Insurer does not have to pay attorneys fees

The Massachusetts Supreme Court reversed a lower court ruling on Wednesday and unanimously held that an insurer does not have to pay attorneys fees in a bodily injury case.

Paul and Jane Poirier, who operated a cleaning business, Leominster, Massachusetts-based Servpro of Fitchburg-Leominster, had obtained “business owners liability coverage” from Montpelier-based Vermont Mutual Insurance Co., according to Wednesday’s ruling by the Massachusetts Supreme Court in Vermont Mutual Insurance Co. vs. Paul Poirier & others.

After setting out the liability coverage, the policy says it will not pay any other sums unless explicitly provided for under a coverage extension, the ruling said.

In June 1999, Douglas and Phyliss Maston hired Servpro to clear up a sewage spill in their basement. Servpro workers remove contaminated material, cleaned the baseman and applied disinfectants.

They did not warn Ms. Maston that staying in the basement could be dangerous until the disinfectants dried. Ms. Matson continued cleaning the basement after the disinfectant’s application and shortly after developed ongoing respiratory problems that her doctors determined were caused by exposure to the chemicals used in Servpro’s cleaning products, the ruling said.

The Matsons sued the Poiriers for breach of contract and negligence, among other charges. Following a bench trial, the trial judge issued a $267,248.67 award to Ms. Maston for diminished earning capacity, medical expenses and pain and suffering and another $5,000 to Mr. Maston for loss of consortium damages.

The judge also awarded the couple $215,328 in fees and $15,447.76 in costs. A state appeals court affirmed the rewards, and imposed additional appellate attorney fees of $21,600 and appellate costs of $1,970.35.

The Massachusetts Supreme Court in Boston reversed the lower courts’ rulings and held the policy did not cover attorney’s fees. “The insurance contract here only provides for the recovery of ‘damages’” and attorneys fees “are not recoverable as damages under the insurance contract,” the state’s high court said, in remanding the case for further proceedings.

Laura A. Foggan, chair of the insurance/reinsurance group of Crowell & Moring LLP in Washington, who submitted an amicus brief supporting the insurer on behalf of the American Property Casualty Insurance Association in the case, issued a statement that said in part, “As the Court recognized, ‘damages are to compensate for the injury, and awards of attorney’s fees are to deter misconduct and recognize the public benefit of bringing the misconduct to light.’ Accordingly, the Court properly found no coverage for the attorneys fee award.”

Other attorneys in the case did not respond to a request for comment.