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Travelers Indemnity Co. v. Children's Friend and Service12/1/2005
ny time resulting therefrom, or (2) loss of use of tangible property which has not been physically injured or destroyed provided such loss of use is caused by an occurrence during the policy period." (Id.)
The two policies that cover the period between January 29, 1986 and January 29, 1988- both labeled as Policy No. MP 905 04 33-do not require that the damages arise "out of the ownership, maintenance, or use of the insured premises and all operations necessary or incidental thereto," but are otherwise identical to the original policy. (Travelers' ex. G, H.) The three policies that cover the period between January 29, 1988 and January 29, 1991-Policy Nos. MLP 5224796, MLP 5239224, and MLP 525477-are worded the same as each other as follows:
We will pay those sums that the insured becomes legally obligated to pay as damages because of "bodily injury " or "property damage" to which this insurance applies. No other obligation or liability to pay sums or perform acts or services is covered unless explicitly provided for under SUPPLEMENTARY PAYMENTS-COVERAGES A AND B. This insurance applies only to "bodily injury" and "property damage" which occurs during the policy period. The "bodily injury" or "property damage" must be caused by an "occurrence."
(Travelers' ex. I, J.) The final policy, Policy No. MLP 203 4119, provides that National Union will cover "'bodily injury ' or 'property damage' to which this insurance applies," and that the insurance "applies to 'bodily injury' and 'property damage' only if:
(1) The 'bodily injury ' or 'property damage' is caused by an 'occurrence' that takes place in the 'coverage territory;' and
(2) The 'bodily injury ' or 'property damage' occurs during the policy period." (Travelers' ex. K.)
B. The First National Union Policy (Policy No. S 996-24-75)
In their complaint, the Rowey plaintiffs allege that as a "direct and proximate" result of CFS's negligent misrepresentation to the Roweys, the Rowey plaintiffs "have suffered great mental anguish, emotional distress, property damage, and bodily injury ." With respect to the policy covering the period between January 1, 1985 and January 1, 1986, National Union argues that it owes CFS no duty to defend because the alleged "bodily injury" and "property damage" are not alleged to and do not arise "out of the ownership, maintenance, or use of the insured premises and all operations necessary or incidental thereto" as required by the plain language of the policy. This Court agrees with National Union.
As noted, an insurance company is obligated to defend its insured if the facts asserted in the complaint are sufficient to bring the case "potentially within the risk coverage of the policy." Peerless, 667 A.2d at 787. Although this language means that the duty to defend is broader than the duty to indemnify, it is nevertheless true that if the case cannot fall within the risk coverage of the policy, there is no duty to defend. Id. In the case at bar, it cannot be said that injuries alleged to have been the result of professional negligence arose "out of the ownership, maintenance, or use of the insured premises and all operations necessary or incidental thereto."
The question of how to interpret this phrase in the policy-namely, the language, "arising out of the ownership, maintenance or use of the insured premises and all operations necessary or incidental thereto"-has never been addressed by Rhode Island's courts. In fact, only the Maryland Court of Special Appeals appears to have decided the issue. See Chesapeake Physicians Prof'l Ass'n v. Home Ins. Co., 608 A.2d 822, 826-27 (Md. Ct. Spec. App. 1992). In Chesapeake, the insured was
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