Reported Decisions

Auto Flat Car Crushers, Inc. vs. Hanover Insurance Company

469 Mass. 813 (2014)

This was a case where Auto Flat (my client) filed a claim with their insurer to pay for a spill of gasoline on private property.  The Massachusetts Department of Environmental Protection (DEP) brought an enforcement action against Auto Flat, ordering it to clean up the site.  The insurer denied the claim stating that the policy issued to Auto Flat did not cover this incident.

Suit was filed by Auto Flat asking the Superior Court to declare the rights and responsibilities of the parties under the insurance contract.  Shortly after filing suit, Auto Flat won summary judgment on the Duty to Defend.  That is, the court ruled as a matter of law (no need for a trial) that Hanover should have defended Auto Flat in their dealings with the DEP.  After Auto Flat won that motion, Hanover paid the damages (money expended by Auto Flat to deal with DEP and to clean the spill).

Hanover filed a motion to dismiss the allegation that Hanover’s denial of the claim was an unfair claims settlement practice which would be a violation of Chapter 93A, which allows a person or a company to seek up to triple damages for these types of violations.  Hanover lost the motion to dismiss that claim and the case was appealed.

The appeal was sent up to the Massachusetts Appeals Court, but the Supreme Judicial Court (the highest court in Massachusetts) took over the case before the Appeals Court had a hearing.  The issue was whether a Chapter 93A claim could be continued after Hanover paid the damages and there was no “judgment” for the court to use as a basis under Chapter 93A.  It was thought that in order to proceed on a Chapter 93A claim, a judgment for damages had to be entered against the defendant.  In other words, you need a judgment as a basis for double or triple damages.

In a landmark ruling, the Supreme Judicial Court found that no “judgment” was needed to allow Auto Flat to pursue Chapter 93A damages.  The Court allowed Auto Flat to proceed by proving its contract damages, even though the contract claims were dismissed.

After the Supreme Judicial Court ruled in my client’s favor, the case was sent back to the Superior Court for further proceedings.

Metropolitan Property and Casualty Insurance Company vs. Morrison

460 Mass. 352 (2011)

Mr. Morrison had a suit brought against him for negligently injuring a police officer.  Mr. Morrison notified Metropolitan that he was a member of his parent’s household at the time of the injury and he wished to have the homeowner’s policy defend him and pay any judgment (or settlement) that results from the case. Metropolitan insured the home of Mr. Morrison’s parents.

Metropolitan denied the claim stating that his actions violated the “Criminal Acts” exclusion of the homeowner’s policy and refused to defend him in the suit.  Metropolitan then filed its own suit against Mr. Morrison asking the court to declare that Mr. Morrison’s action violated the Criminal Acts exclusion and that the company was not obligated to defend or indemnify Mr. Morrison.

Before Metropolitan’s suit could be heard, Mr. Morrison was defaulted in the injury suit, as he did not have the funds to hire an attorney to defend him.  The court held a hearing in his case and entered a judgment against Mr. Morrison for $100,000 for the injuries he caused.

Metropolitan eventually received a ruling in their case that stated that the Criminal Acts exclusion did apply, and Metropolitan did not have to pay the claim.  Mr. Morrison then agreed to assign his rights against Metropolitan to the injured police officer (my client) to help pay the judgment against him and an appeal of the ruling was filed by Attorney McMaster.

The Supreme Judicial Court (the highest court in Massachusetts) took the case directly, skipping over the Appeals Court.   The court wanted to rule, for the first time, on the issue of the Criminal Acts exclusion.  Unfortunately, the court agreed with the Superior Court’s ruling and stated that the Criminal Acts exclusion meant Metropolitan’s policy did not “cover” the injury.  However, it also ruled (for the first time) that because Metropolitan did not defend Mr. Morrison on the first suit, it violated the portion insurance contract that required that the insurer defend him.  Because the judgment against Mr. Morrison entered before Metropolitan got a ruling that the policy did not apply, and they were in breach of their duty to defend, Metropolitan was required to pay contract damages in the amount of the judgment.

Although my client lost the Criminal Acts exclusion fight, he was still paid for his injuries by showing that Metropolitan violated its insurance contract when it failed to defend him.  This contract damages issue makes Metropolitan vs. Morrison a very important insurance coverage case and sets out the boundaries for homeowner’s insurers concerning their obligations under their contract.

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