McEvoy v. Savings Bank Life Insurance Co. of Massachusetts (Lawyers Weekly No. 12-084-17)
1 COMMONWEALTH OF MASSACHUSETTS SUFFOLK, ss. SUPERIOR COURT CIVIL ACTION NO. 2017-1961 BLS1 LESLIE V. McEVOY, individually and on behalf of a class of similarly situated persons, vs. SAVINGS BANK LIFE INSUARNCE CO. OF MASSACHUSETTS MEMORANDUM OF DECISION AND ORDER PLAINTIFF’S MOTION FOR A PRELIMINARY INJUNCTION The plaintiff Leslie V. McEvoy alleges that she holds a participating whole life insurance policy issued by the defendant Savings Bank Life Insurance Co. (SBLI).1 In this action, she seeks to enjoin all SBLI’s policyholders from voting on a proposed conversion of SBLI from a stock life insurance company to a mutual life insurance company. The case came before the court on June 27, 2017 on the plaintiff’s motion for a preliminary injunction enjoining the vote until additional disclosures concerning the plan of conversion demanded by her were made to SBLI’s other 480,000 policyholders. In her complaint, the plaintiff alleges that the vote on the plan of conversion is to occur at a Special Meeting of policyholders scheduled for that purpose on June 28, 2017. It appears, however, that voting has actually been underway for weeks. While the meeting was scheduled for 11:00 AM on June 28, 2017, and policyholders present at the meeting who had not previously voted could vote at that time, voting opened on May 19, 2017 and could be accomplished by mail, phone call, or on the internet, so long as the votes were 1 It appears that the plaintiff owns two policies, each in the face amount of $ 1,000, although was is pledged to a division of the State of New Hampshire. 2 received in time to be counted by the time of the meeting. As a result, the majority of votes cast in this election may well have been received by SBLI management before the annual meeting. In consequence, from a practical perspective a motion brought before the court on the afternoon of June 27th to preliminarily enjoin the vote that was to be completed and tallied the following morning was not timely. The proposed conversion of SBLI into a mutual insurance company calls for the SBLI shareholders, 30 Massachusetts banks or banks that had acquired Massachusetts banks, to receive $ 57.3 million in return for their shares in SBLI. This sum is to be financed through the issuance of Surplus Notes. While SBLI and its financial advisers have been working for some time on the sale of these Surplus Note to certain financial institutions, at oral argument the court was informed that the closing on that transaction was still two or three weeks away. In theory, therefore, the court could still issue a mandatory preliminary injunction voiding the vote, which would of course preclude any possibility […]
Mount Vernon Fire Insurance Company v. Visionaid, Inc. (Lawyers Weekly No. 10-108-17)
NOTICE: All slip opinions and orders are subject to formal revision and are superseded by the advance sheets and bound volumes of the Official Reports. If you find a typographical error or other formal error, please notify the Reporter of Decisions, Supreme Judicial Court, John Adams Courthouse, 1 Pemberton Square, Suite 2500, Boston, MA, 02108-1750; (617) 557-1030; SJCReporter@sjc.state.ma.us SJC-12142 MOUNT VERNON FIRE INSURANCE COMPANY vs. VISIONAID, INC.[1] Suffolk. December 5, 2016. – June 22, 2017. Present: Gants, C.J., Lenk, Hines, Gaziano, Lowy, Budd, & Cypher, JJ. Insurance, Insurer’s obligation to defend. Certification of questions of law to the Supreme Judicial Court by the United States Court of Appeals for the First Circuit. Kenneth R. Berman (Heather B. Repicky also present) for the defendant. James J. Duane, III (Scarlett M. Rajbanshi also present) for the plaintiff. The following submitted briefs for amici curiae: Marshall Gilinsky for United Policyholders. Laura Foggan, of the District of Columbia, & Rosanna Sattler for American Insurance Association & others. Michael F. Aylward for American International Group, Inc., & another. GAZIANO, J. In this case we are called upon to answer three certified questions from the United States Court of Appeals for the First Circuit involving the scope of an insurer’s duty to defend, and whether that duty extends to a counterclaim brought by the insured. For the reasons that follow, we conclude that where an insurance policy provides that the insurer has the “duty to defend any claim” initiated against the insured, the insurer’s duty to defend does not require it to prosecute affirmative counterclaims on behalf of its insured.[2] Facts and prior proceedings. We recite the facts based on the United States District Court judge’s memorandum of decision, the decision by the United States Court of Appeals for the First Circuit, and the undisputed documents in the record. Visionaid, Inc. (Visionaid),[3] is a manufacturer of lens cleaning and eye safety products. It purchased an employment practices liability insurance policy from Mount Vernon Fire Insurance Company (Mount Vernon), which covered, among other things, wrongful termination claims brought against Visionaid from May, 2011, through May, 2012. As relevant here, the policy imposed two duties on Mount Vernon with respect to any wrongful termination claim brought against Visionaid. The policy provided that Mount Vernon had “the right and duty to defend any Claim to which this insurance applies,” and that it was obligated to “pay one hundred percent (100%) of the Defense Costs for the [covered] Claim” up to the policy limit. Under the terms of the policy, “Claim” was defined as “any proceeding initiated against [Visionaid] . . . seeking to hold [Visionaid] responsible for […]
Chamberland v. Arbella Mutual Insurance Company (Lawyers Weekly No. 11-077-17)
NOTICE: All slip opinions and orders are subject to formal revision and are superseded by the advance sheets and bound volumes of the Official Reports. If you find a typographical error or other formal error, please notify the Reporter of Decisions, Supreme Judicial Court, John Adams Courthouse, 1 Pemberton Square, Suite 2500, Boston, MA, 02108-1750; (617) 557-1030; SJCReporter@sjc.state.ma.us 16-P-861 Appeals Court HEATHER CHAMBERLAND vs. ARBELLA MUTUAL INSURANCE COMPANY. No. 16-P-861. Bristol. February 1, 2017. – June 9, 2017. Present: Carhart, Massing, & Henry, JJ.[1] Insurance, Underinsured motorist, Arbitration. Contract, Insurance, Arbitration. Waiver. Collateral Estoppel. Judgment, Preclusive effect. Arbitration. Practice, Civil, Summary judgment, Waiver. Civil action commenced in the Superior Court Department on March 4, 2015. The case was heard by Robert J. Kane, J., on motions for summary judgment. Peter E. Heppner (Andrew Hart Lynch also present) for the defendant. Ronald J. Resmini for the plaintiff. HENRY, J. This case highlights the intricacies of the framework for underinsured motorist claims in Massachusetts, which provides that the insured and the insurer must either agree on the resolution of the claim or arbitrate. The plaintiff, Heather Chamberland, pursued a lengthy civil action against the other driver involved in the underlying accident and obtained a large judgment and eventually a settlement in the amount of that driver’s policy limits. Her underinsurance carrier, Arbella Mutual Insurance Company, was not a party to that action, though it consented to the settlement. Chamberland then sought underinsured motorist coverage from Arbella, which invoked arbitration. On cross motions for summary judgment, a Superior Court judge held that Arbella’s invocation of arbitration was untimely, and thus Arbella had waived its right to arbitrate. The motion judge further held that, as a result of the damages award that Chamberland had secured against the other driver at trial, Arbella was collaterally estopped from contesting issues of liability and damages in connection with Chamberland’s underinsurance claim. Arbella appealed. We reverse because, notwithstanding the significant amount of time that passed before Arbella’s demand for arbitration, Arbella did not act inconsistently with its statutory and policy-based right to arbitrate. As such, there is no basis for a finding of waiver of that right. Background. The following undisputed facts are drawn from the summary judgment record. On July 16, 2007, Chamberland was injured in an accident while operating a motor vehicle insured under a policy issued by Arbella. The other vehicle involved in the accident was operated by Dylon Maiorano and insured under a policy issued by Liberty Mutual Insurance Company. Arbella was notified of the accident, and by October 3, 2007, confirmed in writing that Chamberland’s underinsurance (part […]
Chamberland v. Arbella Mutual Insurance Company (Lawyers Weekly No. 11-077-17)
NOTICE: All slip opinions and orders are subject to formal revision and are superseded by the advance sheets and bound volumes of the Official Reports. If you find a typographical error or other formal error, please notify the Reporter of Decisions, Supreme Judicial Court, John Adams Courthouse, 1 Pemberton Square, Suite 2500, Boston, MA, 02108-1750; (617) 557-1030; SJCReporter@sjc.state.ma.us 16-P-861 Appeals Court HEATHER CHAMBERLAND vs. ARBELLA MUTUAL INSURANCE COMPANY. No. 16-P-861. Bristol. February 1, 2017. – June 9, 2017. Present: Carhart, Massing, & Henry, JJ.[1] Insurance, Underinsured motorist, Arbitration. Contract, Insurance, Arbitration. Waiver. Collateral Estoppel. Judgment, Preclusive effect. Arbitration. Practice, Civil, Summary judgment, Waiver. Civil action commenced in the Superior Court Department on March 4, 2015. The case was heard by Robert J. Kane, J., on motions for summary judgment. Peter E. Heppner (Andrew Hart Lynch also present) for the defendant. Ronald J. Resmini for the plaintiff. HENRY, J. This case highlights the intricacies of the framework for underinsured motorist claims in Massachusetts, which provides that the insured and the insurer must either agree on the resolution of the claim or arbitrate. The plaintiff, Heather Chamberland, pursued a lengthy civil action against the other driver involved in the underlying accident and obtained a large judgment and eventually a settlement in the amount of that driver’s policy limits. Her underinsurance carrier, Arbella Mutual Insurance Company, was not a party to that action, though it consented to the settlement. Chamberland then sought underinsured motorist coverage from Arbella, which invoked arbitration. On cross motions for summary judgment, a Superior Court judge held that Arbella’s invocation of arbitration was untimely, and thus Arbella had waived its right to arbitrate. The motion judge further held that, as a result of the damages award that Chamberland had secured against the other driver at trial, Arbella was collaterally estopped from contesting issues of liability and damages in connection with Chamberland’s underinsurance claim. Arbella appealed. We reverse because, notwithstanding the significant amount of time that passed before Arbella’s demand for arbitration, Arbella did not act inconsistently with its statutory and policy-based right to arbitrate. As such, there is no basis for a finding of waiver of that right. Background. The following undisputed facts are drawn from the summary judgment record. On July 16, 2007, Chamberland was injured in an accident while operating a motor vehicle insured under a policy issued by Arbella. The other vehicle involved in the accident was operated by Dylon Maiorano and insured under a policy issued by Liberty Mutual Insurance Company. Arbella was notified of the accident, and by October 3, 2007, confirmed in writing that Chamberland’s underinsurance (part […]
Nguyen v. Arbella Insurance Group (Lawyers Weekly No. 11-064-17)
NOTICE: All slip opinions and orders are subject to formal revision and are superseded by the advance sheets and bound volumes of the Official Reports. If you find a typographical error or other formal error, please notify the Reporter of Decisions, Supreme Judicial Court, John Adams Courthouse, 1 Pemberton Square, Suite 2500, Boston, MA, 02108-1750; (617) 557-1030; SJCReporter@sjc.state.ma.us 16-P-834 Appeals Court VINCENT NGUYEN vs. ARBELLA INSURANCE GROUP.[1] No. 16-P-834. Middlesex. February 16, 2017. – May 23, 2017. Present: Kafker, C.J., Wolohojian, & Sacks, JJ. Insurance, Insurer’s obligation to defend, Defense of proceedings against insured, Homeowner’s insurance, Business exclusion. Contract, Insurance. Practice, Civil, Summary judgment. Civil action commenced in the Superior Court Department on April 11, 2014. The case was heard by Bruce R. Henry, J., on motions for summary judgment, and a motion for reconsideration was considered by him. Joseph A. Padolsky for the plaintiff. Roberta R. Fitzpatrick (Kathryn Annbinder Covarrubias also present) for the defendant. SACKS, J. The plaintiff, Vincent Nguyen, having been sued in Federal court on various tort, civil rights, and other theories by a former fellow employee of the Newton police department, requested that the defendant, Arbella Insurance Group (Arbella), as issuer of his homeowner’s insurance policy, provide him a defense. After Arbella declined, citing the policy’s “business pursuits” exclusion, Nguyen filed a Superior Court action seeking a declaration that Arbella was obligated to provide him a defense. On cross motions for summary judgment, a judge agreed with Arbella that the “business pursuits” exclusion applied. Nguyen appealed the resulting judgment in Arbella’s favor and the order denying his motion for reconsideration. We affirm. Background. a. The underlying suit. In the underlying Federal action, the plaintiff, Jeanne Sweeney Mooney, alleged that at all relevant times she was an employee of the Newton police department and most recently worked as the executive administrator for the chief of police. The defendants were the city of Newton, its mayor in his official capacity, and the then-chief of police, a police lieutenant, and Nguyen (a civilian employee in the chief’s office), all in their individual capacities. Mooney alleged that the chief, the lieutenant, and Nguyen conspired to coerce her into accepting additional duties in violation of a union contract, as retaliation for Mooney’s objecting to both the potential contract violation and the chief’s improperly obtaining an “exceptional service” pay raise. She also alleged that the chief and Nguyen, in order to obtain leverage over Mooney, conspired to stage a false “I-Team Investigation” by a television station regarding her use of her break time; the ruse relied on photographs that Nguyen took, during working hours, of […]
The Hanover Insurance Group, Inc. v. Raw Seafoods, Inc. (Lawyers Weekly No. 11-048-17)
NOTICE: All slip opinions and orders are subject to formal revision and are superseded by the advance sheets and bound volumes of the Official Reports. If you find a typographical error or other formal error, please notify the Reporter of Decisions, Supreme Judicial Court, John Adams Courthouse, 1 Pemberton Square, Suite 2500, Boston, MA, 02108-1750; (617) 557-1030; SJCReporter@sjc.state.ma.us 15-P-1554 Appeals Court THE HANOVER INSURANCE GROUP, INC. vs. RAW SEAFOODS, INC. No. 15-P-1554. Suffolk. September 16, 2016. – April 26, 2017. Present: Agnes, Neyman, & Henry, JJ. Insurance, General liability insurance, Coverage. Words, “Occurrence.” Civil action commenced in the Superior Court Department on September 21, 2012. The case was heard by Christine M. Roach, J., on motions for summary judgment. Michael J. Daly (Samuel P. Blatchley also present) for the defendant. Jeffrey E. Dolan (Anthony M. Campo also present) for the plaintiff. NEYMAN, J. In this case we analyze whether damage to scallops at a seafood processing facility, where the precise cause of damage is unknown, constituted an “occurrence” within the meaning of a commercial general liability (CGL) policy. A Superior Court judge concluded that the defendant-insured, Raw Seafoods, Inc. (RSI), has no reasonable expectation of proving that its claimed loss was caused by an occurrence, and granted summary judgment in favor of the plaintiff-insurer, Hanover Insurance Group, Inc. RSI appeals therefrom. We reverse. Background. 1. RSI and the damaged scallops. RSI is a seafood processing facility in Fall River. One of RSI’s customers, Atlantic Capes Fisheries, Inc. (Atlantic), sells scallops and other types of seafood around the world. Atlantic purchases fresh scallops from fishing vessels, then transports the scallops to RSI for processing, portioning, packaging, and freezing. RSI’s staff inspects the scallops for quality upon arrival, reports the results to Atlantic, and receives processing instructions from Atlantic. After processing, the scallops are transported to Arctic Cold Storage (Arctic), a third-party cold storage facility. Atlantic then ships its customers’ orders directly from Arctic’s facility. RSI handles approximately 4 million to 6 million pounds of scallops for Atlantic per year. In July, 2011, RSI-processed scallops were making their way through customs in Denmark, heading to an Atlantic customer. Upon inspection, the 37,102 pounds of scallops were found to be decomposed, exhibited a strong ammonia smell, and were deemed unacceptable for human consumption. By all accounts, something was rotten in the state of Denmark.[1] The United States Food and Drug Administration tested the scallops and confirmed that they were spoiled. The scallops were then returned to Arctic’s facility, where representatives from Atlantic and RSI jointly inspected the shipment and confirmed the damage. They also inspected another batch […]
Liberty Mutual Insurance Co. v. Peoples Best Care Chiropractic and Rehabilitation, Inc., et al. (Lawyers Weekly No. 12-047-17)
COMMONWEALTH OF MASSACHUSETTS SUFFOLK, ss. SUPERIOR COURT. 1684CV01239-BLS2 ____________________ LIBERTY MUTUAL INS. CO. v. PEOPLES BEST CARE CHIROPRACTIC AND REHABILITATION, INC.; PLEASANT VALLEY CHIROPRACTIC LLC; and RAGHUBINDER BAJWA, M.D., P.C. ____________________ MEMORANDUM AND ORDER ALLOWING PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT This lawsuit concerns the rates that Liberty Mutual Insurance Company pays to chiropractic clinics under Personal Injury Protection (“PIP”) benefit provisions in personal automobile insurance policies. Liberty seeks a declaration that an Illinois court’s final judgment that approved the settlement of a nationwide class action regarding these rates is entitled to full faith and credit in Massachusetts and binds the three Defendants, who did not opt out of the Illinois proceeding and therefore are members of the plaintiff class in that case. Defendant Raghubinder Bajwa, M.D., P.C., was defaulted for failing to answer the complaint. Defendants Peoples Best Chiropractic and Rehabilitation, Inc. (“PBC”) and Pleasant Valley Chiropractic LLC (“PVC”) (collectively, the remaining “Defendants”) oppose Liberty’s request and assert counterclaims seeking to bar Liberty from implementing the settlement. The Court concludes that Liberty is entitled to summary judgment in its favor on all claims. With respect to Liberty’s affirmative claim, the Court concludes that there is an actual controversy between the parties and that the Illinois final order and judgment is entitled to full faith and credit in Massachusetts courts. In addition, Liberty is entitled to judgment as a matter of law on Defendants’ counterclaims. Defendants sought leave to conduct certain discovery before the Court decided Liberty’s summary judgment motion. The Court denies this request because none of the discovery sought by Defendants concerns any factual issue relevant to whether Liberty is entitled to summary judgment. 1. Factual Background. Liberty was the defendant in a multi-state class action filed in Illinois state court to challenge the way Liberty determines what rates it will pay to chiropractors and other medical care providers under the no-fault PIP – 2 – provisions of personal automobile insurance policies. The Illinois case was captioned Leonon Chiropractic Clinic, P.C. v. Liberty Mutual Insurance Company and docketed as Illinois Circuit Court for St. Clair County, no. 14-L-52. Liberty compares billed charges for medical treatment to a database of charges that Liberty believes are for similar services provided in the same geographic area. Since 2011 Liberty has done so using data maintained by a non-profit company called FAIR Health, Inc. Liberty generally refuses to pay rates any higher than the 80th percentile of similar charges according to the FAIR Health data. The plaintiffs in the Illinois case claimed that this practice was unlawful. The parties to the Illinois lawsuit entered into a Stipulation of Settlement in October 2014 that would resolve all claims on behalf of a proposed class. […]
Caira v. Zurich American Insurance Co. (Lawyers Weekly No. 11-045-17)
NOTICE: All slip opinions and orders are subject to formal revision and are superseded by the advance sheets and bound volumes of the Official Reports. If you find a typographical error or other formal error, please notify the Reporter of Decisions, Supreme Judicial Court, John Adams Courthouse, 1 Pemberton Square, Suite 2500, Boston, MA, 02108-1750; (617) 557-1030; SJCReporter@sjc.state.ma.us 16-P-927 Appeals Court MICHAEL CAIRA vs. ZURICH AMERICAN INSURANCE CO. No. 16-P-927. Essex. February 2, 2017. – April 21, 2017. Present: Grainger, Sullivan, & Lemire, JJ. Motor Vehicle, Insurance. Insurance, Unfair act or practice, Settlement of claim. Consumer Protection Act, Unfair act or practice, Insurance. Practice, Civil, Consumer protection case, Summary judgment, Continuance, Discovery. Civil action commenced in the Superior Court Department on April 9, 2015. A motion for a continuance was heard by Timothy Q. Feeley, J., and the case was heard by him on a motion for summary judgment. Mark T. Rumson (Paul F.X. Yasi also present) for the plaintiff. Jane A. Horne (Allen N. David also present) for the defendant. LEMIRE, J. In this case, we consider whether a judge in the Superior Court erred in granting summary judgment to Zurich American Insurance Co. (Zurich) on a complaint alleging that Zurich committed unfair claim settlement practices in violation of G. L. c. 176D, § 3(9)(f), and G. L. c. 93A, § 2. We conclude that Zurich did not violate these statutory provisions when it conditioned the payment of its primary insurance policy limit on a release of all claims against its insureds, notwithstanding the availability of excess insurance. Accordingly, we affirm. Background. Shortly after midnight on September 14, 2013, Daniel Madigan-Fried was driving a rental car in Swampscott when he was involved in a one-vehicle accident. The plaintiff, Michael Caira, who was a passenger in the front seat, suffered life-threatening injuries, and the two passengers in the back seat sustained serious injuries. A few weeks before the accident, Madigan-Fried had rented the vehicle in his capacity as an employee of Groom Construction Co., Inc. (Groom). Zurich had issued to Groom the primary commercial automobile insurance policy that was in place at the time of the accident. The bodily injury coverage under the policy was $ 1 million. In addition, Groom had two excess insurance policies issued by Starr Indemnity & Liability Company (Starr Indemnity) and Navigators Insurance Company (collectively, excess insurers) that provided coverage of $ 5 million each.[1] On October 29, 2013, Caira filed a complaint in the Superior Court against Madigan-Fried and Groom, alleging negligence.[2] Caira claimed that excessive speed caused Madigan-Fried to lose control of the vehicle and to crash into a granite wall. Zurich undertook […]
Holyoke Mutual Insurance Company in Salem, et al. v. Vibram USA, Inc. (Lawyers Weekly No. 12-031-17)
1 COMMONWEALTH OF MASSACHUSETTS SUFFOLK, ss. SUPERIOR COURT CIVIL ACTION NO. 15-2321 BLS1 HOLYOKE MUTUAL INSURANCE COMPANY IN SALEM and MARYLAND CASUALTY COMPANY vs. VIBRAM USA, INC. MEMORANDUM OF DECISION AND ORDER ON CROSS-MOTIONS FOR SUMMARY JUDGMENT ON RECOUPMENT AND RECOVERY OF DEFENSE COSTS INTRODUCTION This action arises out of a coverage dispute between the plaintiff insurance companies, Holyoke Mutual Insurance Company in Salem (Holyoke)1 and Maryland Casualty Company (Maryland) (individually an Insurer, and collectively the Insurers), and the defendant, Vibram USA, Inc. (Vibram). Each of the insurers issued commercial general liability policies to Vibram (or its affiliate) (the Policies).2 An action was filed against Vibram in the United States District Court for the Western District of Washington at Tacoma captioned: Tefere Abebe Bikila, and others, v. Vibram, case no. 3:15-cv-05082-RBL (the Underlying Action). Vibram asserted coverage under the Policies and tendered defense of the Underlying Action to the Insurers. The 1 Holyoke has been replaced as a plaintiff in this action by its successor, Country Mutual Insurance Company. For consistency, the court will continue to refer to it as Holyoke in this Memorandum of Decision and Order. 2 Holyoke issued policies to Vibram for several years, while Maryland issued policies to an affiliate of Vibram,Vibram Five Fingers, LLC. It is not necessary to distinguish between Vibram and its affiliate for the purposes of this motion, and the court will refer to them collectively as Vibram. Additionally, for purposes of this motion the relevant policy language in all of the policies is identical, and is it also unnecessary to distinguish among policy years. The court will therefore simply refer to the Holyoke and Maryland policies collectively as the Policies. 2 Insurers each sent a “reservation of rights” letter to Vibram in which they agreed to provide its defense to the claims asserted in the Underlying Action, but also maintained that coverage did not exist under the Policies and reserved their rights to bring a declaratory judgment action and seek reimbursement for defense costs advanced. The Insurers then filed this declaratory judgment action seeking a declaration that the claims asserted against Vibram in the Underlying Action are not covered under the Policies; Vibram counterclaimed for a declaration that they are. In a Memorandum of Decision and Order on Cross-Motions for Summary Judgment and Partial Summary Judgment originally issued on August 17, 2016 (the Decision), this court held that the Policies do not provide coverage for the claims asserted against Vibram in the Underlying Action and, accordingly, there is no duty to defend. The case is now before the court on cross-motions for summary judgment addressing the issues of recoupment of defense costs advanced or, conversely, recovery of defense costs incurred before […]
Holyoke Mutual Insurance Company in Sale,, et al. v. Vibram USA, Inc. (Lawyers Weekly No. 12-031-17)
1 COMMONWEALTH OF MASSACHUSETTS SUFFOLK, ss. SUPERIOR COURT CIVIL ACTION NO. 15-2321 BLS1 HOLYOKE MUTUAL INSURANCE COMPANY IN SALEM and MARYLAND CASUALTY COMPANY vs. VIBRAM USA, INC. MEMORANDUM OF DECISION AND ORDER ON CROSS-MOTIONS FOR SUMMARY JUDGMENT ON RECOUPMENT AND RECOVERY OF DEFENSE COSTS INTRODUCTION This action arises out of a coverage dispute between the plaintiff insurance companies, Holyoke Mutual Insurance Company in Salem (Holyoke)1 and Maryland Casualty Company (Maryland) (individually an Insurer, and collectively the Insurers), and the defendant, Vibram USA, Inc. (Vibram). Each of the insurers issued commercial general liability policies to Vibram (or its affiliate) (the Policies).2 An action was filed against Vibram in the United States District Court for the Western District of Washington at Tacoma captioned: Tefere Abebe Bikila, and others, v. Vibram, case no. 3:15-cv-05082-RBL (the Underlying Action). Vibram asserted coverage under the Policies and tendered defense of the Underlying Action to the Insurers. The 1 Holyoke has been replaced as a plaintiff in this action by its successor, Country Mutual Insurance Company. For consistency, the court will continue to refer to it as Holyoke in this Memorandum of Decision and Order. 2 Holyoke issued policies to Vibram for several years, while Maryland issued policies to an affiliate of Vibram,Vibram Five Fingers, LLC. It is not necessary to distinguish between Vibram and its affiliate for the purposes of this motion, and the court will refer to them collectively as Vibram. Additionally, for purposes of this motion the relevant policy language in all of the policies is identical, and is it also unnecessary to distinguish among policy years. The court will therefore simply refer to the Holyoke and Maryland policies collectively as the Policies. 2 Insurers each sent a “reservation of rights” letter to Vibram in which they agreed to provide its defense to the claims asserted in the Underlying Action, but also maintained that coverage did not exist under the Policies and reserved their rights to bring a declaratory judgment action and seek reimbursement for defense costs advanced. The Insurers then filed this declaratory judgment action seeking a declaration that the claims asserted against Vibram in the Underlying Action are not covered under the Policies; Vibram counterclaimed for a declaration that they are. In a Memorandum of Decision and Order on Cross-Motions for Summary Judgment and Partial Summary Judgment originally issued on August 17, 2016 (the Decision), this court held that the Policies do not provide coverage for the claims asserted against Vibram in the Underlying Action and, accordingly, there is no duty to defend. The case is now before the court on cross-motions for summary judgment addressing the issues of recoupment of defense costs advanced or, conversely, recovery of defense costs incurred before […]