          United States Court of Appeals
                     For the First Circuit

No. 17-1505

                 AIG PROPERTY CASUALTY COMPANY,

                      Plaintiff, Appellant,

                               v.

                     WILLIAM H. COSBY, JR.,

                      Defendant, Appellee,

   BARBARA BOWMAN, TAMARA GREEN, ANGELA LESLIE, KATHERINE MAE
 MCKEE, LOUISA MORITZ, KRISTINA RUEHLI, THERESE SERIGNESE, JOAN
                     TARSHIS, LINDA TRAITZ,

                           Defendants.


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

         [Hon. Mark G. Mastroianni, U.S. District Judge]


                             Before

                      Lynch, Circuit Judge,
                   Souter, Associate Justice,
                    and Stahl, Circuit Judge.


     Michael F. Aylward, with whom William A. Schneider,
Morrison Mahoney LLP, Rebecca R. Weinreich, Steven V. Kovarik,
and Lewis Brisbois Bisgaard Smith LLP were on brief, for
appellant.
     Kirk A. Pasich, with whom Pamela M. Woods, Mikaela


     
       Hon. David H. Souter, Associate Justice (Ret.) of the
Supreme Court of the United States, sitting by designation.
Gallagher-Whitman, Pasich LLP, Francis D. Dibble, Jr., John M.
Greaney,   Elizabeth  S.   Zuckerman   and  Bulkley, Richardson
& Gelinas, LLP were on brief, for appellee.


                         June 7, 2018




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             SOUTER,    Associate        Justice.        In    this   declaratory

judgment action, plaintiff AIG Property Casualty Company appeals

from a judgment that it has a duty to defend the policyholder,

defendant William H. Cosby, Jr.            We affirm.

             Over the past decade, a number of women have accused

Cosby of sexual assault.          In 2014 and 2015, nine of them, also

defendants      here,   filed    three    separate    actions      claiming    that

Cosby had defamed them by publicly denying their accusations.

At relevant times, Cosby held two insurance policies issued by

AIG: a homeowners policy and a personal excess liability policy

(the "umbrella policy").           Under each, AIG has a duty to "pay

damages [Cosby] is legally obligated to pay [due to] personal

injury or property damage caused by an occurrence covered[] by

this policy anywhere in the world . . . ."                  Both policies define

"personal injury" to include "[d]efamation," and oblige AIG to

pay the cost of defending against suits seeking covered damages.

             When Cosby notified AIG of the underlying defamation

suits,    AIG    initially      agreed    to    defend      him,   subject    to   a

reservation of rights that permitted the company to bring this

action,    seeking      a   declaration        that   the     policies'      "sexual

misconduct" exclusions barred coverage.               The cited exclusion in

the homeowners policy bars coverage for liability or defense

costs "arising out of any actual, alleged[,] or threatened . . .


                                     - 3 -
[s]exual molestation, misconduct or harassment[,] . . . or . . .

[s]exual, physical or mental abuse."                    And the umbrella policy

similarly   excludes        coverage   for     liability     or        defense     costs

"[a]rising out of any actual, alleged[,] or threatened . . .

[s]exual misconduct, molestation or harassment[,] . . . or . . .

[s]exual,   physical        or   mental    abuse."         Contending        that    the

underlying defamation claims arose out of Cosby's alleged sexual

assaults,   AIG    moved     for   summary     judgment     on    its     declaratory

judgment claim.       Cosby, for his part, moved to dismiss or, in

the alternative, for judgment on the pleadings.                          The district

court treated his motion as one for judgment on the pleadings

under Federal Rule of Civil Procedure 12(c) and held that the

sexual-misconduct      exclusions         were     at     least        ambiguous     and

consequently      granted    Cosby's      motion   insofar        as    it   sought   a

judgment that AIG had a duty to defend.1

            As with a dismissal under Rule 12(b)(6), we review a

judgment on the pleadings de novo, "tak[ing] all well-pleaded

facts in the light most favorable to the non-moving party and

draw[ing]   all    reasonable      inferences      in     that    party's     favor."

Najas Realty, LLC v. Seekonk Water Dist., 821 F.3d 134, 140 (1st

Cir. 2016).


     1 By consent of the parties, the district court dismissed
AIG's claim to the extent it sought a judgment that it owed no
duty to indemnify, without prejudice to the filing of a new
action if subsequent developments justified it.


                                       - 4 -
               The parties debate whether Massachusetts or California

law     governs      the     interpretation       of     the       relevant    insurance

policies,        with       AIG    arguing     for          Massachusetts       on      its

understanding that its law requires a finding of no coverage.

But we have no need to resolve that dispute because, simply by

applying the law of Massachusetts as AIG asks, we conclude that

AIG has a duty to defend Cosby.2                    For the same reason, it is

unnecessary         to   address   Cosby's    arguments        that      AIG   should    be

judicially      estopped      even    from   arguing        that    Massachusetts       law

applies.

               "Under      Massachusetts     law,      we    construe     an   insurance

policy      under    the    general   rules   of       contract      interpretation[,]

. . .       begin[ning]     with   the   actual     language        of   the   policies,

given its plain and ordinary meaning."                        Brazas Sporting Arms,

Inc. v. Am. Empire Surplus Lines Ins. Co., 220 F.3d 1, 4 (1st

Cir. 2000).         "The insurer bears the burden of demonstrating that

an exclusion exists that precludes coverage,” however, “and any

ambiguities in the exclusion provision are strictly construed

        2
        It is no surprise that AIG would prefer to avoid the
application of California law.    On the same day it commenced
this   action,  AIG   began  a  separate   declaratory  judgment
proceeding against Cosby in federal court in California, seeking
a declaration that it had no duty to defend or indemnify Cosby
against a similar defamation action.     AIG Prop. Cas. Co. v.
Cosby, 2015 WL 9700994, at *1-2 (C.D. Cal. Nov. 13, 2015).
Interpreting the same policy provisions at issue here, the
California court applied California law and held that AIG had a
duty to defend Cosby, given the ambiguity of the sexual-
misconduct exclusions. Id. at *3-5.


                                         - 5 -
against the insurer."               Valley Forge Ins. Co. v. Field, 670 F.3d

93,    97    (1st     Cir.     2012)      (internal    quotation          marks     omitted).

Indeed, the general interpretive rule that "[a]mbiguous policy

terms are construed in favor of the insured," Scottsdale Ins.

Co. v. Torres, 561 F.3d 74, 77 (1st Cir. 2009), "applies with

particular force to exclusionary provisions," U.S. Liab. Ins.

Co. v. Benchmark Const. Servs., Inc., 797 F.3d 116, 120 (1st

Cir.    2015)       (internal       quotation      marks   omitted).              "Ambiguity

exists when the policy language is susceptible to more than one

meaning."         Scottsdale, 561 F.3d at 77.

                  There   is   no   single       definition     of       "arising    out    of"

under   Massachusetts          law.        The    Massachusetts          Supreme     Judicial

Court       has    said   that      the    term    "indicates        a    wider     range   of

causation than the concept of proximate causation in tort law,"

Commerce Ins. Co. v. Ultimate Livery Serv., Inc., 897 N.E.2d 50,

62 (Mass. 2008) (internal quotation marks omitted), and that it

"suggest[s] a causation more analogous to 'but for' causation,"

Fuller v. First Fin. Ins. Co., 858 N.E.2d 288, 292 (Mass. 2006)

(internal         quotation      marks     omitted).       In    a       slightly    earlier

decision, however, the same court has taken care to note that

"the expression does not refer to all circumstances in which the

injury would not have occurred 'but for'" the excluded activity.

Rischitelli v. Safety Ins. Co., 671 N.E.2d 1243, 1245 (Mass.

1996) (injuries resulting from fisticuffs that broke out after


                                            - 6 -
vehicle      collision       did      not   "aris[e]       out      of     the        ownership,

maintenance or use of an auto").                         Rather, "there must be a

sufficiently         close     relationship"        or     a   "reasonably            apparent"

causal    connection           between      the     injury     and       relevant         event.

Commerce Ins. Co., 897 N.E.2d at 62 (internal quotation marks

omitted).       Ultimately, "[a] judgment call . . . must be made as

to   where     the     facts    of    the    case       fall   along      a   continuum       of

causation."          Am. Home Assur. Co. v. First Specialty Ins. Corp.,

894 N.E.2d 1167, 1170 (Mass. App. Ct. 2008).

               Here,     AIG       says     that        because     Cosby's            allegedly

defamatory denials were prompted by the women's sexual-assault

allegations, the defamation injury and the excluded conduct are

so   "inextricably           intertwined"          as     to   trigger         the      sexual-

misconduct exclusions.                Cosby counters that the source of the

women's claimed injuries is not any alleged sexual misconduct,

but rather the allegedly defamatory statements.                               Cf. Bagley v.

Monticello Ins. Co., 720 N.E.2d 813, 817 (Mass. 1999) ("It is

the source from which the plaintiff's personal injury originates

rather than the specific theories of liability alleged in the

complaint       which    determines         the     insurer's        duty        to    defend."

(emphasis       in     original;       internal         quotation        marks        omitted)).

Given    the    independent        cause     of    injury,     Cosby       maintains,       the

causal    link       between    the    excluded         conduct   and      the        defamation

claims is too attenuated to trigger the exclusions.


                                            - 7 -
            It        is    only      fair        to    say     that    applying       the   quoted

governing principles of Massachusetts law to this case does not

supply an easy answer to the question before us.                                     But we need

not determine whether the homeowners policy's "arising out of"

exclusion, standing on its own, would or would not eliminate

coverage.         Instead,            a    closer       look     at     the    umbrella      policy

provides a key to decision here.

            As        the       district          court       observed,       the    presence     of

another, more broadly worded sexual-misconduct exclusion in the

umbrella policy tips the scales in favor of finding ambiguity.

That policy's coverage for "Limited Charitable Board Directors

and Trustees Liability" is subject to an exclusion that applies

to     claims    for        damages            "[a]rising       out    of,     or    in   any     way

involving,        directly                or     indirectly,           any     alleged       sexual

misconduct."               RA    at    328,       ¶     D.10    (emphasis       added).          This

provision has a place in the analysis here under the rule that

"[e]very word in an insurance contract must be presumed to have

been    employed       with       a   purpose          and     must    be    given   meaning     and

effect whenever practicable."                          Metro. Life Ins. Co. v. Cotter,

984    N.E.2d     835,          844   (Mass.          2013)     (internal      quotation        marks

omitted);       see    also       J.A.         Sullivan       Corp.    v.     Commonwealth,      494

N.E.2d    374,        378       (Mass.         1986).         Given     that    this      separate,

specific sexual-misconduct exclusion was drafted so closely to a

but-for    view,       the       umbrella          policy's       more       laconic,     generally


                                                  - 8 -
applicable    counterpart   may   most    reasonably    be   read,    in    the

circumstances of this case, as imposing a standard closer along

the continuum to proximate causation than but-for, under that

policy.   And because both the umbrella and homeowners policies

were drafted by the same insurer, and the policies were issued

by it side by side to the same insured, we may infer that the

two policies' identical "arising out of" language was intended

to carry identical meaning, calling for identical effect.                   And

if that meaning is not proximate cause outright, at a minimum it

renders the pertinent sexual-misconduct exclusions ambiguous as

to the question here, requiring judgment for the insured.3

             To be clear, we do not hold that "arising out of" is

an inherently ambiguous term under Massachusetts law or that

discrepancies    in   insurance   provisions     always      give    rise    to

ambiguity.     Rather, our holding is confined to this case where

the ambiguity question is close to begin with and where another

sexual-misconduct exclusion is worded more broadly.4                  Out of

caution, we also note that this appeal decides only the question


     3 Notably, the same result would obtain under California
law. See Safeco Ins. Co. of Am. v. Robert S., 28 P.3d 889, 893
(Cal. 2001) (ambiguities are resolved in favor of insured);
Palmer v. Truck Ins. Exch., 988 P.2d 568, 572-73 (Cal. 1999)
("We must . . . give effect to every part of the policy with
each clause helping to interpret the other." (internal quotation
marks omitted)).
     4  In view of our holding, we            need     not   reach    Cosby's
alternative grounds for affirmance.


                                  - 9 -
of coverage in providing defense to the policyholder.            Coverage

for   any   damages   that   may    be   awarded   if   the   defense   is

unsuccessful could turn on facts beyond those pertinent here,

requiring independent analysis.          Cotter, 984 N.E.2d at 850 (an

"insurer's duty to defend is independent from, and broader than,

its duty to indemnify" (internal quotation marks omitted)).



Affirmed.




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