United States Court of Appeals For the First Circuit

No. 21-1648

GREAT LAKES INSURANCE SE,

Plaintiff, Appellee,

v.

MARTIN ANDERSSON,

Defendant, Appellant.

APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MASSACHUSETTS

[Hon. Timothy S. Hillman, U.S. District Judge]

Before

Barron, Chief Judge, Howard and Montecalvo, Circuit Judges.

Michelle M. Niemeyer, with whom Michelle M. Niemeyer, P.A., Harvey B. Heafitz, and Davagian Grillo & Semple LLP were on brief, for appellant. Michael I. Goldman, with whom Goldman & Hellman was on brief, for appellee.

April 19, 2023 MONTECALVO, Circuit Judge. This maritime insurance case

from Massachusetts arises on interlocutory appeal pursuant to

(a)(3) from the district court's grant of judgment on

the pleadings in favor of the plaintiff-insurer, Great Lakes

Insurance SE (GLI). The defendant, Martin Andersson, asserted

that GLI engaged in unfair claim settlement practices in violation

of Massachusetts General Laws chapters 176D and 93A. The district

court ruled that Andersson's claim was barred by the choice-of-law

provision of the marine insurance policy he purchased from GLI.

For the reasons that follow, we conclude that the choice-of-law

provision is ambiguous as to what law applies to the statutorily

based claim that is at issue. Consistent with the applicable

principles of interpretation we construe this ambiguity against

the drafter -- GLI -- and conclude that Andersson's Massachusetts

state law claim is not subject to the choice-of-law provision.

Accordingly, we reverse.

I. Background

As this question comes to us on appeal from a motion for

judgment on the pleadings, "[w]e view the facts contained in the

pleadings in the light most favorable to the nonmovant and draw

all reasonable inferences in his favor." Zipperer v. Raytheon

Co.,

(1st Cir. 2007). These facts may be

supplemented by reference to "documents 'fairly incorporated' in

the pleadings" and "facts susceptible to judicial notice."

- 2 - Sevelitte v. Guardian Life Ins. Co. of Am.,

(1st

Cir. 2022) (citation omitted).

GLI issued an insurance policy to Andersson which

provided hull and machinery coverage for his forty-seven-foot

catamaran sailing vessel, the Melody. The effective dates of the

policy were from December 21, 2018, to December 21, 2019. The

policy included the following choice-of-law provision, (which is

directly at issue in this case):

It is hereby agreed that any dispute arising hereunder shall be adjudicated according to well established, entrenched principles and precedents of substantive United States Federal Admiralty law and practice but where no such well established, entrenched precedent exists, this insuring agreement is subject to the substantive laws of the State of New York.1

1 We are aware that this choice-of-law provision is currently before the Supreme Court in Great Lakes Ins. SE v. Raiders Retreat Realty Co.,

(3d Cir. 2022), cert. granted, __ S. Ct. __,

(U.S. March 6, 2023) (No. 22-500). The Third Circuit held that prior to applying New York law the district court should have considered whether applying New York law would contravene the forum state's "strong public policy," including protecting insureds from "bad faith and unfair trade practices by insurance companies." Raiders Retreat Realty Co.,

. The Supreme Court granted limited review as to whether "[u]nder federal admiralty law, can a choice of law clause in a maritime contract be rendered unenforceable if enforcement is contrary to the 'strong public policy' of the state whose law is displaced?" Raiders Retreat Realty Co.,

, cert. granted, __ S. Ct. __,

(U.S. March 6, 2023) (No. 22-500); Petition for Cert. at i, Raiders Retreat Realty Co.,

(3d Cir. 2022), cert. granted, __ S. Ct. __,

(U.S. March 6, 2023) (No. 22-500),

, at *i. This question is not raised by the instant appeal, and we do not delve into public policy here.

- 3 - On December 16, 2019, the Melody was traveling to the

Port of Boca Chica in the Dominican Republic when it struck a

breakwater and became stranded. The vessel was severely damaged,

and Andersson notified GLI of the incident. GLI began

investigating the incident and put Andersson in touch with a marine

surveyor. The marine surveyor informed Andersson that the vessel

was a "constructive total loss." Thereafter, on December 27, 2019,

GLI reserved the right to deny coverage.

Andersson informed GLI that salvage of the vessel would

cost $50,000, or, alternatively, Andersson could give title of the

vessel and its contents to the salvor in exchange for the salvor's

services. On January 2, 2020, the marine surveyor determined that

the Melody "ha[d] very little residual value and a high salvage

cost," and so GLI did not object to Andersson "transferring title

to the vessel in exchange for salvage." Accordingly, Andersson

and the salvor executed a contract requiring the salvor to remove

the Melody from the breakwater, and title of the Melody was

transferred to the salvor. The salvor agreed that it would retain

the vessel and provide access to it upon request. In a January

16, 2020 letter, Andersson informed GLI that the right of access

to the vessel would expire on February 10, 2020. Andersson also

told GLI that the vessel's global positioning system (GPS) device

was taken by the surveyor on GLI's behalf.

- 4 - On January 28, 2020, Andersson asked GLI for

confirmation that it had received his January 16th letter. GLI

confirmed receipt and indicated that "[w]e have asked our surveyors

for comments." On February 19, 2020, Andersson inquired when the

GPS device would be returned to him, to which GLI responded that

Andersson should contact the surveyor directly. Andersson did so,

and the surveyor informed him that the GPS device was not received

from the salvor. The surveyor told Andersson that "[b]eyond the

meeting you and I had with the salvors on the beach when I was

there, we have had no further involvement with salvors. Once we

reported to [GLI,] our file was closed."

On February 27, 2020, GLI brought a declaratory judgment

action to determine whether there was coverage under the policy.

GLI alleged that coverage was unavailable because Andersson

breached the policy by 1) failing to keep the Melody in seaworthy

condition; and 2) travelling outside the navigational limits that

were permitted under the policy.

Andersson filed an answer and counterclaim alleging,

inter alia, a statutorily based claim for violations of chapter

176D, section 3(9) and chapter 93A, section 9(3A) of the

Massachusetts General Laws, which -- taken together -- prohibit

unfair or deceptive acts or practices in the business of insurance.

Specifically, chapeter 176D, section 3(9) "regulates the insurance

business and identifies 'unfair claim settlement practices.'"

- 5 - Rawan v. Cont'l Cas. Co.,

, 335 (Mass. 2019). "A

violation of . . . c[h.] 176D amounts to an unfair or deceptive

act or practice for purposes of claims made under . . . c[h.] 93A."

Andersson alleged that GLI violated chapters 176D and 93A

by failing to obtain or inspect the GPS device from the Melody,

resulting in loss of access to the GPS device and an incomplete

investigation into the course taken by the vessel. Andersson

further alleged that GLI "failed to affirm or deny the claim

promptly after the surveyor's report was received on or about

January 2[nd]" and instead "misrepresented the status of its claims

decision . . . so that it could proactively file a declaratory

judgment action[.]"

After answering the counterclaim, GLI moved for judgment

on the pleadings pursuant to Federal Rule of Civil Procedure 12(c).

GLI contended that Andersson's unfair trade and settlement

practices claim under Massachusetts law was barred by the policy's

choice-of-law provision. Specifically, GLI argued that the

policy's choice-of-law provision dictated that any issue not

governed by an entrenched rule of federal admiralty law was

governed by New York law. Thus, GLI pressed, Andersson's

Massachusetts state law claim failed as a matter of law.

Andersson's retort was that the choice-of-law provision limited

the application of New York law to disputes that concern

- 6 - interpretation of the policy itself, but not to claims entirely

separate and distinct from a breach of the policy (hereinafter,

"extracontractual claim(s)"). Thus, Andersson maintained, his

Massachusetts state law claim remained viable because it was an

extracontractual claim that did not concern disputes about the

proper interpretation of the contract.

The district court rejected Andersson's position. It

ruled that pursuant to the choice-of-law provision, New York law

governed and barred Andersson's Massachusetts counterclaim. The

district court reasoned that, in the absence of well-established

admiralty law, New York law applied to all claims, including

extracontractual claims, arising from and related to performance

under the policy. Therefore, because New York law does not provide

for a chapters 176D and 93A claim, the district court dismissed

Andersson's counterclaim. This timely appeal ensued.2

2 Andersson appealed three orders of the district court: 1) an order granting GLI's motion to strike Andersson's jury demand; 2) an order denying Andersson's motion to reconsider the order striking the jury demand; and 3) an order granting GLI's motion for judgment on the pleadings. In response to an order to show cause as to why the challenged orders were not appealable on an interlocutory basis, Andersson notified this court that he would not pursue an appeal of the denial of his motion for reconsideration. Andersson never withdrew his appeal of the order granting GLI's motion to strike his jury demand but failed to brief the issue. As such, this issue is waived for purposes of appeal. See Sonoran Scanners, Inc. v. Perkinelmer, Inc.,

, 545 n.7 (1st Cir. 2009). Therefore, the only order properly before this court on appeal is the district court's order granting GLI's motion for judgment on the pleadings because it is an appealable interlocutory order

- 7 - II. Analysis

"We review the district court's judgment on the

pleadings de novo." Rezende v. Ocwen Loan Servicing, LLC,

(1st Cir. 2017). The non-moving party's well-pleaded

facts are accepted as true, and all reasonable inferences are drawn

in the non-movant's favor.

"Judgment on the pleadings is

proper 'only if the uncontested and properly considered facts

conclusively establish the movant's entitlement to a favorable

judgment.'" Zipperer,

(quoting Aponte-Torres v.

Univ. of P.R.,

, 54 (1st Cir. 2006)).

From this posture, we consider whether the choice-of-law

provision in the policy requires the application of New York law

to extracontractual claims arising between the parties outside the

scope of federal admiralty law, thereby barring Andersson's

Massachusetts state law claim. The parties agreed, in the policy

itself, that

any dispute arising hereunder shall be adjudicated according to well established, entrenched principles and precedents of substantive United States Federal Admiralty law and practice but where no such well established, entrenched precedent exists, this insuring agreement is subject to the substantive laws of the State of New York.

pursuant to

(a)(3). That order conclusively determined that GLI is not liable for unfair trade and claim settlement practices under Massachusetts law, and GLI does not dispute the propriety of this appeal. See Doyle v. Huntress, Inc.,

(1st Cir. 2005).

- 8 - As an initial matter, Andersson does not contest that

the choice-of-law provision is valid and enforceable.3 He also

concedes that entrenched principles of admiralty law would control

an extracontractual claim if such precedent existed.

Thus, Andersson's challenge centers on the proper

interpretation of the choice-of-law provision when faced with an

extracontractual claim that is not governed by entrenched

principles of admiralty law. Andersson maintains that the second,

disjunctive clause of the choice-of-law provision -- which states

that "this insuring agreement is subject to the substantive laws

of the State of New York" -- "narrowed the application of New York

law to the insuring agreement[,]" and not to extracontractual

claims. He thus asserts that his statutory extracontractual claim

does not fall within the ambit of the choice-of-law provision.

A. Andersson's statutorily based counterclaim is extracontractual.

Because Andersson does not dispute that contract-related

claims fall within the scope of the choice-of-law provision, the

3 GLI devotes a substantial portion of its brief to the argument that the choice-of-law provision is enforceable pursuant to a two-part test articulated by the Fifth Circuit in Stoot v. Fluor Drilling Servs., Inc.,

(5th Cir. 1988). Even setting aside the fact that Stoot is not binding on this court, GLI's argument is misplaced in this regard because Stoot presupposes that the parties' choice-of-law provision applies to the claims at issue. Whether Andersson's Massachusetts state law claim falls within the scope of the choice-of-law provision is the question at the very heart of this case.

- 9 - first issue we must resolve is whether Andersson's counterclaim

is, in fact, extracontractual. Andersson alleged that GLI, in

handling his insurance claim, engaged in unfair or deceptive acts

that amounted to unfair claim settlement practices in violation of

chapters 176D and 93A.

The conduct prohibited by chapter 176D, such as

"[f]ailing to adopt and implement reasonable standards for the

prompt investigation of claims" or "[r]efusing to pay claims

without conducting a reasonable investigation based upon all

available information[,]" can be entirely separate and distinct

from the breach of an insurance policy. Mass. Gen. Laws ch. 176D,

§ 3(9)(c), (d). Even if an "insurer eventually pays the claim and

honors the contract, its method of conducting the claims settlement

process, and the payment strategy it adopts, can implicate

liability under c[h.] 176D, and thus under c[h.] 93A." Schwartz

v. Travelers Indem. Co.,

(Mass. App. Ct.

2001).

As pleaded, contract violations are not at the core of

Andersson's chapters 176D and 93A claim. Andersson never alleges

that GLI violated chapter 176D by breaching, or taking actions

forbidden by, the contract. See Ne. Data Sys., Inc. v. McDonnell

Douglas Comput. Sys. Co.,

(1st Cir. 1993)

(holding that chapter 93A claims "amount[ed] to embroidered

'breach of contract claims'" where the supporting allegations were

- 10 - based on actions that broke or were forbidden by the contract).

Rather, Andersson's allegations -- taken in the light most

favorable to him -- are not duplicative of a breach of contract

claim based on the policy. Thus, Andersson's claim is

extracontractual.

B. The plain language of the choice-of-law provision is not broad enough to unambiguously encompass an extracontractual claim.

Having established the nature of Andersson's claim, we

must now address the exact scope of the choice-of-law provision.

There is no federal maritime rule governing construction of marine

insurance contracts, see Littlefield v. Acadia Ins. Co.,

(1st Cir. 2004), and under New York or Massachusetts law, the

relevant rules of contract interpretation are essentially the

same.4

4 We recognize that courts have taken different approaches to determining the scope of a valid choice-of-law provision. Some courts view the scope of a choice-of-law provision as a matter of contract interpretation subject to the law chosen in the provision. See Bunker Holdings, Ltd. v. Green Pac. A/S,

(4th Cir. 2009); Odin Shipping Ltd. v. Drive Ocean V MV,

(9th Cir. 2000) (unpublished table decision). Others determine the scope of the choice-of-law provision pursuant to the laws of the forum state. See Schwan's Sales Enters., Inc. v. SIG Pack, Inc.,

(8th Cir. 2007); Fin. One Pub. Co. v. Lehman Brothers Special Fin., Inc.,

, 333 (2d Cir. 2005). This court has not had occasion to undertake this particular analysis beyond noting that "[g]iving effect to [a choice-of-law] provision for the purpose of determining whether it . . . should be given effect obviously would be putting the barge before the tug." DeNicola v. Cunard Line Ltd.,

, 7 n.2 (1st Cir. 1981). Fortunately, we need not wade into these murky waters any further as there are no differences between applying

- 11 - We begin with the actual language of the policy and

give the words their plain and ordinary meaning. See Jalbert ex

rel. F2 Liquidating Tr. v. Zurich Servs. Corp.,

(1st Cir. 2020) (applying Massachusetts law); Ali v. Fed. Ins.

Co.,

(2d Cir. 2013) (applying New York law). The

choice-of-law provision first provides that "any dispute arising

hereunder" is subject to entrenched admiralty principles.

Andersson's chapters 176D and 93A claim is a "dispute arising

hereunder," and there is no "well established, entrenched

principles and precedent of substantive United States Federal

Admiralty law" governing unfair trade and claim settlement

practices. Absent admiralty precedent, the choice-of-law

provision does not specifically dictate what law applies to a

"dispute arising hereunder," but instead proceeds to state that

"this insuring agreement is subject to the substantive laws of New

York."

This differential in wording employed by GLI in the

choice-of-law provision -- "any dispute arising hereunder" versus

"this insuring agreement" -- creates ambiguity because it is

subject to more than one reasonable interpretation. See Scottsdale

Ins. Co. v. Torres,

(1st Cir. 2009) (applying

Massachusetts law); Aronstein v. Mass. Mut. Life Ins. Co., 15 F.4th

New York or Massachusetts law to the scope determination, and the parties agree as much.

- 12 - 527, 534 (1st Cir. 2021) (applying New York law). Indeed, two

distinct classes of claims are arguably contemplated in the

choice-of-law provision. The first clause encompasses "any

dispute arising hereunder," which could include contract-related

and extracontractual claims. But, the second clause is limited to

"this insuring agreement," which could be limited to

contract-related claims. Only these contract-related claims are

specifically subjected to New York law. It is entirely unclear

whether extracontractual claims -- even if they may be said to

"arise[] hereunder" -- are also subject to New York law.

Although GLI urges us to ignore the differential

wording, a canon of construction refutes this attempt. "Every

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,

(1st Cir. 2012) (quoting Bos. Gas Co. v. Century Indem.

Co.,

, 304 (Mass. 2009)); see Nomura Home Equity

Loan, Inc., Series 2006-FM2, by HSBC Bank USA, Nat'l Ass'n v.

Nomura Credit & Cap., Inc.,

(N.Y. 2017) ("[A]

contract must be construed in a manner which gives effect to each

and every part, so as not to render any provision 'meaningless or

without force or effect.'" (quoting Ronnen v. Ajax Elec. Motor

Corp.,

(N.Y. 1996))). The term "this insuring

agreement" should be given meaning and effect apart from the term

- 13 - "any dispute arising hereunder." Using both terms makes the scope

of the choice-of-law provision ambiguous.

C. Any ambiguity in the policy must be construed in favor of Andersson.

Because the plain language of the choice-of-law

provision is not broad enough to unambiguously encompass

extracontractual claims, "any ambiguities must be construed in

favor of the insured." Clark Sch. for Creative Learning, Inc. v.

Phila. Indem. Ins. Co.,

(1st Cir. 2013) (applying

Massachusetts law); see J.P. Morgan Sec. Inc. v. Vigilant Ins.

Co.,

, 447 (N.Y. 2021). While both Massachusetts

and New York law recognize this rule of construction, "[u]nder New

York law, courts must first examine extrinsic evidence of the

parties' intent before turning to doctrinal presumptions."

Aronstein, 15 F.4th at 534 (applying New York law). However, "if

the extrinsic evidence does not yield a conclusive answer as to

the parties' intent, a court may apply other rules of contract

construction[.]" Parks Real Est. Purchasing Grp. v. St. Paul Fire

& Marine Ins. Co.,

(2d Cir. 2006) (cleaned up)

(applying New York law).

Here, extrinsic evidence of the parties' intent will not

aid our analysis of the policy's boilerplate choice-of-law

provision. See Kolbe v. BAC Home Loans Servicing, LP,

(1st Cir. 2013) ("Because uniform contracts are

- 14 - interpreted uniformly across cases whenever it is reasonable to do

so, extrinsic evidence about what a particular party intended or

expected when signing the contract is generally irrelevant.")

Thus, we proceed directly to the rules of contract construction.

See Sharon Steel Corp. v. Chase Manhattan Bank, N.A.,

(2d Cir. 1982) ("There are no adjudicative facts

relating to the parties to the litigation for a jury to find[,]

and the meaning of [the] boilerplate provision[] is, therefore, a

matter of law rather than fact."). When, as here, there are

"competing plausible interpretations of the insurance policy

'doubts as to the intended meaning of the words must be resolved

against the insurance company that employed them.'" Performance

Trans., Inc. v. Gen. Star Indem. Co.,

(1st Cir.

2020) (quoting Surabian Realty Co. v. NGM Ins. Co.,

(Mass. 2012)); see Lend Lease (US) Const. LMB Inc. v.

Zurich Am. Ins. Co.,

(N.Y. 2017) ("Of course,

where the policy may be reasonably interpreted in two conflicting

manners, its terms are ambiguous, and any ambiguity must be

construed in favor of the insured and against the insurer."

(cleaned up)). Doing so leads to the inescapable conclusion that

only contract-related claims are subject to the substantive laws

of New York. Extracontractual claims do not fall within the scope

of the second clause of the choice-of-law provision.

- 15 - Having already determined that Andersson's chapters 176D

and 93A claim, as pleaded, is extracontractual and forms a cause

of action independent from the insuring agreement, it does not

fall within the scope of the choice-of-law provision.

III. Conclusion

For the reasons stated above, the judgment of the

district court is reversed.

- 16 -