Twombly v. AIG Insurance Co. ( 1999 )

USCA1 Opinion

                 United States Court of Appeals

                     For the First Circuit











No. 99-1616



              LILIA TWOMBLY, F/K/A LILIA MAJERCZYK,



                      Plaintiff, Appellant,



                                v.



                   AIG LIFE INSURANCE COMPANY,



                       Defendant, Appellee.







           APPEAL FROM THE UNITED STATES DISTRICT COURT



                    FOR THE DISTRICT OF MAINE



           [Hon. Morton A. Brody, U.S. District Judge]







                              Before



                      Selya, Circuit Judge,

                 Coffin, Senior Circuit Judge,

                   and Boudin, Circuit Judge.









     David M. Lipman with whom Karen E. Lipman was on brief for

appellant.

     Barbara A. Cardone with whom John W. McCarthy was on brief for

appellee.











December 14, 1999













     COFFIN, Senior Circuit Judge.  Appellant Lilia Twombly claims

that her employer's insurer, appellee AIG Life Insurance Company,

wrongly denied her coverage for injuries she suffered in a serious

car accident that occurred while she was driving home from a work-

related meeting. The district court concluded that the insurance

policy did not cover such travel, and it therefore granted summary

judgment for the insurer.  Because we believe that the contract is

susceptible to more than one reasonable interpretation, we vacate

the summary judgment for the insurer and remand to the district

court to allow the insurer to present extrinsic evidence shedding

light on the parties' intentions.  If none is available,

longstanding principles of Maine law governing the construction of

insurance policies require that judgment be granted for Twombly.

                      I. Factual Background

     At the time of her accident in June 1995, Twombly held a field

service position with Americorps National Service Program.

Although she worked out of the program's Bangor, Maine, office, she

regularly traveled to field sites as part of her job.  One of her

responsibilities was to educate migrant farm workers about public

health issues, including the safe handling of pesticides.  On June

16, 1995, she traveled south from her home in Lincoln to her office

in Bangor to do administrative work before heading back north

beyond Lincoln to a meeting in Houlton to plan an upcoming training

session on pesticide use.  After the meeting, while driving south

toward her home in Lincoln, along the same route that also would

have taken her back to the office in Bangor, Twombly was involved

in a one-car collision that left her severely injured.

     As an Americorps employee, Twombly was insured under an

occupational accident policy issued by AIG.  The policy and the

Master Application sheet contained three statements relating to

coverage for travel that are pertinent to our discussion.  Two of

the statements were virtually identical "Description of Activity"

provisions, one found in the application and one in the policy

itself.  Because the differences between them are irrelevant to the

issues before us, we reproduce for convenience only the application

language, section 3 of the document, which was as follows:

          Occupational Only: 24 Hr. coverage while on Business of

     a sponsoring member.  Excluding commutation to and from.



On the application, this statement was not part of the contract

boilerplate, but was typed in to describe the particular coverage

being purchased.

     The third relevant statement appears on the same page of the

Master Application.  This "Eligibility and Classification"

provision, section 4b, has two pre-printed statements of possible

coverage, each with a box beside it.  One box was checked and one

was not, and beside the unchecked box was the notation "N/A."  The

provision thus appeared as follows:

          Eligibility and Classification of Insured (Please Check):

     All members of the Policyholder as described above will

     be covered for accidental injury sustained while they

     are:



       Participating in any scheduled, sponsored and supervised activity.

            Direct travel to or from such activity.   N/A



The policy does not define the terms "activity," "travel" or

"commutation."

     Twombly contends that she was injured while participating in

a covered activity within the meaning of the "Eligibility and

Classification" provision.  She maintains that the "activity" in

which she was participating embraced her travel to Houlton from her

office and would have included the return trip south from Houlton

to Bangor had her workday not ended, causing her to travel south

only as far as her home in Lincoln.  That travel was not excluded

as "commutation to and from" under the "Description of Activity"

provision, she maintains, because it did not constitute commuting

within the generally understood meaning of that concept   that is,

repeated travel along the same route between home and one's regular

work location    and that common understanding of commutation must

apply because the term is not otherwise defined in the policy.

     Twombly further contends that the unchecked box in section 4b,

the "Eligibility and Classification" provision, does not indicate

rejection of coverage for all travel "to or from" work activities,

but considered together with the "N/A" notation (i.e., "not

applicable") beside it, indicates that the subject is covered

elsewhere in the policy.  The "elsewhere," in her view, is the

exclusion for "commutation to and from" business activities written

in under "Description of Activity."  Thus, her view is that the

"N/A" notation beside the second box in section 4b meant that the

customized "Description of Activity" entry provided the applicable

standard for travel coverage. And she construes that provision to

mean that travel other than that usually considered commutation is

covered.

     The district court, however, concluded that the two provisions

when read together must be understood to exclude coverage not only

for what is typically considered commuting but also for any travel

between an employee's home and her work assignment, regardless of

the location of the work. The court reasonably took section 4b at

face value, observing that "the empty box and the phrase ``N/A'

positioned next to . . . [the travel] language indicate that such

circumstances are not covered activities under this Policy."

Because the accident occurred when Twombly was traveling home at

the end of her workday, the court ruled as a matter of law that her

injuries were not covered and granted summary judgment for AIG.

     On appeal, Twombly re-asserts her interpretation of the

contract and contends that the policy is sufficiently ambiguous

that either its language should be interpreted as a matter of law

in her favor or, in the alternative, the dispute should be given to

a jury to resolve.  As we explain below, we find the contract to be

ambiguous, and, under Maine law governing the interpretation of

insurance polices, Twombly was entitled to have the ambiguity

construed in her favor, unless the insurer can prove through

extrinsic evidence that the parties intended the policy to exclude

the sort of business travel in which Twombly was engaged at the

time of her accident.  Consequently, the case must be remanded to

the district court for further proceedings.

                          II. Discussion

     Maine law provides a series of well established guideposts for

the interpretation of an insurance policy.  Like all contracts, an

insurance contract is to be construed in accordance with the

intention of the parties.  See Maine Drilling & Blasting, Inc. v.

Insurance Co. of N.A., 665 A.2d 671, 673 (Me. 1995); Baybutt

Constr. Corp. v. Commercial Union Ins. Co., 455 A.2d 914, 921 (Me.

1983) (overruled on other grounds).  Questions concerning the

meaning of language in an insurance policy, including whether it is

ambiguous, are to be resolved as a matter of law by the court.  See

Apgar v. Commercial Union Ins. Co., 683 A.2d 497, 498 (Me. 1996);

Banker's Life Ins. Co. of Nebraska v. Eaton, 430 A.2d 833, 834 (Me.

1981).  In seeking to ascertain the intention of the parties, the

court must examine the whole instrument.  See Apgar, 683 A.2d at

498; Baybutt, 455 A.2d at 921.  If an ambiguity in the language of

a contract does not disappear when it is examined in the context of

the other provisions of the document, extrinsic evidence may be

considered to cast light on the parties' intent.  See Apgar, 683

A.2d at 501; T-M Oil Co. v. Pasquale, 388 A.2d 82, 85 (Me. 1978).

Any ambiguities that persist are to be resolved against the insurer

and in favor of coverage.  See, e.g., Geyerhahn v. United States

Fidelity and Guar. Co., 724 A.2d 1258, 1261 (Me. 1999); Cambridge

Mut. Fire Ins. Co. v. Vallee, 687 A.2d 956, 957 (Me. 1996).

     Applying these principles to the case before us, the threshold

question of law is whether the language of the Americorps policy is

ambiguous.  We conclude that it is.  The language of a contract is

ambiguous "if it is reasonably susceptible of different

interpretations."  Cambridge Mutual, 687 A.2d at 957; see also

Peerless Ins. Co. v. Brennon, 564 A.2d 383, 384 (Me. 1989).

Although we acknowledge the logic in the insurer's position,

accepted by the district court, that the policy provisions recited

above had the effect of excluding coverage for any travel between

an employee's workplace and home, we find that it is not the only

plausible construction of the policy.  The district court's view

gave heavy weight to the fact that coverage was checked off for

"any scheduled, sponsored and supervised activity," but that the

box beside the phrase "direct travel to or from such activity" was

unchecked.  The court reasonably construed the absence of a check

mark as an intention not to cover work-related travel.

     Twombly's interpretation, however, is similarly supportable.

She begins with the assertion that section 3, which excludes

coverage for "commutation to and from" business activities, does

not affect coverage for her injuries because the accident did not

occur on her commuting route between Lincoln and Bangor. Any

exclusion from coverage thus must come from section 4b, where

coverage is checked off for "any scheduled, sponsored and

supervised activity" of her employer but the "travel to or from"

box is unchecked.  Twombly argues that the "activity" she undertook

on the day of the accident   planning the out-of-office training

session    included her travel to and from the meeting in Houlton.

In her view, the unchecked box next to "direct travel to or from

such activity" does not eliminate coverage for travel in

circumstances in which the travel is part of the actual work

activity.  She also goes further to argue that the "N/A" notation

beside the travel provision indicates that that provision has no

relevance at all to the coverage provided under the policy. She

contends that the provision is, as the term indicates,

"inapplicable" to this policy.  The applicable provision on travel

is section 3, which she claims excludes only "traditional"

commuting and thus leaves all other work-related travel within the

scope of the policy.

     Both aspects of her interpretation strike us as eminently

reasonable.  It is undisputed that Twombly's responsibilities with

Americorps included regular travel to field sites for the purpose

of educating migrant farm workers about the proper handling of

pesticides.  We think it quite likely that Americorps intended to

acquire an occupational accident policy that covered travel risks

to employees whose work included such regular travel to out-of-

office locations.  Indeed, given the probable expanse of her work

area, Twombly may have spent substantial portions of some work

days traveling.  We are persuaded that a reasonable person

describing Twombly's work "activities" for the purpose of the first

part of section 4b would be likely to include as part of her job

her travel to various locations for farm worker training.  Driving

regularly occurred as part of her work day, not only as commutation

at its beginning and end.

     In addition, rather than negating coverage for workday travel,

the "N/A" notation beside the unchecked travel provision in section

4b reinforces the likelihood that Americorps' failure to check the

provision was not intended to eliminate travel coverage that

otherwise was provided through the broadly written "Description of

Activity" in section 3.  The "N/A" notation is used in at least one

other place in the policy apparently to indicate that boilerplate

language is inapplicable, rather than to exclude certain

circumstances from the scope of coverage.  In particular, in

section 3, the standard form of the contract appears to contemplate

the possibility of a policy that was issued to cover either a

particular trip or a particular activity.

     The relevant portion appears as follows:

                    Trip                Activity



     Destination:_____________N/A____         Description of:___N/A____________

     Mode of Transportation:__N/A____         Location:_________N/A____________

     Date of Coverage:________N/A____         Date of Coverage:_N/A____________





The message of the "N/A" notation as used in this section

reasonably is understood to be that "this provision does not apply

to this contract." It is unsurprising that these two groups of

details, although irrelevant to the sort of comprehensive

occupational coverage obtained by Americorps, appear on the

application, because the Master Application presumably is used to

secure coverage in a variety of settings.  It is logical that not

every provision of boilerplate language would be applicable to

every contract, and it is within common experience to encounter the

"N/A" label on such standardized forms.

     A fair reading of section 4b can lead to the conclusion that

the "N/A" notation next to the provision relating to "travel to or

from" a work activity has the same meaning and serves a related

purpose as in section 3; in this instance, the notation reasonably

can be understood to mean that the provision so designated "does

not apply to this contract" because such travel is covered pursuant

to section 3, unless it constitutes typical commuting.  Indeed,

when the occupational coverage obtained is comprehensive, and when

the "activity" of the insured employees routinely includes workday

travel, it arguably would be unreasonable to reduce coverage that

is explicitly defined quite broadly   as in the Description of

Activity provision here   based on a provision that is labeled as

"inapplicable" to the contract.  At the least, the limited

exclusion for "commutation" in section 3 and the arguable exclusion

of other work-related travel in section 4b creates an ambiguity.

     We note one additional factor in support of appellant.  The

language in the policy excluding medical expenses arising from

"[a]n accident which occurs while the Insured Person is traveling

to and from work," the fourth provision referring to travel

coverage, see note 1 supra, reinforces the notion that this policy

distinguishes between regular commuting and other types of travel.

The use of the conjunctive in "travel to and from work" seems to

designate the concept of commutation, as does the use of the

general word "work" as the destination.  In section 4b, however,

not only is the reference phrased in the disjunctive   "travel to

or from"   but also the destination is more particularized to a

given work "activity."  This comparison, although somewhat

belaboring the point, demonstrates yet again that the type of

travel normally understood to be commuting is explicitly excluded

from coverage, while there is no similarly unambiguous indication

that the parties intended to exclude other types of travel from the

coverage that facially is provided by the broad "Description of

Activity" statement.

     Having concluded that the policy is ambiguous, our attention

next must focus on any extrinsic evidence offered to provide

insight into the parties' intentions.  We have been given none.

Indeed, the insurer, which bears the burden of any unresolved

ambiguity, see supra at 6-7, emphatically asserts in the face of

Twombly's request for fact finding that there are no facts in

dispute and that the court should resolve this case based on the

contract alone.  Although this position may signal an actual

absence of any extrinsic evidence, it may simply reflect the

insurer's view that the contract itself is so clear that no further

aids to its interpretation are necessary.  If the former, the

policy must be construed in favor of the insured and coverage.  See

T-M Oil Co., 388 A.2d at 86 (although extrinsic evidence would have

been admissible, none was offered, and court therefore resolved

ambiguity in favor of insured).

     Our foremost obligation, however, is to give effect to the

intentions of the parties.  "The rule of construction that a policy

should be construed more strongly in favor of coverage ``is a rule

of last resort which must not be permitted to frustrate the

intention the parties have expressed, if that can otherwise be

ascertained.'" Apgar, 683 A.2d at 500-01 (internal citations

omitted).  We therefore vacate the summary judgment for AIG and

remand to the district court to permit the insurer to shed any

further light on that issue that it can through evidence on the

preparation of the policy, its structure, discussions that may have

occurred with Americorps, or any other relevant aspect of the

contract formation.  If no such evidence is presented, judgment

must be entered for Twombly because, as we have indicated, the

policy reasonably can be construed to provide coverage for the

work-related, non-commuting travel in which she was engaged at the

time of her accident.

     Vacated and remanded for further proceedings consistent with

this opinion.