Sunday, December 30, 2018
Massachusetts Appeals Court holds that tortfeasor's insurer's payment to homeowner whose house is an insured location under the policy offsets tort judgment against insured
Bunker Hill then sought reimbursement for the loss twice. First, it sought reimbursement directly from International Insurance Company of Hannover. Hannover was Williams' insurer, and its policy listed Gilbody's house as an insured location. Because Gilbody's house was an insured location, Gilbody was essentially entitled to bring a first party claim for property damage under the policy regardless of whether Williams was negligent. Since the house was an insured location under both the Bunker Hill policy and the Hannover policy, a court applied an "other insurance" analysis and determined that the loss must be split equally between the two insurers. Hannover reimbursed Bunker Hill for fifty percent of what Bunker Hill had had paid.
Bunker Hill then sought reimbursement a second time by bringing a subrogation action against Williams. That means that Bunker Hill exercised its right under the policy it issued to Gilbody to stand in her shoes and sue Williams for damages caused by its negligence, up to the amount Bunker Hill had paid Gilbody. In other words, it brought a third party claim against Williams.
A jury rendered a verdict in the full amount that Bunker Hill had originally paid Gilbody. Williams moved to offset the amount that Bunker Hill had already been reimbursed by Hannover. The Massachusetts Superior Court denied the motion, holding that the payment Hannover had made was from a source collateral to the judgment in the negligence action, because the payment had been pursuant to coverage in the Hannover policy under which Gilbody's house was an insured location (first party coverage), not under negligence coverage for Williams (third party coverage).
In Bunker Hill Ins. Co. v. G.A. Williams & Sons, __ N.E.3d __, 2018 WL 6544124 (Mass. App. Ct.), the Massachusetts Appeals Court overturned the Superior Court decision and held that an offset was required. Although the court used a fairly complicated analysis, the ruling boiled down to the common sense idea that Hannover should not have to pay the same loss twice (or one and one half times), and Bunker Hill should not get a windfall, simply because Williams had had the foresight and business sense to list Gilbody's house as an insured location on the Hannover policy. In more technical terms, the first payment from Hannover was not a collateral source payment with respect to the tort judgment against Williams; it was from the same source as the tort payment would come from.
See the comments section on this post for a different take on this case.
Wednesday, November 28, 2018
Superior Court holds that dispute over coverage for companies related to corporate policyholder does not create conflict between insurer and policyholder
In Crosby Valve, the issue was whether a conflict existed when an insurer agreed to defend a policyholder in long-tail asbestos claims without a reservation of rights, but reserved its rights with respect to closely related companies. The policyholder argued that it should be able to control the defense because settlements of individual claims would deplete the coverage limits and would ultimately harm the related companies.
The dispute arose after a series of mergers and acquisitions in which rights under insurance policies were transferred from one corporate entity to another. The Superior Court held that the dispute over coverage with respect to the related entities did not give rise to a conflict between the insurer and the entity that the insurer had agreed to defend without reserving its rights.
Monday, November 26, 2018
In Aquino v. United Property & Cas. Ins. Co., 2018 WL 5532541 (Mass. Super.), Wenda Aquino sought coverage under a homeowner's policy issued by UPC after a fire in her home. UPC denied coverage. It asserted that the fire was intentionally caused by Aquino's fiance, Kelly Pastrana, who was a named coinsured on the policy, and that in those circumstances there was no coverage for any insured.
Both Aquino and Pastrana were listed on the deed and mortgage for the property. Aquino was innocent of any involvement in Pastrana's intentional setting of the fire. Pastrana died in the fire.
The Superior Court addressed the policy provision stating that intentional loss means "any loss arising out of any act an 'insured' commits or conspires to commit with the intent to cause a loss. In the event of such a loss, no 'insured' is entitled to coverage, even 'insureds' who did not commit or conspire to commit the act causing the loss."
Aquino argued that that provision was broader than the provisions allowed by the Massachusetts Standard Form of Fire Policy statute, Mass. Gen. Laws ch. 175 §99. The statute sets policy language for fire insurance policy. Under the statute, such language includes a provision that the insured "shall not be liable for loss occurring . . . while the hazard is increased by any means within the control or knowledge of the insured" and that the insurer "shall not be liable for loss by fire . . . caused . . . by . . . neglect of the insured to use all reasonable means to save and preserve the property at and after a loss."
Aquino argued that the statute used the phrase "the insured," but the UPC policy used the phrase "an insured." The Superior Court agreed with Aquino that that change had impermissibly broadened the policy exclusion.
UPC argued that Aquino should be allowed to recover only half of the amount due under the policy because of Pastrana's intentional setting of the fire. The court agreed, holding that Pastrana's intentional act forfeited his share of recovery available under the policy. The court construed his share to be one half of the damages, noting that he and Aquino were tenants in common. The judge also held that under the same logic Aquino was entitled to only one half of her additional living expenses (for example, rent while the house is being rebuilt).
Wednesday, November 21, 2018
US District Court for District of Massachusetts holds Builder's Risk policy does not provide defense or indemnity for claim by purchaser of defectively constructed property
Charles River sought coverage under a Builders' Risk policy issued by Zurich, and a declaratory judgment lawsuit followed. In 689 Charles River, LLC v. Am. Zurich Ins. Co., 2018 WL 4211365 (D. Mass.) (unpublished), the United States District Court for the District of Massachusetts granted summary judgment to Zurich. It held that the Builder's Risk policy had no defense or indemnity provisions and provided only first-party coverage (coverage for losses to the insured, not to a third party who sues the insured).
The court also held that even if there were a duty to defend and indemnify under the policy, the allegations in the lawsuits fell squarely within the policy exclusions for dishonesty by the insured and for faulty, inadequate or defective (1) planning, zoning, development, surveying, siting, (2) design, specifications, workmanship, repair, construction, renovation, remodeling, grading compaction; (3) materials used in repair, construction, renovation or remodeling; or (4) maintenance.
Saturday, November 10, 2018
Massachusetts Appeals Court holds that child's father is not related by blood to child's mother's parents
In a split decision, the Appeals Court held that the plaintiff was not related by blood to the policyholders.
As I pointed out to Lawyers Weekly, in other policies the phrase might be considered ambiguous and therefore interpreted in favor of coverage. However, ambiguous terms in auto policies are not interepreted against the insurer because the language of those policies is set by state law.
Friday, October 26, 2018
I'm in the process of developing presentations for insurance adjusters and in-house attorneys on coverage and bad faith issues. Let me hear from you -- what topics would you like to receive trainings on? Anything from basic education for new adjusters on how to respond to 93A demand letters to obscure coverage issues.
Respond in the comments or send me an email.
Monday, October 22, 2018
U.S. District Court holds that regular wages paid to employees after a loss do not come within extra expense coverage, but extra wages and benefits do
On July 9, 2015, water infiltrated the electrical system of Interstate Gourmet Coffee Roasters, Inc., knocking out all power. The business was suspended for thirteen days. During that time Interstate's employees "redirected their efforts" to restore regular business operations. Hourly employees were paid their regular rate and overtime pay. Salaried employees were given additional vacation time to make up for the weekends they worked.
Interstate submitted a claim to Phoenix Insurance Company, it's insurer. The coverage under the policy included "the actual Extra Expense you incur during the 'period of restoration.'" The policy defined extra expense as "reasonable and necessary expenses . . . that you incur during the 'period of restoration' and that you would not have incurred if there had been no direct physical loss of or damage to property."
Interstate sought reimbursement from Phoenix for employee compensation incurred ruing the suspension period. Phoenix reimbursed Interstate for the overtime paid to hourly employees, but denied the rest of the claim.
In Interstate Gourmet Coffee Roasters, Inc. v. Travelers Indemnity Company, 2018 WL 3733937 (D. Mass.), the United States District Court for the District of Massachusetts held that the extra expense coverage does not provide coverage for payment of wages to employees whose normal schedules are disrupted or inconvenienced, except for hourly employees who work additional hours because of the loss and extra vacation time offered to salaried employees.
Tuesday, October 16, 2018
US District Court holds professional liabilty insurer has duty to defend action relating to breakup of law firm
Wednesday, August 29, 2018
Attorneys beware: Insurance agents generally have no duty to ensure you have the professional liability insurance coverage you need
Saturday, August 25, 2018
Massachusetts Appeals Court holds that contractual limitations period in life insurance policy does not apply to 93A claim
Friday, June 8, 2018
Thursday, June 7, 2018
The case started in Massachusetts state court and was removed by the insurer to federal court. The federal judge predicted that even though a 1951 decision of the Massachusetts Supreme Judicial Court held that there was no coverage for the innocent coinsured under similar facts, if the case were before the SJC today it would hold that there is coverage. He based that prediction on changes to the statute regulating fire insurance policies and on Massachusetts Superior Court decisions.
Thursday, May 31, 2018
Monday, January 1, 2018
Massachusetts Appeals Court holds that under New Hampshire law insurer can settle claim over objection of insured
The lesson here: If you want to have control over whether or not a case against you will be settled, buy a policy that gives you that control.