Tuesday, August 24, 2010

First Circuit holds that under Maine law, a claim for reimbursement of educational expenses is a claim for money damages

Andrew Caplan of Gilbert & Renton, LLC sent me this case, decided by the First Circuit Court of Appeals last week:

In School Union No. 37 v. United Nat'l Ins. Co., __ F.3d __, 2010 WL 3260113 (1st Cir.), the court decided the scope of an Educator's Liability Policy.

The plaintiff, School Union 37, sought from its insurer costs incurred in defending a claim for reimbursement of non-tuition expenses, such as room, board and transportation, under the federal Individuals with Disabilities Education Act (IDEA).

The insurance policy required the insurer to "pay on behalf of the Insureds loss and defense expenses . . . for any claim due to a Wrongful Act to which the policy applies." The policy defined "claim" as "any written demand for money damages to which the policy applies."

At issue was whether the third-party claim for reimbursement was a claim for "money damages," which was undefined in the policy.

The court first held that the common law definition of money damages under IDEA is irrelevant to the definition of money damages in an insurance policy. Rather, the definition would be determined by the Maine law of contract interpretation.

The court held that, interpreting ambiguous language against the insurer, the term "money damages" encompassed the reimbursement at issue. The insured was therefore entitled to the attorney's fees it incurred.

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