Northern Security Insurance v. R.H. Realty Trust
941 N.E.2d 688
Mass. App. Ct.2011Background
- Niininen family sues trust and related defendants in 2001 over mold damages from Lexington residential premises.
- Trust rejected insurer's reservation of rights and retained counsel Dailey at $225/hour; insurer later paid $150/hour and delayed payment.
- Dailey reported to Northern Security; October 2003 settlement of underlying action for $75,000.
- Sloane & Walsh demand $225/hour vs Northern Security's $150; c. 93A claim asserted for unfair practices.
- Trial court held $350/hour reasonable, awarded fees; judgment remanded to determine damages at $225/hour; appellate fees awarded to counsel.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Is $225/hour per se reasonable? | Niininen/Dailey rate supported by expert and Dailey’s normal fee. | Northern Security paid $150/hour as market panel rate. | No; court affirmed finding $225/hour reasonable for Dailey. |
| Did delaying payment at $150/hour violate c. 93A §11? | Unreasonable, unfairly coercive conduct delaying payment. | Rational basis to pay $150/hour; no bad faith. | Yes; court affirmed §11 violation based on delay, lack of negotiation, and related conduct. |
| Should damages be capped at the actual incurred fees ($225 rate) rather than the $350 award? | Damages should reflect actual coverage amount due; cap at policyholder's trial rate. | Judge’s award of $350 is reasonable based on market and attorney's abilities. | Damages limited to amount actually incurred by insured; remanded to determine at $225/hour. |
| Are appellate fees recoverable for Sloane & Walsh? | Prevailing on §93A supports appellate fees. | Not contested; seeks standard evaluation. | Appellate fees awarded to Sloane & Walsh; fee request to be filed. |
Key Cases Cited
- Magoun v. Liberty Mut. Ins. Co., 346 Mass. 677 (Mass. 1964) (insurer must pay reasonable defense costs when reservation of rights exists)
- Herbert A. Sullivan, Inc. v. Utica Mut. Ins. Co., 439 Mass. 387 (Mass. 2003) (insurer may be obligated to fund insured's defense under reservation of rights)
- Duclersaint v. Federal Natl. Mort. Assn., 427 Mass. 809 (Mass. 1998) (unfairness in c. 93A analyzed with total circumstances)
- Community Builders v. Indian Motocycle Assocs., 44 Mass. App. Ct. 537 (Mass. App. Ct. 1998) (good-faith disputes generally not c. 93A violations but other conduct can be)
- Kattar v. Demoulas, 433 Mass. 1 (Mass. 2000) (actual damages principle in c. 93A recoveries)
- Berman v. Linnane, 434 Mass. 301 (Mass. 2001) (factor guiding reasonableness of attorney’s fees; no one factor controlling)
- Linthicum v. Archambault, 379 Mass. 381 (Mass. 1979) (consideration of usual price charged for similar services)
- Jet Line Servs., Inc. v. American Employers Ins. Co., 404 Mass. 706 (Mass. 1989) (use of related statutory context in evaluating c. 93A claims)