Heard: November 18, 2016
action commenced in the Superior Court Department on
March 2, 2010.
case was heard by Christine M. Roach, J., on motions
for summary judgment, and an award of attorney's fees was
entered by her.
J. O'Connor (Kara A. Loridas also present) for the
Michael John Miguel for the defendant.
Present: Trainor, Meade, & Hanlon, JJ.
appeal arises from a series of cross motions for summary
judgment. The plaintiff, OneBeacon America Insurance Company
(OneBeacon), appeals from so much of the final judgment as
awarded reasonable and necessary defense costs to its
insured, Celanese Corporation (Celanese), that Celanese
incurred from April 13, 2009, through May 27,
2011. On May 27, 2011, a judge of the Superior
Court determined that OneBeacon was entitled to take control
of Celanese's defense as of April 13, 2009 (see note 1,
supra). The issue on appeal is whether that
determination precludes Celanese from receiving any
reimbursement for defense of the underlying claims during the
period of time when the question of control over the defense
was being litigated. OneBeacon argues that it is not liable
for any defense costs incurred by Celanese during that period
of time because OneBeacon offered to defend Celanese without
a reservation of rights. Celanese, on cross appeal, contends
that the judge committed an abuse of discretion by not
awarding the full amount of defense costs that Celanese
requested. We vacate so much of the judgment that held
OneBeacon liable for Celanese's defense costs for the
period of time at issue, and therefore do not reach the
issues raised in Celanese's cross appeal.
following undisputed facts are taken from the summary
judgment record. See Augat, Inc. v.
Liberty Mut. Ins. Co., 410 Mass. 117, 120 (1991)
("The standard of review of a grant of summary judgment
is whether, viewing the evidence in the light most favorable
to the nonmoving party, all material facts have been
established and the moving party is entitled to a judgment as
a matter of law").
the years, Celanese has been subject to numerous legal
actions involving claims of bodily injury from asbestos and
chemicals allegedly contained in Celanese's products or
facilities. In an effort to seek coverage under its insurance
policies in April, 2009, Celanese sent a letter to OneBeacon
stating that it was terminating the parties'
then-existing defense cost-sharing agreements and demanding
that OneBeacon instead defend the ongoing asbestos and
chemical product injury claims under its original general
liability policies. OneBeacon's general policies provided:
"DEFENSE, SETTLEMENT, SUPPLEMENTARY PAYMENTS. As
respects the insurance afforded by the terms of this policy
"A. defend any suit against [Celanese] alleging bodily
injury or property damage, even if such suit is groundless,
false or fraudulent; but [OneBeacon] may make such
investigation, negotiation and settlement of any claim or
suit as it deems expedient;
"B. pay in addition to the applicable policy limits of
"(1) all expenses incurred by
response to Celanese's letter, OneBeacon agreed to defend
Celanese against the underlying asbestos and chemical product
injury claims without a reservation of rights. To this
effect, OneBeacon offered to waive any issues of
coverage and to indemnify Celanese from any
settlements or judgments up to its full liability limits.
However, OneBeacon also sought to assume full control of
Celanese's defense of these claims.
response, Celanese refused to cede its control of the defense
or replace the counsel it had employed for the past fourteen
years with the representation selected by OneBeacon. Celanese
alleged that because a "demonstrated conflict of
interest" existed, it was not required to yield control
of its defense.
replied by advising Celanese that, as Celanese's insurer,
it did not consent to Celanese's retention of independent
counsel and was not contractually obligated to compensate
Celanese for such defense costs.
March, 2010, OneBeacon filed an action for declaratory
relief. A judge entered an order in May, 2011,
ruling on the parties' cross motions for summary
judgment, and declaring that OneBeacon had the right to
control the defense of Celanese's underlying claims as a
result of its offer to defend without a reservation of
rights. The parties then filed further cross
motions for summary judgment on the issues underlying this
appeal, particularly whether OneBeacon was liable to Celanese
for the defense costs Celanese incurred during the period of
April 13, 2009, (when Celanese elected to revert to defense
under OneBeacon's general policies) through May 27, 2011
(when the judge ruled that OneBeacon had the right to control
Celanese's defense. On the further cross motions, the
judge ruled that OneBeacon was liable for reasonable and
necessary defense costs incurred by Celanese during this
period of time as part of OneBeacon's duty to
defend. The judge further referred the issue of
the amount of reasonable and necessary legal fees to a
special master, and ultimately awarded Celanese $2, 435,
921.49 in attorney's fees, plus prejudgment interest from
May 27, 2011, to May 31, 2013.
OneBeacon is liable for the defense costs incurred by
Celanese is dependent on our answer to four questions: (1)
Does OneBeacon have the right to control Celanese's
defense if OneBeacon has offered to defend without a
reservation of rights? (2) Does Celanese have the right to
refuse OneBeacon's control of the defense if a sufficient
conflict of interest exists? (3) Does a sufficient conflict
of interest ...