Wilkinson v. Citation Insurance

Ireland, J.

(concurring in part and dissenting in part). I agree with the court’s conclusion that summary judgment for the plaintiffs should be affirmed because their insurance policy covers their loss. I write separately because I conclude that there is no logical reason not to extend the exception to the American rule concerning who bears the cost of litigation carved out in the Preferred Mut. Ins. Co. v. Gamache, 426 Mass. 93, 98 (1997) (under a homeowner’s policy, the insured “is entitled to the reasonable attorney’s fees and expenses incurred in successfully establishing the insurer’s duty to defend under the policy”), to insured homeowners who successfully establish an insurer’s duty to indemnify.

The court correctly points out, ante at 669, that the issue in the Gamache case, as well as in Rubenstein v. Royal Ins. Co., 429 Mass. 355, 356 (1999), and Hanover Ins. Co. v. Golden, 436 Mass. 584 (2002), was limited to whether attorney’s fees and costs should be awarded where a duty to defend existed. However, the Rubenstein case set forth a further explanation of the policy reasons behind the Gamache decision. In particular, as noted by the Superior Court judge, the Rubenstein decision stated that the denial of attorney’s fees and costs would deny the insured the benefit of the bargain they made with the insurance company. Id. at 358. The court also noted that a special relationship between the insurer and insured exists, id., and that “[t]he promise to defend [and] indemnify ... is the consideration received by the insured for payment of the policy premiums” (emphasis added). Id., quoting Brohawn v. Transamerica Ins. Co., 276 Md. 396, 409-410 (1975). Moreover, if the insured had to bear the cost of litigation concerning coverage, the insured *677would be no better off for having a policy. Rubenstein v. Royal Ins. Co., supra at 357.

In highlighting these principles, the court in Rubenstein quoted, with approval, decisions where State courts awarded the insureds attorney’s fees in successful duty to indemnify actions. Id. at 359, 360, quoting Olympic S.S. Co. v. Centennial Ins. Co., 117 Wash. 2d 37, 53 (1991), and Hayseeds, Inc. v. State Farm Fire & Cas., 177 W. Va. 323, 329 (1986). In addition, the court awarded appellate attorney’s fees and costs to the plaintiffs, even though they did not request them. Rubenstein v. Royal Ins. Co., supra at 361. The principles outlined in the Rubenstein case were reiterated by the court in Hanover Ins. Co. v. Golden, supra at 586-588, in holding that insureds could recover attorney’s fees and costs after successfully establishing an insurer’s duty to defend, even in the absence of a breach of contract. Additionally, in Preferred Mut. Ins. Co. v. Gamache, supra at 96-97, the court explicitly rejected the argument that a statutory provision was necessary for the award of attorney’s fees and costs. See Hanover Ins. Co. v. Golden, supra at 587 n.3, citing Preferred Mut. Ins. Co. v. Gamache, supra.

In this case, as the Superior Court judge noted, without the award of attorney’s fees and costs, the plaintiffs are ultimately worse off for having prevailed on the issue whether the insurer had a duty to indemnify. The costs of litigation have deprived them of the benefit of the bargain they made with the insurance company. Given the principles articulated in the Gamache, Rubenstein, and Golden cases, I do not see a logical reason not to expand the exception to the American rule to cover the duty to indemnify. Therefore, I respectfully dissent from that part of the court’s opinion that vacates the award of attorney’s fees and costs to the plaintiffs.