“Resident Relative” of Massachusetts Couple Was Entitled to Defense and Indemnification under Homeowners’ Policy – Preferred Mutual Insurance Company v. Vermont Mutual Insurance Company

When someone is injured and the responsible party does not have liability insurance coverage, the injured person still has a legal right to file suit and obtain a judgment, but collecting the judgment may prove to be a long, arduous, and perhaps impossible task. Contrariwise, difficulties can also arise when a defendant is insured by multiple insurance companies.

While this may seem like “a good problem to have,” in some cases it can delay payment of a judgment in an otherwise worthwhile case. At best, it can complicate matters and keep a case in the courts far longer than would otherwise be necessary.

Two Insurance Companies, One Judgment

In the recent case of Preferred Mutual Insurance Company v. Vermont Mutual Insurance Company, the issue was which of two insurance companies was responsible for a judgment secured by a worker who fell while remodeling a residence. In the underlying case, the worker had sued and obtained a judgment against the homeowners and their adult son, who had unfastened a porch railing but left it upright so that it appeared to be securely in place. The homeowners were insured by Vermont Mutual Insurance Company (“Vermont”). After the worker filed suit, Vermont defended the homeowners but refused to defend the son, even though he was an insured under the policy because he was a resident relative.

The son, who was a self-employed, licensed electrician, was the named insured under a commercial lines policy issued by Preferred Mutual Insurance Company (“Preferred”). Preferred defended the son in the worker’s lawsuit against him and his parents but did so under a reservation of rights. The worker obtained a judgment against the homeowners and the son in the amount of $226,218.49 (his wife was also awarded $12,567.69 for loss of consortium). The parents (collectively) and the son were determined to be joint tortfeasors, with the parents being responsible for 50 percent of the judgment and the son being responsible for the remaining 50 percent.

In the current action, Preferred filed a declaratory judgment suit against the homeowners, the son, and Vermont. The trial court held that Preferred had no duty to defend or indemnify the son in the worker’s suit and ordered Vermont to reimburse Preferred for the costs it incurred in defending the son in the suit.

The Court of Appeals’ Decision

The court agreed with the trial court that Vermont had a duty to defend and indemnify the son in the worker’s suit and that Preferred had no duty to indemnify the son. However, the court vacated the remainder of the trial court’s judgment, holding that Preferred had a duty to defend the son but that Preferred was entitled to equitable contribution. The lower court was therefore instructed to order Vermont to reimburse 50 percent of the defense costs expended by Preferred in defending the son in the suit by the worker.

In so holding, the court noted that the Preferred policy covered the son only with respect to the conduct of his business as an electrician but that there were no facts or reasonable inferences that the son was conducting business as an electrician at any time pertinent to the underlying lawsuit.

To Speak to a Massachusetts Injury Lawyer

If you have hurt and believe that you may have a premises liability case against the owner of the property where you slipped and fell, you need to speak to an attorney about your situation as soon as possible. The Law Firm of John C. Manoog, III helps injured people throughout the Cape Cod area, and we will be glad to review your case at no charge. For an appointment, call 888-262-6664, or use the contact form found on this website.

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