In Centennial Insurance Co. v. Patterson, 564 F.3d 46 (1st Cir. 2009), the court assigned a broad interpretation to an insuring agreement in a Veterinarian’s Professional Liability Policy, holding that Centennial Insurance had an obligation to defend a veterinarian against a decidedly peculiar pro se civil action instituted against Patterson and 80 or more defendants, including the state of Maine. The pro se plaintiff had been charged by the state with animal cruelty for not providing proper food, water, or shelter to approximately 60 animals on her farm. She responded with her lawsuit against Patterson and the other defendants with a farrago of claims, including the authorized treatment of stolen animals, libel, and slander.
The insuring agreement of Centennial’s policy obligated Centennial to investigate and defend any suit “alleging a Veterinary Incident.” The policy defined “Veterinary Incident” as “any malpractice, negligent act or omission, utterance or publication of a libel or slander, or other defamatory or disparaging material . . . in the furnishing of professional veterinary services.” The policy excluded actual or alleged dishonest or malicious acts or omissions or willful violations of law or regulation. Id. at 48.
The court remarked that Maine law had adopted the “comparison test,” which requires the court “to lay the underlying damage complaint alongside the insurance policy and then determine whether the pleadings are adequate to encompass an occurrence within the coverage of the policy.” An insurer has a duty to defend “if the underlying complaint discloses a ‘potential or a possibility’ for liability within the policy’s coverage.” Id. at 50 (emphasis in original).
Centennial argued that it had no duty to defend Patterson because the underlying complaint did not allege a “Veterinary Incident.” Though acknowledging that “it is true that the . . . complaint does not explicitly assert that Dr. Patterson was negligent and committed malpractice in the furnishing of professional veterinary services,” the court observed that “the complaint does contain several allegations of wrongful conduct by Dr. Patterson that could ‘potentially’ be so construed.” Id. at 51.
Reading the complaint broadly, the court concluded that “taken together, Murphy’s allegation suggests that Dr. Patterson not only testified against Murphy [at the Animal Repossession Hearing] but performed some type of professional or veterinary service on Murphy’s animals, which Murphy regarded as wrongful in being carried out without her authorization, wrongful in approach (because Dr. Patterson did not ask her about the calves’ origin and prior condition), and wrongful in result (because Dr. Patterson erroneously faulted Murphy for their death).” Id. Such claims arose “out of veterinary malpractice or negligence; claims which, if proven, potentially fall within the Policy’s coverage.” Id. at 51-52. On this basis, the court held that “the allegations of the complaint contained sufficient facts to state a claim of negligence or malpractice potentially covered by the Policy.” Id. at 52.
The court further held that “the duty to defend is independently triggered by our view that Murphy potentially alleged that Dr. Patterson, among other defendants, committed libel and slander against her.” Id. The “Policy language clearly includes within the scope of coverage claims against the insured alleging the ‘utterance or publication of a libel or slander, or other defamatory or disparaging material in the furnishing of professional veterinary services’.” Id. The court made particular mention of allegations that “Murphy alleges that Dr. Patterson provided untruthful and damaging testimony against her at the Animal Repossession Hearing.” Id.
The court rejected Centennial’s suggestion that the furnishing of “professional veterinary services” must necessarily involve malpractice or negligence in the treatment of an animal. Rather, the “Policy definition, which specifically includes within the scope of coverage the ‘utterance or publication of a libel or slander,’ and event which, as noted by the district court ‘is unlikely to occur while a veterinarian is physically treating an animal,’ suggests that the provision has broader applicability.” Id. at 53. Other courts have interpreted the term “Professional services” in professional liability policies broadly “so as to embrace all activities for which the specialized training of the particular profession is required.” Id.
The court also rejected Centennial’s argument that coverage was excluded because the allegations in the complaint described dishonest, fraudulent, or criminal conduct on Patterson’s part. The court rejoined that it “disagreed with the premise upon which Centennial’s argument rests—that there was ‘no potential’ that the allegations against Patterson involved a claim not barred under the Exclusion.” Id. at 54. Though acknowledging that the underlying complaint alleged that Patterson had “committed various crimes, such as racketeering and perjury,” which if proven would fall within the exclusion, “it is not essential under Maine law that all claims against the insured in the underlying complaint raise the possibility of coverage for the insurer’s duty to defend to be triggered, at least where the claims arise from common issues of fact.” Id.
The court sensibly observed that “the fact that Murphy, a pro se plaintiff bringing a civil action and seeking damages, characterizes all of Dr. Patterson’s actions as ‘criminal acts’ . . . and uses words such as ‘guilty’ rather than ‘liable’ to describe Patterson’s culpability, does not mean that Murphy, has, in fact, alleged criminal conduct.” On this basis, the court held that the policy’s exclusion does not “necessarily foreclose coverage under the Policy,” so that “Dr. Patterson’s right to a defense remains intact.” Id.
