Spencer v. Kantrovitz

• Decision Date: 21 January 2005
• Docket Number: No. Civ.A.03-CV-12074-RG.,Civ.A.03-CV-12074-RG.
• Citation: 392 F.Supp.2d 29
• Parties: David SPENCER v. Sherwin L. KANTROVITZ, et al.
• Court: U.S. District Court — District of Massachusetts

392 F.Supp.2d 29

David SPENCER v. Sherwin L. KANTROVITZ, et al.

No. Civ.A.03-CV-12074-RG.

United States District Court, D. Massachusetts.

January 21, 2005.

Elaine M. Kennedy, Peter M. Solomon, Londonderry, NH, for Plaintiff.

James S. Bolan, Brecher, Wyner, Simons & Bolan, LLP, Newton, MA, Lisa A. Harvey, Brecher, Wyner, Simons & Bolan, LLP, Needham, MA, for Defendants.

MEMORANDUM AND ORDER DEFENDANTS' MOTION FOR SUMMARY JUDGMENT

STEARNS, District Judge.

On October 27, 2003, David Spencer brought this lawsuit against his former attorney, Sherwin L. Kantrovitz, Esq., the Law Offices of Sherwin L. Kantrovitz, P.C., and a Kantrovitz legal assistant, Tony Philipon (collectively, the law firm). Spencer alleges that the law firm failed to obtain the consent of his employer's insurance carrier before settling a personal injury claim, thereby precluding Spencer from seeking additional coverage under the underinsured motorist (UIM) provisions of the employer's motor vehicle policy and his own policy. Spencer presses claims of negligence (professional malpractice) against Kantrovitz, the law firm, and Philipon, a claim of breach of contract against Kantrovitz and the law firm, and against Kantrovitz individually, a violation of the Massachusetts Consumer Protection Act, G.L. c. 93A.

The issue before the court on summary judgment is purely a question of law as the underlying facts are not in dispute.¹ Spencer, a New Hampshire resident worked as a field supervisor for Reliable Security Guard Agency, Inc. (Reliable), a New Hampshire company headquarters in Salem, New Hampshire with offices in Massachusetts. Spencer's primary duty was to conduct daily security inspections at customer sites in New Hampshire and Massachusetts, For this purpose, Reliable provided Spencer with a company-owned patrol car. Spencer typically drove 200 miles during his daily inspectional tour.

Upon being hired, Spencer did not give Reliable written notice that he retained his rights at common law to seek legal redress for any injuries that he sustained in the course of his employment. Such written notice is required by the Massachusetts Workers' Compensation Act, G.L. c. 152, § 24, if an employee is to avoid the exclusivity bar limiting recovery for employment-related injuries to benefits under the Act.

On April 22, 1999, while on duty, Spencer was involved in a collision in Lawrence, Massachusetts, with an automobile driven by Moncho Galvez, a citizen and resident of Massachusetts. Spencer suffered a serious back injury that eventually prevented him from working.² Galvez's insurance policy, issued by the Horace Mann Insurance Company (Horace Mann), provided only the statutory minimum layer of coverage of $20,000. Spencer's personal policy, issued by Geico Insurance Company (Geico) in New Hampshire, provided $100,000 in UIM coverage. The Geico policy required Spencer to obtain Geico's written consent before entering any settlement with an underinsured motorist. Reliable in turn had two relevant policies. The first, a State Farm Insurance Company (State Farm) commercial automobile insurance policy, provided for $500,000 in UIM coverage. As was the case with Geico, State Farm required the insured to obtain State Farm's consent before settling any claim with an underinsured motorist. Reliable also carried Massachusetts workers' compensation insurance through Public Service Mutual Insurance Company (Public Service).³

In May of 1999, after receiving a notice of eligibility from Public Service, Spencer elected to receive Massachusetts workers' compensation benefits. Three months later, on August 3, 1999, Spencer hired Kantrovitz and the law firm to represent him in pursuing his bodily injury and workers' compensation claims.

On April 24, 2000, the law firm asked Geico for permission to settle with Galvez. On June 23, 2000, Galvez's insurer, Horace Mann, offered to pay the full $20,000 available under its policy. On July 26, 2000, Geico gave its permission to settle, and on April 27, 2001, the law firm did so with Horace Mann on Spencer's behalf. The same day, the law firm negotiated a $25,000 lump sum settlement of Spencer's workers' compensation claim. The law firm did not seek permission from State Farm to enter either settlement.

On June 19, 2001, Geico encouraged Spencer to seek UIM coverage under Reliable's State Farm policy, identifying State Farm as the "primary" UIM carrier. On July 31, 2001, the law firm asked State Farm to give retroactive approval of the settlement with Galvez. Several months later, the law firm made a demand for the $500,000 UIM policy limit. State Farm refused permission, and on November 28, 2003, denied coverage because of Spencer's failure to obtain prior approval for the settlement. On December 31, 2001, Geico also denied UIM coverage, contending that State Farm's denial of primary coverage relieved it of any liability as the surplus carrier.⁴

Spencer alleges that but for the defendants' negligence in failing to obtain State Farm's approval of the Galvez settlement, he would be entitled to coverage under the UIM provisions of Reliable's State Farm policy and his own Geico policy. Defendants, for their part, maintain that any claim under the State Farm policy was barred by the exclusivity provision of the Massachusetts Workers' Compensation Act, and because Spencer had begun to receive Massachusetts workers' compensation benefits before the law firm was retained, neither it, nor its employees, can be held to have been a proximate cause of any injury to Spencer. Consequently, whether the defendants were in fact negligent in failing to obtain State Farm's consent to settle with Galvez is of no moment, as any recovery under the State Farm policy, according to defendants, was already barred.

Under the Massachusetts Workers' Compensation Act, "if an employee files any claim or accepts payment of compensation on account of personal injury under this chapter ... such action shall constitute a release to the insurer of all claims or demands at common law, if any, arising from the injury." G.L. c. 152 § 23. The exclusivity provision is a jurisdictional bar precluding a court of general jurisdiction from even considering threshold matters involving an employer's liability. See Lee v. International Data Group, 55 Mass. App.Ct. 110, 114, 769 N.E.2d 761 (2002). Because the exclusivity provision is so broadly construed, there is no exemption for claims for additional benefits under an employer's motor vehicle policy. This was the issue presented in Berger v. H.P. Hood, Inc., 416 Mass. 652, 624 N.E.2d 947 (1993). The Supreme Judicial Court, while acknowledging a split of authority, concluded that

we are more persuaded by those courts which have determined that the exclusivity provision of a Workers' Compensation Act bars an employee from recovering UM [underinsurance] benefits from an employer for an injury in the course of employment. See Bouley v. Norwich, 222 Conn. 744, 610 A.2d 1245 (1992); Gullett v. Brown, 307 Ark. 385, 820 S.W.2d 457 (1991). In Bouley, the Connecticut Supreme Court looked to the purpose behind Connecticut's uninsured motor vehicle statute and determined it was designed to be a "safety net" for motorists who are not otherwise protected. When an employee receives workers' compensation benefits, the Connecticut court concluded that "the policies underlying uninsured motorist coverage are not sufficiently compelling to override the exclusivity of the Workers' Compensation Act." Bouley v. Norwich, supra at 757, 610 A.2d 1245. We agree.

Id. at 655-656, 624 N.E.2d 947.

Spencer does not contend that the Massachusetts exclusivity provision would not bar any claim for UIM coverage that he might bring under Massachusetts law.⁵ Rather, he argues that had he received workers' compensation benefits in New Hampshire instead of Massachusetts, he would have been permitted by New Hampshire law to seek UIM coverage under Reliable's policy with State Farm. This is true. The New Hampshire Supreme Court, considering a factual pattern similar to the one raised in Berger, decided that dual recovery was not inconsistent with the immunity provisions of New Hampshire's Workers' Compensation Law.

The workers' compensation scheme is based on a "fundamental quid pro quo," Thompson v. Forest, 136 N.H. 215, 219, 614 A.2d 1064, 1067 (1992), which is "the tort immunity conferred on the employer ... [in exchange] for providing no-fault workers' compensation benefits." Id. at 218, 614 A.2d at 1066 (emphasis added) (quotation omitted). At issue here, however, is not tort liability, but the uninsured/underinsured motorist carrier's contractual liability.

[T]he uninsured motorist carrier does not insure the tortfeasor against liability, but insures the employee against the risk of inadequate compensation if he is injured in an accident with an uninsured motorist. The obligation of the uninsured motorist carrier arises out of contract, although that obligation is precipitated by a third-party's tortious act.

Merchants Mut. Ins. Group v. Orthopedic Prof Ass'n, 124 N.H. 648, 657-58, 480 A.2d 840, 845 (1984). The employer's tort immunity is left wholly intact by the employee's recovery of uninsured/underinsured motorist benefits, and the possibility of double recovery is offset by the availability of a workers' compensation lien. See RSA 281-A:13, 1(b); Rooney v. Fireman's Fund Ins. Co., 138 N.H. 637, 641, 645 A.2d 52, 54-55 (1994). Thus, allowing an employee to collect benefits from the employer's uninsured/underinsured motorist insurer does not upset the fundamental quid pro quo upon which the Workers' Compensation Law is based.

Hull v. Town of Plymouth, 143 N.H. 381, 384-385, 724 A.2d 1291 (1999).⁶

While the thrust of Spencer's argument seems superficially plausible, its fundamental premise is flawed: Spencer was simply not eligible to receive workers' compensation benefits in New Hampshire. The New Hampshire Workers'...