          United States Court of Appeals
                        For the First Circuit

Nos. 14-1380
     14-1438

         LYMAN MORSE BOATBUILDING, INC. and CABOT LYMAN,

               Plaintiffs, Appellees, Cross-Appellants,

                                  v.

                NORTHERN ASSURANCE COMPANY OF AMERICA,

                Defendant, Appellant, Cross-Appellee.



          APPEALS FROM THE UNITED STATES DISTRICT COURT
                    FOR THE DISTRICT OF MAINE

           [Hon. D. Brock Hornby, U.S. District Judge]


                                Before

                          Lynch, Chief Judge,
                  Stahl and Kayatta, Circuit Judges.



     James D. Poliquin, with whom Norman, Hanson & DeTroy, LLC was
on brief, for appellant/cross-appellee Northern Assurance Company
of America.
     Robert C. Hatch, with whom Leonard W. Langer, Hillary J.
Bouchard, and Thompson & Bowie, LLP were on brief, for
appellees/cross-appellants Lyman Morse Boatbuilding, Inc. and Cabot
Lyman.




                           December 2, 2014
            LYNCH, Chief Judge. Lyman Morse Boatbuilding, Inc. (LMB)

of Maine contracted to build a luxury yacht for Russ Irwin.

Unhappy   with   the    completed   yacht,      in   2011   Irwin    brought   an

arbitration proceeding against LMB and Cabot Lyman, the controlling

owner of LMB, alleging that the vessel had numerous defects.                   LMB

and Cabot Lyman tendered defense of the arbitration complaint to

their insurer, Northern Assurance Company of America, but Northern

Assurance refused to defend the insureds.              So the insureds filed

this   federal   suit   in   2012   seeking     to   recover   the    costs    and

attorneys' fees that they incurred in the arbitration proceeding.

            The district court held that Northern Assurance had a

duty to defend Cabot Lyman, the individual, but not LMB, the

corporation; it then awarded to Cabot Lyman 50 percent of the

attorneys' fees incurred during the arbitration by the two insureds

together.   Each side was unhappy and we are faced with appeals and

cross-appeals.    We conclude that on the pertinent facts Northern

Assurance owed neither insured a defense under Maine law. Thus, we

affirm in part, reverse in part, and remand for entry of judgment

in favor of Northern Assurance.

                                      I.

A.          The Arbitration Demand

            On July 22, 2011, Irwin filed an arbitration complaint

against LMB and Cabot Lyman, claiming damages related to the

allegedly   defective     construction     of   a    52-foot   custom   sailing


                                     -2-
vessel.1   Irwin alleged that LMB and Cabot Lyman had agreed to

build the vessel "with the 'best practices for quality yacht

construction' using the 'highest quality materials'" for a price of

$2,155,000.       However,   there    were     cost    overruns,      and    Irwin

eventually ended up paying over $3,400,000 for the completed

vessel.    Moreover, upon LMB's delivery of the vessel to Irwin,

Irwin allegedly discovered multiple defects, which necessitated a

series of rejections and repairs.           As of the date of filing of the

arbitration   complaint,     the    quality     of    the   vessel    was    still

unsatisfactory to Irwin.

           That    complaint       alleged     eight    causes       of     action:

intentional fraud, negligent misrepresentation, constructive fraud,

breach of contract, rejection and revocation of acceptance under

the Uniform Commercial Code, breach of the implied warranty of

fitness for a particular purpose, breach of the implied warranty of

merchantability, and violations of Maine's unfair trade practices

laws. Irwin requested rescission of the agreement and a refund and

damages for the time he spent and the expenses he incurred during

the period when he repeatedly rejected the yacht because of its

defects, as well as "the return . . . of the amounts overpaid to

[LMB and Cabot Lyman] and the difference between the value of the



     1
          The "Yacht Construction Contract" applicable to the
transaction contains an arbitration clause providing that "[a]ny
dispute arising from this agreement will be resolved via binding
arbitration."

                                      -3-
'highest quality' version of the Vessel that [LMB and Cabot Lyman]

represented that [Irwin] would receive and the actual version

[Irwin] received."   He also requested punitive damages, attorneys'

fees and costs, interest, and "such other and further relief as the

Court deems just and proper."

           The arbitration complaint contained two paragraphs naming

Cabot   Lyman.    First,   Irwin   alleged   that   Cabot   Lyman,   the

controlling owner of LMB, was the alter ego of the corporation, and

alleged that "[a] unity of interest exists between [Cabot] Lyman

and [LMB] and injustice and fraud can only be avoided by piercing

the corporate veil" and holding Cabot Lyman jointly and severally

liable for the wrongs alleged.

           Second, in the course of alleging violations of Maine's

unfair trade practices laws, the complaint stated that LMB and

Cabot Lyman

           made further repeated representations and
           promises to [Irwin] about "best practices" and
           "highest quality" construction that they
           guaranteed   for   the   completion   of   the
           Vessel . . .; for example, [Cabot] Lyman
           expressly represented to [Irwin] that he had
           extensive    experience   sailing    worldwide
           including in the Caribbean and he was aware of
           the most common problems [Irwin] would
           encounter during his travels in tropical and
           other varying conditions . . .; as such he
           assured the Vessel would be completed to
           withstand these issues.

           After the insurer refused their request for defense, LMB

hired a law firm, Thompson & Bowie, LLP, to represent both it and


                                   -4-
Cabot Lyman in the arbitration.        That firm then filed this lawsuit

on behalf of the insureds, seeking to recover from Northern

Assurance    the     costs   and    attorneys'   fees    incurred    in   the

arbitration.2      LMB and Cabot Lyman also brought a claim for unfair

claims settlement practices, contending that Northern Assurance had

not made a coverage decision in a timely manner.

B.          The CGL Insurance Policy

            On January 4, 2008, Northern Assurance had issued a

package insurance policy to LMB and Cabot Lyman.                 The named

insureds listed in the Declarations of the policy are "Lyman Morse

Boatbuilding Co., Inc." and "Cabot & Heidi Lyman ATIMA."             "ATIMA"

stands for "as their interests may appear."             Section III of the

package   policy    provides   the    insureds   with   Commercial   General

Liability (CGL) insurance.         It states in relevant part as follows:

            Throughout this policy the words "you" and
            "your" refer to the Named Insured shown in the
            Declarations,   and   any  other   person   or
            organization qualifying as a Named Insured
            under this policy. . . .
            . . . .
                    a.  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. We will have the right
                        and duty to defend the Insured
                        against any "suit" seeking those
                        damages. However, we will have no
                        duty to defend the insured against


     2
          The district court found that LMB paid or reimbursed all
of Cabot Lyman's attorneys' fees.

                                      -5-
                            any "suit" seeking damages for
                            "bodily   injury"   or   "property
                            damage" to which this insurance
                            does not apply. . . .
                       b.   This insurance applies to "bodily
                            injury" and "property damage" only
                            if:
                            (1) The    "bodily    injury"   or
                                 "property damage" is caused
                                 by an "occurrence" . . . .

"Property damage" is defined as "[p]hysical injury to tangible

property, including all resulting loss of use of that property" or

"[l]oss   of     use   of   tangible   property    that   is   not    physically

injured."      "Occurrence" is defined as "an accident, including

continuous or repeated exposure to substantially the same general

harmful conditions."         "'Suit' means a civil proceeding in which

damages because of . . . 'property damage' . . . to which this

insurance applies are alleged," and includes "[a]n arbitration

proceeding in which such damages are claimed and to which the

Insured must submit."

            Importantly,       the     policy     excludes     from     coverage

"'[p]roperty damage' to 'your product' arising out of it or any

part of it."      This exclusion, common to CGL policies, is generally

called the "your product" exclusion.            "Your product," in turn,

            a.         Means:
                       (1) Any goods or products, other than
                            real property, manufactured, sold,
                            handled, distributed or disposed
                            of by:
                            (a) You;
                            (b) Others trading under your
                                 name; or


                                       -6-
                            (c)  A person or organization
                                 whose business or assets you
                                 have acquired; and
                       (2) Containers (other than vehicles),
                            materials, parts or equipment
                            furnished in connection with such
                            goods or products.
             b.        Includes
                       (1) Warranties or representations made
                            at any time with respect to the
                            fitness,   quality,   durability,
                            performance or use of "your
                            product"; and
                       (2) The providing of or failure to
                            provide warnings or instructions.

C.           The Proceedings in the District Court

             On cross-motions for summary judgment, the district court

held that Northern Assurance had no duty to defend LMB, but that it

did have an obligation to defend Cabot Lyman in the arbitration

proceeding.       Lyman Morse Boatbuilding, Inc. v. N. Assurance Co. of

Am., Inc., No. 2:12-cv-313-DBH, 2013 WL 5435204, at *1 (D. Me.

Sept. 27, 2013) [hereinafter Lyman I].             The court held that the

"your product" exclusion excused Northern Assurance from any duty

to defend LMB because the only "property damage" alleged by the

arbitration demand was to the yacht built by LMB.               Id. at *4.

"There is no suggestion" in the arbitration demand, the court

explained,     "that    somehow   the    yacht's   defects   damaged   other

property."     Id.

             However, the court determined that Northern Assurance did

have a duty to defend Cabot Lyman, the individual, notwithstanding




                                        -7-
the   "your    product"     exclusion,     because   "[t]he    yacht   was   the

boatyard's product, not Cabot Lyman's product."               Id. at *5.3

              In a separate order on the issue of damages, the district

court held that Cabot Lyman was entitled to recover 50 percent of

the attorneys' fees that LMB and Cabot Lyman jointly incurred in

defending the arbitration proceeding.             Lyman Morse Boatbuilding,

Inc. v. N. Assurance Co. of Am., Inc., No. 2:12-cv-313-DBH, 2014 WL

901445, at *1, *4 (D. Me. Mar. 6, 2014) [hereinafter Lyman II].

Reasoning that "[b]oth the corporation and the individual needed a

defense,   [and    that]    the   nature    of   their   defenses   overlapped

substantially, albeit not entirely," the court concluded that an

equal division of fees between the corporation and the individual

was appropriate.      Id. at *3-4.

D.            This Appeal

              Northern Assurance has appealed, arguing that it did not

owe a duty to defend Cabot Lyman in the arbitration proceeding, and

LMB and Cabot Lyman have cross-appealed, arguing that Northern

Assurance did owe a duty to defend LMB.           Both parties contend that

the district court's ruling on the duty to defend and the damages

issue was error.



      3
          The court also held that Irwin's claims for economic loss
were not covered by the policy, see Lyman I, 2013 WL 5435204, at
*2, *4 & n.10, and that Northern Assurance was entitled to summary
judgment on the insureds' claim of unfair claims settlement
practices, see id. at *5-6.    Those rulings are not at issue on
appeal.

                                      -8-
                                    II.

           "The district court's conclusion on the duty to defend is

reviewed de novo."       Metro. Prop. & Cas. Ins. Co. v. McCarthy, 754

F.3d 47, 49 (1st Cir. 2014) (citing Bucci v. Essex Ins. Co., 393

F.3d 285, 290 (1st Cir. 2005)); see also Mitchell v. Allstate Ins.

Co., 36 A.3d 876, 879 (Me. 2011) (analysis of insurer's duty to

defend under Maine law is a pure question of law reviewed de novo).

           The parties agree that Maine law applies to this dispute.

To determine whether an insurer owes its insured a duty to defend,

Maine   courts   apply    the   "comparison   test,"   which   involves   a

"comparison of the allegations in the underlying complaint with the

provisions of the insurance policy" to determine if the claims

alleged are within the coverage of the policy.         Mitchell, 36 A.3d

at 879.    "[A]n insurer must provide a defense if there is any

potential that facts ultimately proved could result in coverage."

Id.; accord Howe v. MMG Ins. Co., 95 A.3d 79, 81 (Me. 2014)

(quoting Cox v. Commonwealth Land Title Ins. Co., 59 A.3d 1280,

1283 (Me. 2013)).        "Because the duty to defend is broad, any

ambiguity in the policy regarding the insurer's duty to defend is

resolved against the insurer, and policy exclusions are construed

strictly against the insurer." Mitchell, 36 A.3d at 879 (citations

omitted). At the same time, courts may "not speculate about causes

of action that were not stated" in the complaint.              York Golf &

Tennis Club v. Tudor Ins. Co., 845 A.2d 1173, 1175 (Me. 2004).


                                    -9-
            We first address whether Northern Assurance had a duty to

defend LMB in the arbitration proceeding.          LMB concedes that "the

'your   product'   exclusion   serves     to   exclude   coverage   for   any

property sold, handled, distributed or disposed of by" LMB, which

includes the allegedly defective yacht.         But, LMB argues, Northern

Assurance nonetheless owed a duty to defend it in the arbitration

proceeding because "the allegations in the Arbitration Complaint

provide a basis for Russ Irwin to prove damage to his own or

others' personal property, which would fall within the ambit of

coverage under the Policy as unexcluded 'property damage.'"

            This argument fails.     As the district court correctly

observed,

            [Irwin's] Arbitration Demand is strident, but
            simple.   It complains about the failure to
            build the yacht as promised, as well as
            overbilling. . . . [T]he claims for economic
            damage . . . . all have to do with what the
            buyer paid, the difference in value between
            the yacht as promised and actually delivered,
            and the value of the buyer's time, expense and
            burdens in dealing with the boatyard while
            trying to obtain satisfaction.    There is no
            suggestion that somehow the yacht's defects
            damaged other     property.     There is no
            suggestion, for example, that the buyer put
            cushions and equipment on the yacht that were
            damaged on account of defects.

Lyman I, 2013 WL 5435204, at *4.     Thus the complaint did not allege

any facts that even suggest the potential for a covered claim.

            Plaintiffs resist this conclusion, pointing out that, in

the course of alleging constructive fraud, Irwin alleged that LMB


                                   -10-
and Cabot Lyman "breached the trust and confidence which [Irwin]

entrusted with them in the failed construction and completion of

the Vessel and in putting [Irwin]'s life, limb and property and

those of his family and loved ones at risk on the oceans and at

sea."   But this passing reference to a "risk" to property is not

sufficient to trigger a duty to defend under Maine law.

            In Baywood Corp. v. Maine Bonding & Casualty Co., 628

A.2d 1029 (Me. 1993), the Maine Law Court found that a complaint

alleging that the insured inadequately designed a sewer system for

a condominium complex did not fall within the coverage of a CGL

policy because it sought only "the cost to replace or upgrade the

[sewer] system."   Id. at 1031.    Although "the complaint refer[red]

generally   to   property    damage,"   the   Law   Court   explained,   it

"allege[d] no physical damage to the [condominium] units."               Id.

Thus, the insurer had no duty to defend.        Id.

            So it is here.   While referring generally to a "risk" to

personal property, Irwin's arbitration complaint did not allege any

damage to such property or request any relief for personal property

damage. Instead, the complaint requested several specific items of

relief related to the damage sustained by the defective vessel

itself and the expense that Irwin went to in discovering and

attempting to rectify its defects.       "[B]ecause [Irwin's] complaint

d[id] not allege actual damage to property but rather s[ought]

damages for replacing defective workmanship, which is a business


                                  -11-
risk specifically excluded from the policy, [Northern Assurance]

ha[d] no obligation to defend the underlying action."        Id.

             Plaintiffs erroneously argue that because the arbitration

complaint did not foreclose the possibility that Irwin's personal

property was damaged, LMB was entitled to a defense.         That is not

a correct statement of the law. If plaintiffs' articulation of the

duty to defend were correct, that would make the duty virtually

limitless.4    More specifically, it would run afoul of the Maine Law

Court's admonition that courts adjudicating the duty to defend may

"not speculate about causes of action that were not stated" in the

complaint.     York Golf & Tennis Club, 845 A.2d at 1175.

             The cases upon which plaintiffs rely do not in fact

support plaintiffs' overly broad articulation of the duty to

defend.   They are readily distinguishable from this case.         In Auto

Europe, LLC v. Connecticut Indemnity Co., 321 F.3d 60 (1st Cir.

2003), the underlying complaint alleged that Auto Europe had

fraudulently overcharged its customers in violation of the Maine

Unfair Trade Practices Act (UTPA).       Id. at 63, 66-67.    The court

held that Auto Europe was entitled to a defense from its insurance

company notwithstanding a policy exclusion for "willfully dishonest


     4
          The same goes for plaintiffs' contention at oral argument
that Northern Assurance owed a duty to defend based on the
complaint's request "[f]or such other and further relief as the
Court deems just and proper."     If an insurer were required to
defend simply because a complaint includes a catchall request for
all "just and proper" relief, the duty to defend would be triggered
in virtually every case, contrary to the contours of Maine law.

                                  -12-
or fraudulent acts" because the Maine UTPA "permit[ted] liability

in    the   absence    of    an    intent    to    deceive,"    so   "it   [was]

possible . . . that the facts as developed at trial would reveal an

improper practice that was unaccompanied by an intent to deceive."

Id. at 67-68.      Similarly, in Mitchell, the Maine Law Court held

that Mitchell was entitled to a defense against a complaint that

alleged     that      he     converted       lobster    fishing      equipment,

notwithstanding a policy exclusion for intentional acts, because

the   complainant,     Ames,      could   have    established   that   Mitchell

committed conversion by "accidentally interfer[ing] with Ames's

rights."    36 A.3d at 880-81.       Finally, in Howe, the Law Court held

that the insurer had a duty to defend a nuisance and negligence

lawsuit arising out of the conduct of the insured condominium

owner's dog because the complaint alleged that the dog had "bitten

people" and that other "unit owners ha[d] been assaulted" by the

dog, and thus alleged "bodily injury" potentially covered by the

insurance policy.          See 95 A.3d at 81.5         Thus, in Auto Europe,

Mitchell, and Howe, the court found a duty to defend because there



      5
          Counsel for LMB stated at oral argument that, in Howe,
the Law Court determined that "there was a duty to defend because
it [was] possible, though never alleged in the complaint, that the
dog could have done property damage to [condominium] Association
property." This was an argument that Howe's counsel made in her
brief, see Howe, 95 A.3d at 81, but the court did not explicitly
accept (or reject) it. The court explicitly found a duty to defend
because the complaint "outline[d] a claim of bodily injury for
which Howe might be answerable to the [condominum] Association,
depending on the facts developed as the case proceeds."        Id.
(emphasis added).

                                      -13-
was a theory of liability under a cause of action actually pleaded

that would have afforded insurance coverage.         Here, in contrast,

Irwin's complaint -- while specifying in considerable detail the

relief sought -- made no claim whatsoever for damage to personal

property.     The   district   court   correctly   found   that   Northern

Assurance had no duty to defend LMB.

            We conclude otherwise as to the court's ruling that

Northern Assurance did have a duty to defend Cabot Lyman in the

arbitration proceeding because the "your product" exclusion did not

apply to him.   We find that the exclusion does apply to Cabot Lyman

and thus hold that Northern Assurance had no duty to defend him in

the arbitration proceeding.

            In interpreting this insurance contract, our task is to

"'effect the parties' intentions . . . construed with regard for

the subject matter, motive, and purpose of the agreement, as well

as the object to be accomplished.'" State v. Murphy, 861 A.2d 657,

661 (Me. 2004) (alteration in original) (quoting Handy Boat Serv.,

Inc. v. Prof'l Servs., Inc., 711 A.2d 1306, 1308 (Me. 1998)).           We

must examine the entire agreement, giving the language its plain

meaning.    Id. (citing Am. Prot. Ins. Co. v. Acadia Ins. Co., 814

A.2d 989, 993-94 (Me. 2003)).

            The insurance policy defines "your product" as "goods or

products . . . manufactured, sold, handled, distributed or disposed

of by . . . [y]ou."     The term "[i]ncludes . . . [w]arranties or


                                  -14-
representations made at any time with respect to the fitness,

quality, durability, performance or use of 'your product.'" "[T]he

words 'you' and 'your' refer to the Named Insured" listed on the

policy, and those Named Insureds are LMB, Cabot Lyman, and Heidi

Lyman.     Thus, the "your product" exclusion, by its plain terms,

applies to the products of LMB, Cabot Lyman, or Heidi Lyman, and to

damages arising out of warranties or representations made "with

respect to the fitness, quality, durability, performance or use" of

such products.         Cf. Am. First Credit Union v. Kier Constr. Corp.,

314 P.3d 1055, 1059 (Utah Ct. App. 2013) (holding that "your

product" exclusion in CGL policy on which Broberg was the named

insured was properly read to "exclude[] coverage for '[p]roperty

damage to [Broberg's] product arising out of it or any part of it'"

(second and third alterations in original) (internal quotation

marks omitted)).          The term "your product" includes the yacht

(because    it    is    LMB's    product)   and    the    allegedly   fraudulent

misrepresentations made by Cabot Lyman as president and officer of

LMB (because they concerned the quality of the yacht).

            Northern       Assurance   argues      that    the   "your     product"

exclusion    is   "not     insured-specific"       --    the   operation    of   the

exclusion does not depend on the identity of the insured against

whom the suit is brought.          It adds that this must at least be true

here,    where    the    other   insured,     as   a    corporate   officer,     has

allegedly acted as an alter ego of the corporation that designed


                                       -15-
the product, and the policy explicitly precludes coverage for

representations made with respect to the quality of the corporate

insured's products.6    The provision does not exclude property

damage to "the insured's product"; it excludes property damage to

"your product," a term that, on these facts, includes the yacht

even with respect to the suit against Cabot Lyman.

          Cabot Lyman and LMB cite no case or policy language that

refutes that interpretation of the insurance contract on the facts

here. Instead, they rely on the rule that ambiguities in insurance

contracts should be resolved against the insurer.         That rule is

inapplicable. The "your product" exclusion is not ambiguous in its

application here.   Irwin's complaint alleged damages to the yacht;

the policy excludes damages to "your product"; "you" is defined as,

inter alia, LMB; the yacht is LMB's product; thus, the policy

unambiguously   excludes   the   allegations   of   the     complaint.

Accordingly, on these facts, we find that Northern Assurance had no

duty to defend Cabot Lyman in the arbitration proceeding.

          To hold otherwise would undercut the well-recognized

purpose of CGL insurance policies, as articulated by the Maine Law

Court.   CGL policies are designed to cover "occurrence of harm




     6
          We need not address whether the "your product" exclusion
would preclude coverage for a claim against an individual officer
that is not explicitly included in the policy's definition of "your
product."

                                 -16-
risks" but not "business risks." Peerless Ins. Co. v. Brennon, 564

A.2d 383, 386 (Me. 1989).            As the Law Court explained,

           [a]n "occurrence of harm risk" is a risk that
           a person or property other than the product
           itself will be damaged through the fault of
           the [insured]. A "business risk" is a risk
           that the [insured] will not do his job
           competently, and thus will be obligated to
           replace or repair his faulty work.        The
           distinction between the two risks is critical
           to understanding a CGL policy. A CGL policy
           covers an occurrence of harm risk but
           specifically excludes a business risk.

Id. (quoting Note, Baybutt Construction Corp. v. Commercial Union

Insurance Co.: A Question of Ambiguity in Comprehensive General

Liability Insurance Policies, 36 Me. L. Rev. 179, 182 (1984)). The

type of harm alleged in Irwin's complaint is, by contrast, a

"business risk" that is excluded under the terms of the CGL policy

Northern Assurance issued to LMB and Cabot Lyman.                       There is no

principled reason why that result would change because Irwin named

Cabot   Lyman   as   a    defendant      on   an    alter     ego   theory     and   for

representations he made as a director and president of LMB about a

yacht manufactured by LMB.            As was recognized in Cle Elum Bowl,

Inc. v. N. Pac. Ins. Co., 981 P.2d 872 (Wash. Ct. App. 1999), "an

insured   director       and   officer    .     .   .   is   subject   to    the     same

exclusions that deny coverage to the corporation."                     Id. at 877.

           We   note      that   a    contrary      holding    would    also    create

perverse incentives when plaintiffs sue a corporation for defective

workmanship. If these plaintiffs could trigger a duty to defend on


                                         -17-
the part of the corporation's CGL insurer not otherwise obligated

to provide a defense by simply adding a corporate officer or

employee as a defendant, they would often have the incentive to do

so in order to add another pocket to the other side of the

negotiating table. As a consequence, the "your product" exclusion,

long a staple of CGL policies, would be rendered a dead letter.   We

decline to read the policy to allow such a result, absent any

evidence, of which there is none, that this was the parties'

intent.

                               III.

           We hold that Northern Assurance did not owe a duty to

defend LMB or Cabot Lyman in the underlying arbitration proceeding.

The decision of the district court is affirmed in part and reversed

in part.   We remand for entry of judgment in favor of Northern

Assurance. Costs are awarded to Northern Assurance Company of

America.




                               -18-
