Insurance Alert: The First Circuit Holds, That a Massachusetts Insured May Sue Its Insurer for Bad Faith after Winning a Separate Action for Declaratory Judgment As to Its Rights ...

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In a significant decision concerning the preclusive effect of a declaratory judgment regarding insurance coverage, the First Circuit Court of Appeals recently found in Andrew Robinson International, Inc. v. Hartford Fire Insurance Co. that a final judgment in a declaratory judgment action does not bar a subsequent suit for damages.1 The plaintiffs in the original action shared an office that was badly damaged when the occupant of a neighboring unit negligently discharged lead-laden dust into the plaintiffs’ unit.2

The plaintiffs thus filed a first-party claim against its insurer, Hartford Fire Insurance Co.; and, relying on its pollution exclusion, Hartford denied the claim.3 The plaintiffs then filed a complaint for declaratory judgment in the state court seeking a declaration of their rights under the insurance policy.4 A Massachusetts Superior Court ruled that the dust discharge did not constitute pollution, and, therefore, did not trigger the policy exclusion.5

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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