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Massachusetts Appellate Court Reinstates Breach, Unfair Practices Claims Against Zurich

A judicial panel ruled that JMA, a general contractor, adequately pleaded the breach of contract claim based on Zurich's nonpayment of JMA's defense costs and reinstated JMA's claims for reach of contract and unfair or deceptive practices.

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The Appeals Court of Massachusetts reversed the dismissal of claims against an insurance company after it admitted it had a duty to defend its insured in an underlying matter but refused to do so, remanding its insured’s allegations of breach of contract and unfair or deceptive practices. The case is John Moriarty & Associates, Inc. v. Zurich American Insurance Co., 2023 Mass. App. LEXIS 50 (Mass. App. Ct. 2023).

In addition, this case has brought forth a larger legal question in Massachusetts of whether an insurance company, and under what circumstances, has a right to recoup defense costs provided to an insured. The appellate court noted it was up to the Supreme Judicial Court of Massachusetts to determine if a right to recoup was recognized, according to the opinion filed March 31.

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