Massachusetts high court holds that attorney’s fees awarded under G.L. c. 93A are not covered under commercial liability insurance policy as damages “because of bodily injury”


By: Ryan Giggi

Liability insurance policies do not cover G.L. c. 93A attorney’s fees in Massachusetts after a recent decision from the state’s highest court.

Vermont Mutual Insurance Company v. Paul Poirier et al, (July 6, 2022) rests on conceptual differences between damages and attorney’s fees awarded under G.L. c. 93A, § 9(4). Massachusetts’s Supreme Judicial Court held that fees are not covered under policies that promise to pay “sums that the insured becomes legally obligated to pay as damages because of ‘bodily injury.’”

The case arose from a successful personal injury action by Douglas and Phyllis Maston against Vermont Mutual’s insured, Servpro. The Mastons hired Servpro to remove contaminated material from and clean their basement. Phyllis developed respiratory problems soon thereafter from inhaling disinfectants Servpro used.

The trial judge found that Servpro had violated G.L. c. 93A, Massachusetts’s unfair business practices statute, by violating the implied warranty of habitability and awarded damages to the Mastons. Pursuant to G.L. c. 93A, the trial judge also awarded attorney’s fees totaling well over $200,000. Vermont Mutual paid the Mastons nearly $700,000, covering Servpro’s liability to the Mastons aside from the attorney’s fees award. It then filed a declaratory judgment action seeking clarification that Servpro’s policy did not cover attorney’s fees.

The SJC agreed, relying chiefly on the defined differences between damages and attorney’s fees. Damages, the SJC reasoned, are money claimed by a party as compensation for a loss. But case law treats attorney’s fees under G.L. c. 93A as “a separate form of relief,” meant to deter misconduct and reward a plaintiff for shining a light on misconduct. The statute makes the same distinction, awarding attorney’s fees separately from and “in addition” to damages.

The SJC further held that attorney’s fees are not covered under the policy provisions covering “costs taxed against the insured” in suit, as legal “costs” are also distinct from attorney’s fees.

Coverage is primarily dictated by the language of each individual policy. But as a baseline, Massachusetts does not regard G.L. c. 93A attorney’s fees as damages “because of bodily injury” covered by liability insurance policies.

For more information on this subject, please contact Ryan Giggi or your local FMG attorney. Stay up to date on our latest thought leadership by subscribing to our newsletter here.