Carrier Not Vicariously Liable to Insured for Subrogation Attorney's Misrepresentations

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In Sandman v. Quincy Mut. Fire Ins. Co., 2012 WL 181761 (Mass. App. Ct. Jan. 25, 2012), the Appeals Court of Massachusetts affirmed the trial court's grant of Quincy Mutual Fire Insurance Co.'s motion to dismiss for failure to state a claim and its separate entry of judgment. The court found that Quincy was not vicariously liable for counsel's misrepresentations that he represented both the Quincy and the insured's interests in a subrogation action.

In Sandman, an oil delivery company spilled heating oil into an insured's basement resulting in real and personal property damage. Quincy paid the insured for real property damages, denied coverage for personal property damages, and retained subrogation counsel to recover the damages that it paid to the insured. Subrogation counsel, however, told the insured that he was retained to represent both the insured's and Quincy's interests in the subrogation action. When the subrogation action settled, counsel informed the insured that he was retained to represent only Quincy.

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