          United States Court of Appeals
                     For the First Circuit


No. 18-1968

               ZURICH AMERICAN INSURANCE COMPANY,

                      Plaintiff, Appellant,

                               v.

        ELECTRICITY MAINE, LLC; EMILE CLAVET; KEVIN DEAN;
  SPARK HOLDCO, LLC; PROVIDER POWER, LLC; KATHERINE VEILEUX AND
  JENNIFER CHON, individually and behalf of all other similarly
                        situated parties,

                     Defendants, Appellees.


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

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


                             Before

                      Howard, Chief Judge,
               Boudin and Barron, Circuit Judges.


     John S. Whitman, Esq., with whom Richardson, Whitman, Large,
& Badger were on brief for appellant.
     Timothy E. Steigelman, with whom Melissa A. Hewey, and
Drummond Woodsum were on brief for appellees.


                          June 17, 2019
              BARRON, Circuit Judge.          Electricity Maine LLC is a

private energy company that serves customers in Maine.                It held a

D&O insurance policy (the "Policy") with Zurich American Insurance

Co. ("Zurich") when, in November of 2015, a class action was

brought against it, Spark Holco LLC, Emile Clavet, and Kevin Dean

(together "Electricity Maine").          The named plaintiffs were two of

Electricity      Maine's    customers,     Jennifer    Chon     and   Katherine

Veilleux.      They sought to represent a class of nearly 200,000 of

the company's customers.          The complaint alleged that Electricity

Maine   had    engaged     in   misconduct    that   resulted    in   customers

receiving higher bills than Electricity Maine had represented that

they would be.      The complaint sought class-wide damages totaling

approximately $35 million for a variety of Maine state common law

claims,   as    well   as   for   claims     under   the   federal    Racketeer

Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. §§

1962, 1964; and the Maine Unfair Trade Practices Act, Me. Rev.

Stat. Ann. tit. 5 § 207.

              Electricity Maine tendered notice of the suit to Zurich.

Zurich then initiated the present action against Electricity Maine

in the United States District Court for the District of Maine on

May 3, 2017, based on diversity jurisdiction.              28 U.S.C. § 1332.

Zurich seeks a declaratory judgment that it has no duty to defend

Electricity Maine against the underlying action.              Zurich contends




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that Electricity Maine's policy1 with Zurich provides, in relevant

part, that Zurich has a duty to defend Electricity Maine against

any lawsuit that seeks damages for "bodily injury" caused by an

"occurrence" and that the complaint in the underlying action fails

to allege that Electricity Maine engaged in conduct that qualifies

as an "occurrence" or that caused any "bodily injury."

              Zurich and Electricity Maine cross-moved for summary

judgment on a stipulated record.             The District Court ruled for

Electricity Maine.       Zurich Am. Ins. Co. v. Electricity Maine LLC,

325 F. Supp. 3d 198, 202-03 (D. Me. 2018).           This appeal followed.

We affirm.

                                      I.

              We review the District Court's decisions on the parties'

motions for summary judgment de novo.           See Utica Mut. Ins. Co. v.

Herbert H. Landy Ins. Agency, Inc., 820 F.3d 36, 41 (1st Cir.

2016).    We must affirm the judgments below if there is no genuine

issue    of   material   fact   in   dispute   and   the   District   Court's

conclusions are correct as a matter of law.           See id.

              The parties agree that the only issues presented on

appeal concern the District Court's interpretation of the relevant

provisions of the Policy.        Those issues present matters of law,


     1 The terms of the Policy were set forth in three successive
contracts.    The parties agree that the relevant language is
identical from one contract to the next, and, therefore, should be
treated as one policy.


                                     - 3 -
which we review de novo.     Massamont Ins. Agency, Inc. v. Utica

Mut. Ins. Co., 489 F.3d 71, 72 (1st Cir. 2007).

           The   parties   agree     that     Maine    law   controls   the

interpretive questions at issue on appeal.           Under Maine law, "[i]f

the allegations in the underlying . . . action are within the risk

insured against and there is any potential basis for recovery, the

insurer must defend the insured regardless of the actual facts on

which the insured's ultimate liability may be based."           Elliott v.

Hanover Ins. Co., 711 A.2d 1310, 1312 (Me. 1998).

           To determine if the allegations in the underlying action

are within the risk insured, we must "compar[e] the complaint with

the terms of the insurance contract."          Id.    The key terms in the

Policy that define the "risk insured" are "occurrence" and "bodily

injury."

                                    II.

           The Policy defines an "occurrence" to be "an accident,

including continuous or repeated exposure to substantially the

same general harmful conditions."         The Policy does not define what

constitutes an "accident," but the Maine Law Court (the "Law

Court") has explained that an "accident" is "commonly understood

to mean . . . an event that takes place without one's forethought

or expectation; an undesigned, sudden, and unexpected event."

Kelley v. N.E. Ins. Co., 168 A.3d 779, 782 (Me. 2017) (quoting

Patrick v. J.B. Ham Co., 111 A. 912, 915 (Me. 1921)).


                                   - 4 -
            The complaint in the underlying action sets forth a

number of claims for intentional torts, but also includes a claim

for "negligence" and a claim for "negligent misrepresentation."

The negligence and negligent misrepresentation claims would appear

to seek recovery for the kind of conduct that fits comfortably

within the definition of an "accident," as these claims require

proof only of "event[s] that take[] place without one's forethought

or expectation."     Kelley, 168 A.3d at 782.       Indeed, the Law Court

has held multiple times that "broad conclusory allegations of

'negligence,'" pled in the alternative to claims that require proof

of intentional misconduct, constitute allegations of "accidental"

or "[un]intentional" activity that suffice to trigger the duty to

defend under policies that cover "accidents."           Travelers Indem.

Co. v. Dingwell, 414 A.2d 220, 225-27 (Me. 1980) (finding a duty

to defend for an "accident[]" where the complaint alleged negligent

acts   in   the   alternative   to    intentional   conduct);   Lavoie   v.

Dorchester Mut. Fire Ins. Co., 560 A.2d 570, 571 (Me. 1989)

(finding a duty to defend under a policy with an exclusion for

"intentional" acts where a complaint alleged negligence as an

alternative to its intentional assault and battery claims).

            To blunt the force of this precedent, Zurich relies on

two Law Court cases -- Allocca v. York Ins. Co. of Maine, 169 A.3d

938 (Me. 2017) and Vermont Mut. Ins. Co. v. Ben-Ami, 193 A.3d 178

(Me. 2018) -- that were decided after Travelers and Lavoie.          But,


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neither Allocca nor Ben-Ami involved complaints that, like the

complaint at issue here, expressly allege claims for negligence

(or negligent misrepresentation) alongside claims for intentional

torts.   Allocca, 169 A.3d at 940-41; Ben-Ami, 193 A.3d at 180-81.

            Zurich also attempts to distinguish Travelers and Lavoie

from the present case on the ground that, unlike in those cases,

the facts alleged in the complaint here "make it impossible to

sustain the fiction that Electricity Maine was 'negligent' and

expected no harm to befall its customers."           Zurich is right that

the portion of the complaint that sets forth the RICO claims,

alleges that Electricity Maine promised its customers rates that

were lower than those offered by the public utilities, raised those

rates    unexpectedly   after   the   first   year    of   the   customers'

contracts, notified its customers about the rate increases through

emails that were sent to the customers' spam folders, and required

that customers pay a $100 fee if they wanted to leave these more

expensive contracts.     And, Zurich is also right that this portion

of the complaint does allege that the company engaged in that

conduct intentionally, just as one would expect, given that RICO

claims seek recovery for intentional torts.

            But we do not see why, when the complaint goes on to

incorporate by reference the same factual allegations into its

claims for negligence and negligent misrepresentation, it must be

read to be alleging, with respect to those claims, that Electricity


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Maine   acted    intentionally      rather   than   inadvertently.     Those

claims, unlike the RICO claims, do not require proof of intentional

conduct.     We note, moreover, that this conclusion accords with

Harlor v. Amica Mut. Ins. Co, 150 A.3d 793 (Me. 2016).             There, the

Law Court explained that the duty to defend is triggered so long

as a complaint "reveals . . . any legal or factual basis that could

potentially be developed at trial" for proving conduct that would

fall within the risk insured.         Id. at 797 (emphasis added).      And,

as we explained in Auto Europe, LLC v. Conn. Indem. Co., after

canvassing Maine law, the duty to defend is triggered under the

state's law "where a narrow reading of the complaint's factual

allegations might preclude coverage, but the alleged cause of

action is sufficiently broad that a modified version of the facts

could be developed at trial to show liability."              321 F.3d 60, 68

(1st Cir. 2003).

             That   is   not   to    say     that   either   the   negligent

misrepresentation claim or the negligence claim has merit.              But,

even a "broad, conclusory allegation, such as negligence" that is

"legally insufficient to withstand a motion to dismiss" will

trigger an insurer's duty to defend "whenever the allegations show

a potential that liability will be established within the insurance

coverage."      Travelers, 414 A.2d at 226.

             Zurich does point to precedents in which various courts,

including our own, have, in construing Maine law, concluded that


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a particular complaint in an underlying suit failed to set forth

factual allegations of a type that could trigger an insurer's duty

to defend its insured against claims that had been set forth in

that complaint. See Lyman Morse Boatbuilding, Inc. v. N. Assurance

Co. of Am., 772 F.3d 960, 966 (1st Cir. 2014); Prime Tanning Co.

v. Liberty Mut. Ins. Co., 750 F. Supp. 2d 198, 214-15 (D. Me.

2010); Baywood Corp. v. Me. Bonding & Casualty Co., 628 A.2d 1029,

1031 (Me. 1993); A. Johnson & Co., Inc. v. Aetna Casualty and

Surety Co., 933 F.2d 66, 75 (1st Cir. 1991).               But, none of the

complaints in those cases pled claims for both intentional and

unintentional      torts   and   incorporated    by   reference   facts   that

pertained to the former to support the latter in the way that the

complaint at issue here does.             Thus, none of those precedents

undermines our conclusion that this complaint is fairly read to

set forth -- at least in a "broad, conclusory" fashion, Travelers,

414 A.2d at 226 -- factual allegations of negligent conduct by

Electricity Maine.       Accordingly, none of those precedents supplies

a basis for concluding that this complaint fails to allege facts

that fall within the risk insured by the Policy, at least insofar

as   that   risk   is    defined   by    the   Policy's   definition   of   an

"occurrence."      Id.

                                        III.

            Zurich separately contends that the Policy's definition

of "bodily injury" does not encompass the allegations of misconduct


                                    - 8 -
by Electricity Maine contained in the complaint at issue.               Thus,

the company contends, for this reason as well, that the complaint

fails to contain factual allegations that fall within the risk

insured.

           Electricity Maine acknowledges that the complaint does

not allege that its conduct caused "bodily injury."             The company

contends, however, that Harlor makes clear that the complaint need

not do so to trigger Zurich's duty to defend.          We agree.

           In Harlor, as in this case, the underlying complaint did

not   allege   "bodily    injury."        Harlor,    150    A.3d   at    800.

Nevertheless, the Law Court held that the insurer in that case had

a duty to defend under the policy at issue, because the tortious

conduct alleged in the complaint in the underlying action "could

have resulted in . . . bodily harm due to emotional distress."

Id.; see also York Ins. Grp. of Me. v. Lambert, 740 A.2d 984,

985-86 (Me. 1999) (holding the same).         Moreover, Harlor reached

that conclusion even though the complaint in that underlying action

did not expressly allege "emotional distress."             Harlor, 150 A.3d

at 800.

           Zurich    contends   that   the   Policy    expressly    defines

"bodily    injury"   to   encompass    "mental      injury,   shock,     [or]

fright . . . resulting from bodily injury . . . ."                 (Emphasis

added).    Zurich then goes on to argue that, in consequence, the

Policy's definition of "bodily injury" is best read, impliedly, to


                                  - 9 -
exclude from its scope "bodily injury" that is caused by emotional

distress. And, Zurich contends, this definition of "bodily injury"

differs from the definition of "bodily injury" used in the policy

that was at issue in either Harlor or York, such that neither

precedent supports Electricity Maine's position here.

            But, while the Policy's definition of "bodily injury"

states that it "includes" "mental injury, shock, [or] fright

resulting from bodily injury," (emphasis added), the definition

does not state that it excludes coverage for "bodily injury" caused

by those markers of emotional distress.           Thus, because Maine law

requires us to construe ambiguous policy language in favor of the

insured,    we   reject    Zurich's    restrictive      construction   of   the

Policy.    See Foremost Ins. Co. v. Levesque, 868 A.2d 244, 246 (Me.

2005) ("Any ambiguity in an insurance policy must be resolved

against the insurer and in favor of coverage.").

            Zurich   has     one      last   argument     for   why,   Harlor

notwithstanding, the inclusion of the negligent misrepresentation

and negligence claims provides no basis for concluding that the

complaint sets forth factual allegations that fall within the "risk

insured," at least insofar as the Policy's definition of "bodily

injury" establishes the risk that Zurich has agreed to insure.

Zurich points out that a claim for "negligent misrepresentation"

cannot give rise to damages for emotional distress under Maine

law, see Veilleux v. National Broadcasting Co., 206 F.3d 92, 130


                                   - 10 -
(1st Cir. 2000), and thus that the negligent misrepresentation

claim here cannot be treated as one that seeks damages -- even

potentially -- for bodily injury that arises from such emotional

distress.    Zurich further contends that the putatively stand-alone

negligence claim is in fact just a mirror of the claim that

Electricity        Maine     committed          the    tort      of       negligent

misrepresentation.         Accordingly, Zurich argues that, even though

damages for emotional distress often may be recovered for a

negligence claim, see Curran v. Richardson, F. Supp. 2d 228, 231

(D. Me. 2006) (citing Curtis v. Porter, 784 A.2d 18, 27 (Me.

2001)), the negligence claim that is set forth in the complaint at

issue here cannot.

            But, Zurich's argument overlooks the fact that the Law

Court has, in construing Maine law, held that claims involving

negligent omissions for which there was no statutory duty to

disclose were not negligent misrepresentation claims, but were,

instead,    more      appropriately      characterized    as    pure     negligence

claims.     See Binette v. Dyer Library Ass'n, 688 A.2d 898, 905-06

(Me. 1996).      Here, the face of the complaint is fairly read to

permit     the   conclusion       that    the    negligence      claim     includes

allegations      of   negligent    omissions      of   just    that    sort.   The

complaint alleges that Electricity Maine failed to notify its

customers that their contracts would "automatically renew" at

higher rates and, similarly, failed to notify its customers that


                                      - 11 -
they would face a $100 termination fee if they attempted to leave

their contracts.    Thus, in accord with Auto Europe, we conclude

that, even though "a narrow reading of the complaint's factual

allegations might preclude coverage . . . the alleged cause of

action is sufficiently broad that a modified version of the facts

could be developed at trial to show liability."           321 F.3d at 68.

            Zurich does make the sweeping contention in its reply

brief that emotional distress damages under Maine law may be

recovered in negligence claims only for conduct that resulted in

physical    injuries,   presumably   to   support   the   contention   that

damages may not be recovered in such claims for physical injuries

that result from emotional distress.         But, aside from the fact

that arguments that are made for the first time in reply briefs

are waived, see United States v. Torres, 162 F.3d 6, 11 (1st Cir.

1998), Zurich does not cite to any precedent that supports its

broad assertion about the limited circumstances in which damages

for emotional distress may be recovered for the tort of negligence

in Maine.     Nor does Zurich address the fact that the Law Court

stated in Curtis that "most tort actions" can give rise to recovery

for emotional distress.     Curtis, 784 A.2d at 26.        Thus, we treat

as waived for lack of development any argument that a negligence

claim for an omission such as was alleged to have occurred here

cannot give rise to emotional distress damages under Maine law.

See United States v. Zannino, 895 F.2d 1, 17 (1st Cir. 1990).


                                 - 12 -
          None of this is to deny that one might doubt whether, in

the context of this case, the alleged negligence is of a type that

could cause distress that would result in bodily injury.   But, the

Law Court has made clear that, for purposes of Maine insurance

law, where "general allegations for the particular claims asserted

in the underlying complaint . . . could potentially support an

award of covered damages for bodily injury caused by emotional

distress," the duty to defend exists.    Harlor, 150 A.3d at 799

(emphasis added).

                               IV.

          For the foregoing reasons we affirm the District Court's

decisions granting summary judgment in favor of Electricity Maine

and denying the appellants' Motion for Summary Judgment.       The

parties shall bear their own costs.




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