Practice Resources

Note from the chair

Greetings! Spring is here, and with that comes renewal and the bloom of projects long in planning. The MBA's Civil Litigation Section Council has been very busy throughout the winter, and we are excited for the spring events that are on the horizon.

Below are some of the highlights of recent events, and a preview of others to come.

We had a very successful section council meeting on April 6 at the MBA where former Attorney General Tom Reilly was the featured guest speaker. Reilly spoke about his experiences as Middlesex County District Attorney, as Massachusetts Attorney General, and more recently in private practice at Cooley Manion Jones LLP. It was very interesting, and we thank him for his time and inspiring public service.

The CL Section Council has a newly formed Federal Practice and Procedure Committee that is tri-chaired by Chris Sullivan, Nancy Frankel Pelletier and Frank Morrissey. They kick-off meeting was held on March 22. The first planned event will be a CLE program in Worcester focusing on the differences between state and federal practice. The program will concentrate on the distinct and unique aspects of federal practice and procedure, highlighting how it differs from practice in Massachusetts state courts. The MBA Young Lawyers Division and the Worcester County Bar Association will help design and co-sponsor the program. The committee also hopes to present this program in Springfield, Boston and Southeastern Massachusetts.  In addition to the federal/state practice differences program, the committee is discussing a "Meet the Clerks" program at all of the Federal Courthouses in Massachusetts. Watch for the date for their spring "open house" meeting. Any suggestions for other programs or events for the Federal Practice Committee are welcome.

Ray Ausrotas, vice chair of the CL Section Council, held a CLE Roundtable Series with Dr. Daniel Dugan of Trial Science.  The topic of "Storytelling" was held on March 22, and the topic of "Scientific Trial Preparation" was held on March 23. Both of these programs are available via MBA On Demand if you could not make it to the MBA, 20 West St., Boston for these very interesting and worthwhile events.

On May 4 the CL Section Council will hold its monthly meeting in Western Massachusetts at the U.S.D.C. in Springfield and it will be co-sponsored by the Federal Bar Association. I am excited to inform you that Judge Michael A. Ponsor and Judge Kenneth P. Neiman have agreed to join us at this meeting and provide an overview of practice and procedure in the federal court in Western Massachusetts.  We are currently checking with the judges to see if they will permit us to hold a networking reception following the meeting.

The Construction Law Committee will host the following webinars and seminar:

1. "Signs of a Troubled Project"
2. "Traps for the Unwary in Standard Construction Documents"
3. "Public Construction Update"

Watch for further updates on the time/dates for these exciting events.

Section Council member Holly Polglase has been working with MBA Program Attorney Michele Himes and Katherine Hesse from the ADR Committee to plan a seminar on Mediation Advocacy Tips, Tactics and Techniques to be held later in the Spring. Again, watch for the date/time to be announced.

CL Section Council members Paul White and Marianne LeBlanc will hold a CLE program on Advanced Deposition Techniques. This program will be on Tuesday, May 10 from 4 to 7 p.m. at the MBA, 20 West St., Boston. It will cover deposition fundamentals, but also feature advanced strategic considerations for achieving "game changing" case developments through mediation planning and execution.

Ken Rubinstein and Joan DiCola of the Tax Section Council will hold a seminar on tax implications for settlements and judgments and for Medicare and Medicaid liens. Click here for more information.

This is an exciting time of year. With your assistance and participation, we hope to keep up the energy and enthusiasm that have been building. We continue to encourage you to participate in all that the section has to offer.

Chris Kenney, chair
Civil Litigation Section

Upcoming Civil Litigation meetings

----------------------------------------------------------------------

Civil Litigation Section Council meeting

Wednesday, May 4, 4:30-6 p.m.
U.S. District Court, 300 State St., Springfield

This meeting will be held at the U.S.D.C. in Springfield. Guest speakers will be Hon. Michael A. Ponsor and Hon. Kenneth P. Neiman. All Civil Litigation section members are invited to attend.

Click here to R.S.V.P.

Federal Practice Committee formed

MBA Civil Litigation Section Chairman Christopher A. Kenney has appointed Nancy Frankel Pelletier, Frank Morrissey and Christopher P. Sullivan to serve as tri-chair leaders of the newly formed Federal Practice Committee. On March 22, the tri-chairs held an organization meeting to establish programs and events for the committee. The first planned event will be a CLE program in Worcester on the differences between state and federal practice. The program will focus on the distinct and unique aspects of Federal practice and procedure highlighting how it differs from practice in Massachusetts state courts. The MBA Young Lawyers Division and the Worcester County Bar Association will be asked to help design the program co-sponsor the program.

The committee also hopes to present this program in Springfield, Boston and Southeastern Massachusetts. In addition to the Federal/State practice differences program the committee is discussing a "Meet the Clerks" program at all of the Federal Courthouses in Massachusetts. Any suggestions for other programs or events for the Federal Practice Committee are welcome. More information regarding meetings and events will be forthcoming.

If you are interested in joining this practice group,
e-mail your interest to [e-mail jstevens]">Jean Stevens.

From left to right: Christopher A. Kenney and Adam M. Veness of Kenney and Sams PC.

Massachusetts Federal District Court Holds That An Insurance Company Cannot Recoup Defense Costs From An Insured

by Christopher A. Kenney and Adam M. Veness*

Introduction

A very important and highly debated area of law is the extent of an insurer's ability to recoup defense costs that it advanced to an insured under a duty to defend. The debate only arises when the insurance policy does not contain language explaining the potential for a recoupment of defense costs. The law on this subject differs greatly depending on the state law that governs the issue. Until recently, Massachusetts courts had not officially adopted a position on the question, but in February, the Massachusetts Federal District Court has finally chosen a side. Before discussing the court's opinion, it is important to analyze the two cases with which the court grappled in making its decision.

To Recoup or Not to Recoup

In the controversial decision of Buss v. Superior Court, the Supreme Court of California was the first court to directly address the issue of whether an insurer is entitled to recoup costs for defending the noncovered counts of a third party action against its insured. 939 P.2d 766 (Cal. 1997). In Buss, the insurer defended an entire action and sought restitution for its costs in defending the 26 out of the 27 counts which were not covered by its policies. Id. at 770. The court affirmed a primary insurer's duty to defend an entire "mixed action" but held that the insurer had a quasi-contractual right to secure reimbursement for costs incurred in defending noncovered counts. Id. at 776. The court further held, however, that an insurer is entitled to reimbursement only of defense costs "that can be allocated solely to the claims that are not even potentially covered." Id. at 778.

The court reasoned that the insurer could only recover defense costs allocated solely to the claims not even potentially covered because the insured paid premiums to the insurer to cover claims that are at least potentially covered by the policy. Id. The insured also paid premiums to cover defense costs that can be allocated jointly to both potentially covered and noncovered claims (i.e. mixed claims). Id. The court noted that defense costs which were required to defend actually or potentially covered claims, whether or not joined with noncovered claims, cannot be recovered by the insurer. Id. at 778, n.15.

The other decision the Massachusetts Federal District Court considered was American & Foreign Ins. Co. v. Jerry's Sport Center, Inc., 2 A.3d 526 (Pa. 2010). In Jerry's Sport, the court determined that the insurer had an absolute duty to defend claims that are even potentially covered, and that an insurer must make the decision about whether to advance defense costs. Id. at 542. If the insurer determines that there is no possibility of coverage, then it should deny its insured a defense. Id. However, if the insurer is incorrect in denying coverage, then it risks being liable for breach of contract. Id.

The Jerry's Sport court placed the duty to determine coverage and the risks associated with an incorrect determination solely on the insurer. Following the Jerry's Sport holding, an insurer has two choices: it can advance defense costs and not have a claim for recoupment even if the claims against the insured are not even potentially covered by the policy, or it can deny its insured a defense and risk breaching its contract with the insured.

Massachusetts Makes Its Determination

Relying on the reasoning of the two opposite holdings in Buss and Jerry's Sport, the Massachusetts Federal District Court fell directly in line with Jerry's Sport. In Welch Foods Inc. v. Nat'l Union Fire Ins. Co., the Massachusetts Federal District Court determined that an insurer must bear the risk of advancing defense costs to an insured. 2011 WL 576600, at *3 (D. Mass. Feb. 9, 2011). The Welch court agreed with Jerry's Sport in that it is the insurer's duty to make the determination of whether a claim is covered. Id. The court reasoned that the insurer is in the business of making that determination and should do so in these situations. Id. If the insurer was incorrect in its determination to advance defense costs, the insured will not be required to reimburse the insurer for the insurer's incorrect determination. See id.

Although Welch is a federal opinion and has no direct authority over Massachusetts state courts, it does shed light on the direction that Massachusetts is headed on this issue. One thing that is for sure, the Welch opinion will at least have a deterrent effect on Massachusetts insurance companies that are considering whether to seek reimbursement for defense costs advanced to insureds.

* Kenney & Sams PC

The MBA is on Facebook, Twitter and LinkedIn

Join the conversation today

The Massachusetts Bar Association is pleased to announce its official Facebook fan page. To "Like" our new Facebook page, click here and please suggest your friends "Like" our page as well.

The addition of Facebook means the MBA has a presence on three social networking platforms, including LinkedIn, launched in January 2010, and Twitter, launched in July 2009. All three social media platforms feature information about the MBA including CLE, events and news.

As an MBA member, we encourage you to both post items of interest to you, and the greater legal community, on these pages and comment on items already posted.

Put your name out there

The goal of section councils is to offer members opportunities for professional growth and development through participation in section activities. One opportunity available to section members is publishing articles which are of interest to fellow practitioners. The MBA provides several forums for articles by section members - Lawyers Journal and the Massachusetts Law Review.  

If you are interested in writing an article for any of these publications or if you have seen articles which you think may be of interest to other Civil Litigation Section members, please contact Jean Stevens for more information regarding this opportunity.

MBA May 18-19 Centennial conference to feature two-days of concurrent educational tracks; the Access to Justice Awards Luncheon and "Hail to the Chiefs" Bench-Bar Panel on May 18; Centennial Ball on May 19

The MBA's Centennial Conference, a celebration of the MBA's century of service to the public, profession and rule of law, will take place on Wednesday, May 18 and Thursday, May 19 at the Boston Sheraton Hotel.

Click here to register.

Conference programming includes:

** Massachusetts lawyers who are MBA members can earn up to a 7.5 percent premium credit on Massachusetts professional liability insurance offered by CNA through the MBA Insurance Agency. You can earn a 5 percent premium credit by attending the Building a Solid Foundation: Managing Law Practice Risk session plus one other Substantive Track session. If more than one-third of your firm's attorneys attend, you can earn up to a 7.5 percent premium credit. This offer is valid for new and renewed lawyers' professional liability insurance policies with an effective date of Aug. 1, 2011 to July 31, 2012. This offer may not be combined with any other malpractice prevention/CLE premium credits. **