LUIS PEDROSO, Trustee v. HANOVER INSURANCE COMPANY & Another.

NOTICE: Summary decisions issued by the Appeals Court pursuant to M.A.C. Rule
23.0, as appearing in 97 Mass. App. Ct. 1017 (2020) (formerly known as rule 1:28,
as amended by 73 Mass. App. Ct. 1001 [2009]), are primarily directed to the parties
and, therefore, may not fully address the facts of the case or the panel's
decisional rationale. Moreover, such decisions are not circulated to the entire
court and, therefore, represent only the views of the panel that decided the case.
A summary decision pursuant to rule 23.0 or rule 1:28 issued after February 25,
2008, may be cited for its persuasive value but, because of the limitations noted
above, not as binding precedent. See Chace v. Curran, 71 Mass. App. Ct. 258, 260
n.4 (2008).

COMMONWEALTH OF MASSACHUSETTS

APPEALS COURT

22-P-737

LUIS PEDROSO, trustee,1

vs.

HANOVER INSURANCE COMPANY & another.2

MEMORANDUM AND ORDER PURSUANT TO RULE 23.0

This insurance coverage dispute arises out of a tragic

accident in which one man was killed and another was injured

trying to free a tractor trailer from snow and ice in the rear

alley of commercial rental property owned by the plaintiff, Luis

Pedroso, as trustee of the LMP Realty Trust (LMP). LMP was sued

in connection with the accident, and it sought a defense and

indemnification from the defendants, Hanover Insurance Company

(Hanover) and Sentinel Insurance Company, Limited (Sentinel),

which insured two of LMP's tenants. Hanover and Sentinel denied

that they had a duty to defend or indemnify LMP, and this

lawsuit, in which LMP asserted claims for breach of contract and

violation of G. L. c. 93A, followed. In the Superior Court, a

1 Of the LMP Realty Trust.
2 Sentinel Insurance Company, Limited.
judgment on the pleadings entered in LMP's favor on its breach

of contract claims.3 Hanover and Sentinel appeal, and we affirm.

Background. LMP alleged the following facts.4 LMP owned

commercial property that contained fourteen rental units. LMP

leased one unit to Hanover's insured, Do Can Brewery, LLC (Do

Can), and another unit to Sentinel's insured, North East Form

Engineering, Inc. (North East). On February 6, 2015, the owner

of Do Can, Patrick Slattery, was expecting the delivery of

equipment. When the tractor trailer making the delivery

arrived, Slattery directed the driver to the rear alley of the

building. There, the tractor trailer got stuck in snow and ice.

Slattery and an employee of North East, Jeffrey Sperrey,

attempted to extricate the tractor trailer using Sperrey's

pickup truck. During the efforts to extricate the tractor

trailer, Sperrey backed the pickup truck into Slattery and Gregg

Stevens, an employee of another tenant. Slattery was killed and

Stevens was injured. Slattery's estate and Stevens brought

3 LMP agreed to a voluntary dismissal, with prejudice, of its
c. 93A claims.
4 For purposes of this appeal, Hanover and Sentinel do not

dispute the factual allegations regarding the accident or that
they insured two of LMP's tenants. This appeal instead presents
legal questions regarding how to interpret the underlying
policies. We review the allowance of the motion for judgment on
the pleadings de novo. Ridgeley Mgt. Corp. v. Planning Bd. of
Gosnold, 82 Mass. App. Ct. 793, 797 (2012).

2
claims against LMP, which LMP's insurer, Liberty Mutual

Insurance Company (Liberty Mutual), settled on LMP's behalf.

LMP further alleged that Hanover and Sentinel also had a

duty to defend and indemnify it where LMP was an additional

insured on Hanover's policy with Do Can and Sentinel's policy

with North East.5 In particular, Hanover's policy with Do Can

provided that LMP was an additional insured "only with respect

to . . . [p]remises you own, rent, lease or occupy." Sentinel's

policy with North East provided that LMP was an additional

insured "only with respect to liability arising out of the

ownership, maintenance or use of that part of the land or

premises leased to you."

Discussion. 1. Leased premises. In arguing that they had

no duty to defend or indemnify LMP, Hanover and Sentinel rely on

the fact that LMP was an additional insured (1) under the

Hanover policy, only with respect to Do Can's leased premises

and (2) under the Sentinel policy, only with respect to

liability arising out of the ownership, maintenance, or use of

North East's leased premises. Hanover and Sentinel argue that

they had no duty to defend or indemnify LMP because the accident

5 The real plaintiff in interest is Liberty Mutual, which brought
this action in LMP's name pursuant to Mass. R. Civ. P. 17 (a),
461 Mass. 1401 (2011). This was not disclosed to the court
prior to oral argument and we caution that, going forward,
disclosure would be the better practice.

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occurred in the rear alley, which they assert was a common area

that was not part of the premises leased by their respective

insureds.6

In determining whether the rear alley was part of the

leased premises, we look to how the leases defined the leased

premises, applying the usual rules of contract interpretation.

"When the words of a contract are clear, they control, and we

must construe them according to their plain meaning, in the

context of the contract as a whole." Lieber v. President &

Fellows of Harvard College, 488 Mass. 816, 823 (2022). Here,

the words of the contract were clear; the leased premises

included the rear alley. Using Do Can's lease as an example,

the leases provided as follows:

"1. PARTIES . . . LESSEE hereby leases the following
described premises:

"2. PREMISES A portion of the premises located at 44
Stedman Street, Lowell, Massachusetts being
commonly referred to as Unit 4 . . .
together with the right to use in common
with others entitled thereto the common
areas for ingress and egress and parking."7

6 Separately, Sentinel argues that the accident did not arise out
of North East's ownership, maintenance, or use of the back
alley. This argument is unavailing where the accident arose out
of a North East employee's use of the back alley to try to free
the tractor trailer. See Commerce Ins. Co. v. Theodore, 65
Mass. App. Ct. 471, 476 (2006) (we give "arising out of" broad
meaning).
7 North East's lease included the same language but specified

that North East was leasing Unit 9.

4
Read together, these paragraphs defined the leased premises as

including the right to use the common areas for ingress and

egress and parking, meaning the rear alley.8 While the leases

could have been drafted to draw a distinction between the leased

units and the accompanying right to use the common areas,

identifying only the units as the leased premises, that is not

what occurred here.9

We are unpersuaded by Hanover and Sentinel's arguments to

the contrary. Hanover and Sentinel argue that the leases

distinguished between the premises and the leased premises, with

the premises including the common areas and the leased premises

not including the common areas. First, Hanover and Sentinel

assert that because the second paragraph of each lease, quoted

above, had a heading that read "PREMISES," the language under

8 Hanover and Sentinel do not dispute that the areas for ingress
and egress and parking included the rear alley.
9 Hanover and Sentinel suggest that the leased premises could not

have included the common areas because, according to Hanover and
Sentinel, Massachusetts case law recognizes a distinction
between leased premises and common areas. In part, Hanover and
Sentinel rely on cases holding that (1) absent a contractual
obligation to keep a leased premises safe, a commercial landlord
is not liable for personal injuries arising from defects in
leased premises but (2) a commercial landlord is liable for
personal injuries arising from defects in common areas. See,
e.g., Humphrey v. Byron, 447 Mass. 322, 329 (2006). However,
this case presents a different question: where the parties to a
commercial lease define the leased premises as including common
areas, are those common areas within the leased premises for
purposes of determining the scope of an additional insured
provision. Hanover and Sentinel do not provide any reason why
the definition in the lease would not control.

5
that heading described the premises, not the leased premises.

We are unpersuaded where the words immediately preceding the

"PREMISES" heading stated that that the "LESSEE hereby leases

the following described premises," thereby clarifying that the

premises being described were the leased premises. Second,

Hanover and Sentinel assert that other lease provisions referred

to the leased premises in ways that logically could not have

applied to the common areas, and that the leased premises

therefore did not include the common areas. It is true that

some references to the leased premises logically could not have

applied to the common areas, for example a requirement that the

leased premises be maintained at a temperature of at least fifty

degrees Fahrenheit and a provision making LMP responsible for

the "removal of snow and ice from the parking lots surrounding

the leased premises." However, other references to the leased

premises logically could have applied to the common areas,10 and

the few instances where that was not true do not overcome the

unambiguous definition contained in the second paragraph of each

lease.

10These references included, for example, a requirement that the
leased premises be used for the conduct of the tenant's
business, a prohibition on conducting an unlawful trade or
occupation in the leased premises, and a prohibition against
subletting the leased premises without consent.

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2. Automobile exclusion. Separately, Sentinel argues that

there was no coverage where its policy with North East included

an automobile exclusion, which excluded the following from

coverage:

"'Bodily injury' or 'property damage' arising out of the
ownership, maintenance, use or entrustment to others of any
aircraft, 'auto' or watercraft owned or operated by or
rented or loaned to any insured. Use includes operation
and 'loading or unloading.'

"This exclusion applies even if the claims against any
insured allege negligence or other wrongdoing in the
supervision, hiring, employment, training or monitoring of
others by that insured, if the 'occurrence' which caused
the 'bodily injury' or 'property damage' involved the
ownership, maintenance, use or entrustment to others of any
aircraft, 'auto' or watercraft that is owned or operated by
or rented or loaned to any insured."

In addressing Sentinel's arguments, we are guided by Worcester

Mut. Ins. Co. v. Marnell, 398 Mass. 240 (1986), and First

Specialty Ins. Corp. v. Pilgrim Ins. Co., 83 Mass. App. Ct. 812

(2013). We conclude that the allegations against LMP do not

fall within the automobile exclusion, as that exclusion has been

interpreted under the case law.

In Marnell, 398 Mass. at 241-242, two parents sought a

defense and indemnification from their insurer for allegations

that they negligently supervised a party hosted by their

underage son -- an unnamed insured on the policy -- who left the

party in an intoxicated state, drove his car under the

influence, and struck and killed another person. The insurance

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company argued that the following exclusion barred coverage:

"[liability coverages] do not apply to bodily injury or property

damage . . . arising out of the ownership, maintenance, use,

loading or unloading of . . . a motor vehicle owned or operated

by or rented or loaned to any insured" (emphasis added). Id. at

242. The insurance company argued that because the allegations

arose out of use of a motor vehicle owned or operated by any

insured, namely the son who was an unnamed insured, the parents

were not entitled to liability coverages. See id. at 242-243.

The Supreme Judicial Court disagreed, noting that because the

policy also contained a severability of insurance clause, "the

term 'insured' as used in the motor vehicle exclusion refers

only to the person claiming coverage under the policy." Id. at

244. Because the motor vehicle involved in the fatal accident

was not owned or operated by or rented or loaned to either of

the parents who were claiming coverage, the exclusion did not

bar coverage. See id. at 244-245.

In response, some insurance companies added clarifying

language to their automobile exclusions -- specifically, they

added the language that appears in the second paragraph of the

Sentinel automobile exclusion quoted above -- and that language

was addressed in First Specialty Ins. Corp., 83 Mass. App. Ct.

at 814 n.3, 818. In First Specialty Ins. Corp., this court

noted that "the second paragraph clearly envisions that two

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different insureds are involved." Id. at 818. Specifically,

the second paragraph of the automobile exclusion bars coverage

if "(1) claims are brought against 'any insured' alleging

negligent supervision or hiring of others by 'that insured,' and

(2) the occurrence underlying those claims involved an

automobile owned or operated by 'any insured.'" Id. This court

concluded that in the first clause, the reference to "any

insured" meant only the insured claiming coverage but that in

the second clause, the reference to "any insured" actually meant

any insured. See id. at 819. In sum, where an automobile

exclusion contains this additional language, for each insured

claiming coverage, "we must determine whether, according to the

complaint, that [insured] negligently hired or supervised

another insured person who owned or operated the automobile

involved in the occurrence underlying the claim. If so, that

claim of negligence is unambiguously excluded from coverage."

Id.

Here, applying Marnell, the bodily injury did not arise out

of the ownership, maintenance, use, or entrustment to others of

a motor vehicle owned or operated by or rented or loaned to LMP,

and the first paragraph of the automobile exclusion therefore

does not bar coverage. Turning to the second paragraph of the

automobile exclusion, under First Specialty, we look to whether

the claims against LMP alleged negligent supervision or hiring.

9
We conclude that they did not. The allegations against LMP were

based on LMP's failure to properly remove snow and ice from the

rear alley. Slattery's estate alleged that LMP "failed to

properly clear the [p]remises of snow and ice," and that the

tractor trailer became "lodged in snow and ice on the [p]remises

in the unsafe area created by [LMP's] negligence."11 Where the

claims against LMP did not allege negligent supervision or

hiring, the second paragraph of the automobile exclusion does

11Sentinel points us to an allegation that LMP caused tortious
injury and death "through [its] ownership, operation,
management, maintenance and control of the Premises," and
suggests that this allegation concerned LMP's obligation to
supervise snow removal contractors or anyone trying to free the
tractor trailer. However, when read in the context of the other
allegations regarding LMP's failure to properly remove the snow
and ice, the allegation on which LMP relies concerned LMP's
obligation to keep the rear alley free of snow and ice.

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not apply, and the automobile exclusion does not bar coverage.12

Judgment affirmed.

By the Court (Henry, Shin &
Hodgens, JJ.13),

Clerk

Entered: June 14, 2023.

12LMP's request for an award of its appellate attorney's fees
and costs pursuant to Preferred Mut. Ins. Co. v. Gamache, 426
Mass. 93 (1997), is denied. The rule in Gamache does not apply
here. As explained in John T. Callahan & Sons, Inc. v.
Worcester Ins. Co., 453 Mass. 447, 447 (2009),
"It is well settled that an insured is entitled to recover
reasonable attorney's fees and expenses incurred in
successfully establishing the insurer's duty to defend
under the terms of the policy. See [Gamache, supra at 98].
What happens when the party incurring attorney's fees and
expenses to establish the insurer's obligation to defend is
not the insured but a different insurer that has defended
and provided coverage to the insured? That is the question
raised in this case. We answer that the exception to the
American Rule in Gamache and its progeny does not extend to
allow the prevailing insurer recovery of its attorney's
fees associated with an action brought to establish the
defense and coverage responsibility of another insurer."
13 The panelists are listed in order of seniority.

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