Insurance Coverage: Massachusetts Insurers Cannot Recoup Defense Costs Provided Under Reservation of Rights

A Massachusetts Superior Court last month issued a significant victory for policyholders. In the case Holyoke Mutual Insurance v. Vibram, the court ruled that an insurer that provides a defense under a reservation of rights may not later recoup attorney fees from the policyholder if a court ultimately determines there to have been no coverage.

Someone sues you or your company. You submit a claim to your insurance carrier. Your insurer hires a lawyer to represent you. But then your own insurance company turns and brings a new suit against you for a declaratory judgment that it no longer needs to pay your lawyer in the underlying case. In many states, if the court ultimately determines there to be no coverage, the insurer can then go so far as to recoup from you the money the insurer paid your lawyer. At least for now, that is not the law in Massachusetts.

Delay in Responding to Lawsuit Not a Waiver of Arbitration Provision

The Massachusetts Appeals Court ruled in favor of Gardner & Rosenberg’s client, reversing the trial court’s denial of his request to compel arbitration of a fee dispute with prior counsel.

After obtaining an award and subsequent settlement in favor of the client in an underlying property dispute, the former counsel sought to recover a disputed fee from the client. Despite the arbitration provision in the fee agreement with the client, counsel brought suit in Superior Court. The Superior Court denied the client’s request to compel arbitration and other efforts to seek arbitration, implicitly based on the client’s delayed response to the lawsuit.

The Appeals Court reversed and remanded the case to be sent to arbitration per the parties’ agreement. The Court held that although a default later entered on the docket, the client did not waive his right to arbitration – the first thing he did when responding to the lawsuit was to demand arbitration and he acted consistently with his desire to resolve the dispute through arbitration. Read the Appeals Court’s decision here.

Gardner & Rosenberg “SLAPPS” Back for Clients

In two recent cases, Gardner & Rosenberg won motions to dismiss under the so-called Anti-SLAPP statute. The law is designed to prevent lawsuits brought to stifle participation in petitioning activities to the government. The statute is a powerful shield against suits brought to deter a party from exercising its legal rights. The court must award attorney fees to a party that brings a successful motion.

In the first case, Gardner & Rosenberg represented a commercial tenant who complained to a town Board of Health about the conditions in its offices, and then brought suit to be relieved from its lease. The landlord counterclaimed against the tenant claiming the tenant exaggerated the scope of the issues to the town board. The court agreed with Gardner & Rosenberg that its client’s acts of speaking to the Board of Health and bringing suit were protected petitioning activity, and dismissed the landlord’s claim. Click here for a copy of the court’s decision.

In the second case, a tenant brought suit against its landlord concerning conditions at its property. The landlord then brought a separate lawsuit against the tenant’s attorneys, claiming that the attorneys “conspired” with the tenant to bring the first case. Gardner & Rosenberg represented the tenant’s attorneys in the suit against them. The court fully agreed with Gardner & Rosenberg that the attorneys’ acts in representing their client in the case against the landlord were protected petitioning activity, and dismissed the claims against the attorneys. Click here for a copy of the court’s decision.

Gardner & Rosenberg Welcomes Attorney Mariana Korsunsky

We are pleased that Mariana Korsunsky, an experienced business and employment litigator, has joined Gardner & Rosenberg, adding further depth to the firm’s litigation practice. Mariana represents institutional and individual clients in the state and federal courts in Massachusetts, administrative tribunals, and before government agencies in investigative proceedings. In addition to her business and real estate experience, Mariana has particular experience in resolving disputes arising from non-solicitation and non-competition agreements, breach of contract, breach of fiduciary duty, wrongful termination, and violation of wage and hour, anti-discrimination, and anti-retaliation laws. Mariana was previously a business and employment litigator at Goulston & Storrs in Boston and a graduate cum laude of Boston College Law School.

Civil Settlement with Attorney General Over Alleged Mortgage Violations

After over two years years of litigation, Gardner & Rosenberg’s client this week favorably resolved a civil lawsuit suit brought by the Massachusetts Attorney General under the state’s consumer protection statute.  The Attorney General alleged that the client, along with others, violated regulations concerning the provision of mortgage related services.  Under the terms of the settlement, the client makes no penalty payments and agreed to refrain from certain mortgage services-related activities.

Massachusetts Appeals Court Sides With Gardner & Rosenberg On Enforceability of Settlement Memo

The Massachusetts Appeals Court sided with Gardner & Rosenberg and overturned a Superior Court decision that had found a settlement memo enforceable.  The Appeals Court agreed with Gardner & Rosenberg’s arguments on behalf of its client that the memo was not enforceable because its terms were not complete.  The ruling allows for Gardner & Rosenberg to proceed with its client’s claims against several corporate officers for their alleged breaches of fiduciary duty.  Read the Appeals Court’s ruling…