the child was during this period. The
complaint alleged that they failed to detect or report to state
authorities signs of ongoing physical abuse of the child. That
state court suit led to this insurance coverage litigation in
federal court.
The federal plaintiffs are Valley Forge Insurance Company
and American Casualty of Reading, PA, the insurers of the Carson
Center and, as such, of Field as an employee of the Carson Center.
The insurers sought a declaratory judgment that the allegations
against the insureds in the underlying suit fall within exclusions
to coverage. The district court granted the request for
declaratory judgment. Valley Forge Ins. Co. v. Carson Ctr. for
Human Servs., No. 09-cv-30038, 2011 WL 864802 (D. Mass. Mar. 10,
2011). The insureds and Murphy appealed.
The issue is one of policy language interpretation. It
is whether the policy language of an Abuse or Molestation Exclusion
in a Professional Liability Coverage part and an Abuse or
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Molestation Exclusion in a Commercial Umbrella Coverage part
precludes coverage. The language of these Exclusions precludes
coverage for abuse that occurs to anyone in the insureds' "care,
custody or control." The question is whether the Exclusions apply
where, as here, at the time of the abuse the victim was not in the
physical custody of the insureds and had been receiving bi-weekly
outpatient therapeutic services from them for fourteen months
covered by the policies in question. We conclude, as did the
district court, that the word "care" in the Exclusions is
unambiguous. We reject the defendants' arguments, including that
the term is limited to situations in which there is also "custody"
and "control." As a matter of undisputed fact, the child was in
the care of the insureds as a long-term patient, and the plain
terms of the Exclusions exclude liability on the part of the
insurers. We affirm.
I.
Murphy filed the underlying suit in Superior Court on
October 18, 2007. The complaint alleged that the Carson Center,
Field, and other providers had a doctor-patient relationship with
the child and that in each case the providers knew or should have
known that the physical injuries sustained by the child while she
was in their care were the result of systematic abuse by her
parents. Those injuries included head injuries from a baseball
bat, severe burns on her legs from standing in scalding hot water,
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toenails that had been pulled off, beatings, chipped teeth, and
numerous cuts, scrapes, and bruises that required sutures or had
become infected.
Murphy's complaint further alleged that the negligent
failure to suspect or report such abuse on the part of the Carson
Center, Field, and the other providers culminated in the near-fatal
brain injury the child sustained as a result of abuse by her
parents on September 11, 2005, and that breach of their duties of
reasonable care were substantial contributing factors to the
child's serious injuries. The child's physical injuries, including
paraplegia, are permanently disabling, and she has been left with
significant and permanent mental deficits, for all of which she
will require lifetime care.
Field was a social worker and therapist at the Carson
Center in Westfield, Massachusetts, when she met the child on
October 30, 2002. The Carson Center is a non-profit facility that
provides psychiatric, mental health, rehabilitation, and family
stabilization services to the community. Field provided
therapeutic services to the child over the course of the next
thirty-five months. In the state suit, Field recalled
approximately fifty-one in-person counseling sessions with the
child; approximately twenty different meetings or telephone
conferences with the child's adoptive mother; at least four
meetings with the child's other health care providers; involvement
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in four of the child's hospitalizations; eleven telephone
conferences with the child's medical providers; at least four
telephone conversations with the child's school counselors; and
four conferences with the Massachusetts Department of Social
Services. Field's treatment of the child continued until the child
suffered her catastrophic injuries on September 11, 2005.
This action for declaratory judgment is concerned only
with Murphy's claims in the underlying Superior Court suit for the
years 2002 and 2003. All told, during the period of October 30,
2002, through December 19, 2003, Field saw the child about twenty-
five times, which averages to a visit nearly every other week.
The plaintiffs insured the Carson Center from December
19, 1998, through December 19, 2003. At issue is the policy
provided by Valley Forge for the period December 19, 2001, through
December 19, 2002, and the policy provided by American Casualty for
the period December 19, 2002, through December 19, 2003. Each of
these policies had five different coverage sections, for which a
single premium was paid and which contained a single policy number.
The coverage parts at issue are the Professional Liability and
Commercial Umbrella coverage parts. These coverage parts each
contained an Abuse or Molestation Exclusion. The parties do not
dispute that, absent these Exclusions, the policies would provide
coverage to the Carson Center and Field for the underlying suit.
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Murphy has been named as a defendant in the federal suit
along with the insureds and, not surprisingly, has argued that the
exclusions do not apply. His arguments overlap with those of the
insureds.
II.
We review the district court's grant of summary judgment
de novo, assessing the facts and the inferences to be drawn from
them in the light most favorable to the non-moving party. Sparks
v. Fid. Nat'l Title Ins. Co., 294 F.3d 259, 265 (1st Cir. 2002).
The interpretation of an insurance policy is a question of law for
the court. Bos. Gas Co. v. Century Indem. Co., 910 N.E.2d 290, 304
(Mass. 2009). Massachusetts law applies, Lexington Ins. Co. v.
Gen. Accident Ins. Co. of Am., 338 F.3d 42, 46 (1st Cir. 2003), and
requires that "we construe an insurance policy de novo under the
general rules of contract interpretation." Brazas Sporting Arms,
Inc. v. Am. Empire Surplus Lines Ins. Co., 220 F.3d 1, 4 (1st Cir.
2000). We look first to "the actual language of the policies,
given its plain and ordinary meaning." Id. The insurer bears the
burden of demonstrating that an exclusion exists that precludes
coverage, and "any ambiguities in the exclusion provision are
strictly construed against the insurer." Id. Ambiguity does not
exist simply because the parties disagree about the proper
interpretation of a policy provision; rather, "[a]mbiguity exists
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when the policy language is susceptible to more than one rational
interpretation." Id. at 4-5.
The pertinent part of the Abuse or Molestation Exclusion
to the Professional Liability Coverage reads:
EXCLUSION - ABUSE OR MOLESTATION
This endorsement modifies insurance provided
under the following:
PROFESSIONAL LIABILITY COVERAGE FORM
The following exclusion is added to paragraph
2., Exclusions of Section I - Coverage:
This insurance does not apply to damages
arising out of:
1. The actual or threatened sexual or physical
abuse or molestation by anyone to any person
while in the care, custody or control of any
insured; . . . .
The parallel exclusion in the Commercial Umbrella Coverage part is
essentially identical to the Professional Liability Exclusion and
reads:
ABUSE OR MOLESTATION EXCLUSION
The following paragraph is added to 2.
Exclusions, SECTION I - Coverages:
This insurance does not apply to "bodily
injury", "property damage", "advertising
injury" or "personal injury" arising out of:
1. The actual, alleged or threatened abuse or
molestation by anyone of any person while in
the care, custody or control of any
insured; . . . .
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No one argues that these Exclusions should be interpreted
differently from one another, so we will follow the district court
and the parties in referring to a single Exclusion.
Exclusions of this type for sexual or physical abuse or
molestation are not uncommon for these types of insurance policies
for those who have care of others. Such exclusions appear to have
been in use since 1987. See Harper v. Gulf Ins. Co., No. 01-CV-
201-J, 2002 WL 32290984, *6 (D. Wyo. Dec. 20, 2002) (abuse or
molestation exclusion was promulgated by the Insurance Service
Office, Inc., in 1987). The court in Harper cites to an insurance
reporter series entitled Commercial Liability Insurance, published
by the Insurance Risk Management Institute. Id. at *6 n.9. The
quoted section of that reporter makes explicit that these
exclusions are used with "[o]rganizations that have care or custody
of others -- schools, hospitals, nursing homes, day care centers,
etc." Id. The reporter then goes on to advise: "This endorsement
eliminates coverage for an insured organization's liability in
connection with abuse or molestation committed by someone other
than that insured." Id. The case law has adopted this concept.
See Lincoln Cnty. Sch. Dist. v. Doe, 749 So.2d 943, 946 (Miss.
1999) (en banc) ("[T]he molestation exclusion accordingly serves to
exclude from coverage all classifications of damages arising out of
incidents of molestation.").
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Exclusions of this sort have generally been found to be
unambiguous in the face of attacks on various parts of the language
used, and the insureds in these cases have included medical or
therapeutic care providers, health care centers, summer camps,
schools and preschools, job training programs, churches, and the
like. See, e.g., Nautilus Ins. Co. v. Our Camp Inc., 136 F. App'x
134 (10th Cir. 2005) (underlying suit alleged child attending
insured's summer camp was sexually abused by co-camper); Insights
Trading Grp., LLC v. Fed. Ins. Co., Civil Action No. RDB-10-340,
2010 WL 2696750 (D. Md. July 6, 2010) (underlying suit alleged
enrollee in insured's job training program was assaulted by another
enrollee in the program); Erie Ins. Exch. v. First United Methodist
Church, 690 F. Supp. 2d 410 (W.D.N.C. 2010) (underlying suit
alleged abuse of children at insured's preschool by another child
at the preschool); TIG Ins. Co. v. Smart Sch., 401 F. Supp. 2d 1334
(S.D. Fla. 2005) (underlying suit alleged teacher sexually abused
two of the school's students); TIG Ins. Co. v. Martin, No. CV 00-
5766, 2003 WL 25796732 (E.D.N.Y. Feb. 28, 2003) (underlying suit
alleged child attendee at insured's baseball camp was sexually
assaulted by an intruder); Children's Aid Soc'y of Montgomery Cnty.
v. Great Am. Ins. Co., Civ. A. No. 91-7778, 1995 WL 251374 (E.D.
Pa. Apr. 28, 1995) (insured Children's Aid Society agreed to
provide care services to child and underlying suit alleged insured
allowed child to be placed in abusive foster care situation); Sarah
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G. v. Me. Bonding & Cas. Co., 866 A.2d 835 (Me. 2005) (judgment
creditors of insured motel and its owners sued insurer seeking to
collect damages from underlying suit alleging motel owner sexually
exploited minor children at the motel); Cmty. Action for Greater
Middlesex Cnty., Inc. v. Am. Alliance Ins. Co., 757 A.2d 1074
(Conn. 2000) (underlying suit alleged sexual molestation of female
child who attended insured's preschool by three young boys who also
attended the preschool); Lincoln Cnty. Sch. Dist., 749 So.2d 943
(exclusion precluded coverage where male student of insured school
raped female student in school restroom).
Both sides argue that the Abuse or Molestation Exclusion
here is unambiguous, offering competing interpretations of its
language. That competing interpretations are given does not make
an exclusion ambiguous. Cont'l Cas. Co. v. Canadian Universal Ins.
Co., 924 F.2d 370, 374 (1st Cir. 1991) ("[A]mbiguity is not created
simply because a controversy exists between parties, each favoring
an interpretation contrary to the other's." (alteration in
original) (quoting Jefferson Ins. Co. of N.Y. v. City of Holyoke,
503 N.E.2d 474, 476 (Mass. App. Ct. 1987)) (internal quotation
marks omitted)). The defendants contend that "care, custody or
control" should be given the meaning "physical dominion or
control." The insurers argue that "care" should be given its
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plain, ordinary meaning.1 There is no dispute that the child was
not in the physical dominion or control of either Field or the
Carson Center at the time any of the abuse took place, and it is
not a prerequisite to the application of the Abuse or Molestation
Exclusion that an insured be the abuser, nor is it necessary that
the abuse occur on the insured's premises.
Under Massachusetts law, whose canons of construction
dictate the outcome, we must give the term "care" its plain and
ordinary meaning. In Hingham Mutual Fire Insurance Co. v. Smith,
865 N.E.2d 1168 (Mass. App. Ct. 2007), the Massachusetts Appeals
Court denied coverage to homeowners whose son was sued for sexually
abusing other children, based on an exclusion for sexual
molestation from the definition of bodily injury. In doing so, the
court reiterated the state interpretative rule that "[w]ords in
exclusionary clauses of insurance contracts should be construed in
their usual and ordinary sense," id. at 1172 n.6 (alteration in
original) (quoting Bagley v. Monticello Ins. Co., 720 N.E.2d 813,
816 (Mass. 1999)) (internal quotation marks omitted), and rejected
a reading that would "distort the plain meaning of the clause," id.
In this context, the plain meaning of "care" in the Abuse
or Molestation Exclusion here accords with the dictionary
1
To the extent the insurers suggest on appeal that because
Field, who saw the child extensively, was in a position to
recommend the child be removed from the parents and so had
"control," we disregard that argument, which was not presented to
the district court.
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definition that being "in the care of" includes "charge,
supervision, management: responsibility for or attention to safety
and well-being." Webster's Third New International Dictionary 338
(1993) (illustrating the definition of "care" by using it in the
phrase "under a doctor's care"). The underlying complaint alleges
the child was not only a patient of the insureds, but also that she
was in the care of the Carson Center and Field when she was abused,
and there is no serious dispute about this. The dispute is whether
as against the facts alleged in the complaint, the term "care" as
used in the Exclusion should have a more limited meaning.
A second canon of construction refutes the defendants'
attempt to limit the term "care." "Every word in an insurance
contract must be presumed to have been employed with a purpose and
must be given meaning and effect whenever practicable." Bos. Gas,
910 N.E.2d at 304 (quoting Allmerica Fin. Corp. v. Certain
Underwriters at Lloyd's, London, 871 N.E.2d 418, 425 (Mass. 2007))
(internal quotation marks omitted). The term "care" must be given
a meaning and effect apart from the term "custody" and the term
"control." The three words are connected by the disjunctive "or,"
signalling they are to be read separately. See Miller v. Miller,
861 N.E.2d 393, 401 (Mass. 2007) ("[T]he word 'or' is disjunctive
unless the context and the main purpose of all the words demand
otherwise." (quoting Bleich v. Maimonides Sch., 849 N.E.2d 185, 191
(Mass. 2006)) (internal quotation marks omitted)). It is self-
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evident that a person may be "in the care" of another, without
being "in the custody" of or "in the control" of another. Because
the language of the Exclusion is clear, we do not construe it
against the insurers. See Bagley, 720 N.E.2d at 816 n.2.
The core argument of the defendants is that, regardless
of common meaning, the word "care" in the phrase "care, custody or
control" should be treated as an insurance industry term of art,
across all types of coverage, meaning "physical dominion or
control." We disagree. In the context in which it is used, the
term "care" is not a technical term of art at all. Further, it is
not appropriate, in any event, to turn to definitions purported to
be terms of art in property insurance law to define the term. The
defendants rely on certain constructions of the phrase from
property and construction law, not on constructions of the
Exclusions for sexual and physical abuse from liability insurance
for care givers. They cite to cases and insurance treatises for
the propositions that "[p]hysical control is the hallmark of 'care,
custody, and control'" and that "[t]he control exercised by the
insured must be exclusive." (Quoting 9 Couch on Insurance § 126:22
(2011)). Those cases and treatises, however, all concern the
"care, custody or control" of property, not persons.
The portions of both treatises defendants quote in
support of their argument explicitly are concerned solely with the
"care, custody or control" of property. They make no mention of
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the application of that three-part term to persons. Defendants
quote from a section in Couch on Insurance but omit its heading.
The heading is "IV. Coverage Limitations Based on Insured's
Relationship to Property. B. Phrased in Terms of Insured's Care,
Custody, Control, Charge, and Similar Concepts." (Emphasis added)
From that section defendants quote: "Physical control is the
hallmark of 'care, custody, and control . . .'" but they again omit
the end of that sentence: ". . . of another's property." 9 Couch
on Insurance § 126:22 (emphasis added). In a related section in
the same subchapter, the treatise states that "[p]olicies of
liability insurance, especially those covering the operations of
contractors and similar businesses, commonly contain provisions
specifically excluding from coverage liability for injury or damage
to property in the 'care, custody, or control of the insured.'"
Id. § 126:20 (emphasis added).
The defendants also cite to the Construction Law volume
of the Massachusetts Practice Series, which states that "[f]or
property to be considered within the care, custody or control of
the insured, the insured must have been in charge of the property
or exercised dominion or control over the property at the time when
the property was damaged." 57 Massachusetts Practice: Construction
Law § 8.29 (2009-2010); see also id. ("One of the most common
exclusions in a CGL insurance policy applicable to construction
disputes is the 'care, custody, or control,' or 'owned property,'
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exclusion."). By their terms, these treatise definitions of the
phrase do not apply to the policies at issue here, which are
concerned with the care, custody or control of a person.
The defendants also contend that Massachusetts courts
have consistently interpreted "care, custody or control" to require
physical dominion or control. All of the cases they cite save one
concern policy language in which the exclusion is by its terms
limited to the care, custody or control of property and so are not
on point. See Rogala v. Farm Family Cas. Ins. Co., No. 0700049,
2009 WL 2231161, at *1 (Mass. Super. Ct. Mar. 23, 2009) (exclusion
for damage to "[p]ersonal property in the care, custody or control
of" insured applied where insured damaged truck (alteration in
original)); Commerce Ins. Co. v. Empire Fire & Marine Ins. Co., No.
04-00825, 2006 WL 2439991, at *2 (Mass. Super. Ct. Aug. 9, 2006)
(exclusion for "'[p]roperty damage' to . . . property owned or
transported by the 'insured' or in the 'insured's' care, custody or
control" applied where insureds damaged rental cars (alterations in
original)), aff'd, 879 N.E.2d 1272 (Mass. App. Ct. 2008); Murray v.
Noone, No. 9241, 1994 WL 69565, at *2 (Mass. Dist. Ct. Feb. 24,
1994) (exclusion for "injury or destruction of . . . property
rented to or in the care, custody or control of the insured"
applied where insured damaged vehicle). Further, defendants do not
establish that even in the property context the term "care" is
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necessarily limited to situations where there is also custody or
control, but even if they did, that would not alter our analysis.
The one Massachusetts case defendants cite where a care,
custody or control exclusion was applied to a person, and not to
property, also does not advance their case because the harm befell
someone in "custody." In Jefferson Insurance Co. of New York v.
City of Holyoke, suit was brought after a woman in the "protective
custody" of the Holyoke police department committed suicide. 503
N.E.2d at 475. The appeals court, in denying coverage based on an
exclusion, held that the insurance policy contained a clause that
excluded from coverage "claims arising from events during which the
injured party was in the care, custody or control of any Insured
under this policy other than during an overt attempt to escape from
care, custody or control." Id. at 475. This case assists neither
side because "there [was] no dispute that [the decedent] was in the
'care, custody or control' of the police department at the time she
committed suicide." Id. at 477. The appeals court in Jefferson
had no occasion to rule on whether a person in the care of an
insured -- but not under the insured's custody or control -- is to
be considered in the insured's "care, custody or control."2
2
Cases defendants cite from other jurisdictions applying the
"care, custody or control" exclusion to a person are similarly not
on point because they involve the question of custody or control of
a person, not a situation, as here, where a person was allegedly
under an insured's care only. See Am. Family Mut. Ins. Co. v.
Nunley, No. CV 07-2276, 2009 WL 775424, at *5-6 (D. Ariz. Mar. 23,
2009) (holding that where employee of insured physically restrained
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By contrast, when we review case law concerning
exclusions for sexual and physical abuse of persons, cases from
other jurisdictions give the word "care" its plain, ordinary
meaning when used in abuse or molestation exclusions similar to
that at issue here. In McAuliffe v. Northern Insurance Co. of New
York, 69 F.3d 277 (8th Cir. 1995), an insurer refused to pay claims
related to a priest's abusive sexual relationship with a
parishioner, invoking an abuse or molestation exclusion essentially
the same as the one in the present case and containing a "care,
custody or control" clause. The court held that because the priest
"was counseling the parishioner on a number of personal and
spiritual issues . . . the parishioner was in [the priest's] care
when the abuse occurred," id. at 279, and the exclusion applied.
Although the victim in McAuliffe was abused by the same person she
was in the care of, that distinction is irrelevant to a
determination of what "in the care of" means.
In Children's Aid Society of Montgomery County v. Great
American Insurance Co., the court considered an abuse or
independent contractor on insured's premises, independent
contractor was not in insured employer's "care, custody or
control"); Conn. Ins. Guar. Ass'n v. Daigle, No. CV054013240S, 2007
WL 806375, at *5 (Conn. Super. Ct. Feb. 21, 2007) (finding the
phrase "care, custody or control" in an exclusion to be ambiguous
and interpreting it not to exclude coverage where insured police
officer misled three young women to pose for nude photographs as
part of a fictitious sting operation, and stating the young women
"were always free to leave, free to stop participating in the
'sting operations' and do not seem to be in any way in the custody,
control or care of" the insured).
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molestation exclusion which was substantially identical to the one
at issue here and contained a "care, custody or control" clause.
The court applied those terms "according to their usual English
definitions" and determined that "[t]he dictionary definition of
'care' that is most applicable to the instant case is 'charge,
supervision[,] management: responsibility for or attention to
safety and well-being,'" 1995 WL 251374, at *4 (quoting Webster's
Third New International Dictionary 338 (1986)), the same ordinary
meaning we give "care." In that case, the insured agency had
agreed to "provide child care services to children and youth
referred to it by" Montgomery County, to provide "each child with
the care needed," and to share responsibility with the county for
the children's medical care and clothing. Id. The court held the
insured "exercised a significant amount of care, custody and
control over the foster children." Id. The court also emphasized
that "under any conditions, [the insured] need only have exercised
'care, custody or control' over [the child victim of abuse] for the
exclusion to be applicable." Id. The court held that the
exclusion precluded coverage.
In Nautilus Insurance Co. v. Our Camp Inc., the court
held that an abuse or molestation exclusion like the one here
precluded coverage of an insured summer camp operator where a child
attending the summer camp was abused by a co-camper. The court
stated that "[t]he express language of the exclusion is worded
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broadly," 136 F. App'x at 137, and that "[t]he exclusion . . .
unambiguously excludes coverage for all types of negligent conduct
arising out of the abuse or molestation by anyone of any person
while in the care, custody or control of any insured. To conclude
otherwise would torture the plain language of the parties'
agreement," id. at 138 (citation omitted). See also Erie Ins.
Exch., 690 F. Supp. 2d 410 (holding that terms "abuse" and
"molestation" in abuse or molestation exclusion were unambiguous
and applying exclusion to preclude coverage of claims arising out
of abuse of children at a preschool by another child at the
preschool).
Defendants rely on the doctrine that "technical terms and
words of art are given their technical meaning when used in a
transaction within their technical field." Restatement (Second) of
Contracts § 202(3)(b). This is a canon of construction accepted by
Massachusetts courts, see W. Alliance Ins. Co. v. Gill, 686 N.E.2d
997, 999 (Mass. 1997), and it does not support the defendants'
arguments here. The technical field at issue here is the provision
of care to patients, not environmental damage, as in Gill. In that
case, the court considered the term "pollutant" and related terms
in a pollution exclusion to be "terms of art in environmental law
which generally are used with reference to damage or injury caused
by improper disposal or containment of hazardous waste." Id. The
Massachusetts court was careful to say that terms were "terms of
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art in environmental law." Id. (emphasis added). Thus, the type
of hazard covered and type of insurance involved was important to
whether the terms were technical terms of art. The court held that
carbon monoxide produced by a malfunctioning or improperly operated
oven in a restaurant was not a "pollutant" as that term was used in
the exclusion. Id. at 1000-01.
Gill is a far different case from this. Gill does not
support defendants' argument that the term "care" in the context
not be given its ordinary meaning, or that it must be viewed as a
technical term of art, much less that its meaning must be taken
from another area of insurance law covering different hazards. Nor
does Gill purport to establish a rule governing interpretation of
Professional Liability and Commercial Umbrella Coverage, much less
for Abuse or Molestation Exclusions.
Other Massachusetts cases that cite the rule that
technical terms of art should be given their technical meanings
also support our conclusion. Atlantic Mutual Insurance Co. v.
McFadden, 595 N.E.2d 762 (Mass. 1992), invoked the rule and was,
like Gill, concerned with a pollution exclusion in an insurance
policy and held that the terms "'discharge,' 'dispersal,'
'release,' and 'escape,' are terms of art in environmental law."
Id. at 764 (emphasis added). McFadden does not support defendants'
argument for the same reasons Gill does not.
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In City of Springfield v. Department of
Telecommunications & Cable, 931 N.E.2d 942 (Mass. 2010), the
Supreme Judicial Court invoked the technical term of art rule in
interpreting a technical provision in a cable television service
provider license and did so by resort to use of a definition from
a state agency with telecommunications expertise. The court held
that first, resort must be made to the ordinary language of the
contract. Id. at 946. The court went on: "However, where, as
here, we consider a specialized contract subject to a complex
regulatory scheme, we recognize that language that appears to have
an ordinary meaning may carry a technical meaning not obvious to a
layperson." Id. at 947. The court addressed the question whether
the term "pass through" was a technical term of art as applied to
the treatment of franchise-related costs under renewal licenses.
In answering that question, the court relied on the expertise of
the state Department of Telecommunications and Cable, which had
concluded that the term was a term of art. Id. at 947. The court
accepted the department's view, "in light of the deference [the
court] give[s] to the department's expertise and experience,
particularly where this interpretive question arises under a
complex statutory and regulatory framework." Id. 950. In the
present case, we are not considering "a specialized contract
subject to a complex regulatory scheme." City of Springfield
supports our analysis.
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Indeed, City of Springfield cites to Davis v. Dawson,
Inc., 15 F. Supp. 2d 64 (D. Mass. 1998), which concluded that the
term "deliver" in an agreement in the context of the delivery of a
complete and accurate accounts receivable schedule did not have a
technical meaning. Id. at 121. Applying the rule that the usual
and ordinary meaning controls, the court gave "deliver" its common
meaning. Id. at 122.
These cases reinforce that the plain and ordinary meaning
rule applies and that the preconditions for applying the technical
term of art rule are not met here. Further, they support our view
that the technical term of art rule applies to the specific field
of expertise involved, and does not justify abandonment of the
ordinary meaning rule where that specific technical field is not
involved. Indeed, in City of Springfield, the SJC cited to the
Restatement (Second) of Contracts, see 931 N.E.2d at 947, which
states that "technical terms and words of art are given their
technical meaning when used in a transaction within their technical
field" unless a different intention is manifested. Restatement
(Second) of Contracts § 202(3) (emphasis added). As we have said,
a body of law has developed around Abuse or Molestation Exclusions
that is separate from the body of law regarding "owned property"
exclusions upon which defendants rely.
Further, as the district court stated, "[t]he use of the
word 'care' in relation to a physical object is necessarily much
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different from the use of the same term in relation to a child
receiving medical or therapeutic services." Valley Forge, 2011 WL
864802, at *3. Defendants admit this difference, stating "[t]here
is no such thing as non-possessory 'care' of personal property."
Non-possessory care of a person is an ordinary event.
Moreover, we reject the defendants' related argument that
because other coverage clauses in the policies are concerned with
property damage, we must adopt their two-step proposition that (1)
in property damage coverage the term "care" can never mean anything
other than "custody" and "control," and (2) because the different
coverage parts are all contained in one policy, the terms "care,
custody or control" must have the same meaning throughout all the
types of coverage provided in the same policy. As to the first
premise, we have no occasion to pass on the terms of the property
damage coverage which are not at issue in this case. As such, the
second step does not necessarily follow from the first. Even more
importantly, the argument is barred by the Massachusetts ordinary
meaning rule and as the defendants must admit, the ordinary meaning
of care of persons is different.3
The defendants make a separate argument from their
technical term of art argument. They argue the district court's
3
By contrast with property cases, it would be rare in
ordinary usage for property to be "in the care" of another without
the other's having some sort of custody or control over the
property.
-24-
construction of "care" requires that word to be construed one way
in the Professional Liability Exclusion and another way in an
endorsement to the Commercial General Liability (CGL) Coverage. To
be precise, they point to the CGL Coverage part and to the Sexual
or Physical Abuse or Molestation Specified Liability Coverage
Endorsement. The CGL endorsement excludes coverage for "'bodily
injury,' 'property damage,' or 'personal and advertising injury'
arising out of . . . [t]he actual or threatened abuse or
molestation . . . of a 'patient' or 'resident' of the insured while
in the care, custody or control of any insured."
While the argument is unclear, defendants appear to argue
that the definition of "patient" in the CGL endorsement refers to
recipients of care and that use of the ordinary meaning of the term
"in the care of" renders the word "patient" surplusage. They
invoke two Massachusetts cases, J.A. Sullivan Corp. v.
Commonwealth, 494 N.E.2d 374, 378 (Mass. 1986) ("[E]very phrase and
clause must be presumed to have been designedly employed, and must
be given meaning and effect, whenever practicable, when construed
with all the other phraseology contained in the instrument, which
must be considered as a workable and harmonious means for carrying
out and effectuating the intent of the parties." (alteration in
original) (quoting Charles I. Hosmer, Inc. v. Commonwealth, 19
N.E.2d 800, 804 (Mass. 1939)) (internal quotation marks omitted)),
and S.D. Shaw & Sons, Inc. v. Joseph Rugo, Inc., 180 N.E.2d 446,
-25-
449 (Mass. 1962) ("An interpretation which gives a reasonable
meaning to all of the provisions of a contract is to be preferred
to one which leaves a part useless or inexplicable." (quoting
Sherman v. Emp'rs Liab. Assurance Corp., Ltd., 178 N.E.2d 864, 866-
67 (Mass. 1961)) (internal quotation marks omitted)), for the
proposition that terms should not be interpreted to create
surplusage. "Patient" is defined in the CGL endorsement as
"mentally, physically, developmentally disabled, mentally disabled
and /or economically disadvantaged persons who are non-resident
recipients of the care services provided by" the Carson Center.
Defendants argue that if "care" is construed to mean the outpatient
care provided by the insureds, the use of "care" in this
endorsement is surplusage because a "patient" is necessarily in the
"care" of a person providing treatment.
We go back to what we said at the start -- defendants'
reading both departs from the ordinary meaning rule and equates
care with custody or control and so renders "care" in that three-
part term meaningless. The defendants' precise argument assumes
that under Massachusetts insurance law, the ordinary meaning rule
is trumped by a no-surplus-language rule. But we see no basis for
that assumption, and the cases cited to us do not stand for that
proposition. The test is not one of redundancy, but of
meaningfulness. Terms in a contract may, when applied to certain
factual scenarios, sometimes overlap. But those terms still have
-26-
different, independent meanings. The plain, ordinary meaning given
to "in the care" of does not render either of the two terms of the
CGL endorsement "meaningless." S.D. Shaw & Sons, 180 N.E.2d at
449.4
In any event, we disagree, as did the district court,
that there is surplusage here. As the district court recognized,
a patient who received "care services" on only a single occasion or
infrequently is not necessarily "in the care" of a provider in
relevant terms. Valley Forge, 2011 WL 864802, at *4. We do not
need to decide at what point a recipient of "care services" is
considered to be "in the care" of a treatment provider; we only
decide that on the facts alleged by Murphy in the underlying suit,
the child was clearly in the care of Field and the Carson Center.5
Finally, the defendants present arguments that the
Exclusions make coverage illusory and leave them stripped of
coverage that an objectively reasonable person would have expected
4
Further, the rule of giving meaning to every phrase is
still governed by two other principles: that it be done "whenever
practicable" when construed with other terms and that the
construction be "a workable and harmonious means for carrying out
and effectuating the intent of the parties." J.A. Sullivan Corp.
v. Commonwealth, 494 N.E.2d 374, 378 (Mass. 1986) (quoting Charles
I. Hosmer, Inc. v. Commonwealth, 19 N.E.2d 800, 804 (Mass. 1939))
(internal quotation mark omitted). Our construction is in
accordance.
5
The variant of this argument as to Coverage D of the CGL
Coverage fails for similar reasons. The parties agree Coverage D
is inapplicable to this matter, and it is not contained in the
Umbrella policies.
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to have. See McGregor v. Allamerica Ins. Co., 868 N.E.2d 1225,
1227 (Mass. 2007) ("When interpreting an insurance contract,
[courts are to] 'consider what an objectively reasonable insured,
reading the relevant policy language, would expect to be covered.'"
(quoting Hazen Paper Co. v. U.S. Fid. & Guar. Co., 555 N.E.2d 576,
583 (Mass. 1990))). Defendants suggest that at least the
Professional Liability Coverage has no value to them if coverage
for this type of physical abuse is excluded. See Liberty Mut. Ins.
Co. v. Tabor, 553 N.E.2d 909, 912 (1990) ("A provision in an
insurance policy that negates the very coverage that the policy
purports to provide in the circumstances where the person is liable
is void as against public policy.").
That is simply not so. There are many instances of
professional malpractice that are covered, which are not concerned
with sexual or physical abuse. Indeed, many usual professional
malpractice claims are in that first category and are covered. The
Exclusion precludes coverage on the limited occasions where the
damages flow from sexual or physical abuse by another of someone in
the care of the insured. As explained earlier, that is the very
purpose for the Abuse or Molestation Exclusion since its creation.
Nor is this a case in which application of the Exclusion defeats an
objectively reasonable policyholder's expectations of coverage.
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Since the Exclusion was not ambiguous, the Carter Center and Field
had no reasonable expectation of coverage.6
In short, we agree with the reasoning of the district
court and affirm. No costs are awarded.
-- Dissenting Opinion Follows –-
6
We also note the tension between this argument by
defendants and their argument that the term "care, custody or
control" must not be given its plain and common meaning, but its
"accepted meaning in the insurance industry" as to property
insurance. We have rejected the term of art argument, reinforcing
the conclusion that there could be no reasonable expectation of
coverage. See Aguiar v. Generali Assicurazioni Ins. Co., 715
N.E.2d 1046, 1049 (Mass. App. Ct. 1999). And we have explained
that these Exclusions are well recognized in their own branch of
insurance law.
-29-
THOMPSON, Circuit Judge, dissenting. The insurers'
interpretation of the phrase "care, custody or control," which the
majority has adopted, is certainly rational. However, I am not
persuaded that the policy language indisputably supports this
interpretation. In my view, the interpretation offered by the
defendants is equally (if not more so) rational. Because I think
my colleagues got it wrong when they disregarded the defendants'
interpretation - rendering erroneous their conclusion that there is
no insurance coverage - I dissent.
I.
Under Massachusetts law, ambiguity exists when the
language in an insurance policy "is susceptible to more than one
rational interpretation." Brazas Sporting Arms, Inc. v. Am. Empire
Surplus Lines Ins. Co., 220 F.3d 1, 4-5 (1st Cir. 2000). I discern
such an ambiguity here.7 As I said, the insurers'
7
The majority cites to a string of cases for the proposition
that abuse and molestation exclusions are generally found to be
unambiguous. I do not find these cases particularly helpful. Two
of the cases dealt with exclusions that did not contain the
critical language. See Insights Trading Grp., LLC v. Fed. Ins.
Co., Civil Action No. RDB-10-340, 2010 WL 2696750 (D. Md. July 6,
2010); Lincoln Cnty. Sch. Dist. v. Doe, 749 So.2d 943 (Miss. 1995).
While the remaining cases did involve exclusions containing the
"care, custody or control" requirement, the courts (with the
exception of one, discussed below) did not specifically consider
the phrase. Further, whether there was care, custody or control
was not an issue because the abuse took place on the insured's
premises. See Nautilus Ins. Co. v. Our Camp Inc., 136 F. App'x 134
(10th Cir. 2005) (abuse occurred at the insured summer camp); Erie
Ins. Exch. v. First United Methodist Church, 690 F. Supp. 2d 410
(W.D.N.C. 2010) (abuse occurred at insured preschool); TIG Ins. Co.
v. Smart Sch., 401 F. Supp. 2d 1334 (S.D. Fla. 2005) (abuse
-30-
interpretation of "care, custody or control" is sound. There is a
cogent argument that "care, custody or control" is not a term of
art outside the property context and therefore the phrase should be
treated as purely disjunctive with an ordinary meaning applied to
the word "care." However, defendants' position is likewise
logical. A compelling argument can be made that "care, custody or
control" is an insurance industry term of art, in both the context
of property and persons, which requires physical dominion or
control. And in fact, I am surprised at how readily the majority
disregarded this reasoned argument. Since the majority has adopted
the insurers' position and set forth its reasons for doing so, I
will not rehash this point. Let me focus on why the defendants'
interpretation is rational.
occurred at insured school); TIG Ins. Co. v. Martin, No. CV 00-
5766, 2003 WL 25796732 (E.D.N.Y. Feb. 28, 2003) (abuse occurred at
insured's baseball camp); Sarah G. v. Me. Bonding & Cas. Co., 866
A.2d 835 (Me. 2005) (abuse occurred at insured motel); Cmty. Action
for Greater Middlesex Cnty., Inc. v. Am. Alliance Ins. Co., 757
A.2d 1074 (Conn. 2000) (abuse occurred at insured's preschool
program).
The only case that did involve consideration of the verbiage
"care, custody or control" was Children's Aid Soc'y of Montgomery
Cnty. v. Great Am. Ins. Co., Civ. A. No. 91-7778, 1995 WL 251374
(E.D. Pa. Apr. 28, 1995). The court there found no ambiguity in
the exclusion (though its ambiguity analysis actually focused on
the term "damages") and its reading of "care, custody or control"
was consistent with the majority here. Id. at *3-5. I disagree
with the first premise but do not quibble with the second.
However, I do not think the majority's reading is the only rational
one.
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II.
In the property context, courts have consistently read
the expression "care, custody or control" to denote physical
dominion or control. See, e.g., Acadia Ins. Co. v. Peerless Ins.
Co., 679 F. Supp. 2d 229, 241 (D. Mass. 2010) (applying New
Hampshire law); Factory Mut. Ins. Co. v. Liberty Mut. Ins. Co., 518
F. Supp. 2d 803, 810 (W.D. Va. 2007). The treatises cited by the
defendants and considered by the majority reflect this. See, e.g.,
9 Couch on Insurance § 126:22; 57 Massachusetts Practice:
Construction Law § 8.29 (2009-2010). This was the district court's
reading as well, and further seems to be a proposition accepted by
the insurers. Nonetheless (though it does not cite to any case law
or treatises in support) the majority does not accept that this
phrase has such a set meaning in the property framework. I do not
think I need to spend much time on this proposition. It seems
beyond dispute that the expression "care, custody or control"
routinely (if not always) signals physical dominion or control when
pertaining to property. That being said, the question is whether
the defendants' contention that this meaning should be extended to
persons holds water.
The majority says it does not, dismissing the
Massachusetts cases that defendants cite to as inapplicable because
they only address "care, custody or control" of property or
because, with respect to the one case that involved "care, custody
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or control" of a person, custody was not disputed. However, I take
something different from these cases. In particular, this case law
demonstrates that in the instances where Massachusetts courts have
applied an exclusion that required "care, custody or control," the
insured actually exercised physical dominion or control over a
person or property. See Jefferson Ins. Co. of N.Y. v. City of
Holyoke, 503 N.E.2d 474, 477 (Mass. App. Ct. 1987) (woman who
committed suicide was in the custody of insured police department);
Rogala v. Farm Family Cas. Ins. Co., No. 0700049, 2009 WL 2231161
(Mass. Super. Ct. Mar. 23, 2009) (damaged truck was possessed and
controlled by the insured business owner); Commerce Ins. Co. v.
Empire Fire & Marine Ins. Co., No. 04-00825, 2006 WL 2439991 (Mass.
Super. Ct. Aug. 9, 2006), aff'd, 879 N.E.2d 1272 (Mass. App. Ct.
2008) (damaged rental cars were in the possession of insured
renters/drivers); Murray v. Noone, No. 9241, 1994 WL 69565 (Mass.
Dist. Ct. Feb. 24, 1994) (damaged vehicle was physically controlled
by insured driver). Notably, of all the cases cited by the
majority where an abuse or molestation exclusion served to bar
coverage, just one involved a situation where "care" alone was
provided. See McAuliffe v. Northern Ins. Co. of N.Y., 69 F.3d 277
(8th Cir. 1995) (exclusion applied where priest abused a
parishioner that was under his care). All the others involved
scenarios where some type of custody or control was exerted over
the victim.
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Further endorsement for defendants' standpoint is found
in the fact that Massachusetts courts accept the canon of
construction that technical terms and words of art are given their
technical meaning when used within their technical field. See
Davis v. Dawson, Inc., 15 F. Supp. 2d 64, 109 (D. Mass. 1998); City
of Springfield v. Dep't of Telecomm. & Cable, 931 N.E.2d 942, 947
(Mass. 2010); W. Alliance Ins. Co. v. Gill, 686 N.E.2d 997, 999
(Mass. 1997); Atlantic Mut. Ins. Co. v. McFadden, 595 N.E.2d 762,
764 (Mass. 1992). Moreover, the courts have applied this canon to
the interpretation of insurance policy exclusions. See W. Alliance
Ins. Co., 686 N.E.2d at 999; Atlantic Mut. Ins. Co., 595 N.E.2d at
764. Nonetheless the majority dismisses this canon's
applicability. I am not persuaded by their reasoning.
First, the majority distinguishes the various
Massachusetts cases that apply the canon because they either
involve a different technical field, see W. Alliance Ins. Co., 686
N.E.2d at 999 (involving environmental law); Atlantic Mut. Ins.
Co., 595 N.E.2d at 764 (same), or a specialized contract governed
by regulations, see City of Springfield, 931 N.E.2d at 947
(involving a cable television service provider license). This
seems beside the point to me. It does not matter that we are
dealing with a different technical field; these cases still have
bearing on our analysis as they are examples of Massachusetts
courts applying a technical meaning to a term of art contained in
-34-
an insurance policy or contract. Second, the majority emphasizes
the district court's finding that "care" of an object is
necessarily different than the type of "care" provided to a
recipient of medical or therapeutic services. I do not disagree,
but it seems the majority and I are of two minds on the
significance of this point. The defendants' position is that
"care" should not be read alone but as part of the phrase "care,
custody or control" - an insurance industry term of art. As I have
likely made clear at this point; this makes sense.
What is more, this ordinary meaning reading of "care"
advocated by the majority is not ironclad. "Words in an agreement
are given their ordinary and usual sense 'unless it appears that
[the words] are to be given a peculiar or technical meaning.'"
City of Springfield, 931 N.E.2d at 947 (quoting Davis, 15 F. Supp.
2d at 109). And insurance policy language is interpreted based on
both the common and the technical understanding of the words. See
id. at 947 (citing Lodge Corp. v. Assurance Co. of Am., 775 N.E.2d
1250, 1252 (Mass. App. Ct. 2002)). One could certainly see how
this interplay between common and technical understandings would
lend itself to the formulation of two (not one) rational readings
of the verbiage "care, custody or control."
As for the majority's slant that the word "care" must be
given meaning and effect separate from "custody" and "control";
such a reading is certainly consistent with canons of construction.
-35-
Nonetheless, crediting the rationality of the defendants' position,
which I have, this canon is inapplicable since the phrase "care,
custody or control" needs to be read as a whole and treated as a
term of art. Furthermore, the corresponding position taken by the
majority that the word "or" should be treated as disjunctive
"unless the context and the main purpose of all the words demands
otherwise," Miller v. Miller, 861 N.E.2d 393, 401 (Mass. 2007)
(quotation marks and citation omitted), is equally supportive of
the defendants' and the insurers' position. Defendants say context
demands otherwise; insurers say the opposite. The majority has
disregarded defendants' position as without merit and again, on
this point, we part ways.
The majority also made quick time with the defendants'
argument that the Exclusions must be read in conjunction with the
other policy provisions that used the phrase "care, custody or
control" but I think the argument is compelling. Courts must
construe an insurance contract as a whole. See Am. Home Assurance
Co. v. Fore River Dock & Dredge, Inc., 321 F. Supp. 2d 209, 216 (D.
Mass. 2004); Hakim v. Mass. Insurers' Insolvency Fund, 675 N.E.2d
1161, 1166 n.11 (Mass. 1997). In this case, each of the policies
at issue contained the expression "care, custody or control" at
least a dozen times. With the exception of the various abuse and
molestation provisions (and one provision regarding dogs), the
phrase was used exclusively in the context of property. And as
-36-
noted, the insurers appear to concede that "care, custody or
control" has a certain meaning in the property context. Applying
this meaning throughout the policies is consistent with
Massachusetts law that contracts be read as a whole. See Am. Home
Assurance Co., 321 F. Supp. 2d at 216; Hakim, 675 N.E.2d at 1166
n.11.
Finally, I agree with the defendants that the insurers'
tack - now the majority's holding - defeats the reasonable
expectation of an insured. When construing insurance polices,
Massachusetts courts "consider what an objectively reasonable
insured, reading the relevant policy language, would expect to be
covered." McGregor v. Allamerica Ins. Co., 868 N.E.2d 1225, 1227
(Mass. 2007). It seems to me that a reasonable insured would
expect to be covered in precisely the facts at hand. By nature of
the services it offers, the Carson Center undoubtedly provides
service and treatment to those who are suffering physical and
sexual abuse. A reasonable insured would expect that errors that
occur during the assistance and treatment of these persons -
including the negligent failure to recognize the signs of abuse -
would be fully covered by professional liability insurance. In
this final respect, defendants' interpretation of the phrase "care,
custody or control" is once again solid.
-37-
III.
This brings me to the end result. Where there are two
rational interpretations of policy language, the insured is
entitled to the benefit of the one that is more favorable to it.
See Makrigiannis v. Nintendo of Am., Inc., 815 N.E.2d 1066, 1071
(Mass. 2004) (citing Trs. of Tufts Univ. v. Commercial Union Ins.
Co., 616 N.E.2d 68, 72 (Mass. 1993)). Furthermore, "[c]onsistent
with the Massachusetts general rule favoring insureds in policy
interpretation," ambiguities in policy language are strictly
construed against the insurer. Brazas Sporting Arms, Inc., 220
F.3d at 4. And finally, "[e]xclusionary clauses must be strictly
construed against the insurer so as not to defeat any intended
coverage or diminish the protection purchased by the insured."
City Fuel Corp. v. Nat'l Fire Ins. Co. of Hartford, 846 N.E.2d 775,
777 (Mass. 2006).
These canons of construction point in only one direction.
Faced with two rational interpretations of an exclusionary clause,
we must strictly construe the Exclusion against the insurers,
applying the interpretation of "care, custody or control" that is
most beneficial to the defendants (i.e., the phrase requires
physical dominion or control). Because neither Field nor the
Carson Center exercised any such dominion or control over the child
at the time the abuse took place, the Exclusion does not apply and
coverage for the claims asserted exists. I therefore dissent.
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