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Under Massachusetts law, the proper interpretation of an insurance policy is a matter of law to be decided by a court, not a jury. As with any contract, the court must construe the words of the policy in their usual and ordinary sense. If a term is susceptible of more than one meaning and reasonably intelligent persons would differ as to which meaning is the proper one, the term is ambiguous. Ambiguities are to be construed against the insurer and in favor of the insured. This rule of construction applies with particular force to exclusionary provisions. However, an ambiguity does not exist simply because the parties disagree about how to interpret the policy.
In July 2009, homeowners Tom and Sue Ghezzi hired general contractor Benchmark Construction Services, Inc. ("Benchmark") to renovate their Newton, Massachusetts home. The homeowners had hired architect Thomas Huth to design the renovation plans. Huth, in turn, hired Sara Egan d/b/a Painted Design to apply decorative painting to one of the interior walls, and Egan set her employee, Meghan Bailey, to the task. Uncontestedly, Benchmark had no contractual relationship with Huth, Egan, or Bailey; neither was Bailey's work performed under a contract with any of Benchmark's contractors or subcontractors. On March 5, 2010, while Bailey was applying the decorative paint, she fell from a ladder that was positioned on top of scaffolding. Bailey sued Benchmark in the Massachusetts Superior Court, alleging that she was injured in the fall, that Benchmark owed her a duty of care, and that Benchmark negligently erected and maintained the ladder and scaffolding. Benchmark sought a defense from its insurer, United States Liability Insurance Company ("USLIC"), but USLIC determined that Bailey's claims were not covered under Benchmark's insurance policy and, hence, that USLIC has no duty to defend or indemnify Benchmark against those claims. According to USLIC, an endorsement to the policy excluded Bailey's injuries from coverage. Ruling on cross motions for summary judgment, the district court concluded that USLIC had no duty to defend or indemnify Benchmark in the personal injury lawsuit.
Under the circumstances, did USLIC have a duty to defend or indemnify Benchmark in the personal injury lawsuit?
The court reversed the district court’s judgment, holding that USLIC had a duty under a commercial general liability insurance policy to defend and indemnify the general contractor in the underlying negligence suit because there was an ambiguity in an exclusion as to whether the phrase "for which any insured may become liable" referred to "services" or "bodily injury," the exclusion applied only if the general contractor may become liable for the injured party's services, and the general contractor could not have been liable for the employee's decorative painting. The undefined term, "contractor," was ambiguous, and the reasonable expectations of the general contractor support the definition it advanced.