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York Insurance Group of Maine v. Lambert11/24/1999
Reporter of Decisions
Submitted on Briefs: September 15, 1999
Majority: WATHEN, C.J., and CLIFFORD, DANA, and CALKINS, JJ.
Dissent: RUDMAN, SAUFLEY, and ALEXANDER, JJ.
Defendant Richard O. Lambert appeals from a summary judgment entered in the Superior Court (Cumberland County, Mills, J.) in favor of his insurer, plaintiff York Insurance Group of Maine, ruling that it had no duty by virtue of a policy of homeowner's insurance to defend Lambert in an underlying probate action. Because the court erred in considering evidence beyond the pleadings, we vacate the judgment.
The facts as developed for purposes of summary judgment may be summarized as follows: Margaret Umbaugh, individually as an heir-at-law entitled to an intestate share, and together with David Lambert, as co-special representatives of the Estate of Hugh A. Graff, brought an action in York County Probate Court against Lambert. The complaint alleged the following facts: Lambert was the stepson of Hugh Graff. Prior to his death, Hugh Graff was incompetent. For a period prior to decedent's death, Lambert had a confidential or fiduciary relationship with the decedent. During that time period Lambert exercised control of the decedent's person and his property, obtaining a power of attorney from decedent and using the power of attorney to transfer tangible and intangible personal property from decedent to himself. The complaint included, inter alia, claims for breach of fiduciary duty (constructive trust), conversion, and interference with an expectancy of inheritance.
York Insurance filed a declaratory judgment action requesting the court declare that its insurance contract with Lambert did not cover the allegations contained in the complaint. York Insurance filed a motion for summary judgment, together with a supporting memorandum of law and a statement of material facts. The statement of material facts was supported by answers to interrogatories. After hearing, the court entered an order granting York Insurance's motion for summary judgment. The court ruled, based on the answers to interrogatories, that York Insurance did not have a duty to defend Lambert in the underlying probate action on the basis that the damages sought were economic damages, which are not covered by the homeowners insurance policy. From this ruling, Lambert appeals.
"'Whether an insurer has a duty to defend in a particular case is a question of law.'" Penney v. Capitol City Transfer, Inc., 1998 ME 44, § 4, 707 A.2d 387, 388 (citations omitted). The longstanding rule is that we "'determine the duty to defend by comparing the allegations in the underlying complaint with the provisions of the insurance policy.'" Id. (citations omitted). A duty to defend exists "' f a complaint reveals a "potential . . . that the facts ultimately proved may come within the coverage."'" Id. (citations omitted).
Lambert contends that the court erred when it looked beyond the pleadings and considered evidence extrinsic to the complaint. We agree. We recently restated the general rule as follows: "'Except in limited circumstances, we have held that an insurer cannot avoid its duty to defend by establishing, before the underlying action has concluded, that ultimately there will be no duty to indemnify.'" Penney, 1998 ME 44, § 5, 707 A.2d at 388-89 (citations omitted). We explained the reason for the rule as follows:
To secure the just, speedy and inexpensive determination of an action involving a duty to defend and a duty to indemnify and avoid a duplication of trials requires that courts proceed in the following order: the determination of a duty to defend, then the determination
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