The opinion of the court was delivered by: Landya McCafferty United States Magistrate Judge
In an action that has been removed from the New Hampshire Superior Court, DAE Aviation Enterprises, Corp. ("DAE") petitions for a declaratory judgment concerning the extent of its coverage under an insurance policy sold to it by Nationair Insurance Agencies, Inc. ("Nationair"), issued by Old Republic Insurance Company ("Old Republic"), and underwritten by Phoenix Aviation Managers, Inc. ("Phoenix").*fn1 Before the court are motions for summary judgment filed by: (1) Tracy Cardelli ("Cardelli"), whose claim against DAE brought DAE's insurance policy into play; (2) DAE; and (3) Old Republic and PhoeniX (referred to collectively as "the insurers"). All three motions are duly opposed. For the reasons that follow, each of the three motions is granted in part and denied in part.
Summary Judgment Standard
"To prevail on summary judgment, the moving party must show that 'there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.'" Markel Am. Ins. Co. v. Diaz-Santiago, 674 F.3d 21, 29 (1st Cir. 2012) (quoting Fed. R. Civ. P. 56(a)). Where, as here, the court is presented with cross motions for summary judgment, the summary-judgment standard is applied to each motion separately. See Am. Home Assur. Co. v. AGM Marine Contrs., Inc., 467 F.3d 810, 812 (1st Cir. 2006) (citing Reich v. John Alden Life Ins. Co., 126 F.3d 1, 6 (1st Cir. 1997)). In other words, "[t]he presence of cross-motions for summary judgment neither dilutes nor distorts [the] standard of review." Mandel v. Boston Phoenix, Inc., 456 F.3d 198, 205 (1st Cir. 2006).
Stephen Cardelli ("Mr. Cardelli") died on June 13, 2009, when the plane he was piloting lost power and crashed just after take-off, about a mile from the Laconia Municipal Airport ("Laconia Airport"). The power loss resulted from a leak that caused the plane's engine to lose virtually all of its oil.
Shortly before the crash, Mr. Cardelli had gotten the plane back from DAE. DAE is a "fixed-base operator," or FBO which provides, among other things, aircraft maintenance at Laconia Airport. Prior to Mr. Cardelli's crash, DAE had performed an annual inspection of his plane that included an oil and filter change. DAE also performed some other repair work, including a windshield replacement.
The windshield was replaced on June 12. At that time, a DAE mechanic told Mr. Cardelli that the plane would not be available until late in the afternoon of June 13, because the material used to seal the windshield needed twenty-four hours to cure, and it was necessary for the sealant to cure before DAE could perform an engine run-up. A run-up is required after any oil change, and had a run-up been performed, the mechanic performing it would have detected the oil leak that caused Mr. Cardelli's plane to crash.
On June 13, Mr. Cardelli went to pick up the plane, arriving before the end of the twenty-four cure period for the windshield sealant. When a DAE employee was unable to tell Mr. Cardelli where the plane was, Mr. Cardelli went into a hanger and found it. He also went into an office and took the plane's log books, which contained entries indicating that all the work on the plane, including a run-up, had been completed. Mr. Cardelli then had a low-level DAE employee get the plane out of the hangar for him. Thereafter, he taxied away, leaking oil onto the runway, and took off on his fatal flight.
Mr. Cardelli's surviving spouse, who is also the personal representative of his estate, has sued DAE in the United States District Court for the District of Maine. Among her claims is one for negligence against DAE. Specifically, she asserts that DAE breached its duty of care by: (1) gouging the oil-cooler return hose and fracturing the oil-cooler return-line-attach nipple; (2) failing to perform the required run-up; (3) releasing the plane to Mr. Cardelli before performing the runup; (4) failing to take steps, such as taping the plane's doors and fuselage, to indicate that the plane had not been made airworthy; and (5) violating various federal regulations governing aircraft service and inspection.
DAE's operations at Laconia Airport were governed by an FBO Operating Contract between DAE and the Laconia Airport Authority ("LAA"). Article VI of that contract required DAE to carry commercial general liability insurance and to provide the LAA with a Certificate of Insurance "naming the LAA, the City of Laconia, the Town of Gilford, and the County of Belknap as Additional Insureds hereunder." Resp't's Mot. Summ. J., Ex. D (doc. no. 37-3), at 3. Article VI further provides:
The coverage available to the LAA, the City of Laconia, the Town of Gilford, and the County of Belknap as Additional Insured, shall not be less than a $2,000,000 Smooth Limit with respect to Premises-Operations . . . provided that such coverage is commercially available; a $2,000,000 Smooth Limit with respect to Products-Completed Operations arising out of the servicing or sale of fuel, oil and other petroleum products, provided that such coverage is commercially available; and a $1,000,000 Per Occurrence limit with a $100,000 Per Person Bodily Injury Sub-Limit with respect to all other Products-completed Operation exposure (i.e. Repair & Service, Pilot Supplies, Food & Beverage Sales, etc.), provided that such coverage is commercially available. Smooth Limit is defined as a distinct limit of liability coverage per occurrence with no sub-limit for bodily injury to any person.
Id. Article VI also gave the LAA the discretion to require DAE to maintain commercial umbrella liability insurance with a coverage limit of at least $1 million per occurrence. See id. There is no indication that the LAA ever required DAE to obtain or maintain an umbrella policy.
At the time of Mr. Cardelli's fatal accident, DAE was covered by a policy of airport liability insurance that was issued by Old Republic and underwritten by Phoenix. The policy's "Comprehensive General Liability Insurance -- Coverage Part" recites that the "policy provides coverage to owners, landlords and tenants of property and operations located on the premises designated in the declarations of this policy as an airport including all operations necessary and incidental thereto." Resp't's Mot. Summ. J., Ex. E (doc. no. 37-4), at 36. More specifically, under the policy, Old Republic is obligated to pay on behalf of the "insured" all sums that the "insured" shall become legally obligated to pay as "damages" because of
B. "property damage" to which this insurance applies, as caused by an "occurrence" . . .
Id. The policy's declarations page lists five "Coverage Parts." They include: (1) hangarkeepers' liability insurance; (2) completed operations and/or products liability insurance; (3) comprehensive general liability insurance; (4) premises medical payments insurance; and (5) other liability insurance. Id. at 2.
On a page titled "Comprehensive General Liability Insurance -- Schedule" (hereinafter "schedule page"), the policy describes five "General Liability Hazards," several of which include subparts, and two of which are potentially implicated by the facts of this case:
(a) Premises - Operations
Named Insured's aviation operations located at Laconia Municipal Airport; Laconia, NH . . . and any location necessary and incidental to the aviation operations of the Named Insured. . . .
Aircraft Repairs & Services
Servicing of Fuel, Oil and Other Petroleum Products Only
Resp't's Mot. Summ. J., Ex. E (doc. no. 37-4), at 5. To clarify, the
policy identifies three potentially relevant hazards: (1)
premises-operations; (2) completed operations (repair); and (3)
completed operations (petroleum only). The policy also describes a
hazard labeled "Products," which includes the sale of: (1) fuel, oil,
and other petroleum products only; (2) used aircraft; (3) new
aircraft; (4) aircraft parts not installed; and (5) pilot supplies.
The description of the premises-operations hazard quoted above is all the policy has to say about the nature of that hazard. Regarding what qualifies as a completed-operations hazard, the policy's definitions section provides, in pertinent part:
"completed operations hazard" includes "bodily injury" and "property damage" arising out of operations or reliance upon a representation or warranty made at any time with respect thereto, but only if the "bodily injury" or "property damage" occurs after such operations have been completed or abandoned and occurs away from premises owned by or rented to the "named insured". "Operations" include materials, parts, or equipment furnished in connection therewith. Resp't's Mot. Summ. J., Ex. E (doc. no. 37-4), at 44.
Each of the three hazards identified above has a coverage limit. With respect to the premises-operations hazard only, a single-limit endorsement provides, in pertinent part:
The total liability of [Old Republic] for all damages sustained by any person . . . because of bodily injury to any one person as the result of any one occurrence shall not exceed $2,000,000.
The total liability of [Old Republic] for all damages because of Property Damage . . . as a result of any one occurrence shall not exceed $2,000,000.
Subject to the above, the total liability of the company for all damages because of all bodily injury and all property damage . . . as a result of any one occurrence shall not exceed $2,000,000.
Resp't's Mot. Summ. J., Ex. E (doc. no. 37-4), at 8. With respect to the completed-operations (repair) and products (non-petroleum) hazards only, a ...