Tort and Insurance Law Update – Part Three

Tort and Insurance Law Update – Part Three

Safety Insurance Company v. Day
65 Mass. App. Ct. 15 (2005)

Regular Use Exclusion; Declaratory Judgment; Attorney’s Fees

[Regular use exclusion applied where use was consistent and with some frequency, but insurer was estopped from raising this defense due to delay. Insured was entitled to award of attorney’s fees in the defense of the declaratory judgment action.]

The defendant was the operator of a roommate’s car when it was involved in a serious accident. The injured person brought claims against the operator. The owner’s insurer initially assumed the defense of the action, but paid its policy limits and then tendered the defense to Safety. The case involved clear liability and serious damages, which was reported to the carrier by its counsel. Over two years after the accident, Safety raised the regular use exclusion, and brought a declaratory judgment seeking to avoid coverage. The trial judge found that the use was not regular, ruling in favor of the defendant. A second judge awarded attorney’s fees to the defendant for her costs in defending the declaratory judgment. The insurer appealed.

The Appeals Court affirmed, but on different grounds. The court reviewed the regular use exclusion, and found that in the present case the defendant’s use of her roommate’s car was consistent and regular. Furthermore, the car was readily available. She used the car not just as an operator, but also as a passenger. The court therefore found that the trial judge had erred in ruling that the regular use exclusion did not apply. However, the court then considered whether Safety should be estopped from denying coverage, since it had delayed so long. Not only had the insurer defended without reservation, it had failed to keep the defendant informed of major developments in the case, and did not seek her input or participation. Because of its delay, an opportunity to settle the case for its policy limits was lost, exposing the excess carrier to a significant indemnity expense. The court ruled that Safety was estopped from asserting the defense. Finally, the court affirmed the award of attorney’s fees which the defendant incurred defending the declaratory judgment action under the principles set out in Hanover Ins. Co. v. Golden , 51 Mass. App. Ct. 465, 468 (2001). The fee award of just over $100,000 was found to be reasonable.

Monticello Insurance Company v. Dion
65 Mass. App. Ct. 46 (2005)

Insurance Coverage; “Arising Out Of”

[Commercial general liability policy did not afford coverage to individual working on same job even if she was an independent contractor or a temporary employee.]

The plaintiff insured a tree service. While the owner of the service, the defendant Dion, was cutting a tree, it fell the wrong way, striking and killing the operator of the nearby tree chipper. The decedent’s administratrix had brought a claim for her wrongful death, which the insurer disclaimed. The disclaimer led to this declaratory judgment action. The insurer claimed that the policy language plainly excluded the claim whether the decedent was an employee or an independent contractor. The trial judge granted the insurer’s summary judgment motion and the plaintiff’s decedent appealed.

The Appeals Court affirmed. The court agreed with the trial judge that the policy excluded claims “arising out of the operations performed for the named insured by independent contractors.” Thus, the court reasoned, if the decedent were an independent contractor, doing work for the insured, the claim would not be covered. The court noted that the terms “arising out of” must be “read expansively.” The decedent could not recover as a temporary employee under the terms of the policy. Commentary: It seems that the decision is an incorrect one, and that the policy would have been intended to deny coverage to third persons injured by independent contractors who were working for or on behalf of the insured, but not to deny coverage for the negligent acts of the insured, even if an independent contractor of the insured was the one who was injured.

Hennessey v. The Stop & Shop Supermarket Company
65 Mass. App. Ct. 88 (2005)

Service of Process; Misnomer; Slip and Fall; Bananas

[Dismissal for failure to effect service of process not proper after complaint was amended to correct misnomer and proper defendant had actual notice; summary judgment not appropriate in slip and fall on the record in this case.]

The plaintiff was shopping at the defendant’s supermarket when she slipped on a banana peel and fell. After litigation was commenced, the plaintiff was informed that the defendant had been misnamed. A motion to amend the complaint was allowed, and the amended complaint was docketed as part of the motion. The complaint was not re-served. After some time the defendant moved for summary judgment on the plaintiff’s failure to effect service in accordance with Mass. R. Civ. P. 4(j). The defendant also moved for summary judgment claiming that the plaintiff could not establish that the defendant knew or should have known of the banana on the floor. The motion was allowed on both grounds and the plaintiff appealed.

The Appeals Court reversed. If the correct defendant is properly served, as here, and merely misnamed, and the misnomer is later corrected, it is not necessary for the plaintiff to re-serve the complaint. There was no prejudice to the actual defendant, which had been served at its usual place of business, and which had participated in the suit from its commencement. The court also found that although plaintiff could not show how long the banana had been on the floor (and it was only mildly decayed and mutilated), discovery was incomplete, and the plaintiff should be afforded the opportunity to discover whether employees of the defendant were in close proximity to the banana peel, and thus had the opportunity to remove the offending substance immediately.

Garcia s. Essex County Sheriff’s Department
65 Mass. App. Ct. 104 (2005)

Massachusetts Tort Claims Act; Presentment

[Correspondence from public employer on official letterhead containing the executive officer’s name is not evidence the executive officer had actual notice of a claim under the Massachusetts Tort Claims Act; presentment will also be insufficient if it does not allege a legal theory of liability.]

Plaintiff was injured in a motor vehicle accident while in the custody of the Essex County Sheriff ‘s Department. Plaintiff’s counsel sent three letters to the ECSD, which stated that plaintiff suffered injuries, enclosed medical records, and made a demand for settlement. An ECSD attorney responded to plaintiff’s counsel and indicated that ECSD would be willing to pay plaintiff’s medical bills in exchange for a release. There were no further settlement negotiations and plaintiff filed suit. In its answer and motion to dismiss, ESCD argued that plaintiff failed to make adequate presentment in accordance with G.L. c. 258, § 4 because plaintiff did not disclose facts of the incident, did not allege any theory of liability or make known his intention to bring claim under Massachusetts Tort Claims Act, and plaintiff did not make presentment of claim directly to the Essex County Sheriff, Frank Cousins. Summary judgment was entered for ECSD.

On appeal, the first issue was whether presentment to the chief fiscal officer was sufficient under the Act. The Act requires that presentment of the claim must be made directly to the executive officer of the public employer. The exception to this rule is when the executive officer has actual notice of the claim. Plaintiff argued that Sheriff had actual notice of the claim because the ECSD attorney responded to plaintiff’s letters and the sheriff’s name was on the ECSD letterhead. The court held that the use of official letterhead with the sheriff’s name was not sufficient to indicate that the sheriff had actual notice of the claim and the record contains no evidence that the sheriff had direct notice of this claim. The second issue was whether the content of the notice was sufficient. The court found the only allegation made in the presentment letters was that an accident occurred; the letters failed to give notice of the legal basis for liability and do not assert that injuries were caused by negligence or wrongdoing. Therefore, plaintiff’s counsel’s letters to ECSD failed to meet the statutory requirement of identifying legal basis for claim. Third, the Appeals Court held that plaintiff was not “lulled” into believing that presentment was sufficient because the defendant never affirmatively indicated that the presentment requirement had been satisfied or waived.

Joslyn v. Chang
445 Mass. 344 (2005)

Wrongful Death; Medical Malpractice; Statute of Repose

[Medical malpractice statute of repose is not subject to either equitable estoppel or tolling pursuant to G.L. c. 260, § 12 for fraudulent concealment of the cause of action.]

Plaintiffs’ infant suffered from a rare metabolic disorder and in October 1992 underwent a surgical procedure in which the heart was unexpectedly punctured by defendants. The infant died. Surgeons told plaintiffs that the infant’s heart was too weak to withstand the procedure and the death certificate indicated the cause of death was “natural.” The plaintiffs were never told about the intraoperative complications and did not receive a copy of the autopsy report. Nine years later, the pediatrician who was caring for plaintiffs’ other daughter suggested plaintiffs obtain the medical records of the deceased child. Plaintiffs did so, learning for the first time of the intraoperative complications. In February 2002, plaintiffs filed this malpractice action and the Superior Court Judge granted summary judgment in favor of the defendants because the statute of repose had expired.

Pursuant to G.L. c. 260, § 4, the medical malpractice statute of repose is seven years after the date on which the injury occurred. Plaintiffs argued that defendants should be equitably estopped from asserting the statue of repose defense because they fraudulently concealed plaintiffs’ cause of action. Plaintiffs also argued that the statute of repose should be tolled under G.L. c. 260, § 12, which provides that fraudulent concealment tolls “the time limited for commencement of the action.” The SJC held that, in light of the clear legislative intent behind the statute, the statute of repose is not subject to equitable tolling or tolling pursuant to G.L. c. 260, § 12, even where plaintiffs allege fraudulent concealment.

Saggese v. Kelley
445 Mass. 434 (2005)

Attorney Fee Sharing

This case is included not for the tort or insurance principles involved, but rather for the important ethical requirement announced by the court. The case involved an oral agreement to share a contingent fee. The Supreme Judicial Court upheld the trial court’s findings that the agreement should be enforceable, rejecting arguments that the Statute of Frauds applied; that the agreement was against public policy; that there was no consideration; that the referring attorney failed to get the client’s consent; and that there were unclean hands.

The SJC enunciated a new policy, going forward, as follows: “[T]he referring lawyer, who usually is in the best position to secure compliance with [Mass. R. Prof. C.] 1.5 (e), is required to disclose the fee-sharing agreement to the client before the referral is made and secures the client’s consent in writing. The rule will be construed to require this in fee-sharing agreements that are formed after the issuance of the rescript in this decision. Although the primary responsibility for compliance will fall on referring lawyers, lawyers to whom referrals are made are not absolved of all responsibility, and should confirm, before undertaking such representations, that there has been compliance with rule 1.5 (e). We emphasize that although failure to comply with the rule may not necessarily render a contract unenforceable between lawyers, it may subject both lawyers to disciplinary action upon division of a fee.”

Fee agreements and client acknowledgements should be updated accordingly!

Rudenauer v. Zafiropoulos
445 Mass. 353 (2005)

Statute of Repose; Wrongful Death; Medical Malpractice; Loss of Consortium

[The medical malpractice statute of repose cannot be tolled during “continuous treatment” with defendant physician.]

Plaintiff’s husband received care from defendant in 1991 related to his kidney. Several tests were done on his kidney, the last of which occurred on November 8, 1991 and “revealed a very nodular left kidney with no definite mass seen.” Thereafter, plaintiff’s husband did not visit defendant for the next 39 months. On February 21, 1995, plaintiff’s husband had pain in his kidney area. After ten moths of tests, defendant diagnosed plaintiff’s husband with kidney cancer and he died from metastatic disease on October 8, 2000. Plaintiff filed a wrongful death action on August 30, 2001. Defendant moved for summary judgment on the grounds that the action was barred by the seven-year statute of repose. Defendant’s motion for summary judgment was denied.

The SJC transferred the case from the Appeals Court on its own initiative and reversed. The SJC rejected plaintiff’s arguments that G.L. c. 260, § 4 should be read to include an exception for “continuous treatment”, which would toll the start of the repose period until the treatment with the physician terminates. The SJC held that the Massachusetts statute of repose is not subject to any tolling under any circumstances. In this case, while some negligence may have occurred after August 30, 1994, there is no evidence that such negligence caused any harm.

The Stop & Shop Supermarket Co. v. Loomer
65 Mass. App. Ct. 169 (2005)

Consumer Protection Act

[Cashing checks on insufficient funds at Stop & Shop to meet an individual’s general contracting company’s payroll does not constitute engaging in trade or commerce for the purposes of G.L. c. 93A, § 11 because it is not a business to business transaction.]

Karen Loomer was a cash office clerk at Stop & Shop. Karen cashed checks for her husband Richard, drawn on their joint personal checking account, when both knew there were insufficient funds. The cash was intended to be used for Richard’s general contracting company’s payroll. The couple hoped that by the time personal checks cashed at Stop & Shop were presented for collection, there would be sufficient funds in their checking account. In October 1995, Stop & Shop filed suit in Superior Court against Karen and Richard. The case was transferred to the District Court, where, after trial, the judge found for Stop & Shop on counts alleging conversion and deceit, but found for the Loomers on counts against them under G.L. c. 93A, § 11. The Loomers requested the case be transferred to the Superior Court. In Superior Court, Stop & Shop moved for summary judgment; the Loomers did not oppose this motion, relying on the prima facie effect of the District Court judgment on the c. 93A claims. The Superior Court judge granted summary judgment in favor of Stop & Shop on the grounds that the Loomers “admittedly engaged in illicit activity to convert funds of Stop & Shop for use in their business,” which as a matter of law was unfair and deceptive and proscribed by G.L. c. 93A, § 11. The Loomers moved for reconsideration and relief from judgment; both motions were denied. The Loomers appealed form the orders denying reconsideration and relief from judgment only

The Appeals Court first found that the District Court judgment constituted prime facie evidence sufficient to warrant a finding in favor of the Loomers on Stop & Shop’s motion for summary judgment on the c. 93A claims. The Appeals Court then went on to address the merits of the case, ultimately finding that as a matter of law, the Loomers’ conduct did not amount to a violation of c. 93A, § 11. In order for there to be a violation of G.L. c. 93A, § 11, there must be a commercial transaction between two persons engaged in trade or commerce. After it is established that there is a “commercial transaction,” the next step is to determine whether the individuals were acting in a “business context.” Here, the court assumed that check cashing constituted a “commercial transaction” for the purpose of c. 93A. However, the court found that the two parties were not “engaged in trade or commerce” and therefore failed the “business context” prong of the c. 93A, § 11 test. The court stated that “the conduct complained of must occur in a context in which the parties to the transaction are persons engaged in “trade or commerce” with each other and therefore “acting in a business context.” The court found that the Loomers’ activities do not constitute engaging in “trade or commerce” with Stop & Shop for the purposes of § 11 because the check cashing was not a business-to-business transaction and there were no business-to business communications about the transaction.

Vinci v. Byers
35 Mass. App. Ct. 135 (2005)

Legal Malpractice; Statute of Limitations

[The continuing representation doctrine, which tolls the statute of limitations for legal malpractice, does not apply where the client has actual knowledge of attorney’s malpractice while he/she is still represented by that attorney.]

Vinci retained Attorney Byers on November 10, 1996 to represent him in a divorce proceeding. Vinci was suspicious of the legal advice he received from Byers and stated in his deposition that he no longer trusted Byers as of June 30, 1998, yet he continued to have Byers represent him. After the divorce proceeding concluded, on May 3, 2002, Vinci filed a legal malpractice claim against Byers. The Superior Court granted summary judgment in favor of the defendant, holding that the action was barred by the three-year statute of limitations. Vinci argued that his claim did not accrue until the divorce proceeding concluded and the continuing representation doctrine should be expanded and applied to this case.

The statute of limitations for legal malpractice is three years from the date the client knew or should have known he was injured by the attorney’s conduct. Under the continuing representation doctrine, the limitations period can be tolled where the client continues to be represented by the attorney. However, if the client has actual knowledge of the attorney’s harm, there is no “innocent reliance which the continued representation doctrine seeks to protect.” The Appeals Court held that Vinci had actual knowledge of his claim against Byers because he stated in his deposition that he no longer trusted Byers as of June 30, 1998. At that point, the limitations period began to run. Appeals Court affirmed the grant of summary judgment in favor of the defendant because the statute of limitations had expired and the continuing representation doctrine did not apply.

Roberts v. Legendary Marine Sales
65 Mass. App. Ct. 198 (2005)

Misrepresentation; Long-Arm Statute

[Personal jurisdiction exists, pursuant to G.L. c. 223A, § 3(c), where defendant in Florida made misrepresentations of material facts to plaintiff in Massachusetts , thereby causing plaintiff to purchase a defective boat.]

Plaintiff in Massachusetts purchased a boat from defendant in Florida . Defendant made certain representations to plaintiff about the condition of the boat. The boat was delivered to Massachusetts and plaintiff discovered numerous defects in the boat. Plaintiff sent defendant a c. 93A demand letter and subsequently filed a complaint alleging breach of contract, breach of express and implied warranties, and intentional and negligent misrepresentation. The defendant filed a motion to dismiss for lack of personal jurisdiction, which the judge allowed.

The Appeals Court reversed. Plaintiffs argued that under G.L. c. 223A, § 3(c) causing tortious injury by an act or omission in the Commonwealth is a basis for jurisdiction. Two counts in the complaint allege intentional and negligent misrepresentation of material facts that caused plaintiffs to purchase the defective boat. G.L. c. 223A, § 3(c) requires two elements: (1) a tortious injury by the act or omission of the defendant; and (2) that the tortious act or omission occurred in the Commonwealth. The Appeals Court found that defendant’s misrepresentations of material fact to a purchaser in Massachusetts met the statutory requirements and constitutional due process requirements for personal jurisdiction.

Spellman v. Shamut Woodworking & Supply, Inc.
445 Mass. 675 (2006)


[Assignment of general contractor’s right to indemnification from the subcontractor for the cost of defending negligence claims asserted by injured subcontractor’s employee to the injured employee was valid.]

Spellman, an employee of East Coast Fireproofing, Inc., was injured while working at a construction site. He received workers’ compensation benefits from his employer’s workers’ compensation insurance carrier and he and his wife and sons filed a complaint against the general contractor, Shawmut Woodworking & Supply, Inc., for negligence resulting in injuries. Prior to the incident giving rise to this litigation, East Coast and Shawmut entered into a subcontract which provided that East Coast will defend, indemnify and hold harmless Shawmut from any and all claims caused in whole or in part by negligent acts or omissions of East Coast or its employees. Shawmut answered plaintiffs’ complaint and notified East Coast of its request for defense and indemnification. Shawmut also filed a third party complaint against East Coast asserting breach of contract for East Coast’s failure to name Shawmut as an additional insured. A few weeks before trial, Shawmut and Spellman entered an agreement for judgment for $300,000 that contained a waiver of all rights of appeal. East Coast unsuccessfully opposed the agreement for judgment. Additionally, Shawmut and plaintiffs disclosed that Shawmut assigned to plaintiffs any and all rights and claims it may have against East Coast arising out of plaintiff’s incident. In exchange, plaintiffs agreed to only seek to recover the $300,000 from East Coast.

Plaintiffs’ moved to amend their complaint to add East Coast as the primary defendant so as to “pursue the contractual indemnification [and breach of contract] claims that Shawmut had against East Coast.” East Coast opposed the amendment and filed a motion to dismiss Shawmut’s third party complaint.

The Appeals Court held this was a valid assignment. Through the assignment, plaintiffs step into Shawmut’s shoes and can only assert those claims that Shawmut had against East Coast for contractual indemnification and breach of contract. There is nothing that prohibits a party from contractually assuming greater liability than it would have otherwise had. The assignment is enforceable and is not limited to the amount specified in the agreement for judgment, which is not enforceable against East Coast. In order to collect under the indemnification policy, plaintiffs must prove that Shawmut was negligent in causing injuries and that, under the contractual indemnification agreement, East Coast had a duty to indemnify and defend Shawmut.

Covell v. Olsen
65 Mass. App. Ct. 359 (2006) – Jan. 11

Wrongful Death; Negligence; Motor Vehicle

[G.L. c. 231, § 85A shifts the burden to the defendant to prove the absence of control over the vehicle in a negligent entrustment claim.]

Plaintiff’s decedent died after his motorcycle was struck by an automobile owned and registered to defendant Olsen, which was operated by Olsen’s 18 year old son, Erik Olsen. Plaintiff filed suit for wrongful death and conscious pain and suffering, basing claims on the following three theories of liability: Erik was his mother’s agent; negligent supervision of a minor child; and negligent entrustment. The Superior Court allowed defendant’s motion for summary judgment.

The Appeals Court affirmed in part and reversed in part. First, the Appeals Court held that the claim for negligent supervision of a minor child must fail because Erik was not a minor; plaintiff’s argument that the court should look to the common law definition of majority of 21 years was rejected. Second, under G.L. C. 231, § 85A, which provides that proof that defendant is registered owner of vehicle is evidence of defendant’s responsibility for the actions of the driver, the court held that § 85A shifts the burden to the defendant to prove the absence of control over the vehicle. Thus, the question was whether the defendant had the authority and means to control Erik’s use of the car at the time the accident occurred. That burden was not satisfied by defendant’s argument that the record contains no evidence of her control over the vehicle. The facts that defendant paid the car’s insurance and paid Erik’s living expenses and the absence of evidence that she took steps to ensure safe operation of the car, created triable issues of fact.

These case summaries were compiled with the assistance of MBA intern Shannon Ryman, whose help is gratefully acknowledged.

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