Attorney Fee Awards in Insurance Coverage Litigation

When I was first starting out as a lawyer, stuck with research assignments that required figuring out all aspects of a particular state's law on a particular issue, I always liked to begin by looking for a federal district court decision on the subject, because the federal court decisions had a tendency to include a comprehensive summary of all the law in the state in question on the issue in dispute. This saved the work of reviewing multiple state court decisions, each of which tended to address only one narrow part of the overall issue without discussing other state court decisions that addressed other aspects of the issue. I have always attributed this, by the way, to the federal courts' greater access to law clerks, who could be counted on to turn opinions into minor treatises.

Anyway, here is a perfect example of this phenomenon, only here on an issue that matters to this blog: namely, when can an insured obtain recovery of attorneys fees under Massachusetts law from an insurer in a lawsuit over coverage. Massachusetts state court decisions establish that coverage litigation is an exception, at least here, to the American rule, and that in Massachusetts, it is loser pays, at least if the insurer is the loser in the case.

But the Massachusetts state court decisions to this effect are spread across several cases and could arguably be limited to their facts, unless you synthesize them and push their reasoning one step further. The federal district court in Massachusetts has taken this last step for us, reviewing the Massachusetts state court decisions on this issue and concluding that they add up to an insured being entitled to recover the attorneys fees it incurs in establishing either a duty to defend or a duty to indemnify on the part of the insurer, without limitation to whether the policy in question provides first party or instead third party coverage.

Written By:Andrew Caplan On October 5, 2006 2:10 PM

There is another case to note on this topic. A case is pending before the Supreme Judical Court of Massachusetts on the issue of "whether the rule enunciated by the court in Preferred Mutual Insurance Co. v. Gamache, 426 Mass. 93 (1997), permitting an insured to recover attorneys' fees incurred in a successful coverage dispute with his insurer over a duty to defend also extends to disputes concerning the insurer's duty to indemnify." The case is Wilkinson v. Citation Insurance Co., SJC-09683. The case has been briefed and was argued on September 6. Reflecting the significance of this issue, a number of parties filed amicus briefs at the court's request. Stay tuned!