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MASSACHUSETTS INSURANCE LAW |
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DECEMBER 2009 MAY 2009 Declaratory Judgment - Attorneys Fees MARCH 2009 INTELLECTUAL PROPERTY EXCLUSION DECEMBER 2008 JUNE 2008 MAY 2008
DECEMBER 2009 - POLLUTION EXCLUSION In Clean Harbors Environmental Services, Inc. v. Boston Basement Technologies, Inc. The insured, Basement Technologies, caused a heating oil leak by breaking a heating oil line as it was installing a waterproofing system in Richard Silva’s home. Pursuant to G.L. c. 21E, the Massachusetts Department of Environmental Services (“DEP”) issued a notice of responsibility to Basement Technologies. Basement Technologies retained Clean Harbors Environmental Services, Inc. (“Clean Harbors”) to clean up the spill. Basement Technologies then asserted that it was entitled to coverage for that expense under a general liability policy issued by Admiral Insurance Company. The policy included the following exclusion:
MaY 2009 - Intellectual property exclusion DECLARATORY JUDGMENT – ATTORNEYS FEES The Supreme Judicial Court has held that an insurer is not entitled to recover the attorneys fees it incurs in establishing that a second insurer breached its duty to defend. See John T. Callahan & Sons, Inc. v. Worcester Ins. Co.,453 Mass. 447 (2009). Massachusetts normally follows the American Rule whereby each party to a litigation must pay its own attorneys’ fees absent an applicable statute. In previous cases, the court recognized an exception to the American Rule and permitted an insured to recover attorneys fees establishing that its insurer had breached its duty to defend. See e.g. Preferred Mut. Ins. Co. v. Gamache, 426 Mass. 93, 98 (1997) In John T. Callahan & Sons, Inc. v. Worcester Ins. Co., the court held that the Gamache exception did not apply where one insurer had incurred the fees proving that another insurer had breached its duty to defend someone who had coverage with both insurers. The court reasoned that the normal American Rule should apply because “[t]wo insurers that have independently issued separate policies to the same insured have no contractual relationship with, and no special relationship to, each other, at least arising out of the fact that they share an insured.”
March 2009 - Intellectual property exclusion INTELLECTUAL PROPERTY EXCLUSION In Finn v. National Union Fire Ins. Co. of Pittsburgh, Pennsylvania, 452 Mass. 690 (2008) , the Supreme Judicial Court held that an intellectual property exclusion in an errors and omissions policy issued to Uniscribe Services, Inc. (“Uniscribe”) negated coverage for the claims asserted in this case. “Uniscribe provided records management, document imaging, and electronic printing services to law firms and corporations.” National Union issued an errors and omissions policy to Uniscribe that had an exclusion that negated coverage for “any claim arising out of any misappropriation of trade secret or infringement of patent, copyright, trademark, trade dress or any other intellectual property right.” Jones Day hired Uniscribe to provide services in connection with its representation of DirectTV. In the course of that project, a nephew of a Uniscribe employee performed some work and disclosed confidential trade secret information belonging to DirectTV. Jones Day forfeited some of its legal fees and made a claim against Uniscribe. The Supreme Judicial Court held that the intellectual property exclusion negated coverage for Jones Day’s claim. Assuming that the nephew was not an insured, the exclusion still negated coverage. The court reasoned that “[t]he breadth of the phrase ‘arising out of,’ in conjunction with the words ‘any claim,’ unambiguously encompasses claims based on third-party conduct.” Furthermore, Jones Day’s claim “arose out of the nephew’s misappropriation” because Jones Day would not have incurred any loss but for the misappropriation. UNINSURED COVERAGE – LATE NOTICE In Pilgrim Ins. Co. v. Molard, 73 Mass.App.Ct. 326 (2008), the Appeals Court held that an insurer that provided uninsured coverage was not entitled to summary judgment because there were genuine issues of material fact regarding (1) whether the claimant made sufficient efforts to identify the cab driver responsible for the accident and (2) whether Pilgrim was prejudiced by the claimant’s failure to comply with the notice provisions of the policy. The claimant was a passenger in a taxi cab when it was involved in an accident and she sought uninsured benefits. The policy provided coverage for “hit-ands-run accidents only if the owner or operator causing the accident cannot be identified.” The claimant did not obtain information about the cab or its driver at the time of the accident, and the key question was whether the cab was “a hit-and-run vehicle whose owner or operator ‘cannot be identified’” within the meaning of the policy. That issue depended on whether the claimant had a duty to make additional efforts to identify the cab and its driver. The Appeals Court explained that whether the claimant knew she was injured was a critical fact. If she were unaware of her injuries when she left the vehicle, she could recover uninsured benefits even if she did not make any effort to obtain identifying information about the cab driver. On the other hand, if she knew she was hurt, she had “an obligation to gather information from which the vehicle and its driver can be readily identified if the nature of the injuries or other circumstances of the accident do not prevent [her] from doing so.” In those circumstances, her failure to obtain information about the taxi cab would preclude coverage. In this case, there was a conflict in the evidence regarding whether the claimant realized immediately that she had been hurt so the insurer was not entitled to summary judgment on the issue of whether the claimant made sufficient efforts to identify the cab and its driver. There was also a question of fact regarding whether Pilgrim was prejudiced by the claimant’s late notice of the accident. To prove prejudice, Pilgrim had to show that the delay in notice hampered its ability to identify the taxicab driver or determine how the accident occurred. On that issue, Pilgrim was not entitled to summary judgment because there was a genuine issue of material fact regarding whether Pilgrim could have obtained sufficient facts about the accident if it had submitted to the cab company the information that it had received from the claimant.DECEMBER 2008 - AUTOMOBILE COVERAGE - USE OF AUTOMOBILE In American Home Assur. Co. v. First Specialty Ins. Corp., 73 Mass.App.Ct. 1 (2008), the Appeals Court held that an automobile policy issued by American Home provided coverage for an accident that occurred when an oil delivery driver, Bone, fell from the top of a trailer while loading oil at an oil terminal. Bone filed suit against Global Companies, LLC (“Global”) the operator of the terminal, alleging that Global’s equipment was defective and that the terminal was defective because it lacked a guardrail. The issue was whether First Specialty’s general liability policy or American Home’s automobile policy provided coverage.
The court concluded that the accident arose out of the use of the tanker truck so that American Home’s policy applied. Noting that Massachusetts courts have read the phrase “arising out of” broadly, the court reasoned that “Bone, while loading his tanker truck, was in the process of trying to make a loading pipe work properly when he fell. He thus was engaged in the very activity for which the tanker truck was present at Global's terminal. These facts provide a sufficient causal connection between the loading of the tanker truck and Bone's resulting injury.” Id. at 6. Bob Powers of our office successfully argued the case on behalf of First Specialty. June 2008 - MA SJC Issues Ruling On PIP Medical Review And Subrogation Issues The Supreme Judicial Court has issued two decisions regarding Personal Injury Protection (“PIP”) No Fault benefits. In Boone v. Commerce Insurance Company 451 Mass. 192 (2008), the court held that an insurer can terminate PIP medical payments based on an IME obtained from a physician who was not the same specialty as the billing or treating physician. The statute governing PIP provides in part, that an insurer shall not refuse to pay a claim for PIP medical benefits:
The claimant sought PIP benefits for chiropractic services and the insurer refused to pay the benefits based on an IME conducted by an orthopedic surgeon. The claimant argued that the insurer had violated the statute because the orthopedic surgeon was not licensed under the same chapter as the chiropractor. The SJC disagreed, adopting the industry position that the same specialty requirement only applied if the insurer denied coverage based solely on a medical review of the bills, and did not apply when the physician conducted an IME. Andre Sansoucy of Melick, Porter& Shea LLP submitted an amicus brief in support of the industry position on behalf of the Massachusetts Insurance Federation. In Enterprise Rent-A-Car Company of Boston, Inc. v. Arbella Mutual Insurance Co, 451 Mass. 264 (2008), the court held that the self-insured owner of a rental vehicle could seek subrogation against an insurer that issued a personal auto policy to the operator of the vehicle. Enterprise rented a vehicle to Joseph Navis. Navis was involved in an accident, and Enterprise paid PIP benefits to three passengers in the rental vehicle. Enterprise pursued a subrogation claim against Metropolitan, Navis’ personal auto insurer. The court held that Enterprise could pursue a subrogation claim against Metropolitan, based on an allegation that Navis was at fault. MAY 2008 - Rescission and Reformation In Hingham Mutual Fire Insurance Co. v. Merrcurio, 71 Mass. App. Ct. 21 (2008), the Appeals Court held that Hingham Mutual was not entitled to rescind or reform an umbrella policy issued to the Mercurios, even though they did not list their seventeen year old son, Daniel, as an operator on the insurance application. Daniel lived with his parents but owned his own vehicle and had his own insurance. Daniel was involved in an accident while driving a friend’s car, and the issue was whether his parent’s umbrella policy applied to claims arising out of that accident. The application asked for a list of all vehicles “owned, leased or furnished for regular use”, and then stated “List All Members Of Household And All Operators Of Vehicles/Watercraft As Required By Company.” The court concluded that the application was ambiguous because the question could be read to seek only the operators of the vehicles listed on the application, as opposed to all vehicles or watercraft owned by anyone living in the household. As a result, the Mercurio’s response to the question was not a misrepresentation, and Hingham Mutual was not entitled to rescission. Hingham Mutual was also not entitled to reform the policy to exclude Daniel as an insured. The definition of insured included relatives under the age of 21 who lived with the insureds, and Hingham Mutual did not show, by clear and convincing evidence, that the policy terms were the result of a mutual mistake. MAY 2008 - Use of Automobile – Resisting Arrest The Appeals Court has held that automobile polices did not apply to injuries suffered by a police officer when a driver resisted arrest after he was stopped for a traffic violation. Bonina v. Marshall, 71 Mass. App. Ct. 904 (2008). Officer Jusseaume pulled over a vehicle operated by Jason Marshall, and officer Bonina stopped to assist. The officers concluded that Marshall was under the influence of drugs, and struggled to place him into custody. During the scuffle, Marshall “placed at least one hand on a fixed object in the rear of his pickup truck in order to avoid having handcuffs placed on him.” Bonina sought coverage under both the liability coverage issued to Marshall and his own uninsured and underinsured coverage. Both coverages applied only to injuries arising out of the use of an auto. The Appeals Court concluded that neither coverage applied because the connection with the use of the vehicle was too remote. The court reasoned that “Marshall's failure to submit to arrest effectively broke the chain of causation between the operation of the truck and the injury.” Id. at 906.
December 2007 DECEMBER 2007 - UNINSURED MOTORIST COVERAGE
In Hale v. Elco Administrative Services, 69 Mass. App. Ct. 878 (2007), the Appeals Court held that a renter complied with the notice provision of a policy when he notified the company of the accident within 24 hours, even though he did not mention any personal injury at that time, and did not inform the company that he had suffered an injury until more than four months after the accident. The plaintiff rented a car from Enterprise Rent-A-Car and Enterprise provided uninsured coverage to him pursuant to a motor vehicle bond. He was involved in an accident on January 4, 2004 and reported the accident to Enterprise the following day. He did not, however, mention any personal injuries until his attorney sent a claim letter on May 7, 2004. The court concluded that the plaintiff’s initial notice had complied with the notice requirement. Symptoms which led to his claim had not appeared at that time so he was not required to mention a possible personal injury. The court explained that “[t]he UM policy does not state a continuing duty to inform the insurer of changes in physical condition days after the accident…” DECEMBER 2007 - HOMEOWNERS COVERAGE
In Utica Mutual Insurance Co. v. Fontneau, 70 Mass. App. Ct. 553 (2007), the Appeals Court held that a homeowners’ policy provided coverage for a claim against the insured that arose out of an accident on property that was adjacent to the resident premises. The policy insured lot 378 and excluded coverage for excludes coverage for “bodily injury” “arising out of a premises ... owned by an insured ... that is not an ‘insured location.’ ” The policy defined “insured location” as “the ‘residence premises' ” or “any premises used by [the insured] in connection with [the residence premises]”. The accident occurred on a dirt track in lot 380 that was sometimes used to access lot 378. The dirt track was the most convenient way to get from lot 380 to lot 378. The insured stored antique cars in the lower backyard of lot 378. After learning the cars had been vandalized, the insured arranged to meet Edward Burbank, a police officer, at lot 380. When Burbank arrived, he walked down the dirt track to investigate the area in lot 378 where the insured stored the antique cars. Burbank was injured on lot 380 as he walked back on the dirt track. The court concluded that Utica had a duty to defend an amended complaint filed by Burbank. That complaint triggered the duty to defend because it alleged that the dirt track was used to gain access to lot 378 and otherwise used in connection with that lot. On the duty to indemnify, the court explained that three factors were relevant for determining whether a site was used in connection with a residential premises within the meaning of the policy: “(1) the character of the use as a residentially related activity; (2) the distance between the residence and the site; and (3) the resulting reasonable foreseeability of the risk of the connected activity on the site to the insurer.” In the circumstances of this case, those criteria demonstrated that the coverage applied. The storage of antique automobiles qualified as a residential activity, and. the situs of the accident was near the boundary line of lot 378. Finally, the use was foreseeable to Utica Mutual, considering that it had insured the property since 1989, the insured had stored antique cars there since the early 1990’s, and the dirt track “provided the only vehicular access and the most convenient pedestrian access to the lower backyard of 378.”.
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Liability Law
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