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May 11, 2022

Legal Update
John G. O'Neill, Jessica H. Park

D/B/A Designation In Policy Leaves Insured Without Coverage

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Many companies use a “d/b/a” (“doing business as”) designation to distinguish between the legal name of the entity behind the business and the name the business uses in its dealings with the public. The use of a d/b/a designation does not create a separate entity, and for companies that engage in multiple business endeavors, a d/b/a may not encompass the full scope of the entity’s operations. For example, “Daniel & Craig LLC” may do business as “Daniel’s Ice Cream Shop,” but it may also later decide to open a bicycle shop using the d/b/a “Craig’s Bike Store.” And, as a recent decision of the Massachusetts Supreme Judicial Court reflects, use of a d/b/a designation in an insurance policy can limit the scope of coverage provided.  

The Potential Limiting Effects of “D/B/A” 

The decision, Masonic Temple Association of Quincy, Inc. v. Patel, involved a Masonic Temple in Quincy that became too costly for its members to maintain. The members signed a purchase and sale agreement under which the Temple building was to be developed into two separate condominium units. The agreement was eventually assigned to Jay Patel, the president and sole owner of Dipika, Inc., which operated a Super 8 motel in Weymouth. Pursuant to the agreement, Patel would complete the renovations, leaving the downstairs unit for the use of the Masons while taking possession of the upstairs unit, which he intended to turn into a “boutique hotel.”

Several months later, two workers were cutting metal on site when a fire broke out, causing extensive damage. After receiving a claim from the Masons, Patel sought coverage under the Dipika general liability policy. The insurer denied coverage, citing the fact that the named insured on the policy was “Dipika Inc. dba Super 8” and asserting that the policy therefore covered only liability arising from Dipika’s activities related to the Super 8 in Weymouth. Dipika contended that because a “d/b/a” designation does not create a separate legal entity, all of Dipika’s activities were covered under the policy, whether related to the Super 8 or not.

The Superior Court ruled in favor of the insurer and the Supreme Judicial Court affirmed, citing several aspects of the policy, such as the business description as “motel” (as opposed to a “boutique hotel”) and the relatively low premiums, to support its conclusion that the policy only covered claims related to the Weymouth Super 8.

And while the Court noted the “dba Super 8” designation used in identifying the named insured “[might] not be determinative on its own,” it was “an important consideration” in the court’s analysis. Citing decisions from other jurisdictions that have relied on a “dba” designation alongside other policy details to determine that coverage did not extend to a largely unrelated enterprise, the Court concluded that: 

The ordinary understanding of the phrase ‘doing business as Super 8’ suggests that the policy covers only liability arising from Dipika’s activities that it undertakes doing business as a Super 8. Even if the phrase ‘doing business as’ does not operate to create a separate legal entity… that does not preclude it from being used in the ordinary sense, as here, to describe the ambit of a policy’s coverage. Notably, Dipika has not even argued that the Temple project was to create a new Super 8 or was in any way connected to its existing Super 8 business.

The Masonic Temple decision makes clear that using a “d/b/a” designation in an insurance policy can have significant consequences, and emphasizes the need for the named insured to be listed precisely and appropriately in scope. 

If you have questions about this decision, please contact one of the Insurance & Reinsurance attorneys at Sugarman Rogers.