HOWARD, Chief Judge.
Utica Mutual Insurance Company ("Utica") appeals from a summary judgment order requiring it to defend its insured Herbert H. Landy Insurance Agency ("Landy") in a California state court lawsuit. Agreeing with the district court that Utica is obligated to defend Landy under its professional liability insurance policy, we affirm.
Landy and Utica each are insurance companies. Landy provides insurance to real estate professionals, and Utica insured Landy under a professional liability insurance policy. This policy, which the parties agree is governed by Massachusetts law, contains a "duty to defend" obligation that required Utica to defend Landy in certain lawsuits arising from errors and omissions in Landy's provision of professional services as an insurance broker and agent.
Landy alleges that Utica's duty to defend was triggered when Landy was sued by CRES Insurance Services, LLC ("CRES"). CRES is a competitor of Landy in the California real estate professional liability insurance market. CRES sued Landy in California state court, alleging that Landy had engaged in unfair business practices in violation of California state law.
Specifically, CRES alleged that California law divides the relevant insurance market between "admitted" and "surplus" insurers. See generally Cal. Ins.Code § 1763; Cal.Code Regs. tit. 10, §§ 2131-2140; 39 Cal. Jur.3d Insurance Companies § 227.
Based on these facts, CRES asserted two causes of action. CRES's first claim was a statutory claim alleging that Landy's violation of the state insurance code constituted
CRES's second claim was for negligence, alleging that Landy's conduct negligently interfered with CRES's prospective economic advantage. Specifically, CRES asserted that Landy "failed to act with reasonable care," including "in the solicitation and placement of [insurance policies]." It further alleged that Landy "failed to conduct a diligent search of the admitted market, filed falsified documentation relating to the search, and evaded scrutiny ... by failing to file required statements."
Landy demanded that Utica defend it in the CRES lawsuit under the policy. In response, Utica filed this action in Massachusetts federal district court, seeking a declaration that CRES's negligence claim did not trigger its duty to defend.
The parties dispute the meaning of two policy provisions. First, the policy covers only suits arising from Landy's errors or omissions in "rendering or failing to render professional services" as an insurance broker or insurance agent.
Second, the policy expressly excludes coverage for "unfair competition of any type." The policy also contains an exclusion for intentional misconduct.
Landy disagrees for two reasons. It says that under Massachusetts law, "unfair competition" encompasses only conduct that misleads consumers, and the CRES complaint includes no allegations of consumer confusion. Alternatively, Landy argues that the exclusion does not apply to negligent performance of professional services, even if that negligence also harmed a business competitor.
On competing motions for summary judgment, the district court denied Utica's motion and granted summary judgment to Landy. UTICA Mut. Ins. Co. v. Herbert H. Landy Ins. Agency Inc., No. 13-11471, 2014 WL 5475038, at *1 (D.Mass. Oct. 29, 2014). It held that the policy required Utica to defend Landy in the CRES lawsuit because CRES's negligence claim arose out of Landy's allegedly negligent performance of professional services, and because the exclusion for unfair competition did not cover CRES's negligence claim.
We review summary judgment decisions de novo. Batista v. Cooperativa De Vivienda Jardines De San Ignacio, 776 F.3d 38, 41 (1st Cir.2015). We may affirm a grant of summary judgment on any ground supported by the record, so long as there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. Id. at 42. "Where [as here] facts are not in dispute, the interpretation and application of the [insurance] policy language is a question of law. The parties and the district court agree that Massachusetts law governs, and we accept this premise." Massamont Ins. Agency, Inc. v. Utica Mut. Ins. Co., 489 F.3d 71, 72 (1st Cir.2007) (citation omitted). Generally the insured bears the initial burden of establishing coverage, while the insurer bears the burden on exclusions from coverage. Boazova v. Safety Ins. Co., 462 Mass. 346, 968 N.E.2d 385, 390 (2012).
Three sets of settled principles under Massachusetts decisional law guide our analysis. First, on the duty to defend, the Massachusetts Supreme Judicial Court has stated that
Metropolitan Prop. & Cas. Ins. Co. v. Morrison, 460 Mass. 352, 951 N.E.2d 662, 667 (2011) (citations and internal formatting omitted).
See id. (citations and internal formatting omitted).
Third, for purposes of professional service insurance policies, Massachusetts defines
Roe v. Fed. Ins. Co., 412 Mass. 43, 587 N.E.2d 214, 217 (1992) (internal formatting omitted).
The touchstone for professional services coverage is whether the alleged wrongful act or omission is inherent in the practice of the profession. See id.; see also Massamont, 489 F.3d at 73. Thus, professional liability policies generally do not cover, for example, business management activities, business decisions of a nonprofessional nature, activities not requiring professional expertise, or activities totally unrelated to the profession. See Med. Records Assocs., Inc. v. Am. Empire Surplus Lines Ins. Co., 142 F.3d 512, 514-16 (1st Cir.1998). While these other acts may "set the stage" for the performance of professional services, they are not themselves professional services and thus are not covered by most professional liability policies. Massamont, 489 F.3d at 74.
Applying this law to the facts here, CRES's complaint can be reasonably construed to sketch a professional liability claim, and it is therefore covered by the policy. CRES's negligence claim alleged that Landy "failed to act with reasonable care in the solicitation and placement [of insurance policies]." It further alleged
Generally speaking, only insurance professionals solicit and place insurance policies and conduct due diligence into the admitted insurance market.
Neither are these activities ones not requiring professional expertise, such as sending a client a bill, answering a phone call, driving to a specified location, see Med. Records Assocs., 142 F.3d at 512, or discarding old files, see Saint Consulting Grp., Inc. v. Endurance Am. Specialty Ins. Co., 699 F.3d 544, 555 (1st Cir.2012). To the contrary, solicitation and placement of insurance policies and research of the admitted insurance market require knowledge and skills particular to the insurance profession. Finally, there is no claim that these activities are wholly unrelated to the insurance profession. Cf., e.g., Roe, 587 N.E.2d at 218 (sexual assault is unrelated to profession of dentistry).
Utica's counterarguments are unpersuasive. First, Utica contends that the labels
Utica is correct that labels are not controlling, see Bagley v. Monticello Ins. Co., 430 Mass. 454, 720 N.E.2d 813, 817 (1999), and that professional and business activities are not identical, see Med. Records Assocs., 142 F.3d at 515. But neither are these two categories mutually exclusive, for the provision of insurance is both a profession and a business. Naturally then, some professional decisions also affect business practices. Such is the case here. Landy's allegedly unfair business practices derive from alleged errors in the performance of professional services: negligent solicitation and placement of insurance policies and failure to conduct due diligence into the admitted insurance market.
Second, Utica suggests that professional liability insurance does not cover claims by competitors at all, relying on an unpublished district court opinion in Welch Foods, Inc. v. Nat'l Union Fire Ins. Co., No. 09-12087, 2010 WL 3928704, at *5 (D.Mass. Oct. 1, 2010) aff'd on other grounds, 659 F.3d 191 (1st Cir.2011). Welch Foods addressed whether professional liability insurance for "promotion and marketing services" covered false advertising claims brought by the insured's competitor. See id. at *5. The district court in that case observed that professional liability insurance is "usually intended to provide liability protection for insureds whose clients hire them to provide professional services." Id. Such insurance is "not intended to cover claims by competitors." Id. (citing Visiting Nurse Ass'n, 65 F.3d at 1102).
That general observation is unexceptional, but it is not a categorical rule. While professional liability policies often do not cover competitor suits alleging negligent business decisions, the reason is that the alleged wrongful act is not inherent in the practice of the profession, not that the suit was brought by a competitor. See Roe, 587 N.E.2d at 217. The gauge is the nature of the act, not the identity of the parties. See id.
Relatedly, Utica argues that the policy does not apply because Landy did not breach any professional duties owed to CRES. It is true that CRES did not allege that Landy breached professional duties to it. But professional liability coverage is not necessarily restricted to lawsuits based on allegations of breach of professional duty to the plaintiff. See Harad v. Aetna Cas. & Sur. Co., 839 F.2d 979, 984 (3d Cir.1988). And there is no reason to read this policy so narrowly.
Here, the policy covers losses "aris[ing] out of `wrongful acts' ... in rendering or failing to render professional services." "The phrase `arising out of' must be read expansively," and suggests "but for" causation. Bagley, 720 N.E.2d at 816. Thus, the policy applies where, as here, CRES alleges injuries actually caused by Landy's wrongful performance of professional services. CRES need not allege any breach of professional duties owed to CRES itself.
Turning to the policy's exclusion for "unfair competition of any type," Utica has not met its burden of establishing that the exclusion applies. In construing insurance policies, some Massachusetts courts have interpreted "unfair competition" according to its common law meaning: "conduct that causes confusion on the part of consumers, such as palming off or
The policy at issue here refers to "unfair competition of any type." Applying the Massachusetts definition as described by the cases above, this means "any type" of "conduct that causes confusion on the part of consumers."
In an attempt to get around this plain reading, Utica argues that the modifier "any type" expands "unfair competition" to encompass CRES's negligence claim — even though that claim did not allege consumer confusion. We disagree. Read naturally, the phrase "any type" refers to every kind of the noun that it modifies. See, e.g., Ali v. Fed. Bureau of Prisons, 552 U.S. 214, 220, 128 S.Ct. 831, 169 L.Ed.2d 680 (2008) (The "use of `any' to modify `other law enforcement officer' is most naturally read to mean law enforcement officers of whatever kind."); see also any, Webster's Third New International Dictionary (1993) (defining "any" to mean "one or some indiscriminately of whatever kind"). And while the word "any" may have an "expansive" meaning, it does not have a "transformative" one: it can "never change in the least[ ] the clear meaning of the phrase" it modifies. Freeman v. Quicken Loans, Inc., ___ U.S. ___, 132 S.Ct. 2034, 2042, 182 L.Ed.2d 955 (2012); see also Ali, 552 U.S. at 220 n. 4, 128 S.Ct. 831. For example, "any type of fruit" includes apples, blueberries, cranberries, and every other kind of fruit. It does not include leafy vegetables or red meat.
Similarly, the provision here should be construed consistently with the term of art "unfair competition." See Lodge Corp. v. Assurance Co. of Am., 56 Mass.App.Ct. 195, 775 N.E.2d 1250, 1252 n. 4 (2002) ("technical terms and words of art are given their technical meaning when used in a transaction within their technical field" (quoting Restatement (Second) of Contracts § 202(3)(b) (1981))). Accordingly, "any type of unfair competition" means every kind of conduct leading to consumer confusion. At the very least, this is a reasonable construction. Even assuming that a more expansive construction is also reasonable, Massachusetts law requires us to adopt the construction more favorable to the insured, Landy. See Metropolitan, 951 N.E.2d at 671.
Utica also makes two further arguments based on the canon against surplusage. Under this canon, "[e]very word in an insurance contract must be presumed to have been employed with a purpose and must be given meaning and effect whenever practicable." Valley Forge Ins. Co. v. Field, 670 F.3d 93, 99 (1st Cir.2012). Utica first argues that the provision must embrace forms of unfair competition not recognized by the common law — such as CRES's negligence claim — lest the modifier "any type" be surplus.
Utica's second surplusage canon-based argument fares no better. Utica says that "any type" must embrace negligence claims since a different provision of the policy excludes intentional claims. This argument is unavailing, however. To restate, the CRES lawsuit did not allege any kind of consumer confusion, whether intentional or negligent.
For the foregoing reasons, the judgment of the district court is AFFIRMED.
"Wrongful act" is defined as "any negligent act, error, or negligent omission to which this insurance applies."
Utica did not contest the factual accuracy of these statements, although it did assert that they were not material.
