             United States Court of Appeals
                        For the First Circuit

No. 13-1809

         METROPOLITAN PROPERTY AND CASUALTY INSURANCE COMPANY,

                         Plaintiff, Appellant,

                                  v.

                SUSAN MCCARTHY; GLYNIS DIXON MCCORMACK,

                        Defendants, Appellees.


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

             [Hon. Nancy Torresen, U.S. District Judge]


                                Before

                          Lynch, Chief Judge,
                      Souter,* Associate Justice,
                       and Lipez, Circuit Judge.


     Jeffrey T. Edwards, with whom Preti Flaherty Beliveau &
Pachios, LLP was on brief, for appellant.
     Michael J. Donlan, with whom Verrill Dana, LLP was on brief,
for appellee Susan McCarthy.
     Christopher C. Dinan and Monaghan Leahy, LLP on brief for
appellee Glynis Dixon McCormack.



                             June 5, 2014




     *
      Hon. David H. Souter, Associate Justice (Ret.) of the Supreme
Court of the United States, sitting by designation.
          LIPEZ, Circuit Judge.           In this declaratory judgment

action, the district court ruled that Metropolitan Property and

Casualty Insurance Company has a duty to defend its insured, Glynis

Dixon McCormack, in a lawsuit alleging that McCormack's ward

sexually and physically abused a younger boy.        The court rejected

Metropolitan's   assertion   that    the    governing   policy   excludes

coverage for such abuse, concluding that the facts alleged in the

underlying complaint leave open the possibility that some of the

alleged conduct fell outside the policy's exclusions.             Having

reviewed the complaint and policy with care, we agree.1

          On appeal, Metropolitan offers three primary arguments in

support of its claim that the district court erred.          First, the

insurer maintains that the only abuse alleged in the underlying

complaint was either sexual in nature or intended to conceal sexual

abuse and, hence, the alleged harmful conduct is excluded from

coverage by the policy's definition of bodily injury.2       Second, the


     1
       Before oral argument, we raised a question about our
appellate jurisdiction because Metropolitan originally had sought
a declaration that it had no duty to defend or indemnify McCormack,
and the district court's order, consistently with McCormack's
motion for summary judgment, addressed only the duty to defend.
The district court subsequently clarified that the lawsuit as
litigated did not encompass the issue of Metropolitan's duty to
indemnify.   Accordingly, there is no bar to our review of the
judgment on the duty to defend.
     2
       After defining "Bodily injury," in part, as "any physical
harm to the body," the policy states:

     Bodily injury does not include:


                                    -2-
insurer argues that the abuse exclusion disallows coverage for even

non-sexual physical abuse committed by any person.                  Finally,

Metropolitan insists that the policy at least excludes coverage for

non-sexual physical abuse committed by an insured, as well as harm

resulting from intentional acts of an insured, and it reads the

complaint to identify the perpetrator as an insured member of

McCormack's household.

             None of these theories is persuasive for the reasons

given by the district court in its thoughtful opinion.             We briefly

review the court's rulings explaining Metropolitan's potential

obligation to pay under the policy, thereby establishing its duty

to defend.        See Bucci v. Essex Ins. Co., 393 F.3d 285, 290 (1st

Cir. 2005) ("[T]he insurer has a duty to defend if the underlying

complaint discloses a 'potential or a possibility' for liability

within the policy's coverage." (quoting          Elliott v. Hanover Ins.

Co., 711 A.2d 1310, 1312 (Me. 1998)); see also Mitchell v. Allstate

Ins. Co., 36 A.3d 876, 879 (Me. 2011) (same).        The district court's

conclusion on the duty to defend is reviewed de novo.              Bucci, 393

F.3d at 290.

             1.     As   noted   above,   Metropolitan   asserts    that   the

complaint alleges only sexual abuse or "other" physical abuse



     . . .

     3. the actual, alleged or threatened sexual molestation
     of a person; . . . .

                                      -3-
related to sexual abuse, which is excluded from coverage by the

policy's definition of "bodily injury." Under the comparison test,

in which the allegations in the complaint are compared with the

policy provisions, "an insurer must provide a defense if there is

any   potential       that    facts     ultimately    proved    could   result   in

coverage." Mitchell, 36 A.3d at 879. Here, the complaint directly

alleges   that       some    of   the   perpetrator's    acts    are    within   the

definition      of    "bodily     injury"   because    the   complaint    includes

allegations of physical abuse that are not on their face limited to

physical contact related to sexual abuse.                See, e.g., Compl. ¶ 9

(stating that the victim was "repeatedly sexually and otherwise

physically abused" (emphasis added)), ¶ 14 (referring to "the

sexual    and    other      physical    abuse   and    exploitation"     (emphasis

added)), ¶ 19 (alleging "McCormack's negligent failure to prevent

this sexual and other physical and psychological abuse" (emphasis

added)); ¶ 21 (alleging that on one occasion, the victim was

"violently and forcefully struck" in the abdomen).

            2.       Metropolitan argues that, even if the bodily injury

definition does not preclude coverage for all of the abuse alleged

in the complaint, the policy elsewhere excludes coverage for any

type of abuse inflicted by any person.                However, the provision on

which Metropolitan relies -- the abuse exclusion -- reasonably may

be read to preclude coverage only for abuse inflicted or directed




                                          -4-
by an insured rather than by any individual.3          Although the first

sentence of the provision is written in general terms, the second

sentence   may   be   understood   to    limit   the   exclusion   to   such

individuals.     See Jipson v. Liberty Mut. Fire Ins. Co., 942 A.2d

1213, 1216 (Me. 2008) ("All parts and clauses of an insurance

policy must be considered together that it may be seen if and how

far one clause is explained, modified, limited or controlled by the

others." (brackets omitted) (internal quotation marks omitted));

see also Peerless Ins. Co. v. Wood, 685 A.2d 1173, 1174 (Me. 1996)

(stating that the language of an insurance policy is viewed "from

the perspective of an average person, untrained in either the law



     3
       The abuse provision states as follows (with bold text as it
appears in the original):

     Abuse.   We do not cover bodily injury caused by or
     resulting from the actual, alleged or threatened sexual
     molestation or contact, corporal punishment, physical
     abuse, mental abuse or emotional abuse of a person. This
     exclusion applies whether the bodily injury is inflicted
     by you or directed by you for another person to inflict
     sexual molestation or contact, corporal punishment,
     physical abuse, mental abuse or emotional abuse upon a
     person.

The policy identifies "you" as "the policyowner," and states that
the policy "insures you and your property."    The definition of
"you" and "your," in relevant part, is as follows:

     "You" and "your" mean:
     1. the person or persons named in the Declarations and if
     a resident of the same household:
     A. the spouse of such person or persons;
     B. the relatives of either; or
     C. any other person under the age of twenty-one in the care of
     any of the above . . . .

                                   -5-
or the insurance field, in light of what a more than casual reading

of the policy would reveal to an ordinarily intelligent insured").

              At best for appellant the provision is ambiguous.           See

Cox v. Commonwealth Land Title Ins. Co., 59 A.3d 1280, 1283 (Me.

2013)       ("Policy   language   is   ambiguous    if   it   is   reasonably

susceptible of different interpretations or if any ordinary person

in the shoes of the insured would not understand that the policy

did not cover claims such as those brought." (internal quotation

marks omitted)). Given that ambiguity, we are obliged to adopt the

reading most favorable to the insured.             Mitchell, 36 A.3d at 879

("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." (citations omitted)); see also Foremost Ins. Co. v.

Levesque, 868 A.2d 244, 246 (Me. 2005) (stating that "[e]xclusions

and exceptions in insurance policies are disfavored" and thus

construed narrowly).4       Hence, for purposes of the duty to defend,

we treat the conduct of a non-insured individual as outside the

scope of the abuse exclusion.

              3.   Having concluded that the abuse exclusion should be

applied only to an insured -- i.e., anyone who qualifies as "you"


        4
       Defendants urge us to conclude that Metropolitan has made
inconsistent alternative arguments about the meaning of the abuse
exclusion and to take those arguments as evidence of ambiguity.
Because we conclude that the abuse exclusion is ambiguous for the
reasons already stated, we need not reach this issue.

                                       -6-
under the policy, see supra note 3 -- we must consider whether the

allegations   in   the   complaint    allow   the   possibility   that   the

perpetrator is a non-insured.        "You" is defined as a person who is

"a resident of the same household" and a spouse, relative, or

person under age 21 in the care of an insured.              See id.      The

complaint establishes that the alleged abuser was a minor ward of

McCormack, but it does not state that he resided with her. Rather,

the allegations permit the inference that he, like the victim,

stayed only temporarily, though repeatedly, at McCormack's home.

See, e.g., Compl. ¶ 21 (stating that the older boy was "at

Plaintiff's home," allowing inference that it was not also his home

(emphasis added)). Given that inference, the youth would be a non-

insured whose conduct would be outside the abuse exclusion under

the reading of the policy we have described above.                The same

rationale -- i.e., that the perpetrator might not be a covered

individual under the policy -- also potentially places his conduct

outside the policy exclusion for intentional acts.         That provision

also applies only to an insured.5

          In sum, the complaint allows inferences that McCormack's

ward was not a resident of her household and alleges that he


     5
       The intentional loss provision states, in pertinent part
(again, with bold text as it appears in the original):

     Intentional loss.    We do not cover bodily injury or
     property damage which is reasonably expected or intended
     by you or which is the result of your intentional and
     criminal acts or omissions.

                                     -7-
inflicted physical, non-sexual abuse on the younger boy.            Under

those   facts,   her   policy   would    cover   the   resulting   harm.

Accordingly, Metropolitan has a duty to defend McCormack in the

underlying action.       We therefore affirm the district court's

judgment denying summary judgment for Metropolitan and granting

summary judgment for McCormack.

           So ordered.




                                   -8-
