Paul Peter Nicolai
CGL policy doesn’t cover 93A attorneys’ fees
The plaintiffs in the underlying case hired a company to clean up a sewage spill, after which the wife experienced ongoing respiratory problems that her doctors linked to the company’s cleaning products.
A commercial general liability policy did not cover counsel fees imposed against its insureds after they were found liable under Chapter 93A for breach of warranty resulting in bodily injury.
The plaintiffs had hired a cleaning business operated by the insureds to clear sewage from the basement of their home. The workers did not warn the homeowner not to go into the basement while the chemicals they applied were still drying, an omission that resulted in an exposure.
The insurer sued, arguing that the CGL policy did not cover the fee award because attorneys’ fees are not damages caused by bodily injury within the meaning of the policy. The Massachusetts Supreme Court agreed.
Why This is Important… The court noted that damages and attorneys’ fees serve two different purposes. Damages are to compensate for an injury. Awards of attorney’s fees are to deter misconduct and recognize the public benefit of bringing the misconduct to light. The insurance contract only provided for the recovery of ‘damages. This language is standard in most general liability policies, meaning insureds are on the hook for attorney fee awards even if insured.