No. 22-1462

ADMIRAL INSURANCE COMPANY, STARR INDEMNITY & LIABILITY COMPANY, GREAT AMERICAN ASSURANCE COMPANY,

Plaintiffs, Appellees,

v.

TOCCI BUILDING CORPORATION, TOCCI RESIDENTIAL LLC, JOHN L. TOCCI, SR.,

Defendants, Appellants.

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

[Hon. Patti B. Saris, U.S. District Judge]

Before

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

Jeffrey J. Vita, with whom Kerianne Kane Luckett and Saxe Doernberger & Vita, P.C. were on brief, for appellant.

Eric B. Hermanson, with whom Austin D. Moody and White and Williams LLP were on brief, for appellee.

Joel Lewin, Eric F. Eisenberg, Alexandra A. Gordon, Hinckley Allen & Snyder, LLP on brief for Associated General Contractors of America, Inc. and Associated General Contractors of Massachusetts, Inc., amici curiae. November 8, 2024 HOWARD, Circuit Judge. This appeal results from a dispute between a general contractor and its insurers over coverage under a commercial general liability ("CGL") insurance policy. The principal question is whether a general contractor's CGL insurance policy covers damage to a non-defective part of the contractor's project resulting from a subcontractor's defective work on a different part of that project. The answer to that question dictates whether Admiral Insurance Company ("Admiral")1 is obligated to defend Tocci Building Corporation, Tocci Residential LLC, and John L. Tocci, Sr., (together, "Tocci") in an underlying lawsuit alleging a range of issues with Tocci's work on a residential construction project. Applying Massachusetts law, the district court concluded that Admiral had no duty to defend Tocci because the lawsuit did not allege "property damage" caused by an "occurrence," as required for coverage under the Admiral insurance policy. We are uncertain whether the Massachusetts courts would ultimately agree with the district court's interpretation of those terms, but we affirm the district court's

1 Two other insurers are also affected by our ruling. Starr Indemnity & Liability Company and Great American Assurance Company intervened in the suit brought by Admiral seeking a declaratory judgment as to its duty to defend. They provide excess policies that follow form to Admiral's policy. The parties agree that if Admiral has no duty to defend, then Starr and Great American can have no obligation to provide indemnity coverage either. (Neither excess policy includes a duty to defend.) On appeal, Starr and Great American adopted Admiral's briefing by reference, so we focus on Admiral's arguments throughout.

- 3 - ultimate holding that Admiral has no duty to defend Tocci, albeit for different reasons.

I.

From 2013 to 2016, Tocci was the construction manager for an apartment project owned by Toll JM EB Residential Urban Renewal LLC ("Toll"). There were several work quality issues and delays on the project, and Toll eventually terminated Tocci in March 2016 for alleged mismanagement of the project. Toll then filed a lawsuit against Tocci in New Jersey state court in July 2016, and Tocci removed it to federal court.

The amended complaint contained five counts: (1) breach of contract; (2) breach of the obligation of good faith and fair dealing; (3) declaratory judgment, for an order that Toll lawfully terminated Tocci for default of its obligations; (4) alter ego liability; and (5) fraud in the inducement. The complaint did not allege negligence or expli