The Massachusetts Appeals Court recently reaffirmed that jurisdiction’s broad understanding of a general liability carrier’s duty to defend, holding that an insurer had a duty to defend against a claim of trespass first asserted after the expiration of its policy period.  Porter v. Clarendon Nat’l Ins. Co., No. 09-P-964 (Apr. 26, 2010) (click here for a link to the slip opinion).

The insured was 1915 Beacon Street Condominium Trust.  As its name implies, it owned a residential condominium building in the congested Boston suburb of Brookline.  It purchased general liability policies from Greater New York Insurance Company (2000-01), Clarendon National Insurance Company (2001-03), and Vermont Mutual Insurance Company (2003-07).

At some point before the inception of Greater New York’s policy, the trust built a retaining wall and two parking spaces, presumably for the use of its building’s residents.  In September 2004, the abutting property owner demanded that the trust remove the wall and the parking spaces, claiming that they impermissibly encroached on the abutter’s parcel.  The trust refused, asserting that it had been using the disputed space since 1983 and had title to the land through adverse possession.  The abutter sued in November 2004, alleging “continuing trespass” in its complaint.  Vermont Mutual accepted the tender and defended the suit, settling it for $27,500 in March 2007.

Vermont Mutual demanded that Greater New York and Clarendon contribute to the defense of the underlying claim.  They refused, arguing that the claim for trespass accrued only from September 2004 and, therefore, did not occur during their policy periods.  They also asserted that the “your work” and “your property” exclusions barred coverage.  The Norfolk County Superior Court granted summary judgment to Greater New York and Clarendon.

The appeals court reversed.  Reviewing Massachusetts law, the appeals court noted that a general liability carrier had a duty to defend if the allegations in a third-party action were “reasonably susceptible of an interpretation that they state or adumbrate a claim covered by the policy terms.”  The court construed the broad continuous trespass allegation in the complaint as stating a claim for negligent trespass dating back to before the inception of the Greater New York policy in 2000.  The court specifically noted that a claim for intentional trespass could reasonably be construed to “adumbrate a claim for negligent trespass,” which would fall within the scope of coverage.

The court further found that the carrier’s asserted exclusions were inapplicable.  The “your property” exclusion, the court wrote, is included in liability policies to prevent them from being converted into first-party policies.  The damage asserted by the abutter, though, was damage to a third party and, therefore, fell within the scope of coverage.  It also found that the “your work” exclusion was inapplicable, because the complaint sought damages for tort – not for work that it had contracted with the trust to perform.

The court’s decision reaffirmed the broad reading that Massachusetts law gives to a liability insurer’s duty to defend.