Late last month the Massachusetts Supreme Court made a significant addition to the state’s insurance coverage jurisprudence with its decision in Masonic Temple Association of Quincy, Inc. v. Patel, 489 Mass. 549 (2022), decided on April 27, 2022. The primary issue addressed in the decision was whether the addition of an insured’s trade name on the declarations page of a commercial general liability insurance policy had the legal effect of limiting the policy’s coverage to liability arising from the insured’s business activities under that trade name. The court held that it did.
The case arose in the aftermath of a catastrophic fire that destroyed a historic Masonic Temple in Quincy. The fire was caused by careless workers as part of a renovation of the temple under the stewardship of the temple’s new owner, Jay Patel. He requested liability coverage under a CGL policy issued by Union Insurance Company to a company named Dipika, Inc., of which Patel was the sole owner. The declarations page of the Dipika policy designated the named insured as “Dipika Inc. dba Super 8.” (Patel/Dipika operated a Super 8 Motel in Weymouth.) Union moved for summary judgment, arguing that the identification of the named insured’s “dba” limited the policy’s coverage to Dipika’s activities doing business as the Super 8. Patel countered that the use of a “dba” does not create a separate legal entity, so it cannot be read to limit coverage only to activities related to such trade name.
In granting Union’s motion, and finding that the policy “unambiguously” limited coverage to the dba-related Super 8 Motel operations, the majority primarily relied on the policy’s inclusion of Dipika’s trade name, stating: “This is the only interpretation that appropriately lends meaning to the choice of the insurer and insured to include the “dba Super 8” language when designating the insured.” The majority supported their decision by pointing to a second designation in the policy declarations—that of “Motel” under the “Business Description” of the insured—as well as the fact that the policy premium was based on the gross revenue generated at the single location of the Weymouth Super 8.
The Chief Judge of the court dissented. He was not convinced that the three factors relied on by the majority were sufficient to “unambiguously” limit the scope of coverage because none of them expressly defined the scope of coverage and, in fact, arguably contravened the policy’s covering provisions, stating that “it is not unreasonable to interpret the policy as covering the fire-related damages at the Temple in line with the policy’s express coverage language…although the ‘dba’ designation, business description, and premium calculation may hint at the parties’ contrary intention, these clues at most render the policy’s scope of coverage ambiguous.”
Interestingly, stepping outside the four corners of the Masonic decision and turning to the Superior Court’s underlying decision on Union’s summary judgment motion would seem to go a long way toward bridging the gap between Masonic’s majority and lone dissenter on the issue of whether the policy was unambiguous in defining its scope of coverage. In reaching its decision that the Union policy did not provide coverage for the temple fire, the lower court highlighted, and relied on, additional language in the policy that the Masonic decision did not address—the policy’s “Location Schedule which lists only the Weymouth [Super 8 Motel] address.” The Superior Court also pointed out that the Union policy contained an endorsement (“Hospitality Expanded Coverage Endorsement”) which included a provision for “Newly Acquired or Constructed Property.” Jay Patel argued that the Masonic Temple in Quincy was, in fact, a “newly acquired” property. The court pointed out that the property, while recently acquired, was not acquired by Dipika (i.e., the named insured), but rather by Patel (who was not identified as an insured in the policy).
The lesson to be taken from the Masonic decision is, like the majority’s characterization of the subject policy’s language, unambiguous—while the core covering provisions in an insurance policy have universally been held to be legally significant, an insurer and insured ignore the significance of the policy declarations at their own peril. Designations and descriptions which might otherwise seem superfluous (such as the addition of a “dba” trade name) could very well make the difference between full coverage and a multi-million-dollar shortfall.