Premier Homes, Inc. v. Lawyers Title Ins. Corp., Civil Action No. 98-11242-WGY.

CourtUnited States District Courts. 1st Circuit. United States District Courts. 1st Circuit. District of Massachusetts
Writing for the CourtYoung
Citation76 F.Supp.2d 110
Docket NumberCivil Action No. 98-11242-WGY.
Decision Date01 December 1999
76 F.Supp.2d 110
Civil Action No. 98-11242-WGY.
United States District Court, D. Massachusetts.
December 1, 1999.

Page 111

Stanley N. Wallerstein, Law Office of Stanley N. Wallerstein, Newton, MA, for Premier Homes, Inc.

John L. Harrington, John Connolly, Jr., Law Offices of John Connolly, Jr., Wakefield, MA, for Lawyers Title Insurance Corporation.

Lawrence M. Cohen, United States District Court, United States Courthouse, Boston, MA, for Lawrence M. Cohen, ADR Provider.


YOUNG, Chief Judge.


The Plaintiff, Premier Homes, Inc. ("Premier") moves for summary judgment, as to liability only, on its breach of contract claim. The defendant, Lawyers Title Insurance Corporation ("Lawyers"), moves

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for summary judgment on its counterclaim.

The following facts appear free of substantial dispute. Allegations are identified as such. The Kattar family ("Kattar") had long owned property, which included a golf course, in Methuen, Massachusetts. See Stipulation as to Agreed Upon Facts ("Stipulation") Ex. B. at ¶ 24. For business development reasons, the Demoulas family ("Demoulas") extended a $2,000,000 loan to Kattar secured by a mortgage on the Methuen property. See id. at ¶ 27. When Demoulas needed cash to pay various debts, the family foreclosed and the Methuen property was sold to Skard Realty Trust on April 21, 1994 for $3,1000,000. See id. at ¶ 44. On June 10, 1994, Skard Realty deeded the Methuen property to NNA Associates, which then sold the portion of it not containing the golf course to Premier on February 13, 1997 for $3,200,000. See id. at ¶ 47. On February 13, 1997, the same day Premier purchased the non-golf course Methuen property (the "Property"), it also purchased Owners Title Insurance Policy # 136-00-207883 (the "Policy"), issued by Lawyers. See Stipulation at ¶ 2.

At the time of the foreclosure, Demoulas had allegedly assured Kattar that it would convey the golf course back to Kattar once the debts were paid. Demoulas did not do so, however, see Stipulation Ex. B at ¶ 48, and Kattar brought suit in the Massachusetts Superior Court on June 9, 1997, alleging the above facts and claiming wrongful foreclosure, misrepresentation, breach of contract, bad faith, civil conspiracy, intentional interference with business relations and unfair and deceptive practices, among other claims. See Pls.' Second Am. Compl. & Jury Demand, Kattar v. Demoulas, Sup.Ct.Mass. No. 97-3069-C (1997) ("Kattar Compl.") (attached as Exhibit B to Stipulation). Premier Homes was named in the lawsuit as a "Necessary Party." Stipulation at ¶ 3.

The Kattar Complaint sought to have the Property re-conveyed to Kattar. The only allegation in the Kattar Complaint specifically relating to Premier was that "[u]pon information and belief, Premier Homes was not a bona fide purchaser for value." Stipulation Ex. B at ¶ 47. Kattar requested, at all relevant points in the Complaint, that the Court "declare, adjudge and decree that ... the Plaintiffs are the [rightful] owners of the Methuen properties ... and ... [that] the Demoulas Defendants and the Necessary Party Premier Homes, Inc. [be] ordered and directed to reconvey title to the Methuen properties to the Plaintiffs." Id. at 20.

Premier provided notice of the claim to Lawyers, who by letter dated June 13, 1997, accepted defense of the claim subject to a reservation of rights. That letter reads, in pertinent part:

Our acceptance of the defense is under a Reservation of our Rights to Deny Coverage and withdraw the defense in the event the allegations that Premier was not a bona fide Purchaser for Value. [sic]1 In the event the allegations prove true, we further reserve the right to seek reimbursement for fees expended in the defense.

By accepting the defense under a Reservation of Rights, please recognize and understand that we are not agreeing that a defense obligation even exists in light of the allegations.

Stipulation Ex. C.

On November 18, 1997, the Superior Court granted Motions to Dismiss as to a number of Counts in the Kattar lawsuit, but denied a Motion to Dismiss the count that sought reconveyance from Premier on the ground that it was not a bona fide purchasers for value. The Superior Court also denied Premier's Motion for Summary Judgment on December 17, 1997. See Stipulation at ¶¶ 10, 11.

On February 4, 1998, Lawyers sent a letter to Premier concerning its status as

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defense counsel (the "February Letter"). The letter followed several telephone conversations regarding the same topic. The text of the February Letter reads:

[T]he Company [Lawyers] has again considered its obligations to provide a defense and it has concluded that the Company is not under such a duty.

Accordingly, the Company is tendering the defense of this claim back to the Insured. You indicated during our last telephone conversation that the Insured disagrees with the Company's position and that the Insured would look to the Company to continue to defend this matter to its conclusion. This letter details why we feel that our position is correct. We are hopeful that the Insured will reconsider its position, thereby avoiding the filing of a complaint for declaratory relief to determine our obligations under the policy.

Stipulation Ex. E.

The letter proceeds with a three-page legal analysis concerning the issue of whether the surviving claim against Premier is one covered by the terms of the Policy. It then concludes:

In summary, having considered the rules of law governing the duty to defend, the allegations contained in the pleadings and the provisions of the policy, we must conclude that the Company is not, and perhaps was not, under a duty to provide a defense in this matter. We respectfully ask that the Insured reconsider its position and advise the Company immediately that the Insured will accept the defense of this matter without further obligation on the part of Lawyers Title Insurance Corporation.


On or about February 11, 1998 (five days after receipt of the February Letter), Premier settled the remainder of the suit with the Kattars. See Stipulation ¶ 14, Ex. F.

Premier brought this suit claiming Breach of Contract (Count I) and Violation of Mass.Gen.Laws ch. 93A, § 11. See Compl. at ¶¶ 19-26. Lawyers has counterclaimed for a declaration that it was not obligated to continue to defend Premier at the time of the February Letter and, consequently, it is not liable to indemnify Premier for the costs of settlement.

Premier here demands that Lawyers indemnify it for the settlement with the Kattars and pay the defense costs it incurred after February 4, 1998. Lawyers has refused to indemnify, maintaining its position that it no longer had a duty to defend or indemnify after the dismissal of Count I, or alternatively on the grounds that Premier settled the claim without authorization prior to actual withdrawal. See Affidavit of Stanley N. Wallerstein Aff. ¶ 6, Ex. 5.


Summary judgment is appropriate if, after reviewing the facts in the light most favorable to the nonmoving party, "the pleadings, depositions, answers to interrogatories, and admissions on file, together with affidavits, if any, show that there is no genuine dispute as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed. R.Civ.P. 56(c). A "genuine" issue is one that "properly can be resolved only by a finder of fact because [it] may reasonably be resolved in favor of either party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). A "material" fact is one that "might affect the outcome of the suit" under the applicable legal standard. Id. at 248, 106 S.Ct. 2505.


A. Effect of the February Letter

Premier claims that Lawyers breached its contract by withdrawing from its defense and terminating coverage via the February Letter. Lawyers claims that the February Letter was merely an offer

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to "tender" defense of the case to Premier, and did not constitute a withdrawal. If Lawyers' assertion that it was still defending holds true, then Premier may be said to have settled the claim without written authorization, a violation of the Policy.

A plain and reasonable reading of the February Letter demonstrates that it constitutes a withdrawal from the defense.

The February Letter, quoted above, continues an ongoing discussion between the parties about whether Lawyers is required to continue its defense. It uses the word "tendering" to indicate that it is offering back to Premier control of the defense and invites Premier to assume the defense so as to avoid a suit for declaratory relief. Finally, it asks for Premier to reconsider its position and to advise Lawyers as to whether Premier will accept control of the litigation. Nowhere in this letter is there an assertion that coverage has ceased, or will cease, prior to the hypothetical filing and decision of a declaratory judgment action. Likewise, there is no assertion that defense of the action will continue until Premier responds or until a declaratory judgment is decided. The portion of the letter that analyzes the legal situation is long and emphatic, and the reader is left with the definite conclusion that Lawyers is convinced of its position.

Although the letter is cloaked in the language of a query and purports to seek a response, essentially it is a carefully written letter notifying Premier that Lawyers was withdrawing from defense of the claim. Although written in pleasant terms, the February Letter itself indicates that failure to acquiesce to Lawyers' position would provoke a declaratory judgment action, thus posing the threat to Premier of defending itself against two lawsuits at once. Lawyer's pleasant invitations to "discuss the matter" are insufficient to distract this...

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1 practice notes
  • Global Naps, Inc. v. Federal Ins. Co., No. Civ.A. 00-12430-PBS.
    • United States
    • United States District Courts. 1st Circuit. United States District Courts. 1st Circuit. District of Massachusetts
    • July 18, 2002 insurer's duty to defend an insured is more expansive than its duty to indemnify." Premier Homes, Inc. v. Lawyers Title Ins. Corp., 76 F.Supp.2d 110, 115 (D.Mass.1999) (citations omitted). "An insurer must tread cautiously regarding its duty to defend an insured against third-party actio......
1 cases
  • Global Naps, Inc. v. Federal Ins. Co., Civ.A. 00-12430-PBS.
    • United States
    • United States District Courts. 1st Circuit. United States District Courts. 1st Circuit. District of Massachusetts
    • July 18, 2002 insurer's duty to defend an insured is more expansive than its duty to indemnify." Premier Homes, Inc. v. Lawyers Title Ins. Corp., 76 F.Supp.2d 110, 115 (D.Mass.1999) (citations omitted). "An insurer must tread cautiously regarding its duty to defend an insured against third-party actio......

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