12 N.E.3d 1037
Mass. App. Ct.2014Background
- Pacific Indemnity, as subrogee of the Levkoffs, sues SMD and Preferred over property damage at Levkoffs' Lake Garfield area.
- Levkoffs contracted with SMD to remove trees and brush in accordance with environmental permits and plans.
- SMD subcontracted work; the subcontractor failed to follow permit restrictions, causing extensive clear-cutting down to Lake Garfield.
- The damage was on the Levkoffs' land and required remediation; Pacific paid over $100,000 on the Levkoffs' behalf.
- The parties settled part of the case; Pacific asserted c. 93A claims and sought coverage and indemnification from Preferred.
- The trial judge granted judgment on the pleadings, ruling the damage wasn’t covered under SMD’s policy and that the 93A claims failed
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Levkoffs’ damages are an occurrence under the policy | Pacific argues damages fall within occurrence coverage | SMD policy excludes non-accidental work and relies on exclusions | No; not an occurrence under the policy |
| Whether business risk exclusions apply to defeat coverage | Pacific contends exclusions do not apply since overstepping permit scope | Preferred relies on exclusions (j)(5) and (j)(6) to bar coverage | Yes; exclusions apply to bar coverage for the damaged property |
| Whether Preferred’s conduct supports a G. L. c. 93A claim | Pacific seeks 93A relief for insurer’s handling of the claim | Preferred had no duty to settle given non-covered loss and defenses | No; 93A claim fails as liability not reasonably clear and no duty to settle |
| Whether the 93A claim, if any, is viable under c. 176D §3(9) | Pacific argues bad-faith settlement conduct violated §3(9)(f) | Defenses to coverage negate a reasonable settlement obligation | Rejected; no reasonable basis shown for liability or settlement obligation |
Key Cases Cited
- Liberty Mut. Ins. Co. v. Tabor, 407 Mass. 354 (Mass. 1990) (occurrence defined; ordinary meaning of accident)
- Smartfoods, Inc. v. Northbrook Property & Cas. Co., 35 Mass. App. Ct. 239 (Mass. App. Ct. 1993) (accident; normal foreseeability in landscaping work)
- Porter v. Clarendon Natl. Ins. Co., 76 Mass. App. Ct. 655 (Mass. App. Ct. 2010) (business risk exclusions and third-party property)
- Clegg v. Butler, 424 Mass. 413 (Mass. 1997) (176D §3(9) scope beyond insured-privity relationship)
- Polaroid Corp. v. Travelers Indem. Co., 414 Mass. 747 (Mass. 1993) (relation of 176D §3(9) to c. 93A claims)
- Terrio v. McDonough, 16 Mass. App. Ct. 163 (Mass. App. Ct. 1983) (insurer liability for good faith settlement; timing matters)
- Frost v. Porter Leasing Corp., 386 Mass. 425 (Mass. 1982) (subrogation and bad faith concepts in settlement)
- A.W. Chesterton Co. v. Massachusetts Insurers Insolvency Fund, 445 Mass. 502 (Mass. 2005) (duty to indemnify; defense to coverage not always bad faith)
- Lusalon, Inc. v. Hartford Accident & Indemnity Co., 400 Mass. 767 (Mass. 1987) (business risk exclusions and third-party property damages)