Judge Applies Well-Established Rules of Policy Interpretation to Narrow the Reach of an Exclusion and to Find Copyright Coverage
In a February 10, 2026 Order, Judge F. Dennis Saylor IV granted Plaintiff-Insured’s Motion for Judgment on the Pleadings, finding that Mount Vernon had a duty to defend a copyright infringement claim brought against the real estate agency. Mount Vernon Fire sold the insured a Real Estate Agents’ Errors and Omissions Liability Policy. The underlying case alleged that the realty agency used an architect’s drawings in its marketing for the sale of a home, in violation of copyright law. The insurer denied coverage relying primarily on an exclusion for “disputes involving…(d) conversion, misappropriation, commingling, improper use, theft, embezzlement or defalcation of funds, account information or other property….” The Court rejected the insurer’s reliance on the exclusion.
In its decision, the court emphasized the need for contextual interpretation of policy exclusions.
First, the Court found that the language used in the exclusion clearly connoted financial characteristics and intentional conduct. Further, the Court found that interpreting the term “property” so broadly as to include both tangible and intangible property would render the examples listed in the exclusion “superfluous.” And finally, the Court highlighted that interpretation must comport with the reasonable expectations of the insured, in this case, a real estate agent, and the business risks for which a real estate agent seeks insurance.
The Court found that unwitting use of intellectual property of a photographer, architect, or other party, was a business risk of the agency due to its extensive use of marketing materials in the course of business. The Court found that no reasonable policyholder would read the exclusion so broadly that it would apply to a copyright claim, and at a minimum, the exclusion is ambiguous. As such, the Court held that Mount Vernon had a duty to defend and awarded the policyholder its attorneys’ fees in the coverage action.
Decision: Nichole Sliney Realty Team, Inc. v. Mount Vernon Fire Ins. Co., 25-11145-FDS (D. Mass. Feb. 10, 2026)
