United States Court of Appeals
For the First Circuit
No. 12-1569
THE SAINT CONSULTING GROUP, INC.,
Plaintiff, Appellant,
v.
ENDURANCE AMERICAN SPECIALTY INSURANCE COMPANY, INC.,
Defendant, Appellee.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. George A. O'Toole, Jr., U.S. District Judge]
Before
Lynch, Chief Judge,
Boudin, Circuit Judge,
and McConnell, Jr.,* District Judge.
Robert D. Cohan with whom Cohan Rasnick Myerson LLP, Jonathan
D. Plaut and Chardon Law Offices were on brief for appellant.
Michael F. Perlis with whom Richard R. Johnson, Rachael Shook,
Locke Lord LLP, Michael P. Roche and Murphy & Riley, P.C. were on
brief for appellee.
November 2, 2012
*
Of the District of Rhode Island, sitting by designation.
BOUDIN, Circuit Judge. This dispute between The Saint
Consulting Group, Inc. ("Saint") and its liability insurer
Endurance American Specialty Insurance Company ("Endurance") stems
from Endurance's refusal to defend Saint in a lawsuit against Saint
in the Northern District of Illinois, Rubloff Dev. Grp. v.
SuperValu, Inc., No. 10-cv-03917, 2012 WL 1032784 (N.D. Ill. Mar.
27, 2012) (the "Rubloff Action"). The district court dismissed
Saint's lawsuit against Endurance based on an exclusion in the
policy, and Saint now appeals.
The Rubloff Action. According to the complaint in that
action,1 Saint is a consulting company that advises and advocates
for its clients in land use disputes; its work includes gaining
approval for its clients' projects and opposing projects to which
its clients are opposed. Saint has developed a niche practice:
acting on behalf of rival grocery store chains, it aims to block or
delay Wal-Mart stores from opening in a rival's territory. Calling
its operatives "Wal-Mart killers," Saint has allegedly blocked or
delayed hundreds of Wal-Mart stores by spurring litigation and
regulatory proceedings.
1
The alleged "facts" being recited in describing the Rubloff
Action, taken from its complaint, are relevant not because assumed
here to be true but because under insurance law the allegations
determine whether in this case the insurer is responsible to defend
the action. See, e.g., Sterilite Corp. v. Cont'l Cas. Co., 458
N.E.2d 338, 340 (Mass. App. Ct. 1983).
-2-
The Rubloff Action centers on Saint's alleged efforts to
block two Wal-Mart stores in the Chicago area on behalf of its
client SuperValu, Inc. ("SuperValu"). SuperValu, the third-largest
grocery retailer in the country, owns Jewel-Osco, a chain of
Chicago area grocery stores that competes with Wal-Mart. The
Rubloff Action focused on two proposed Wal-Mart stores: one was
planned for a shopping center to be built in Mundelein, Illinois;
the other, planned for a shopping center to be built in New Lenox,
Illinois. Both are in the vicinity of Chicago.
In Mundelein, real estate developer Rubloff Development
Group, Inc. and an associated company ("Rubloff Development")
agreed with Mundelein officials to annex land for a shopping
center; in New Lenox, McVickers Development, LLC and associated
entities ("McVickers Development") acquired and later exercised an
option to purchase land for a shopping center. Rubloff Development
and McVickers Development (collectively, the "Rubloff plaintiffs")
each had an agreement with Wal-Mart to sell it a parcel of land in
their respective developments for a Wal-Mart store and had
agreements or negotiations with other retailers to open stores
there.
In or around 2007, SuperValu allegedly hired Saint to
lead a campaign to delay or block these two developments in order
to hinder Wal-Mart from competing with Jewel-Osco in the Chicago
area grocery market. To carry out this mission, Saint's
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representative (Leigh Mayo) organized local landowners to oppose
the two new developments; using a pseudonym, he told a false story
of his parents supposedly being evicted from their home to make
room for a Wal-Mart store and retained a lawyer (William Graft) to
represent them, never explaining that both Mayo and Graft were
being paid by Saint, and ultimately by SuperValu. Rubloff, 2012 WL
1032784, at *2.
In Mundelein, Graft allegedly initiated several
administrative complaints and lawsuits against the Rubloff
development starting in 2007; the lawsuits dragged on for years and
were ultimately settled in 2011 for $200,000, but the Mundelein
development still has not been built and (due to the extreme delay)
may never be built. Rubloff, 2012 WL 1032784, at *2. With the New
Lenox development, obstacles in obtaining various permits
(allegedly caused by Saint's obstructive activities) delayed the
development by two years, causing significant losses to McVickers
Development.
After Mayo left Saint's employment, he contacted Rubloff
Development and, in exchange for payment, turned over thousands of
Saint documents detailing Saint's scheme to block the developments.
Rubloff, 2012 WL 1032784, at *2. In June 2010, the Rubloff
plaintiffs sued Saint and SuperValu in federal district court in
Illinois--the Rubloff Action--where the case was assigned to Judge
Leinenweber. The initial complaint, as slightly amended a day
-4-
later, focused on the documents Mayo had turned over and which
Saint had demanded back.
Claiming that the documents were needed for a lawsuit it
intended to bring against Saint and SuperValu, Rubloff Development
sought a declaratory judgment that the documents were not
privileged and that it need not return them; made a claim for
negligent spoliation of evidence alleging that Saint and SuperValu
had destroyed documents needed for the lawsuit; and sought
injunctive relief to foreclose further destruction of documents.
In September 2010, Judge Leinenweber dismissed most of the claims
but retained the declaratory relief claim against Saint alone.
The Rubloff plaintiffs then moved in October 2010 for
leave to file a proposed Second Amended Complaint and before acting
upon it, Judge Leinenweber resolved the retained declaratory relief
claim, holding that most of Saint's documents were not privileged.
Thereafter, in July 2011, Judge Leinenweber allowed the Second
Amended Complaint.2 This complaint, in which McVickers Development
joined as co-plaintiff, greatly expanded the suit. In this new
complaint, Rubloff Development and McVickers Development centrally
charged Saint and SuperValu with the following:
2
The original proposed Second Amended Complaint tendered in
October 2010--which is the one Saint tendered to Endurance in
requesting coverage, and is therefore the one relevant to this
appeal--differed in slight, and here irrelevant, ways from the one
Rubloff Development ultimately filed in July 2011.
-5-
-violations of the Racketeer Influenced and
Corrupt Organizations Act ("RICO"), 18 U.S.C.
§ 1962(c) (2006), by engaging in a pattern of
mail or wire fraud, 18 U.S.C. §§ 1341, 1343,
involving deceptions (the Mayo pseudonym and
misrepresentations) to hide their involvement
in the opposition to the Wal-Mart
supermarkets, and conspiracy to violate RICO,
18 U.S.C. § 1962(d);
-conspiracy in restraint of trade under the
Sherman Act, 15 U.S.C. § 1, and the Illinois
Antitrust Act, 740 Ill. Comp. Stat. 10/1
(2010), to prevent Wal-Mart from opening
stores; and
-tortious interference with prospective
economic advantage by disrupting the
developers' expected business relationships
with Wal-Mart and other tenants or purchasers
of space in the shopping centers; common law
fraud by the aforementioned deceptive means,
and conspiracy to commit the torts listed
above.
Two other claims were part of the case: first, Rubloff
Development alone made a separate claim alleging abuse of process
on the ground that Saint and SuperValu initiated litigation to
delay and impose costs on Rubloff Development related to the
Mundelein development; and second, the Rubloff plaintiffs
reiterated their document-related claims for declaratory relief.
Finally, on top of the original and the newly proposed
claims made by the plaintiffs, Saint itself filed counterclaims in
the Rubloff Action against Rubloff Development; these claims were
directed to the documents that Mayo had turned over to it, and
included inducement of breach of fiduciary duty, conversion,
replevin, tortious interference with contractual relations, and
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misappropriation pursuant to the Illinois Trade Secrets Act, 765
Ill. Comp. Stat. 1065/1.
On March 27, 2012, Judge Leinenweber issued a decision,
dismissing in full all of the Rubloff plaintiffs' claims on a
variety of grounds. Rubloff, 2012 WL 1032784, at *1. The
antitrust, RICO, and tortious interference claims were dismissed as
governed by the Noerr-Pennington doctrine hereafter discussed. See
note 4, below. The declaratory judgment claim was dismissed as
moot, and the other claims were also dismissed without prejudice to
further amendment, id. at *10-13. In addition, Saint's
counterclaims relating to the Mayo documents were greatly narrowed.
Id. at *13-17.
On June 7, 2012, Rubloff Development filed a Third
Amended Complaint reasserting many of the claims with more detailed
allegations of fact, aiming to cure deficiencies identified by the
court. The litigation remains pending, although the Third Amended
Complaint was filed after the expiration of Saint's policy with
Endurance and does not figure in this lawsuit.
Saint's Suit Against Endurance. This history now brings
us to the insurance coverage dispute that arises out of the Rubloff
Action, depends upon its allegations, and is the subject of the
separate litigation now before us on appeal. In 2008, Saint
obtained from Endurance a liability insurance policy running from
November 1, 2008, through November 1, 2009. This policy, which was
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later renewed for another year, was in force when the original and
First Amended complaints were filed in the Rubloff Action and when
the Second Amended Complaint was initially proposed in October
2010.
The policy is labeled as a "Premier Professional
Liability Insurance Policy." It is a type of policy often referred
to as an "errors and omissions" policy or a "malpractice" policy,
which insures firms or individuals against liability from errors
and omissions committed in the performance of their professional
services. 4 Thomas & Abramovsky, New Appleman on Insurance Law §
25.01[1], at 25-6 (library ed. 2012). Such insurance is common
among skilled professionals such as physicians, attorneys,
architects, engineers, and accountants. Id. § 25.01[2], at 25-9 -
25-10.
These policies typically cover claims based on performing
or failing to perform professional services--claims that are
themselves often expressly excluded from commercial general
liability policies. Med. Records Assocs. v. Am. Empire Surplus
Lines Ins. Co., 142 F.3d 512, 513 & n.1 (1st Cir. 1998). However,
Saint's policy contains many exclusions that are common in
malpractice policies, such as for bodily injury and property
damage, fraud, pollution liability, securities claims, patent
claims, and most pertinently, antitrust claims. See 4 Thomas &
Abramovsky, supra, § 25.06[1], at 25-57.
-8-
Subject to exclusions and a timely demand, the policy in
question required Endurance to defend Saint, and provide
indemnification of liability found, as to any claim for any
"Wrongful Act" committed within the policy period. "Wrongful Act"
was defined as "any actual or alleged act, error or omission
committed or attempted solely in the performance of or failure to
perform Professional Services by an Insured." Saint's
"Professional Services" were listed as "[a]dvocacy consulting
services including: analysis, strategic planning, research,
recommendations, recruiting, organizing, support management and
media communication."
Shortly after the Rubloff plaintiffs brought the Rubloff
Action, Saint forwarded copies of the complaint and First Amended
Complaint to Endurance and requested defense and indemnification;
Endurance refused. The same sequence occurred after the Rubloff
plaintiffs sought to file the Second Amended Complaint and again
the request was refused by Endurance. Thereafter, Saint sent a
demand letter under chapter 93A,3 which Endurance again refused,
expressly invoking Exclusion N in the policy. That exclusion
provides that the policy does not apply
3
Chapter 93A prohibits "[u]nfair methods of competition and
unfair or deceptive acts or practices in the conduct of any trade
or commerce," Mass. Gen. Laws. ch. 93A, § 2, and provides
businesses wronged by an unfair trade practice with a cause of
action, id. § 11.
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to any Claim based upon or arising out of any
actual or alleged price fixing, restraint of
trade, monopolization or unfair trade
practices including actual or alleged
violations of the Sherman Anti-Trust Act, the
Clayton Act, or any similar provision [of] any
state, federal or local statutory law or
common law anywhere in the world.
On June 6, 2011, Saint filed the complaint in the present
case against Endurance in Massachusetts state court, alleging that
Endurance had breached the contract embodied in the written policy
by refusing to defend Saint in the Rubloff Action; based on the
same conduct, the complaint also charged breach of contract by
estoppel and of the implied covenant of good faith and fair
dealing, negligence, fraud, negligent misrepresentation, and unfair
and deceptive business practices under chapter 93A, § 2. Two other
claims--breach of implied-in-fact contract and unjust enrichment--
were included but were abandoned on appeal.
Endurance removed the case to federal district court on
diversity grounds, where it was assigned to Judge O'Toole. Three
days after the Second Amended Complaint of the Rubloff Action was
dismissed in Illinois, Judge O'Toole granted Endurance's motion to
dismiss Saint's lawsuit for failure to state a claim. Saint
Consulting Grp., Inc. v. Endurance Am. Specialty Ins. Co., 2012 WL
1098429 (D. Mass. Mar. 30, 2012). He held that the antitrust
claims in the Rubloff Action were expressly excluded by Exclusion
N and that policy coverage was precluded as to the other claims
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because they arose out of Saint's alleged restraint of trade.
Id. at *3.
Saint had asserted theories of recovery against Endurance
that rested on theories other than breach of contract embodied in
the insurance policy. The district court held that they were
doomed either by the failure of the breach of contract claim or
because Saint had not sufficiently alleged additional facts to make
out a claim. Saint, 2012 WL 1098429, at *4-6. The disposition of
these theories we defer for later discussion. Saint's appeal
followed.
This appeal. Although factual assertions in Saint's
complaint are assumed to be true for purposes of evaluating the
grant of the motion to dismiss, Lichoulas v. City of Lowell, 555
F.3d 10, 12 n.1 (1st Cir. 2009), the issues before us are virtually
all legal issues on which our review would in any event be de novo.
In particular, save where extrinsic evidence is relevant, the
comparison of a complaint (allegedly triggering a duty to defend)
with an insurance policy is ordinarily treated as a matter of law.
See Stop & Shop Cos. v. Fed. Ins. Co., 136 F.3d 71, 73 (1st Cir.
1998).
Judge O'Toole assumed that Massachusetts law governs the
insurance policy--neither side contests this--and Massachusetts
courts in contract cases look to the law of the state with "the
most significant relationship to the transaction and the parties .
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. . ." Bushkin Assocs., Inc. v. Raytheon Co., 473 N.E.2d 662, 669
(Mass. 1985) (quoting Restatement (Second) of Conflict of Laws §
188(1) (1971)). Saint is a Massachusetts corporation with a
principal place of business in Massachusetts; Endurance, a Delaware
Corporation, does business in Massachusetts.
In a coverage case, Massachusetts requires that the
insured show coverage, and then the burden shifts to the insurer to
show that coverage is limited by a separate exception or exclusion.
Highlands Ins. Co. v. Aerovox Inc., 676 N.E.2d 801, 804 (Mass.
1997). The duty to defend arises if the complaint is "reasonably
susceptible of [an] interpretation" that would fall within the
policy, and exclusions "are to be strictly construed," with
ambiguities resolved against the insurer. Vappi & Co. v. Aetna
Cas. & Sur. Co., 204 N.E.2d 273, 275-76 (Mass. 1965).
The relevant complaints here are the First Amended
Complaint and the proposed Second Amended Complaint, because both
were tendered to Endurance. See Open Software Found., Inc. v. U.S.
Fid. & Guar. Co., 307 F.3d 11, 14 (1st Cir. 2002). If even one of
the counts in either of the complaints falls within the coverage
provisions but outside any exclusion, Endurance would have a duty
to defend the entire lawsuit. Norfolk & Dedham Mut. Fire Ins. Co.
v. Cleary Consultants, Inc., 958 N.E.2d 853, 862 (Mass. App. Ct.
2011).
-12-
Although Saint's own complaint proffers various theories
of recovery, the place to begin is with its claim that Endurance
violated the contract, represented by the insurance policy, in
failing to defend the Rubloff Action. Under the policy that duty
could be triggered by either one of the main complaints in that
lawsuit but the charges in the Second Amended Complaint are the
place to start, partly because Saint's own brief aims primarily at
that complaint.
The underpinning of that complaint is the set of factual
allegations already recited at length above--and thereafter
expressed through various stated theories of recovery in common law
tort, antitrust, and otherwise--that Saint and SuperValu engaged in
a campaign designed to frustrate feared competition from Wal-Mart.
The acts, also recited above, included recruiting local residents
to oppose the two shopping centers (in part through the use of
deception) and, in the event, substantially delaying both and
possibly derailing the construction of one of the two.
Judge O'Toole assumed that the alleged conduct was within
the professional services coverage of the policy save as it might
be excluded by Exclusion N and then ruled that Exclusion N applied
to all of the counts of the Second Amended Complaint. Exclusion N
explicitly says that the policy
shall not apply . . . to any Claim based upon
or arising out of any . . . actual or alleged
violations of the Sherman Anti-Trust Act . . .
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or any similar provision [of] any state . . .
law . . . .
Thus, the Rubloff Action counts based on the Sherman Act and the
counterpart Illinois statute cannot trigger coverage.
The far more interesting question is whether Exclusion N
also reaches counts of the Second Amended Complaint that rely upon
the same facts but charge violations of statutes (e.g., RICO) or
common law theories (e.g., fraud, interference with prospective
economic advantage) that are not limited to and do not expressly
identify their target as restraints of trade. If Exclusion N
applied only where the count set forth an antitrust or similarly
named claim, a count charging a RICO violation or fraud based on
the same facts would not fall within the exclusion and foreclose
coverage.
However, Exclusion N, in addition to "including" counts
denominated as violations of the Sherman Act and like statutes,
extends by its terms to any claim "based upon or arising out of any
actual or alleged . . . restraint of trade." And Massachusetts
case law construes "arising out of" as looking at the character of
the behavior alleged in the count and, if it fits the terms of the
exclusion, that exclusion governs even though the statute or tort
is denominated in different or broader terms. See Bagley v.
Monticello Ins. Co., 720 N.E.2d 813, 817 (Mass. 1999).
For example, in Fuller v. First Financial Insurance Co.,
858 N.E.2d 288 (Mass. 2006), a property owner carried a liability
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insurance policy excluding claims "arising out of assault or
battery," and the court held that the exclusion barred coverage of
a judgment against the property owner for negligence for failing to
protect the victim from being attacked and kidnapped by a third
party while on the property, and eventually raped. Id. at 289-90.
The court reasoned that even though the claim was for negligence,
the facts alleged showed that the claim arose out of assault and
battery--absent which there would have been no injury due to
negligence. Id. at 293.
Fuller cited a "general rule that the phrase 'arising out
of' is to be read broadly" in liability insurance exclusions, 858
N.E.2d at 293 n.9, and it does not stand alone. Thus, in Bagley,
720 N.E.2d at 816, the court stressed that "[t]he phrase 'arising
out of' must be read expansively, incorporating a greater range of
causation than that encompassed by proximate cause under tort law."
Accord Brazas Sporting Arms, Inc. v. Am. Empire Surplus Lines Ins.
Co., 220 F.3d 1, 7 (1st Cir. 2000).
It can hardly be disputed that the factual allegations of
the Second Amended Complaint allege a conspiracy to forestall
competition through misuse of legal proceedings and through
deception. And every count in the Rubloff Action that is not
itself described as an antitrust claim depends centrally on the
alleged existence of such a scheme. Thus, judged by the
allegations of the complaint,
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-the deceptions that form the basis of
the RICO and common law fraud counts were
undertaken in order to stop the shopping
centers and prevent Wal-Mart from competing;
-the interference with prospective
economic advantage counts were for interfering
with prospective contracts to fill the
shopping centers, including the contracts with
Wal-Mart;
-the abuse of process count was for
misusing legal proceedings for the purpose of
delaying or blocking the shopping centers so
Wal-Mart could not operate from them; and
-the conspiracy counts were for
agreement between Saint and SuperValu to do
precisely these allegedly anti-competitive
things.
Both the facts stated in the Rubloff complaint and the
connection between them and the counts are merely allegations, but
Exclusion N is triggered where a claim is based upon or arises out
of any actual or "alleged" conduct of the anti-competitive
character limned in the exclusion. See Sterilite Corp., 458 N.E.2d
at 340. And insurance policies covering litigation require the
insurer to take responsibility based not on what actually happened-
-which will be known only at the end of litigation--but what is
charged in the complaint.
Saint's brief scarcely engages with this line of
reasoning, which is merely an expansion of the more condensed
rationale offered by the district court. Instead, bewilderingly,
Saint's argument rests on the propositions that the Illinois
district court ruled that Saint's alleged conduct was protected
-16-
against antitrust scrutiny by the Noerr-Pennington doctrine and,
since it was not wrongful conduct, it could not be excluded from
coverage by Exclusion N. This is a non-sequitur.
The Noerr-Pennington doctrine,4 resting on Supreme Court
interpretations of the Sherman Act, reads that statute not to
extend to petitions or other representations aimed at legislators,
even where the motive and effects are to secure legislation to
forestall competition and such efforts use deception and other
improper methods. Although the doctrine was thereafter narrowed in
certain respects, see note 4, above, it helps Saint not at all if
we assume that the doctrine immunizes all of the alleged conduct in
the Second Amended Complaint.
Exclusion N depends not on whether conduct occurred or,
if so, whether it was unlawful, but on what the complaint alleged.
What was factually alleged in the Second Amended Complaint in no
uncertain terms was an anti-competitive scheme and, where the
pertinent counts arise out of that alleged scheme, Exclusion N
negates coverage. The exclusion does not depend on whether a
4
E. R.R. Presidents Conference v. Noerr Motor Freight, Inc.,
365 U.S. 127 (1961); United Mine Workers v. Pennington, 381 U.S.
657 (1965). Compare Cal. Motor Transp. Co. v. Trucking Unlimited,
404 U.S. 508, 511 (1972) (holding that Noerr-Pennington does not
apply to litigation that is a "mere sham" to stifle competition),
with Prof'l Real Estate Investors, Inc. v. Columbia Pictures
Indus., Inc., 508 U.S. 49, 60 (1993) (holding that the sham
exception only applies to "objectively baseless" litigation).
-17-
successful defense can be advanced: it excludes meritless claims
quite as much as ones that may prove successful.
Saint alternatively argues that if activities protected
by Noerr-Pennington are excluded, the policy coverage becomes
illusory for it because Noerr-Pennington activities comprise such
a large portion of its business. That the exclusion substantially
reduces coverage does not in any way make the policy illusory under
contract law since it still provides coverage for many potential
claims related to Saint's activities. Bagley, 720 N.E.2d at 817.
Whether Endurance misrepresented the coverage is a different
question which brings us to Saint's backup claims.
These backup counts, which effectively seek to hold
Endurance liable for the coverage excluded by Exclusion N, also
were properly rejected by Judge O'Toole for reasons set forth in
his able decision. Importantly, neither the covenant of good faith
and fair dealing nor chapter 93A can be used to negate an express
provision of a written contract. Saint, 2012 WL 1098429, at *5.
As for the negligence claim, it is predicated on a breach of a duty
to defend that does not exist in the contract.
Saint's other backup counts--for estoppel, negligent
misrepresentation, and fraud--all rest on the notion that Saint
sought protection for its core business and its disclosed business
included efforts to halt development opposed by its clients. But
Exclusion N specifically excludes certain actions and claims
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whether or not they comprise core activities of Saint. The
"purpose of a policy exclusion is to narrow the scope of coverage."
Certain Interested Underwriters at Lloyd's, London v. Stolberg, 680
F.3d 61, 67 (1st Cir. 2012).
As Judge O'Toole pointed out, the complaint does not
describe any explicit representation by Endurance that the policy
would cover without exclusions all of Saint's core activities,
Saint, 2012 WL 1098429, at *4, let alone indicate any disclosure by
Saint that such activities included deception and misuse of
administrative or judicial proceedings. That Saint may have
expected more protection than it got suggests mainly that it may
not have read carefully the policy it purchased.
It remains to address the First Amended Complaint. While
the Second Amended Complaint sought relief for the anti-competitive
scheme itself, the First Amended Complaint was concerned entirely
with documents that might be relevant to the substantive claims
that the Rubloff plaintiffs ultimately included in the Second
Amended Complaint. It was filed because after Mayo turned over the
incriminating Saint materials to Rubloff Development, Saint
threatened to sue to obtain their return.
The First Amended Complaint purported to assert three
different counts:
-first, a request for a declaration
that the materials delivered by Mayo were not
privileged and need not be returned to Saint
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(made a case and controversy by Saint's
threatened lawsuit to secure their return);
-second, a claim for negligent
spoliation of evidence which, under Illinois
law, e.g., Boyd v. Travelers Ins. Co., 652
N.E.2d 267, 270 (Ill. 1995), may allow a
plaintiff to collect damages where its own
substantive claim was frustrated by the other
side's negligent destruction of critical
evidence;5 and
-third, a request for an injunction to
prevent any further destruction by Saint of
relevant materials.
The first and third claims--the declaratory count and the
demand for injunctive relief--effectively aimed at preservation of
evidence in support of the substantive claims that the complaint
stated were to be asserted later. While siding mostly with the
Rubloff plaintiffs on the request for declaratory relief, Judge
Leinenweber found that a request for injunctive relief standing
alone asserted a remedy but not a cause of action. Then, he found
the spoliation claim premature since at the time no substantive
counts directed to the alleged scheme had been asserted. See note
5, above.
The document claims are not discussed in Judge O'Toole's
decision--it is unclear how far they were pressed by Saint in the
district court as a basis for arguing that Endurance had breached
5
Illinois law recognizes negligent spoliation of evidence as
a subcategory of the broader tort of negligence, but to prevail a
plaintiff must show that he would have prevailed in the underlying
lawsuit if he had the destroyed evidence. Borsellino v. Goldman
Sachs Grp., Inc., 477 F.3d 502, 510 (7th Cir. 2007).
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its policy obligations. In our court almost all of Saint's
arguments for coverage are aimed at the Second Amended Complaint.
But Saint does say almost without explanation that the negligent
spoliation claim in the First Amended Complaint is enough to
require protection; we will assume dubitante that this argument was
preserved since it does not change the outcome.
Endurance may have scanted its response due to the
terseness of Saint's reference but Endurance appears to think that
the First Amended Complaint is in all events irrelevant because it
was superseded by the Second Amended Complaint. However, the First
Amended Complaint was tendered to Endurance and representation
refused, and it may not help Endurance that the document issues
were thereafter resolved by Judge Leinenweber before the Second
Amended Complaint was even filed.
Endurance might have argued that the negligent spoliation
count was itself "based upon or arising out of" the anti-
competitive scheme that was alleged in both amended complaints; but
the relationship between the alleged scheme and the "negligent"
destruction of documents might appear at least more remote than
counts in the Second Amended Complaint, all of which seek under
some heading redress for the harm done by the alleged scheme.
Anyway, under Massachusetts law an antecedent objection to coverage
based on the spoliation count is more straightforward.
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The coverage of the malpractice policy is for wrongful
acts committed in the performance or failure to perform Saint's
"Professional Services," which are defined by Saint itself as
"[a]dvocacy consulting services including: analysis, strategic
planning, research, recommendations, recruiting, organizing,
support management and media communication." For example, if Saint
carelessly failed to organize media communication, this negligence
would surely be covered.
But in Massachusetts, the "professional services"
language is read to cover only claims involving the exercise or
failure to exercise professional judgment; and, critically here,
"even tasks performed by a professional are not covered [by a
professional services policy] if they are 'ordinary' activities
'achievable by those lacking the relevant professional training and
expertise.'" Med. Records Assocs., 142 F.3d at 514 (quoting
Jefferson Ins. Co. of N.Y. v. Nat'l Union Fire Ins. Co. of
Pittsburgh, PA, 677 N.E.2d 225, 230 (Mass. App. Ct. 1997)).
It is hard to see how the "negligent" discarding of old
files by a consulting firm qualifies as its performance of
"professional services" as that concept is understood in
Massachusetts law. Possibly it would be different if the policy
holder were a document storage and disposal firm, which negligently
discarded documents confided to its care. But that is not the
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business in which Saint declared itself to be engaged, and its
representation defines the scope of its protection.
Finally, there were references during oral argument to
yet other claims which Saint made by counterclaim against Rubloff
Development in the Illinois district court action, such as
conversion and replevin. Rubloff, 2012 WL 1032784, at *13-17.
Whether or not there might be coverage if these claims were brought
against Saint is of no matter; the policy covers claims against
Saint but not those brought by Saint as a claimant or counter-
claimant.
Affirmed.
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