ISAAC CHOW vs. MERRIMACK MUTUAL FIRE INSURANCE COMPANY.

GREEN, J. Sometime during late December, 2006, or early January, 2007, a house owned by the plaintiff and insured under a homeowner's policy issued by the defendant incurred substantial damage when pipes froze, and then burst, releasing

Page 623

large amounts of water into the structure. The defendant denied coverage for the loss, based upon a policy exclusion for damage caused by frozen pipes if (i) the house was unoccupied at the time of the loss, and (ii) the insured failed to use reasonable care to maintain heat in the building. The plaintiff filed this action against the defendant for breach of contract and declaratory relief. After a trial, a jury returned a verdict in the defendant's favor, and this appeal followed. At issue is whether the trial judge correctly instructed the jury that the negligence of a person entrusted by the plaintiff to maintain heat in the building should be imputed to the plaintiff, so as to establish a failure by the plaintiff, himself, to use reasonable care. We conclude that the instruction was in error, and reverse the judgment.

Background. Beginning in 1987 and continuing until the summer of 2006, the plaintiff owned and operated a restaurant in Northampton known as the Panda Garden. When the restaurant opened, the plaintiff acquired a four-bedroom house located at 103 Rocky Hill Road in Hadley (the property), to serve as living quarters for restaurant employees. [Note 1] The plaintiff resides in New York, but lived at the property during the period when the restaurant was first getting established. Thereafter, for so long as the restaurant was operating, the restaurant's general manager, Richard Lau, lived at the property and generally managed it, paying utility bills and addressing any maintenance needs. During the fall of 2006, Lau moved to a home he purchased in Amherst, but left various items of furniture and other personal property at the property. Other former restaurant employees found work elsewhere and moved away from the property. According to the plaintiff, however, one or two former restaurant employees stayed at the property at various times through the fall of 2006. [Note 2] The plaintiff testified that he met with Lau in early December, 2006, to discuss various matters related to

Page 624

winding up the Panda East restaurant. [Note 3] Among the items discussed was the need to maintain heat at the property as the cold season approached. As constructed, the property was heated exclusively by means of electric baseboard heaters. [Note 4] According to the plaintiff, he instructed Lau to maintain the thermostats at the property at sixty degrees.

In late January, 2007, the Hadley building inspector was notified that the property showed signs of water damage. His inspection of the property revealed significant flooding, caused by frozen and burst pipes. The carpets, furniture, and other items in the house were waterlogged, and ceilings had collapsed. Large icicles protruded from the exterior siding of the house. The thermostats on the baseboard heating units were turned to the "off" position. [Note 5] The building inspector condemned the property, and notified the plaintiff.

The defendant issued a property insurance policy to the plaintiff, which was in force during the period in which the damage occurred. The policy insures against various risks of loss to the property. However, among its exclusions from coverage is loss:

"2. caused by

"a. freezing of a plumbing, heating, air conditioning or automatic fire protective sprinkler system or of a household appliance, or by discharge, leakage or overflow from within the system or appliance caused by freezing. This exclusion applies only while the dwelling is vacant, unoccupied or being constructed unless you have used reasonable care to:

"(1) maintain heat in the building; or

Page 625

"(2) shut off the water supply and drain the system and appliances of water" (emphasis added).

The policy defines "you" as "the 'named insured' shown on the [d]eclarations [page] and the spouse if a resident of the same household." [Note 6]

After a trial, the jury returned a verdict in favor of the defendant, essentially concluding that the property was unoccupied at the time of the damage, and that the plaintiff had failed to use reasonable care to maintain heat in the building. This appeal followed.

Discussion. The plaintiff contends that the judge erred in instructing the jury that it should attribute to him the reasonableness of actions taken on his behalf by any person to whom the plaintiff delegated responsibility to take care of the property. We agree.

Interpretation of an insurance contract presents a question of law. Save-Mor Supermarkets, Inc. v. Skelly Detective Serv., Inc., 359 Mass. 221 , 226 (1971). As a general matter, "exclusionary clauses must be strictly construed against the insurer so as not to defeat any intended coverage or diminish the protection purchased by the insured." Camp Dresser & McKee, Inc. v. Home Ins. Co., 30 Mass. App. Ct. 318 , 324 (1991).

We are aware of only one reported Massachusetts appellate decision construing an exclusion similar to the one at issue in the present case, and it did not involve a question of agency. [Note 7] Published authority on the precise question raised by an insured's

Page 626

engagement of a caretaker to look after unoccupied property is decidedly sparse nationwide. Our research discloses only two published decisions, both declining to impute negligent acts of an agent to an insured property owner, albeit based on differing rationales. [Note 8]

Page 627

In the present case, though the parties and the judge correctly recognized that the question whether Chow used reasonable care to maintain heat in the building turned in part on the extent to which Lau's actions could be imputed to him, we conclude that the judge's charge to the jury incorrectly framed the issue. [Note 9]

As a threshold matter, we observe that the question whether a party to a contract has satisfied a contractually imposed duty to use reasonable care is tested by reference to ordinary principles of negligence. See Herbert A. Sullivan, Inc. v. Utica Mut. Ins. Co., 439 Mass. 387 , 402-403 (2003). The further question whether a principal may be held vicariously liable for the failure of his agent to use reasonable care depends on the nature of the relationship between the principal and the agent. When a master-servant relationship exists between a principal and his agent, the principal may be held liable for the acts of his agent under the doctrine of respondeat superior. See Corsetti v. Stone Co., 396 Mass. 1 , 9-11 (1985); Hohenleitner v. Quorum Health Resources, Inc., 435 Mass. 424 , 431-432 (2001). [Note 10] By contrast, "[g]enerally speaking, the employer of an independent contractor is not liable for harm caused to another by the independent

Page 628

contractor's negligence, except where the employer retained some control over the manner in which the work was performed." Herbert A. Sullivan, Inc. v. Utica Mut. Ins. Co., supra at 407. "Whether an employer has sufficient control over part of the work of an independent contractor to render him liable . . . is a question of fact for the jury." Corsetti v. Stone Co., supra at 11. Separately, if a principal has actual knowledge of the unsuitability of an agent, the principal may be held liable for his own negligence in the selection of an unsuitable agent to take action on his behalf. See Peters v. Haymarket Leasing, Inc., 64 Mass. App. Ct. 767 , 771 (2005).

The judge's instruction in the present case, see note 9, supra, did not ask the jury to determine whether the relationship between the plaintiff and Lau was one of master-servant or whether Lau instead acted as an independent contractor, with regard to Lau's services looking after the property on the plaintiff's behalf. In addition, the judge's instruction essentially advised the jury to impute to the plaintiff any and all negligence by Lau in carrying out the caretaking duties the plaintiff assigned to him, without regard to the degree of control the plaintiff retained over Lau's actions on the plaintiff's behalf. [Note 11] We consider whether the error was prejudicial.

Though Lau initially undertook his caretaking duties concerning the property ancillary to his role as manager of the plaintiff's restaurant, he was no longer employed in that capacity by the fall of 2006, and testified that he continued to manage the property after the restaurant closed "as a friend" to the plaintiff. The evidence accordingly would have permitted a rational jury to conclude that the relationship between plaintiff and Lau was not one of master-servant at the time of the loss, and that Lau instead was serving as an independent contractor. [Note 12] The evidence likewise contains unresolved issues of fact concerning the extent of the plaintiff's control over Lau's activities. Finally, there was evidence that would have allowed a rational jury to conclude

Page 629

either that the plaintiff was negligent in his selection and supervision of Lau, or that the plaintiff exercised reasonable care in choosing, supervising and relying on Lau. The judgment accordingly must be reversed.

We address briefly a second claim of error raised by the plaintiff, since it could recur in a retrial. The plaintiff contends that the trial judge erred in her instruction to the jury on the meaning of the term "unoccupied" appearing in the exclusion. [Note 13] The plaintiff contends that the judge improperly failed to construe the term as a matter of law, instead leaving it to the jury to interpret the meaning of the insurance policy. See Boazova v. Safety Ins. Co., 462 Mass. 346 , 350 (2012) ("[t]he proper interpretation of an insurance policy is a matter of law to be decided by a court, not a jury"). Alternatively, the plaintiff suggests,

Page 630

the term "unoccupied" is ambiguous, so that the judge should have instructed the jury that ambiguities in an insurance contract should be resolved against the insurer and in favor of the insured. See Hingham Mut. Fire Ins. Co. v. Mercurio, 71 Mass. App. Ct. 21 , 24 (2008).

In our view, the judge's instruction was essentially correct. The judge explained that "unoccupied means that no person is presently utilizing the premises as a dwelling." The judge further clarified that a building may be unoccupied for "short periods of time, even where the occupant intends to return, as in the case of a vacation home," and that "[e]very time you leave your house you are not leaving it in a state that the law would say is unoccupied every time you walk out the door. Instead you should evaluate in this case whether the house was being used as a dwelling place at the time of the loss, and whether it was occupied as such." The guidance the judge furnished to the jury essentially correctly framed the meaning of the term in the context of the insurance contract. [Note 14] See, e.g., McCabe v. Allstate Ins. Co., 260 A.D.2d 850, 852 (N.Y. 1999). To be sure, the judge's comments, twice repeated, that the term has no definition in the law, coupled with the judge's suggestion that jurors resort to their "own good common sense," might have suggested to the jurors that they held greater latitude to interpret the terms of the contract than they did; such comments should be avoided in the event the case is retried. On the whole, however, we agree with the defendant that the term "unoccupied" is not ambiguous, and that the judge's guidance accurately conveyed its meaning to the jury.

Conclusion. The judgment is reversed, and the verdict set aside. The case is remanded to the Superior Court for further proceedings consistent with this opinion.

So ordered.