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Supreme Judicial Court Finds Attorneys’ Fees Are Not Damages

Where an insurance policy provides coverage for damages because of, e.g., bodily injury, property damage, or advertising injury, does that insurance policy cover attorneys’ fees awarded as a result of a covered claim? The Supreme Judicial Court has just said that it does not.

In Vermont Mutual Insurance Company v. Paul Poirier, the SJC considered an insurance policy that covered “those sums that the insured becomes legally obligated to pay as damages because of ‘bodily injury,’ ‘property damage,’ ‘personal injury’ or ‘advertising injury’ to which this insurance applies.” The insureds, Paul and Jane Poirier, were sued for bodily injuries resulting from decontamination work the insureds performed. That lawsuit included a claim under Massachusetts General Law Chapter 93A.

At trial, the plaintiff in the bodily injury suit prevailed on her Chapter 93A claims and was awarded both damages and attorneys’ fees, as provided for under Chapter 93A. Vermont Mutual, the Poiriers’ insurer, paid the plaintiff the entire amount of the judgment except for the award of attorneys’ fees. Vermont Mutual took the position that the attorneys’ fees were not “damages because of bodily injury” and therefore not covered by the policy. Vermont Mutual then sought declaratory judgment in court, requesting that the court declare that it was not obligated to pay attorneys’ fees. After summary judgment, the trial court found in Vermont Mutual’s favor and the Poiriers appealed.

To determine whether attorneys’ fees were covered by the policy language, the SJC analyzed whether such damages were “because of” the bodily injury. The SJC explained that damages for bodily injury are compensatory in nature, that is, “money claimed by, or ordered to be paid to, a person as compensation for loss or injury.” The Court next explained that “attorneys’ fees expended to pursue a c. 93A claim are different.” Such fees, the Court found, do not compensate for the bodily injury, but rather for the cost of bringing the lawsuit. Noting that the language of Chapter 93A itself decouples damages from attorneys’ fees, the Court found that damages and attorneys’ fees are conceptually different, and therefore the policy provision did not cover attorneys’ fees.

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