In National Union Fire Ins. Co. of Pittsburgh, PA v. Town of Norwood, __ F. Supp. 3d__, 2017 WL3185848 (D. Mass. July 26, 2017), the Town of Norwood, Massachusetts (“Norwood”) recently found out that a First Amendment claim for retaliation is inherently willful. Norwood owns and operates the Norwood Airport. At all relevant times, Norwood maintained Aviation Commercial General Liability Policies (“CGL Policies”) issued by National Union Fire Ins. Co. of Pittsburgh, PA (“National Union”) for Norwood’s operations in connection with the Norwood Airport.
Plaintiff, Boston Executive Helicopters, LLC (“BEH”) sought to expand its business at the Norwood Airport. To satisfy Norwood’s permit application requirements, BEH leased property at the airport and built a new hangar and fuel farm. Norwood refused to provide BEH with the necessary ramp space to conduct its aviation operations. BEH demanded records concerning Norwood’s refusal to provide ramp space and sought a court order to compel the production of the records. BEH also filed a formal complaint with the Federal Aviation Administration (“FAA”).
Norwood subsequently decided to table the discussion of BEH’s permit application. In response, BEH filed suit against Norwood. BEH asserted 12 causes of action, however the suit ultimately proceeded on a single cause of action for unlawful retaliation in violation of the First Amendment. BEH’s retaliation claim was based on Norwood’s decision to table discussion of BEH’s permit application, Norwood’s refusal to issue the permit, and Norwood’s denial of hearings on BEH’s permit application. National Union undertook the defense of Norwood pursuant to a reservation of rights. After dismissal of the majority of the claims, National Union sought declaratory relief from the court that it no longer had a duty to defend under the CGL Policy.
The main issue was whether the Knowing Violation Exclusion, which excludes coverage for “‘personal and advertising injury’ caused by or at the direction of the insured with the knowledge that the act would violate the rights of another and would inflict ‘personal and advertising injury.’” National Union argued that the Knowing Violation Exclusion excluded coverage for the remaining retaliation claim. Norwood argued that the exclusion would only apply if Norwood had intended the retaliatory acts and the resulting harm and would not apply if the retaliatory acts resulted from reckless or negligent conduct. Norwood maintained that the issue of intent was in dispute, thus precluding summary judgment.
The court rejected Norwood’s arguments because the only remaining cause of action for retaliation in violation of the First Amendment was inherently willful. To succeed on a cause of action for a First Amendment Claim for Retaliation, there must be an intentional and deliberate infliction of injury. Therefore, the court held that the claim fell within the Knowing Violation Exclusion and held that National Union was relieved of its duty to defend Norwood against the retaliation claim.
The issue of an insured’s intent for the purposes of intentional conduct exclusions is frequently disputed. The burden is on the insurer to show that the insured engaged in intentional conduct and it is often a difficult to overcome. However, where a plaintiff asserts claims that require intentional conduct in order to prevail on the cause of action, intentional conduct exclusions may exclude defense and indemnity under the policy. When evaluating the duty to defend where intentional conduct is alleged, the insurer should evaluate whether plaintiff could prevail against the defendant whether the conduct is intentional or negligent. Where the plaintiff can only prevail if the conduct is intentional, coverage may be excluded under the policy.