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United States Fire Insurance Co. v. Worcester Insurance Co.1/20/2005
Middlesex.
May 14, 2004.
Insurance, Defense of proceedings against insured, Construction of policy. Practice, Civil, Attorney's fees.
Civil action commenced in the Superior Court Department on July 14, 1999.
The case was heard by Nonnie S. Burnes, J., on motions for summary judgment, and a motion to reconsider and to vacate the judgment was considered by her.
This appeal brings before us the question of who had the duty to defend Youngblood Plumbing & Heating Company (Youngblood) on a partially settled claim -- Worcester Insurance Company (Worcester), the primary insurer, or United States Fire Insurance Company (US Fire), the excess carrier. On cross-motions for summary judgment, Worcester argued that after it had exhausted its policy limits in obtaining settlements of the claims against Youngblood, five full and one partial, it became US Fire's duty to represent Youngblood on the remainder of the partially settled claim. US Fire argued in the trial court and continues to do so on appeal that based on the language of its policy and the law to be applied in the circumstances presented, the duty to defend remained with Worcester. We affirm the judgment in Worcester's favor.
1. The Undisputed Facts
Although somewhat lengthy in the retelling, the undisputed facts are not complicated. Due to work negligently performed by Youngblood at the Woburn Nursing Center (the Center), there was an explosion and fire. Various claims, six in all, for bodily injury and property damages were then brought against Youngblood. Youngblood owned a "Contractor's Business Owners Insurance Policy" issued by Worcester with liability limits in the amount of $1,000,000. US Fire provided Youngblood with a commercial umbrella policy with excess liability limits in the amount of $5,000,000. In tendering a defense to the six claims, Worcester put US Fire on notice that the claims against Youngblood were likely to exceed the $1,000,000 policy limit of the primary insurance.
After an investigation, and due to some irregularities in Youngblood's application for insurance, Worcester brought an action against Youngblood and the six claimants in the underlying tort actions. Pursuant to that action, and as of July 14, 1994, Worcester had negotiated full settlements on five of the claims for a total amount of $150,500. The sixth claim was that of St. Paul Fire and Marine Insurance Company (St. Paul). St. Paul had paid the center $2,900,000, pursuant to an arbitration award on the nursing center's property damage claim. Worcester negotiated a settlement of St. Paul's subrogation claim, and on July 17, 1994, received a partial and limited release in consideration of a payment of $59,500 as well as a previous payment in the amount of $790,000, for a total amount of $849,500. With those payments, Worcester exhausted the limits of its policy -- that is, $1,000,000, leaving Youngblood exposed to further litigation with St. Paul on the remaining amount of its claim, $2,050,500. Youngblood knew of these negotiations and agreed to all six settlements, and Worcester dismissed its action against the six claimants.
Its policy limit exhausted, Worcester notified Youngblood and US Fire that it was withdrawing its defense of Youngblood against St. Paul. Although US Fire then took up Youngblood's defense, it did so under protest and made repeated requests to Worcester that it resume its defense of Youngblood, all to no avail. US Fire settled what remained of St. Paul's claim and then brought this action against Worcester seeking a declaration that it was entitled to recoup the costs of its defense in so doing.
After the judge ruled o
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