June 4, 2019




                                                                   Supreme Court

                                                                   No. 2017-350-Appeal.
                                                                   (PC 16-2169)


           Bacon Construction Co., Inc.         :

                        v.                      :

      Arbella Protection Insurance Company,     :
                        Inc.




                  NOTICE: This opinion is subject to formal revision before
                  publication in the Rhode Island Reporter. Readers are requested to
                  notify the Opinion Analyst, Supreme Court of Rhode Island,
                  250 Benefit Street, Providence, Rhode Island 02903, at (401) 222-
                  3258 of any typographical or other formal errors in order that
                  corrections may be made before the opinion is published.
                                                                   Supreme Court

                                                                   No. 2017-350-Appeal.
                                                                   (PC 16-2169)


       Bacon Construction Co., Inc.             :

                     v.                         :

  Arbella Protection Insurance Company,         :
                    Inc.


              Present: Suttell, C.J., Goldberg, Flaherty, Robinson, and Indeglia, JJ.

                                          OPINION

       Justice Goldberg, for the Court.             This case came before the Supreme Court on

January 17, 2019, on appeal from a grant of summary judgment in favor of the defendant,

Arbella Protection Insurance Company, Inc. (Arbella or defendant).           The plaintiff, Bacon

Construction Co., Inc. (Bacon or plaintiff), challenges the findings of a Superior Court justice

that Arbella is not contractually obligated to provide insurance coverage to Bacon, which is

listed as an additional insured on the insurance policy at issue. For the reasons set forth herein,

we affirm the judgment of the Superior Court.

                                        Facts and Travel

       The material facts in this case are not in dispute. Bacon, having been hired as the general

contractor for a construction project at the University of Rhode Island (the construction project),

subcontracted with U.S. Drywall (U.S. Drywall or the insured) for structural work on the project.

Pursuant to the subcontract agreement (the subcontract), U.S. Drywall was required to obtain a

general liability insurance policy that listed Bacon as an additional insured. U.S. Drywall

complied with this requirement by purchasing a commercial general liability insurance policy

                                                -1-
from Arbella (the Arbella policy), which included an endorsement naming Bacon as an

additional insured. The Arbella policy itself provided for defense and indemnification costs to

U.S. Drywall for its work on the project.

       On December 12, 2014, an employee of U.S. Drywall, Thiago Almeida (Almeida), while

performing work at the construction project site, sustained severe injuries when he slipped on ice

and fell down a staircase. On June 25, 2015, Almeida filed a complaint (the Almeida complaint)

in Superior Court against Bacon, alleging that Bacon’s negligent acts were the proximate cause

of his injuries (the Almeida action). Notably, although the Almeida complaint averred that he

was performing work in accordance with the subcontract, it contained no allegations of

negligence against his employer, U.S. Drywall.1

       In response to Almeida’s claims, Bacon initially filed a third-party complaint against U.S.

Drywall, asserting that U.S. Drywall was contractually obligated to defend and indemnify

Bacon; and, in an amended third-party complaint, Bacon included a claim for breach of contract

against U.S. Drywall. However, on June 27, 2017, Bacon made what it characterized as “a

strategic legal decision” to dismiss all claims in the suit, with prejudice, including those against

U.S. Drywall.2

       Concomitantly, Bacon sought to recover indemnity and defense costs from U.S.

Drywall’s commercial general liability insurer, defendant, Arbella. Bacon alleged that, because

the Arbella policy named Bacon as an additional insured, Bacon is entitled to indemnification.



1
 The record reflects that Almeida collected workers’ compensation benefits from U.S. Drywall’s
workers’ compensation insurer.
2
  The hearing justice noted that Bacon “independently reached a settlement agreement with Mr.
Almeida that resulted in the dismissal of Mr. Almeida’s lawsuit. Additionally, Bacon voluntarily
dismissed with prejudice all of its third-party claims against U.S. Drywall in the underlying
action.”
                                               -2-
Arbella, however, took the position that, “based on the additional insured endorsements, Bacon

would be an additional insured only with respect to liability for bodily injury caused by our

insured acts or omissions.” The additional insured endorsement that is contained within the

Arbella policy forms the foundation of this appeal.

       On May 13, 2016, Bacon filed the present action seeking a declaratory judgment that

Arbella is contractually obligated to indemnify and defend Bacon as an additional insured

relative to the Almeida action. Bacon subsequently moved for summary judgment, arguing that,

pursuant to the unambiguous provisions of the Arbella policy, Bacon, as an additional insured, is

afforded the same coverage as U.S. Drywall. Arbella filed an objection, along with a cross-

motion for summary judgment, countering that Arbella had no duty to defend or indemnify

Bacon as an additional insured because the allegations against Bacon in the Almeida complaint

fell outside the scope of coverage provided by the Arbella policy. Arbella asserted that Bacon is

entitled to coverage only for liability caused by U.S. Drywall’s acts or omissions; and, according

to Arbella, because the Almeida complaint alleges negligence solely against Bacon, Arbella is

not required to provide coverage with respect to the Almeida action.

       On July 26, 2017, the Superior Court justice heard arguments on both motions and issued

a bench decision in which she determined that the Arbella policy is clear and limits additional

insured coverage to “that which was due, at least in part, to U.S. Drywall’s negligence.” The

hearing justice further explicated that, after “looking at the original complaint that contains only

allegations against Bacon only for Bacon’s own negligence[,]” as well as “the insurance policy

language, and the fact that there is nothing here to suggest that any of these actions could have

been attributed to U.S. Drywall, [she did] not believe the facts as presented would trigger the

additional insured coverage clause[.]”     Arbella’s cross-motion for summary judgment was



                                               -3-
granted, and Bacon’s motion for summary judgment was denied. Judgment entered in favor of

Arbella on September 1, 2017. Bacon timely appealed.

                                        Standard of Review

       It is well settled that “[t]his Court reviews de novo a trial justice’s decision granting

summary judgment.” Sola v. Leighton, 45 A.3d 502, 506 (R.I. 2012) (quoting Lynch v. Spirit

Rent-A-Car, Inc., 965 A.2d 417, 424 (R.I. 2009)). “Only when a review of the admissible

evidence viewed in the light most favorable to the nonmoving party reveals no genuine issues of

material fact, and the moving party is entitled to judgment as a matter of law, will this Court

uphold the trial justice’s grant of summary judgment.” Id. (quoting National Refrigeration, Inc.

v. Standen Contracting Company, Inc., 942 A.2d 968, 971 (R.I. 2008)).

       Additionally, “[w]hether an ambiguity exists in an insurance policy is a question of

law[.]” Merrimack Mutual Fire Insurance Company v. Dufault, 958 A.2d 620, 625 (R.I. 2008).

“This Court reviews a trial justice’s conclusions on questions of law de novo.” Beacon Mutual

Insurance Company v. Spino Brothers, Inc., 11 A.3d 645, 649 (R.I. 2011). “Accordingly, we

review a trial justice’s interpretation of a contract de novo.” Id.

                                              Analysis

       Before this Court, Bacon contends that the Superior Court erred in denying its motion for

summary judgment and granting Arbella’s cross-motion for summary judgment because,

according to Bacon, it is entitled to additional insured coverage under the Arbella policy.

Specifically, Bacon argues that the hearing justice erred by: (1) ruling that Bacon is not afforded

additional insured coverage under a plain-language reading of the endorsement; (2) ruling that

the endorsement includes a negligence trigger; (3) conflating the U.S. Drywall-Bacon




                                                 -4-
subcontract and the Arbella policy analyses;3 and (4) ruling that, based on the allegations

contained within the Almeida complaint, Arbella does not have a duty to defend Bacon.

                           Entitlement to Additional Insured Coverage

         We first address Bacon’s argument that, according to the plain language of the additional

insured endorsement, Bacon is entitled to coverage. We disagree with this contention. The

policy’s additional insured endorsement reads in pertinent part:

                 “Who is An Insured is amended to include as an additional
                 insured any person or organization for whom you are performing
                 operations when you and such person or organization have agreed
                 in writing in a contract or agreement, executed prior to an
                 ‘occurrence’, that such person or organization be added as an
                 additional insured on your policy. Such person or organization is
                 an additional insured only with respect to liability for ‘bodily
                 injury’; ‘property damage’ or ‘personal and advertising injury’
                 caused, in whole or in part, by:
                         “1. Your acts or omissions; or
                         “2. The acts or omissions of those acting on your
                         behalf;

                 in the performance of your ongoing operations for the additional
                 insured.” (Emphasis added.)

In addition, the Arbella policy clearly provides that the terms “you” and “your,” as used

throughout the policy, exclusively refer to the named insured, U.S. Drywall. The additional

insured endorsement lists Bacon as an additional insured and not as the named insured.4



3
  We need not reach this issue because we are satisfied that the indemnification clause contained
within the U.S. Drywall-Bacon subcontract—which is an entirely separate agreement and not
challenged on appeal—is irrelevant to this analysis. Moreover, the subcontract has no bearing on
U.S. Drywall’s obligation, if any, to indemnify and defend Bacon because, as agreed upon by
both parties, the subcontract’s indemnity provision is clear and unambiguous and is fault-based.
Thus, given Bacon’s voluntary dismissal of all its claims against U.S. Drywall, there can be no
requisite finding of fault on the part of U.S. Drywall that would trigger these contractual
obligations.
4
    As the hearing justice determined:


                                               -5-
       “It is well established that this Court applies the rules for construction of contracts when

interpreting an insurance policy and that we shall not depart from the literal language of the

policy absent a finding that the policy is ambiguous.” Lynch, 965 A.2d at 425 (brackets omitted)

(quoting Mallane v. Holyoke Mutual Insurance Company in Salem, 658 A.2d 18, 20 (R.I. 1995)).

In order to determine whether the terms of a policy are ambiguous, “we read a policy in its

entirety, giving words their plain, ordinary, and usual meaning.” Peloquin v. Haven Health

Center of Greenville, LLC, 61 A.3d 419, 431 (R.I. 2013) (quoting Sjogren v. Metropolitan

Property and Casualty Insurance Company, 703 A.2d 608, 610 (R.I. 1997)).

       Based on our review of the Arbella policy, we are satisfied that the clear and

unambiguous additional insured endorsement provision contains limiting, fault-based language;

thereby restricting Bacon’s entitlement to coverage to those situations where liability is

attributable, at least in part, to the negligence of U.S. Drywall, the named insured.

       Initially, we note that the endorsement contains a significant limitation on the availability

of coverage. As expressly provided by the endorsement, “[s]uch person or organization is an

additional insured only with respect to liability for ‘bodily injury’ * * * caused, in whole or in

part, by: (1) Your [U.S. Drywall’s] acts or omissions; or (2) The acts or omissions of those

acting on your [U.S. Drywall’s] behalf[.]” (Emphasis added.)               Thus, pursuant to this

unambiguous language, whether Bacon is entitled to coverage as an additional insured is

restricted to those situations where liability is caused by U.S. Drywall’s acts or omissions.


               “the policy’s initial declaration that the words ‘you’ and ‘your’
               would only refer to the named insured, the additional insured
               endorsement, in this [c]ourt’s opinion, used the pronouns ‘you’ and
               ‘your’ only in reference to the named insured. * * * In fact, the
               endorsement specifically referred to the additional insured only
               using that term, ‘additional insured’ or ‘such person or
               organization.’”

                                                -6-
        Bacon next contends that, contrary to the hearing justice’s determination, the additional

insured endorsement does not contain a negligence trigger.             Bacon points out that the

endorsement does not include the term “negligence” and, therefore argues that, under the “plain,

ordinary, and usual” interpretation of the policy, additional insured coverage is triggered

irrespective of negligence. Bacon contends that, despite the inclusion of the phrase “caused, in

whole or in part,” dictionaries “do not define or imply negligence as a requisite aspect of

‘cause.’” Thus, Bacon asserts that an additional insured need only show that the complainant

was injured while acting in the course of employment. Lastly, Bacon asserts that, because the

endorsement utilizes broad “in whole or in part” language and Almeida was injured while

working for U.S. Drywall, which itself was working on behalf of Bacon, Arbella is obligated to

provide coverage. We reject these contentions.

        We are satisfied that the endorsement is fault-based, and expressly provides that coverage

as an additional insured is limited to “liability for ‘bodily injury’ * * * caused, in whole or in

part, by” the acts or omissions of U.S. Drywall or its agents. Thus, the endorsement, by

including the terms “liability” and “bodily injury caused by” one’s acts or omissions, includes a

negligence trigger. The fault-based nature of the endorsement is further evinced by the fact that

there must be a showing as to how the named insured’s acts or omissions caused the bodily

injury at issue.

        Were this Court to accept Bacon’s interpretation of the policy, Bacon would be entitled to

greater coverage than U.S. Drywall, the named insured, because the Arbella policy explicitly

excludes from coverage U.S. Drywall’s liability for “bodily injury” to one of its employees.

Thus, it is our conclusion that the endorsement is fault-based, meaning that additional insured

protection is limited to that which was due, at least in part, to U.S. Drywall’s acts or omissions.



                                                -7-
       Having concluded that the endorsement is fault-based, we are of the opinion that Bacon

was entitled to additional insured coverage only upon a showing of fault attributable to U.S.

Drywall or its agents. Bacon’s voluntary dismissal of all claims against U.S. Drywall and its

settlement with Almeida preclude any finding of U.S. Drywall’s negligence to trigger this

contractual obligation. Accordingly, we hold that Bacon is not entitled to coverage from Arbella

under its policy with U.S. Drywall for claims alleging Bacon’s exclusive negligence.

                                         Duty to Defend

       Bacon also contends that the Superior Court justice erred in ruling that Arbella did not

have a duty to defend Bacon based on her finding that the allegations contained within the

Almeida complaint did not fall within the risk covered by the Arbella policy. We disagree.

       “It is well settled in Rhode Island that the ‘pleadings test’ is applied in order to ascertain

whether an insurer has a duty to defend an insured.” Medical Malpractice Joint Underwriting

Association of Rhode Island v. Charlesgate Nursing Center, L.P., 115 A.3d 998, 1003 (R.I.

2015). “That test requires the trial court to look at the allegations contained in the complaint,

and ‘if the pleadings recite facts bringing the injury complained of within the coverage of the

insurance policy, the insurer must defend irrespective of the insured’s ultimate liability to the

plaintiff.’” Progressive Casualty Insurance Company v. Narragansett Auto Sales, 764 A.2d 722,

724 (R.I. 2001) (quoting Peerless Insurance Co. v. Viegas, 667 A.2d 785, 787 (R.I. 1995)).

Moreover, “when a complaint contains a statement of facts which bring the case within or

potentially within the risk coverage of the policy, the insurer has an unequivocal duty to defend.”

Medical Malpractice Joint Underwriting Association of Rhode Island, 115 A.3d at 1004 (quoting

Employers’ Fire Insurance Company v. Beals, 103 R.I. 623, 632, 240 A.2d 397, 403 (1968)).




                                               -8-
       Relying on the “pleadings test,” Bacon contends that Arbella had a duty to defend Bacon

because the allegations in the Almeida complaint are “potentially” within the risk covered by the

Arbella policy. The Almeida complaint alleges negligence exclusively against Bacon. Yet,

Bacon maintains that the factual allegations in the Almeida complaint are “unequivocally

associated with U.S. Drywall’s work at the [p]roject for Bacon” because Almeida, its employee,

“would not have suffered his alleged injuries at the [p]roject were it not for U.S. Drywall’s work

on behalf of Bacon[.]” Bacon further asserts that, based on Almeida’s allegations that he slipped

on ice while working at the construction project site, “there is a clear potential jury verdict that

apportions some contributory negligence to Mr. Almeida for the incident, which is within the

risk covered by the Arbella [p]olicy.”

       After a review of the language of the insurance policy and the factual allegations

contained in the Almeida complaint, the hearing justice determined that the Almeida complaint

contains only allegations against Bacon for Bacon’s own negligence. The hearing justice noted

that “it could be a different story had that complaint against U.S. Drywall not been dismissed[,]”

but, nonetheless, concluded that the facts, as presented, do not trigger the additional insured

coverage clause. Accordingly, she granted summary judgment in favor of Arbella. We agree

with this reasoning.

       As discussed, the Arbella policy provides additional insured coverage only with respect

to liability for injuries that were caused, at least in part, by U.S. Drywall’s negligence, and there

are no allegations in the Almeida complaint that U.S. Drywall’s acts or omissions caused

Almeida’s injury. The fact that Bacon voluntarily dismissed, with prejudice, all claims against

U.S. Drywall and reached a settlement agreement with Almeida is fatal because these actions

extinguished any vicarious-liability claims that Bacon could have raised. As such, we conclude



                                                -9-
that the Almeida complaint is devoid of any allegations that bring the underlying case “within or

potentially within the risk coverage of the policy[.]” Beals, 103 R.I. at 632, 240 A.2d at 403. It

is our opinion, therefore, that Arbella has no duty to defend Bacon in the Almeida action.

                                           Conclusion

       For the reasons set forth in this opinion, we affirm the judgment of the Superior Court

granting summary judgment in favor of the defendant. The record shall be remanded to the

Superior Court.




                                              - 10 -
STATE OF RHODE ISLAND AND                                     PROVIDENCE PLANTATIONS



                         SUPREME COURT – CLERK’S OFFICE

                                 OPINION COVER SHEET

                                     Bacon Construction Co., Inc. v. Arbella Protection
Title of Case
                                     Insurance Company, Inc.
                                     No. 2017-350-Appeal.
Case Number
                                     (PC 16-2169)
Date Opinion Filed                   June 4, 2019
                                     Suttell, C.J., Goldberg, Flaherty, Robinson, and
Justices
                                     Indeglia JJ.
Written By                           Associate Justice Maureen McKenna Goldberg

Source of Appeal                     Providence County Superior Court

Judicial Officer From Lower Court    Associate Justice Maureen B. Keough
                                     For Plaintiff:

                                     Peter H. Carroll, Esq.
Attorney(s) on Appeal
                                     For Defendant:

                                     Lisa M. DeMari, Esq.




SU‐CMS‐02A (revised June 2016)
