In a recent, precedent-setting opinion, the First Circuit Court of Appeals addressed several significant issues involving liability insurance coverage. Sanders v. Phoenix Ins. Co., 843 F.3d 37 (1st Cir. 2016).[1]

As characterized by Judge Selya, the facts of the case begin with “a tragic tale of unrequited love and morph into a series of imaginative questions regarding the coverage available under a standard form homeowner’s insurance policy.” The claims were brought by the plaintiff, as executor of his wife’s estate, pursuant to an assignment of rights, for liability coverage and unfair claim settlement practices under a homeowner’s policy issued to his late wife’s divorce attorney, whom the plaintiff blamed for her untimely death.

The central holdings of the decision are:

  • There is no duty to defend where no lawsuit has been filed against the insured under the policy language at issue, and a Chapter 93A demand letter is not the functional equivalent of a suit;
  • A request for participation in a voluntary mediation does not trigger a duty to defend;
  • There is no duty to indemnify where there is no duty to defend, and also where there has been no final judgment against the insured or settlement agreement signed by the insurer (under the applicable policy provisions);
  • There is no duty to settle under Chapter 93A where there is no duty to defend or indemnify; and
  • Liability is not “reasonably clear” under Chapter 93A, as a matter of law, where the nature of the claim being made against the insured has not been recognized by existing law, but rather is an adventuresome claim not recognized by existing tort law.

The decision, which was featured in Massachusetts Lawyers Weekly, should prove useful to attorneys and parties because it lends clarity to these common issues in liability coverage cases.

SPECIAL DISCLAIMER: Because this case is one in which Robinson & Cole LLP represented the defendant, we reiterate that the intent of this blog is to serve as an informational resource for readers, not advertising for our legal services. Every case is different and the result achieved in the case described above may differ from the result in some other case, which may involve different facts, different applicable law, or a different jurisdiction. Case results depend upon a variety of factors unique to each case. Case results do not guarantee or predict a similar result in any future case undertaken by the same lawyer(s). This blog does not constitute legal advice and you should always consult your own lawyer about your own case.

[1] Robinson + Cole lawyers Wystan Ackerman and Jonathan Small represented The Phoenix Insurance Company in the Massachusetts Federal District Court and on appeal to the First Circuit.