A current determination of Decide Denise Casper of the USA District Courtroom for Massachusetts dismissed all claims in a lawsuit searching for to carry two legal responsibility insurers accountable underneath G.L. c. 93A and c. 176D for not providing coverage as additional insureds to each other’s named insureds.
The plaintiff, Melanie Costa, had previously settled her wrongful death claims against two construction subcontractors, Maxim Crane Works and G&C Concrete Construction, for $12 million after her husband died in a 2019 construction accident at MIT. After settling, Costa sued Zurich American Insurance (Maxim’s insurer) and Hartford Accident and Indemnity Company (G&C’s insurer), claiming each insurer had violated Massachusetts’ consumer protection and unfair insurance practices statutes by failing to acknowledge additional insured obligations to the other’s named insured.
Costa alleged that under Walsh Brothers’ (the general contractor) subcontracts with Maxim and G&C, each subcontractor had agreed to provide liability insurance protecting other subcontractors. Based on these contract provisions, Costa claimed Zurich and Hartford breached their statutory duties by not stepping forward to provide coverage to G&C and Maxim respectively when her husband’s death occurred.
The court rejected Costa’s interpretation of the subcontracts’ insurance requirements. Judge Casper found that neither subcontract required one subcontractor to name another subcontractor as an additional insured. Without such a contractual requirement, neither Zurich nor Hartford had any obligation under their respective policies to provide additional insured coverage to the other’s named insured.
The Fatal Accident and Ensuing Litigation
On February 28, 2019, Anthony Costa Jr. suffered fatal injuries at an MIT construction site in Cambridge when approximately 1,500 pounds of steel screw jacks fell on him from four stories above. At the time, Costa worked for Walsh Brothers, Inc., the general contractor on MIT’s new undergraduate dormitory project.
The accident occurred during what OSHA later termed a prohibited “double pick” crane operation involving two different types of construction materials – stacked perry decking and screw jacks. G&C Concrete had rigged the materials for lifting by a tower crane operated by Maxim Crane Works. The crane, which had a 197-foot jib, was operated by Adam Anderson, who OSHA later determined was an uncertified apprentice working without required supervision.
According to court documents, Anderson, from his position in the crane’s cab, could see that the two different types of construction materials were rigged side-by-side. After lifting the materials to the fourth floor, G&C’s employees unhooked the screw jacks while the perry decking remained attached to the crane’s hook. When Anderson then attempted to lift the perry decking alone, the load’s movement toward center pushed the unsecured screw jacks over the building’s edge, striking Costa and two other workers below.
The Path to Settlement
On February 28, 2020, exactly one year after her husband’s death, Melanie Costa filed suit in Middlesex Superior Court against both Maxim and G&C alleging negligence, gross negligence, and wrongful death claims. Despite the severity of the accident and the available evidence regarding both defendants’ roles, settlement negotiations progressed slowly.
The first meaningful settlement offer did not come until February 2022, when Zurich and Hartford collectively offered $1 million. At a June 1, 2022 mediation, the insurers increased their combined offer to $2.4 million. Costa rejected both offers.
At a second mediation session on September 20, 2022, the parties finally made substantial progress, with the defendants extending a global offer of $11.8 million. Within days, this offer increased to $12 million, with Maxim’s portion being $7 million and G&C’s portion being $5 million. Soon after Costa and Maxim agreed to a settlement number of $7.25 million reserving her rights against Maxim’s insurer for unfair claim practices. Costa also demanded from G&C’s insurers, Zurich’s $5 miillion primary policy limit and the $10 million excess limit from National Fire.
Costa subsequently filed suit against Harford and Zurich, contending their handling of her claim violated Massachusetts consumer protection laws. She specifically alleged that each insurer had additional insured obligations to the other’s named insured that they wrongfully ignored during the claims process.
The Insurance Coverage Dispute
The core of Costa’s case against the insurers rested on her interpretation of the subcontracts Walsh Brothers had with Maxim and G&C and the insurance policies issued by Zurich and Hartford. According to Costa, both subcontractors had agreed to obtain liability insurance protecting other subcontractors on the MIT project, creating reciprocal additional insured obligations between their insurers.
The Insurance Policies and Subcontracts
Zurich insured Maxim under a commercial general liability policy that included additional insured coverage for “any organization whom [Maxim is] required so as to add as a further insured underneath a written contract.” Equally, Hartford’s coverage to G&C supplied further insured standing to any “group(s) [that] are a further insured once you [G&C] have agreed, in a written contract…that such group be added as a further insured.”
Each subcontracts with Walsh Brothers contained similar insurance coverage necessities in Part 13.1, requiring every subcontractor to “buy and preserve insurance coverage of the next forms of protection and limits of legal responsibility.” The contracts’ Exhibit 4 additional specified that “All Subcontractors shall buy and preserve…insurance coverage as will shield the Normal Contractor, Subcontractors, Proprietor, House owners Consultant and all affiliated entities” from varied claims together with bodily damage.
Costa’s Statutory Claims
Based mostly on these provisions, Costa filed swimsuit alleging Zurich and Hartford violated G.L. c. 93A and c. 176D by failing to acknowledge their respective further insured obligations. She claimed every insurer had unfairly extended settlement by ignoring duties to offer protection to each defendants in her underlying wrongful loss of life motion.
To help her place, Costa pointed to certificates of insurance coverage issued to Walsh Brothers stating that “any entity required by contract or settlement [is] further insured.” She argued these certificates confirmed the insurers’ understanding that their insurance policies lined different subcontractors as further insureds.
Costa additionally relied on the subcontracts’ use of the plural time period “Subcontractors” in describing who should be protected by the required insurance coverage. She contended this language demonstrated Walsh Brothers’ intent to have every subcontractor’s insurance coverage shield all subcontractors on the venture.
Moreover, Costa alleged Zurich breached a settlement settlement concerning her movement for sanctions within the underlying case. This declare arose from representations made at a June 30, 2023 courtroom listening to that allegedly violated the phrases underneath which Costa had agreed to settle her claims in opposition to Maxim.
The Courtroom’s Evaluation and Rulings
In dismissing all of Costa’s claims, Decide Casper methodically addressed every of her authorized theories, beginning with the foundational challenge of whether or not Costa had standing to carry claims underneath c. 93A.
Standing to Sue Insurers
The court first rejected Zurich’s argument that Costa lacked standing because she had no contractual relationship with either insurer. Judge Casper noted that claims under c. 93A do not require contractual privity between plaintiff and defendant. Instead, any person whose rights are affected by an insurer’s violation of c. 176D may bring an action under c. 93A.
Contract Interpretation
The court’s central analysis focused on whether the Walsh Brothers’ subcontracts actually required Maxim and G&C to provide insurance coverage for each other. This question proved dispositive because both insurers’ additional insured provisions only applied when their named insureds had agreed by contract to add another party as an additional insured.
Judge Casper found the subcontracts’ use of “Subcontractors” was a defined term that did not create mutual insurance obligations. In the Maxim subcontract, “Subcontractor” meant only AmQuip Crane Rental LLC and Maxim Crane Works. Similarly, in the G&C subcontract, the term referred only to G&C Concrete Construction, Inc.
The court also dismissed Costa’s reliance on the certificates of insurance. Judge Casper noted these certificates explicitly stated they were “issued as a matter of information only” and did not “amend, extend or alter the coverage afforded by the policies.” The certificates thus could not expand coverage beyond what the underlying insurance policies and subcontracts required.
Chapter 93A Claims
Having found no contractual requirement for either subcontractor to insure the other, the court concluded neither Zurich nor Hartford had any obligation to provide additional insured coverage. Without such an obligation, their alleged failure to acknowledge additional insured status could not constitute an unfair insurance practice under c. 176D or c. 93A.
Judge Casper cited Massachusetts precedent holding that “recovery under Chapter 93A for a violation of Chapter 176D is unlikely when an insurance company in good faith denies a claim of coverage on the basis of a plausible interpretation of its insurance policy.” Here, the insurers’ interpretation was not only plausible but correct under the court’s analysis.
Breach of Contract Claims
Finally, the court dismissed Costa’s claims regarding the alleged settlement agreement breach. Judge Casper found this claim essentially duplicated allegations previously rejected in related litigation. She also noted Costa failed to allege facts showing Zurich was a party to the settlement agreement or that the agreement included any valid consideration flowing to or from Zurich.
Lessons from The Costa Decision
The Costa decision reaffirms several important aspects of Massachusetts insurance law regarding additional insured coverage and unfair insurance practice claims.
Additional Insured Status Requires Clear Contractual Obligation
The court emphasized that additional insured coverage only exists when specifically required by contract. Where subcontracts carefully define terms like “Subcontractor,” those definitions control which entities must be added as additional insureds. General references to protecting “Subcontractors” will not create additional insured obligations beyond the contract’s defined terms.
Certificates of Insurance Have Limited Legal Effect
Judge Casper reaffirmed that certificates of insurance serve only as informational documents. They cannot create coverage obligations beyond those contained in the actual insurance policies and underlying contracts. The court cited with approval the principle that certificates are “simply…form[s] accomplished by an insurance coverage dealer or agent on the request of a policyholder to doc the truth that an insurance coverage coverage has been written.” See Company Checklists’ article of February 20, 2024, “What You Need To Know About The Massachusetts Insurance Certificate Law.”
CHAPTER 93A CLAIMS REQUIRE MORE THAN COVERAGE DISPUTES
Whereas third-party claimants can carry c. 93A actions in opposition to insurers with out contractual privity, they need to nonetheless present the insurer violated an obligation owed underneath the coverage or legislation. An insurer’s good religion denial of protection based mostly on an accurate coverage interpretation can’t help a c. 93A declare, even when that denial delays settlement of the underlying case.
CONTRACT FORMATION BASICS STILL MATTER
The courtroom’s dismissal of Costa’s settlement settlement claims demonstrates that primary contract ideas stay necessary in insurance coverage disputes. With out displaying an insurer was celebration to an settlement or supplied consideration, a plaintiff can’t preserve claims for breach of contract or violation of the implied covenant of fine religion and honest dealing.
Owen Gallagher
Insurance coverage Protection Authorized Professional/Co-Founder & Writer of Company Checklists
Over the course of my authorized profession, I’ve argued quite a few circumstances within the Massachusetts Supreme Judicial Courtroom in addition to helped brokers, insurance coverage firms, and lawmakers alike with the complexities and idiosyncrasies of insurance coverage legislation within the Commonwealth.
