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15-P-1706                                                Appeals Court

            EDITH SCHULTZ    vs.   CHRISTOPHER TILLEY & others.1


                               No. 15-P-1706.

             Suffolk.       December 15, 2016. - May 18, 2017.

                Present:    Cypher, Maldonado, & Blake, JJ.2


Dog.    Insurance, Coverage, Homeowner's insurance,
       Misrepresentation.


     Civil action commenced in the Superior Court Department on
July 30, 2013.

     The case was heard by Heidi E. Brieger, J., and entry of
separate and final judgment was ordered by her.


       James T. Scamby for the plaintiff.
       Jeffrey T. Scuteri for Christopher Tilley & another.
       Peter C. Kober for Vermont Mutual Insurance Company.


       BLAKE, J.    The insureds, Angela Tilley and Christopher

Tilley,3 owned a dog that caused property damage and injury to


       1
           Angela Tilley and Vermont Mutual Insurance Company.
       2
       Justice Cypher participated in the deliberation of this
case while an Associate Justice of this court, prior to her
appointment as an Associate Justice of the Supreme Judicial
Court.
                                                                    2


the plaintiff, Edith Schultz.   Schultz filed suit against the

Tilleys and the defendant, Vermont Mutual Insurance Company

(Vermont Mutual).   Vermont Mutual counterclaimed and

cross-claimed, seeking a declaration that the homeowner's policy

at issue was void as a result of the insureds' material

misrepresentations on their application for insurance as to the

dog's bite history and their history of loss.   Following a bench

trial on the issue of coverage only, a judge of the Superior

Court agreed with Vermont Mutual on the bite history issue, and

accordingly dismissed Schultz's complaint against Vermont

Mutual.   The Tilleys and Schultz (collectively, the appellants)

now jointly appeal.

     Background.    We summarize the facts as found by the judge,

supplemented by undisputed information from the record, with

certain facts reserved for later discussion.    On December 30,

2010, Christopher visited the Tarpey Insurance Group (Tarpey) in

Peabody for the purpose of obtaining homeowner's insurance for

his residence in Peabody.    With the assistance of Elaine

Faithful, one of Tarpey's customer service representatives,

Christopher completed an application for insurance with Vermont

Mutual.   On the application, Christopher responded "Yes" to the

question, "Are there any animals or exotic pets kept on


     3
       For ease of reference, we shall refer to the Tilleys by
their first names.
                                                                       3


premises?"   As a follow-up, the application states, in

parentheses, "Note breed and bite history."    Under the "Remarks"

section of the application, Faithful noted, "American bull dog

-- no biting incidents."     Another section of the application was

entitled "Loss History" and asked, "Any losses, whether or not

paid by insurance, during the last 6 years, at this or at any

other location?"   Christopher responded "No" and placed his

initials adjacent to his response.    At the bottom of the

application, just above the signature line, it states:       "I have

read the above application and any attachments.    I declare that

the information in them is true, complete and correct to the

best of my knowledge and belief."    Christopher signed and dated

the application.   Vermont Mutual subsequently issued a

homeowner's policy to the Tilleys.

    On March 18, 2011, Schultz was walking her two Yorkshire

Terriers on Harrison Avenue in Peabody.    As she was walking near

the Tilleys' home, their American Bulldog, Bocephus, ran out and

attacked Schultz's dogs.   Before Angela and other neighbors

could restrain Bocephus, he injured Shultz's dogs.    In

attempting to protect her dogs from the attack, Schultz suffered

a broken arm, a laceration to her face, and scrapes to her

knees, elbows, and ankles.    On March 21, 2011, Christopher

reported the incident to Tarpey, who in turn notified Vermont

Mutual.
                                                                     4


    Following notification of the claim, Vermont Mutual

commenced an investigation.    During that process, it learned

that Bocephus had bitten two other dogs prior to the date of

Christopher's insurance application.   In particular, Vermont

Mutual learned that on November 12, 2009, Bocephus bit a dog

named Buddy, who was walking near the Tilleys' house.      Buddy's

owner filed a police report and spoke with Peabody's animal

control officer.    Buddy's owner also incurred a $200

veterinarian bill as a result of the bite, which the Tilleys

voluntarily paid.    In July, 2010, Bocephus bit another dog,

Bruno, who also was walking near the Tilleys' house.     After

confirming that Bocephus was current on his shots, Bruno's owner

took no further action.   At trial, Christopher acknowledged that

he was aware of both of these incidents at the time he applied

for insurance in December, 2010.

    On July 30, 2013, Schultz filed a complaint in the Superior

Court alleging strict liability and negligence on the part of

the Tilleys (counts I-IV), and unfair claim settlement

practices, in violation of G. L. c. 176D, on the part of Vermont

Mutual (count V).   On August 26, 2013, Vermont Mutual filed its

answer, cross claim, and counterclaim, seeking a declaration

against Schultz and the Tilleys that the policy is void and does

not afford coverage.    In July, 2014, the case was tried on the

issue of coverage only.    During the trial, the parties
                                                                    5


stipulated to the dismissal of count V of Schultz's complaint

alleging unfair claims settlement practices against Vermont

Mutual, without prejudice.

     In written findings of fact and rulings of law, on the

basis of the testimony presented and her interpretation of the

policy language, the judge concluded that the phrase "biting

history" is unambiguous, with the "general understanding of the

word [biting] read to mean biting anything or anybody" (emphasis

in original).   Finding that Christopher had "neglected (either

deliberately or by virtue of wilful blindness to the veracity

requirement of the application) to answer truthfully that his

dog had a biting history," the judge concluded that he had made

a material misrepresentation on his application for insurance.

As a material misrepresentation is dispositive on the issue of

coverage, she ordered that judgment enter for Vermont Mutual on

its counterclaim for declaratory judgment.   In addition, despite

the limited nature of the trial and the prior stipulation, the

judge also ordered that judgment enter in favor of Schultz on

counts I to IV of her complaint, and in favor of Vermont Mutual

on count V of the complaint despite the parties' agreement to

dismiss this count.4


     4
       The judge also erroneously found that a Vermont Mutual
employee had testified. The parties jointly moved to substitute
stipulated language concerning that employee; the judge endorsed
the motion as "[s]o noted."
                                                                    6


     By joint posttrial motion, the parties alerted the judge to

the error.   As a proposed remedy, they moved for the entry of

separate and final judgment, Mass.R.Civ.P. 54(b), 365 Mass. 820

(1974), in favor of Vermont Mutual on its cross claim and

counterclaim, and requested a stay pending appeal on Schultz's

claims against the Tilleys.   In spite of her written endorsement

of "[a]llowed" on the motion, the judge ordered the entry of

final judgment dismissing Schultz's complaint against Vermont

Mutual.   This, as we have noted, was despite the prior

stipulation dismissing count V against Vermont Mutual without

prejudice.

     Discussion.   On appeal, the appellants argue that the judge

erred in finding a material misrepresentation as to the bite

history portion of the application.     Likewise, they argue, no

material misrepresentation was made with respect to the loss

history portion of the application.     Finally, they argue that

the judge erred in ordering the entry of final judgment

dismissing count V of Schultz's complaint as against Vermont

Mutual.   We agree in all respects, addressing each point in

turn.

     1.   Material misrepresentation.    In Massachusetts, "[u]nder

common-law principles and G. L. c. 175, § 186, when an insured

makes a material misrepresentation during the application or

renewal period for an insurance policy, the insurer may be able
                                                                      7


to deny coverage on that basis."5     Commerce Ins. Co. v. Gentile,

472 Mass. 1012, 1015 (2015), citing Barnstable County Ins. Co.

v. Gale, 425 Mass. 126, 128 (1997).     See Hingham Mut. Fire Ins.

Co. v. Mercurio, 71 Mass. App. Ct. 21, 23-24 (2008) (Mercurio).

Here, Vermont Mutual argued that the policy was voidable based

on two material misrepresentations made on the application.

Before reaching the misrepresentation issue, however, we must

examine and interpret the relevant application language,

particularly in relation to ambiguity.     In other words, "[i]n

order to determine whether an answer is a misrepresentation, we

must identify the information sought by the question."

Mercurio, supra at 24.      The analysis of policy language is a

matter of law, which we review de novo, applying those

principles equally to the language of insurance questionnaires

and applications.   Ibid.

     The "[t]erms of an insurance policy must be interpreted in

accordance with the 'fair meaning of the language used, as


     5
       General Laws c. 175, § 186(a), as amended by St. 2008,
c. 376, § 1, provides:

     "No oral or written misrepresentation or warranty made
     in the negotiation of a policy of insurance by the
     insured or in his behalf shall be deemed material or
     defeat or avoid the policy or prevent its attaching
     unless such misrepresentation or warranty is made with
     actual intent to deceive, or unless the matter
     misrepresented or made a warranty increased the risk
     of loss."
                                                                     8


applied to the subject matter.'"    Winbrook Communication Servs.,

Inc. v. United States Liab. Ins. Co., 89 Mass. App. Ct. 550, 556

(2016), quoting from Davis v. Allstate Ins. Co., 434 Mass. 174,

179 (2001).    A term or policy provision is ambiguous "only if it

is susceptible of more than one meaning and reasonably

intelligent persons would differ as to which meaning is the

proper one."    Barnstable v. American Financial Corp., 51 Mass.

App. Ct. 213, 215 (2001).    "If there are two rational

interpretations of policy language, the insured is entitled to

the benefit of the one that is more favorable to it."     Rass

Corp. v. Travelers Cos., 90 Mass. App. Ct. 643, 654 (2016),

quoting from Hazen Paper Co. v. United States Fid. & Guar. Co.,

407 Mass. 689, 700 (1990).    "The rationale behind this rule is

to encourage insurers, who typically draft the policy and are in

the best position to avoid future misunderstandings, to be as

clear and explicit as possible. . . .    Where a question on an

application lends itself to more than one reasonable

interpretation, an honest answer to one of those reasonable

interpretations cannot be labeled a misrepresentation."

Mercurio, supra.

    a.   Bite history.    As we have noted, the application asks

about "breed and bite history" as a subpart of the question

whether animals or exotic pets are kept on the premises.    At

trial, Christopher testified that he understood the question, as
                                                                    9


Faithful asked it, to mean whether the animal has a history of

biting humans, to which he responded in the negative.6    Faithful,

on the other hand, testified that her custom and practice was to

inquire whether the animal was "aggressive" or had "had a biting

incident" in responding to the question.   Kathleen Parch, an

underwriting manager at Vermont Mutual, testified that she

interpreted the term to mean "bodily injury or property damage

to someone else's pet."   In reaching her interpretation of the

term, the judge adopted a broad meaning advanced by none of the

witnesses at the trial, namely that it should be read to mean a

history of biting "anything or anybody."

     Although we agree with the judge that a fair meaning of the

language could be read to mean, literally, anything the animal

has ever bitten, that view hardly seems reasonable in the

context of insurance given the strong propensity of dogs to chew

toys and other inanimate objects of little or no value.     We

understand the judge to have meant any living thing.     However,

we conclude that the language remains subject to multiple

reasonable interpretations, as the trial testimony demonstrates.

Even though our review is de novo, it is notable that each

witness who testified on the matter essentially offered a

different interpretation of the bite history question.

     6
       Christopher testified that he did not read the application
word for word, but responded to the questions as asked by
Faithful.
                                                                    10


Moreover, in our view, all of those interpretations are

reasonable, in that they each would afford the insurer an

assessment, at some level, of the risk associated with a given

animal.   While listing each and every time a dog has bitten

another animal, pet, or dog would certainly provide the insurer

with more complete information, such incidents might be common

or negligible enough, given the animal, for a reasonable

applicant to believe an insurance company would not be

interested in such information.7

     Because the language is ambiguous, we must afford the

Tilleys, as the insureds, the benefit of the reasonable

interpretation that is most favorable to them; namely, the one

that limits the biting history to humans only.    Because

Christopher answered that question honestly, as it is undisputed

that Bocephus had only bitten other dogs, Christopher's response

cannot be labeled a misrepresentation by Vermont Mutual.    See

ibid.

     b.   Loss history.   At trial, Christopher testified that he

did not consider the $200 veterinarian bill he paid for Buddy's

treatment to be a "loss."   Rather, he stated that "a loss is

[when] an insurance company pays a claim.    It's a loss.   You

have [a] loss for an insurance company."    Parch testified that

     7
       It is not difficult to imagine a dog that frequently hunts
and catches wildlife, playfully nips another dog, or gets into
an occasional scuffle with a neighboring dog.
                                                                     11


it was Vermont Mutual's position that the $200 payment was a

loss that should have been disclosed on the application.     As

with bite history, the appellants argue that the question --

"Loss History -- Any losses, whether or not paid by insurance,

during the last 6 years, at this or at any other location?" --

is ambiguous and that, for that reason, Christopher's answer

("No") was not a misrepresentation.

     We agree with the appellants that the question is

ambiguous, at least as to the lower limit of a loss that must be

disclosed in order to avoid a rescission of the policy for

misrepresentation.   Setting aside the matter of whether a "loss"

means only a "claimed loss" in this context,8 the question

reasonably could be read to mean losses at a threshold level at

which an insurance company would be interested in order to

accurately assess risk.   See generally 1 New Appleman Law of

Liability Insurance § 2.02[1](a), at 2-3 (2d ed. 2010) ("An

application generally includes the various information that is

necessary for the underwriting of the contract, such as:     . . .

the nature of the risk to be insured").   Where that threshold


     8
       Although we do not reach this question, we again observe
the principle that, as the drafter of the language, the burden
is on the insurer to tailor the application to elicit the
specific information it requires. See Mercurio, 71 Mass. App.
Ct. at 24. See also Frank vs. Nationwide Mut. Fire Ins. Co.,
U.S. Dist. Ct., No. 3:04cv0025 (M.D. Tenn. Mar. 28, 2006)
(examining whether loss history question in insurance
application was ambiguous).
                                                                     12


level lies is open to interpretation, and is therefore

ambiguous.9   Given that $200 is a small fraction of the Tilleys'

personal liability policy limit,10 we conclude that Christopher's

view that such a payment would not be considered a loss for an

insurance company is reasonable.     Because, as the insureds, the

Tilleys are entitled to the interpretation that favors them, and

because it is undisputed that the $200 payment was the only

disputed loss, Christopher's response to the loss history

question was not a misrepresentation.

     2.   Final judgment.    The appellants correctly observe that

the final judgment dismissed count V of Schultz's complaint,

which alleged unfair claim settlement practices against Vermont

Mutual, despite the parties' earlier stipulation to dismiss that

count without prejudice.    Because a final judgment on the matter

prevents Schultz from reviving this claim as contemplated by the

earlier stipulation, we reverse the judge's ruling as an abuse

of discretion.     See Kobrin v. Board of Registration in Med., 444

Mass. 837, 843 (2005).

     Conclusion.     The order for judgment, entered November 19,

2014, is vacated, and a new judgment is to enter on Vermont


     9
       However, in our view, an interpretation that would require
disclosure of literally "any losses," however negligible, is not
reasonable.
     10
       The personal liability policy limit was $500,000 for each
occurrence.
                                                                 13


Mutual's counterclaim and cross claim declaring that Vermont

Mutual is contractually obligated to provide coverage to the

insureds.   The judgment entered August 3, 2015, pursuant to

Mass.R.Civ.P. 54(b) dismissing Schultz's claim against Vermont

Mutual is vacated.

                                    So ordered.
