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Styller v. National Fire & Marine Insurance Co.

Appeals Court of Massachusetts, Essex

June 26, 2019


          Heard: March 7, 2019.

         Civil action commenced in the Superior Court Department on December 7, 2012.

         The case was heard by Joshua I. Wall, J., and motions to amend the judgment were considered by him.

          Lester E. Riordan, III, for the plaintiff.

          Peter G. Hermes (Kara A. Loridas also present) for the defendant.

          Present: Vuono, Ditkoff, & Wendlandt, JJ.

          WENDLANDT, J.

         This insurance coverage dispute principally presents the question whether a supplementary payment provision of an insurance policy, requiring the insurer to pay "costs taxed" against an insured, extends to attorney's fees and expert fees and expenses awarded against the insured, pursuant to G. L. c. 93A, § 9. We hold that it does not.


         The plaintiff, Alex Styller, brought this declaratory judgment action against the defendant, National Fire & Marine Insurance Company (National Fire or insurer), as the assignee of rights of the insured, FCMNH, Inc. (FCMNH or insured), under the insurance policy between FCMNH and the insurer (policy), relating to the underlying action described in more detail infra. Briefly, the underlying action stems from demolition and reconstruction work FCMNH performed on Styller's house. Styller alleged that FCMNH performed the work negligently. FCMNH was insured by National Fire, which assumed FCMNH's defense. Styller prevailed, and National Fire denied coverage under the insurance policy. In a subsequent settlement agreement between FCMNH and Styller, FCMNH assigned its rights against National Fire to Styller. In the present insurance coverage suit, Styller sought an order requiring National Fire to indemnify him (as FCMNH's assignee) for the judgment he obtained against FCMNH.

         1. The underlying action.

         In 2004, Styller entered into a construction contract with FCMNH to demolish and reconstruct his house. The relationship soured, and Styller withheld payment. Ultimately, FCMNH commenced the underlying action in Superior Court against Styller for, among other things, breach of contract. Styller counterclaimed, asserting breach of contract, negligence, and violations of G. L. c. 142A and G. L. c. 93A. Styller's counterclaims for damage caused by FCMNH's allegedly defective work and violations of G. L. c. 93A and G. L. c. 142A did not fall within the coverage provided by the policy. Nonetheless, because Styller also asserted counterclaims for property damage apart from FCMNH's defective work, the insurer's duty to defend was triggered.

         When FCMNH notified the insurer of Styller's counterclaims, the insurer assumed the defense, subject to a reservation of rights. Although the insurer initially took the position that it would not be responsible for any fees and expenses incurred prosecuting FCMNH's affirmative claims against Styller, the insurer offered to have its counsel manage the whole case for FCMNH, including FCMNH's affirmative claims, and to waive all claims for reimbursement of expenses associated with the case. FCMNH agreed, and the insurer assumed control of the entire case on behalf of FCMNH.

         The case was tried to a jury, which found in favor of Styller on FCMNH's claims. With regard to Styller's counterclaims, the jury found by way of answers to special questions that Styller did not suffer any damage to property other than FCMNH's defective work. The jury further found that FCMNH was not liable for breach of contract, but was negligent in performing the work, and awarded Styller $85, 409.80 in damages. The jury also found that Styller was comparatively negligent in the amount of twenty-seven percent.

         Following the jury trial, the Superior Court judge conducted a bench trial on Styller's claim that FCMNH committed a deceptive and unfair trade practice as a contractor in violation of G. L. c. 93A (through violations of G. L. c. 142A[1]), which as set forth supra was not a claim covered under the policy.[2] The judge determined that G. L. c. 142A applied to the contract between Styller and FCMNH, FCMNH violated G. L. c. 142A, and the violation entitled Styller to recover under G. L. c. 93A.

         The judge awarded Styller the same amount in damages ($85, 409.80) on the G. L. c. 93A claim as the jury had awarded on the negligence claim. The judge also awarded attorney's fees and expert fees and expenses to Styller under G. L. c. 93A in the amount of $105, 374.70 (fee award).[3] No postjudgment costs were allowed. FCMNH appealed, and this court affirmed. FCMNH, Inc. v. Styller, 77 Mass.App.Ct. 1109 (2010) . Following the appeal, the insurer informed FCMNH that it was declining coverage under the policy because the jury found FCMNH liable only for damage to FCMNH's own work, which was property damage excluded from the policy's coverage. See note 4, infra.

         2. Assignment and coverage lawsuit.

         Three years later, FCMNH settled with Styller. In connection with the settlement, FCMNH assigned to Styller its rights relating to the underlying action under the policy.

         Styller then filed this suit against the insurer, seeking a declaratory judgment under G. L. c. 231A, § 1, that the insurer must indemnify FCMNH (and by assignment, Styller) for the full amount of the judgment obtained in the underlying action. He also asserted a claim against the insurer under G. L. c. 93A (alleging violations of G. L. c. 176D) in view of the insurer's refusal to pay Styller prior to the institution of this coverage lawsuit. The ...

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