Sanders v. Phoenix Insurance Company , 843 F.3d 37 ( 2016 )

United States Court of Appeals
For the First Circuit
No. 15-2539
HARRY SANDERS, Executor of the ESTATE OF NANCY A. ANDERSEN
and Assignee of JOHN DOE,
Plaintiff, Appellant,
v.
THE PHOENIX INSURANCE COMPANY and
THE TRAVELERS INDEMNITY COMPANY OF AMERICA,
Defendants, Appellees.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. George A. O'Toole, Jr., U.S. District Judge]
[Hon. Jennifer Boal, U.S. Magistrate Judge]
Before
Lynch and Selya, Circuit Judges,
and Burroughs,* District Judge.
Robert D. Cohan, with whom Jonathan D. Plaut and Cohan Rasnick
Myerson Plaut LLP were on brief, for appellant.
Wystan M. Ackerman, with whom Jonathan E. Small and Robinson
& Cole LLP were on brief, for appellees.
December 7, 2016
*
Of the District of Massachusetts, sitting by designation
SELYA, Circuit Judge. This case begins with a tragic
tale of unrequited love and morphs into a series of imaginative
questions regarding the coverage available under a standard form
homeowner's insurance policy. But when imagination runs headlong
into settled legal precedent, imagination loses. Recognizing as
much, the court below dismissed the complaint. After careful
consideration, we affirm.
I. BACKGROUND
This diversity suit arises from the refusal of The
Phoenix Insurance Company to defend and/or indemnify its named
insured, an attorney whom we (like the court below) shall call
"John Doe," against claims advanced by Harry Sanders, suing in his
capacities as executor of the estate of Nancy A. Andersen (his
deceased spouse) and as Doe's assignee.1 Inasmuch as the district
court dismissed Sanders's complaint for failure to state a claim
upon which relief could be granted, we take as true the raw facts
as alleged in the complaint. See SEC v. Tambone, 597 F.3d 436,
441-42 (1st Cir. 2010) (en banc).
1Sanders sued both The Phoenix Insurance Company (which
issued the homeowner's insurance policy to Doe) and The Travelers
Indemnity Company of America (which, like Phoenix, is a wholly-
owned subsidiary of The Travelers Companies, Inc.). In the
district court, the parties referred indiscriminately to both
defendants. Phoenix now insists for the first time that The
Travelers Indemnity Company of America is not a proper party.
Because nothing in this case turns on any distinction between these
sister companies, we refer throughout to them, collectively, as
"Phoenix."
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Doe met Andersen in January of 2011 when she sought legal
representation in possible divorce proceedings against Sanders.
Roughly four months later, Doe initiated divorce proceedings on
Andersen's behalf. During this interval, Doe learned that Andersen
suffered from severe depression and anxiety, had been prescribed
several anti-depressant and anti-anxiety medications, and had
recently attempted suicide. Nevertheless, Doe and Andersen began
an on-again/off-again intimate relationship. Despite his personal
involvement, Doe did not withdraw as her counsel.
The relationship did not go smoothly. As the fall of
2011 approached, Doe's ardor cooled and he became progressively
distant. Correspondingly, Andersen's anxiety increased. Matters
came to a head when, on or around October 1, 2011, Doe promised to
join Andersen at her apartment. He did not do so. Distraught,
Andersen wrote a suicide note lamenting Doe's inconstancy and
proceeded to drink herself to death. Doe tried unsuccessfully to
contact Andersen by telephone the next day. When he could not
reach her, he went to her apartment and discovered her body.
Sanders was appointed as executor of Andersen's estate.
Slightly over a year after Andersen's death, he sent Doe a demand
letter pursuant to Massachusetts General Laws Chapter 93A, Section
9.2 Cognizant that some of his meretricious interludes had
2
Section 2 of Chapter 93A declares unlawful "[u]nfair methods
of competition and unfair or deceptive acts or practices in the
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occurred at his home, Doe promptly notified his homeowner's
insurance carrier (Phoenix). After looking into the matter,
Phoenix denied coverage on two grounds: that Andersen's death was
not an "occurrence" covered under Doe's homeowner's policy (the
Policy) and that the Policy's professional services exclusion
barred coverage.
In a letter dated September 19, 2013, Sanders notified
Phoenix that he and Doe planned to mediate their dispute and
invited Phoenix to participate. Phoenix declined the invitation.
About three weeks later, Doe sought to have Phoenix reconsider its
denial of coverage, informing it that Sanders was advancing a claim
for negligent infliction of emotional distress. Unmoved, Phoenix
reiterated its denial of coverage.
Eventually, Doe, Doe's law firm, and Sanders reached an
accord: the law firm's insurers agreed to pay Sanders $500,000 in
exchange for a release of all claims against the firm. Ancillary
to the settlement, Doe agreed that his personal liability to
Sanders amounted to an additional $500,000 and assigned to Sanders
all of Doe's rights and interests under the Policy vis-à-vis
Andersen's death and any claims that he might have against Phoenix
conduct of any trade or commerce." Mass. Gen. Laws ch. 93A,
§ 2(a). The statute creates a private right of action through
which consumers may seek equitable and monetary relief from
businesses employing unfair or deceptive practices. See id.
§ 9(1).
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as a result of its failure to defend and/or indemnify him.3 Sanders
followed up by sending a Chapter 93A demand letter to Phoenix, see
supra note 2, accusing it of unfair settlement practices and
demanding $500,000 (the limit of liability under the Policy).
Phoenix refused the demand.
Sanders repaired to a Massachusetts state court and
filed this suit. Citing diversity of citizenship and the existence
of a controversy in the requisite amount, Phoenix removed the case
to the federal district court. See 28 U.S.C. §§ 1332(a), 1441.
Phoenix then moved to dismiss. See Fed. R. Civ. P. 12(b)(6). The
district court referred the motion to a magistrate judge, who
recommended granting it. Sanders objected, and the district court,
undertaking de novo review, overruled his objections and dismissed
the action.4 This timely appeal ensued.
II. ANALYSIS
We review a district court's dismissal of a complaint
for failure to state a claim de novo. See Artuso v. Vertex Pharm.,
Inc., 637 F.3d 1, 5 (1st Cir. 2011). Accepting as true all well-
3According to Phoenix, Doe's liability to Sanders was on a
non-recourse basis; that is, the settlement agreement stipulated
that the additional $500,000 could be collected only from whatever
proceeds might be due under the Policy. Sanders has not
contradicted this description.
4In our discussion of these rulings, it would serve no useful
purpose to distinguish between the district judge and the
magistrate judge. Instead, we take an institutional view and refer
throughout to the district court.
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pleaded facts contained in the complaint, we are constrained to
draw all reasonable inferences in the pleader's favor. See id.
Where relevant, we may supplement the pleaded facts with
"documentation incorporated by reference in the complaint."
Rivera-Díaz v. Humana Ins. of P.R., Inc., 748 F.3d 387, 388 (1st
Cir. 2014); see Hidalgo-Vélez v. San Juan Asset Mgmt., Inc., 758
F.3d 98, 101-02 (1st Cir. 2014).
Because this case is brought in diversity jurisdiction,
we must look to state law for the substantive rules of decision.
See Erie R.R. Co. v. Tompkins, 304 U.S. 64, 78 (1938). The parties
agree that Massachusetts law applies, and we readily embrace that
sensible agreement. See Artuso, 637 F.3d at 5 ("In determining
which state's law applies, a diversity court is free to honor the
parties' reasonable agreement.").
If we are unable to discern any controlling
Massachusetts authority on a particular point, we must make an
"informed prophecy" as to how the state's highest court — the
Supreme Judicial Court (SJC) — would rule if faced with the issue.
Ambrose v. New Eng. Ass'n of Schs. & Colls., Inc., 252 F.3d 488,
498 (1st Cir. 2001). Our prediction may be "guided, inter alia,
by persuasive case law from other jurisdictions and relevant public
policy considerations." Id.
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A. Alleged Breach of Duty to Defend.
We start with Sanders's principal remonstrance (asserted
in his capacity as Doe's assignee): that Phoenix forsook its duty
to defend Doe against the claims advanced by Sanders. In
Massachusetts, the duty to defend under an insurance policy arises
"when the allegations in a complaint are reasonably susceptible of
an interpretation that states or roughly sketches a claim covered
by the policy terms." Billings v. Commerce Ins. Co., 936 N.E.2d
408, 414 (Mass. 2010). When determining whether an insurer has a
duty to defend, an inquiring court must consider "the facts alleged
in the complaint, and [any] facts known or readily knowable by the
insurer that may aid in its interpretation of the allegations in
the complaint." Id. The precise scope of an insurer's duty to
defend is defined by the insurance policy itself, to which we apply
familiar rules of contract interpretation. See B & T Masonry
Constr. Co. v. Pub. Serv. Mut. Ins. Co., 382 F.3d 36, 39 (1st Cir.
2004); Bos. Gas Co. v. Century Indem. Co., 910 N.E.2d 290, 304
(Mass. 2009). We interpret the words of the policy in light of
their plain meaning, considering the document as a whole. See B
& T Masonry, 382 F.3d at 39; Golchin v. Liberty Mut. Ins. Co., 993
N.E.2d 684, 688 (Mass. 2013). Our construction must be consistent
with what an objectively reasonable insured, reading the relevant
policy language, would expect the words to mean. See Hazen Paper
Co. v. U.S. Fid. & Guar. Co., 555 N.E.2d 576, 583 (Mass. 1990).
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If this analysis yields two reasonable (but conflicting)
interpretations of the policy's text, the insured must be given
the benefit of the interpretation that redounds to his benefit.
See id.
In the case at hand, the Policy (to which we add our own
emphasis and remove original emphasis) states in pertinent part:
If a claim is made or a suit is brought against any
insured for damages because of bodily injury or
property damage caused by an occurrence to which
this coverage applies, even if the claim or suit is
false, we will:
. . . .
b. provide a defense at our expense of counsel of
our choice, even if the suit is groundless, false
or fraudulent. We may investigate and settle any
claim or suit that we decide is appropriate.
In Phoenix's view, the Policy therefore provides that it must only
furnish counsel to defend the insured in the face of a suit but
may investigate and settle a claim. Thus, it has no obligation to
provide a defense in the absence of a suit.
Sanders demurs. He points to the Policy's other
references to claims or suits and asseverates that the Policy
obligates the insurer to defend broadly against pre-suit claims.
This asseveration lacks force. The majority of the references
that Sanders identifies come from the Policy's credit card, fund
transfer card, forgery, and counterfeit money provision, which
covers losses of up to $1,000 incurred due to unauthorized use of
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the insured's credit cards or similar forms of financial
misfeasance. The particular subsection most loudly bruited by
Sanders states:
Defense:
a. . . . OUR OBLIGATION TO DEFEND ANY CLAIM
OR SUIT ENDS WHEN THE AMOUNT WE PAY FOR
THE LOSS EQUALS OUR LIMIT OF LIABILITY.
b. If a claim is made or a suit is brought
against any insured for liability under the
Credit Card or Fund Transfer Card coverage,
we will provide a defense at our expense by
counsel of our choice.
The location of these statements within the credit card provision,
coupled with the fact that the claims asserted in this case in no
way implicate that coverage, persuasively indicates that the
language cannot reasonably be read to support Sanders's broader
argument concerning the scope of the basic liability coverage
afforded by the Policy. While an insurance policy must be read as
a whole, see Golchin, 993 N.E.2d at 688, that prescription does
not give a party license to transplant randomly words from one
provision into the inhospitable soil of an entirely different
provision.
Sanders' next argument is no more convincing. He notes
that the Policy states that Phoenix will cover "reasonable expenses
incurred by any insured at [its] request . . . for assisting [it]
in the investigation or defense of any claim or suit." Using this
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clause as a springboard, he contends that Phoenix has undertaken
a duty to defend claims as well as suits.
This glib reading of the quoted language does not
withstand scrutiny. Giving the language its natural meaning, it
denotes no more than that — if the company does investigate either
a claim or a suit — it will reimburse any reasonable expenses
incurred by the insured. An objectively reasonable insured,
reading this language, would surely come to this conclusion.
Of course, the general rule that there is no duty to
defend before the filing of a suit is not ironclad. For example,
the SJC has held that a Comprehensive Environmental Response,
Compensation, and Liability Act (CERCLA) notice letter from the
federal Environmental Protection Agency (EPA) to a potentially
responsible party is sufficiently analogous to a suit as to trigger
a duty to defend. See Hazen Paper, 555 N.E.2d at 580-81. The
CERCLA letter notified Hazen Paper that it could be held
responsible for the release of hazardous substances at a particular
waste facility. See id. at 578. Hazen Paper asked its insurer to
defend it in the CERCLA proceeding, but the insurer declined. The
SJC held that the duty to defend had been triggered, reasoning
that the litigation defense insurance purchased by Hazen Paper
would be "substantially compromised" if the insurer's duty to
defend was not activated by the CERCLA letter. Id. at 580. After
all, the CERCLA letter itself had severe consequences: without a
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response, the EPA could proceed unilaterally with its
administrative action, and subsequent judicial review of the EPA's
final order would be limited to the administrative record created
before the EPA. See id. at 581 (citing 42 U.S.C. § 9613(j)(1)).
Moreover, the EPA's final order would be subject to review only
under an agency-friendly standard. See id. (citing 42 U.S.C.
§ 9613(j)(2)). In addition, merely failing to provide requested
information to the EPA would have exposed Hazen Paper to monetary
penalties (independent of its potential responsibility for the
hazardous substances). See id. at 580; 42 U.S.C. § 9604(e). This
administrative structure, the SJC said, left the insured with "no
practical choice other than to respond actively to the letter."
Hazen Paper, 555 N.E.2d at 581-82. To characterize such a response
as "voluntary" would be "naive." Id.
In the last analysis, though, the SJC's decision in Hazen
Paper was quite narrow and case-specific. Among other things, the
SJC took great pains to distinguish the CERCLA letter from a
"conventional demand letter based on a personal injury claim."
Id. at 581.
Sanders argues that this case comes within the confines
of the Hazen Paper exception because of his Chapter 93A letter to
Doe. In support, he notes that failure either to respond to a
Chapter 93A letter or to make a reasonable settlement offer can
expose the insured to multiple damages, attorneys' fees, and costs.
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See Mass. Gen. Laws ch. 93A, § 9(3)-(4). That is true as far as
it goes — but it does not take Sanders very far. A Chapter 93A
demand letter is simply not a fair congener to the CERCLA letter
discussed in Hazen Paper; rather, it is more like a "conventional
demand letter based on a personal injury claim" — a type of
communication that the SJC said was insufficient to trigger the
duty to defend.5 Hazen Paper, 555 N.E.2d at 581.
In Hazen Paper, the failure to participate in the
administrative process would have all but forfeited the insured's
case. Ignoring a Chapter 93A demand letter, however, would not
"substantially compromise[]" an insured's position: a failure to
respond produces a much more limited effect. Id. at 580.
Significantly, Doe's underlying liability could not have been
affected by the Chapter 93A letter — and his potential exposure to
5
The district court agreed with this conclusion, finding the
Chapter 93A demand letter insufficient to trigger the duty to
defend. So, too, another district court has held that a Chapter
21E pre-suit demand letter did not animate the duty to defend.
See Zecco, Inc. v. Travelers, Inc., 938 F. Supp. 65, 68-69 (D.
Mass. 1996) (discussing Mass. Gen. Laws ch. 21E, § 4A; comparing
that provision to Chapter 93A; and reasoning that the Hazen Paper
court had "carefully avoided opening the door" to having an array
of pre-suit demand letters impose the duty to defend). Yet a third
district court, though, has reached a contrary conclusion (but
held nonetheless that various policy exclusions precluded
coverage). See Cytosol Labs., Inc. v. Fed. Ins. Co., 536 F. Supp.
2d 80, 88, 90 (D. Mass. 2008). The Cytosol decision contains very
little in the way of reasoning on this point, and we find that
court's conclusion less convincing than the contrary conclusions
reached by the court below and by the Zecco court.
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multiple damages, attorneys' fees, and costs would only come to
fruition if a court established that underlying liability. See
Mass. Gen. Laws ch. 93A, § 9(3)-(4).
The short of it is that Chapter 93A demand letters are
fairly comparable to demand letters sent in anticipation of garden-
variety personal injury litigation. Given the frequency with which
they are used and the important differences that distinguish them
from CERCLA letters, we are reluctant to widen the narrow
boundaries sketched by the Hazen Paper court and hold that Chapter
93A demand letters are a functional equivalent of a suit. In our
view, such restraint is particularly appropriate given our status
as a federal court predicting state law. Cf. Katz v. Pershing,
LLC, 672 F.3d 64, 73-74 (1st Cir. 2012) (declining to recognize
novel exception to "bright-line rule" of state law because "federal
diversity courts are charged with ascertaining state law, not with
reshaping it").
If more were needed — and we do not think that it is —
there is substantial reason to doubt, based on the facts of this
case, whether a failure to respond to the Chapter 93A letter would
have brought about the consequences that Sanders gloomily
predicts. Chapter 93A applies to "acts or practices in the conduct
of any trade or commerce." Mass. Gen. Laws ch. 93A, § 2(a). Here,
however, Sanders alleges that Doe's liability arises from personal
— rather than professional — misconduct (presumably because the
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Policy excludes coverage for liability originating from
professional services rendered by the insured).6
Sanders also submits that the mediation in which he and
Doe participated was the functional equivalent of a suit and, thus,
triggered the duty to defend. For this proposition, he relies on
the decision in Selective Insurance Co. v. Cherrytree Cos., 998
N.E.2d 701 (Ill. App. Ct. 2013). There, the insurer denied
coverage for a disputed claim, and the insured entered into a
settlement agreement with the claimant without suit having been
filed. See id. at 702-03. The court held that the absence of a
lawsuit did not insulate the insurer from liability, explaining
that "the indemnification provision in the policy . . . did not
require the filing of a 'suit.'" Id. at 709-10.
Sanders's reliance on Cherrytree is triply misplaced.
First, Cherrytree is an Illinois case, never adopted by the
Massachusetts courts. Second, it is black-letter law that the
policy language determines the scope of coverage, see B & T
6 In somewhat the same vein, we note that Sanders also assigns
error to the district court's ruling that the Policy's professional
services exclusion barred coverage. But the challenged ruling was
simply that "[t]o the extent in this action that the plaintiff
sought coverage of claims based on Doe's professional misconduct
under the homeowner's policy, the professional services exclusion
would be effective to preclude those claims." Here, however, the
liability that Sanders posits is premised upon Doe's decision to
embark on a volatile intimate relationship with a known vulnerable
person. Since this asserted liability is not based on a
professional responsibility theory, any error in the challenged
ruling is harmless.
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Masonry, 382 F.3d at 39, and the Policy on which Sanders sues
contains no provision allowing indemnification without suit.
Third, the Cherrytree decision did not in any way implicate the
duty to defend. See Wesco Ins. Co. v. Regas, No. 14 C 716, 2015
WL 500702, at *6 (N.D. Ill. Feb. 3, 2015) (observing that, in
Cherrytree, there was "no determination of whether the insurer had
a duty to defend"). Given these salient distinctions, the
Cherrytree decision fails to persuade us that the SJC would
conclude that the mediation conducted in this case was the
functional equivalent of a suit.
Bereft of any support in the case law, Sanders's
suggestion that mediation, in the circumstances of this case,
should be regarded as the functional equivalent of a suit strikes
us as patently unreasonable. The mediation to which he adverts
was a less formal, more ad hoc proceeding, and Doe's involvement
in it was completely voluntary. So viewed, the mediation was
markedly different from a lawsuit, which operates under
established procedural rules and in which a defendant must
participate to protect his interests. In the face of a lawsuit,
mounting a defense is a necessity; in the face of a proposal to
mediate, opting to participate is a strategic choice.7
7For essentially the same reasons, we reject Sanders's
assertion that "alternative dispute resolution proceedings [can
come] within the scope of policies utilizing the term 'suit'
alone." Without exception, the few cases that Sanders cites for
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In an effort to catch lightning in a bottle, Sanders
emphasizes that Doe's desire for anonymity created an added
pressure to settle before Sanders filed suit (thus making
participation in mediation more imperative for fear that Doe's
name would be exposed in public court documents). This stated
concern turns a blind eye to familiar procedural protections.
Sanders could have filed a motion to seal the case along with his
complaint or, if he did not, Doe himself could have moved to seal.
See D. Mass. R. 7.2; New Eng. Internet Café, LLC v. Clerk of
Superior Ct., 966 N.E.2d 797, 803 (Mass. 2012). In the
alternative, Doe could have sought — whether by agreement or by
court order — to have his identity safeguarded through the use of
a pseudonym (which is precisely what transpired here).
To sum up, the Policy, fairly read, draws a clear
distinction between the duty to defend (which applies to suits
alone) and the right to investigate (which applies to both suits
and claims). Giving force to this clear distinction, we hold — as
did the court below — that Phoenix's duty to defend was never
triggered (and, thus, never breached) in the circumstances of this
case.
that proposition involve policies that explicitly include
arbitration or alternative dispute resolution in their definitions
of "suit." See, e.g., Sunoco, Inc. v. Ill. Nat'l Ins. Co., No.
04-4087, 2007 WL 127737, at *11 (E.D. Pa. Jan. 11, 2007).
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B. Other Theories of Liability.
Sanders raises a gallimaufry of other theories of
liability. To begin, he asserts that, even in the absence of a
duty to defend, Phoenix violated its separate duty to indemnify.
In his view, the two duties are separate and distinct: the duty-
to-defend analysis considers all preliminary allegations, whereas
the duty-to-indemnify analysis examines the factual merits of the
case. Phoenix counters that, under Massachusetts law, there can
be no duty to indemnify if there is no duty to defend.
As a general matter, the duty to defend is broader than
the duty to indemnify. See Bagley v. Monticello Ins. Co., 720
N.E.2d 813, 817 (Mass. 1999). The SJC has made pellucid that "[i]f
an insurer has no duty to defend, based on the allegations in the
plaintiff's complaint, it necessarily follows that the insurer
does not have a duty to indemnify." Id. In other words, the
broader duty (the duty to defend) swallows up the narrower duty
(the duty to indemnify).
Sanders resists this formulation. He lauds decisions
from other jurisdictions in an effort to cast the SJC's formulation
into doubt. See, e.g., Grinnell Mut. Reins. Co. v. Reinke, 43
F.3d 1152, 1154 (7th Cir. 1995) (suggesting that "because of the
possibility that the legal theory of the underlying suit may
change, a conclusion that the insurer need not defend does not
[necessarily] imply that it need not indemnify"). As federal
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judges sitting in diversity jurisdiction, though, we are not free
to pick and choose which state's jurisprudence is the most sound.
Rather, we are duty-bound to accept controlling state law where it
can be discerned. See Kassel v. Gannett Co., 875 F.2d 935, 949-
50 (1st Cir. 1989). On this issue, then, it is incumbent upon us
to accept the clear statement of Massachusetts law articulated by
the SJC.
Here, moreover, the Policy affords us an independently
sufficient reason to hold that Phoenix does not have a duty to
indemnify. The Policy states that "no action with respect to [the
insured's personal liability coverage] can be brought against
[Phoenix] until the obligation of the insured has been determined
by a final judgment or [an] agreement signed by [Phoenix]." In
this instance, there is neither a final judgment nor a settlement
agreement executed by Phoenix; there is only a settlement
negotiated between Sanders and Doe, in Phoenix's absence.
Consequently, no action lies against Phoenix for indemnification
under the terms of the Policy.
Sanders asks us to overlook this Policy language and
focus instead on the Policy's general indemnification provision.
That provision states that Phoenix will "[p]ay up to [its] limit
of liability for the damages for which the insured is legally
liable." Sanders contends that the phrase "legally liable" does
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not logically require that the insured's obligation be reflected
in a final judgment.
This contention ignores the more specific provision
cited by Phoenix. It likewise ignores the logical import of that
provision: that an insured's liability will either be adjudicated
by a court of law or agreed to by the insurer. Massachusetts law
teaches that an inquiring court normally should give a more
specific policy provision priority over a more general policy
provision, see Certain Interested Underwriters at Lloyd's, London
v. Stolberg, 680 F.3d 61, 67 (1st Cir. 2012), and Sanders has not
offered a plausible rationale for abandoning that tenet here.
This brings us to Sanders's common-law claims sounding
in tort and breach of contract. Those claims need not detain us.
The complaint predicates them largely on Phoenix's failure to
defend or indemnify Doe. But here — as discussed above — Phoenix
did not have a duty either to defend or to indemnify in the
circumstances at hand.
The one remaining claim hinges on Sanders's allegation
that Phoenix is guilty of unfair and deceptive trade practices in
violation of Massachusetts General Laws Chapter 176D.
Specifically, he alleges that Phoenix's liability rests on its
refusal to effectuate a prompt, fair, and equitable settlement.
This claim fails for two reasons. For one thing, Phoenix
has no duty to settle absent a duty either to defend or to
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indemnify. See Transam. Ins. Co. v. KMS Patriots, L.P., 752 N.E.2d
777, 783 (Mass. App. Ct. 2001) (explaining that "[w]hen coverage
has been correctly denied . . . no violation of the Massachusetts
statutes proscribing unfair or deceptive trade practices may be
found"). For another thing, Massachusetts law only requires an
insurer to effectuate settlement once "liability has become
reasonably clear." Mass. Gen. Laws ch. 176D, § 3(9)(f); see Clegg
v. Butler, 676 N.E.2d 1134, 1140 (Mass. 1997). Doe's liability to
Sanders — as a private individual, not an attorney — was far from
reasonably clear. Sanders has not identified a case in which
Massachusetts (or any other jurisdiction, for that matter) has
held an individual's romantic partner responsible for the
individual's suicide.
In lieu of case law, Sanders relies on the Restatement
(First) of Torts section 325, which provides:
One who gratuitously undertakes with another to do an
act or to render services which he should recognize as
necessary to the other's bodily safety and thereby leads
the other in reasonable reliance upon the performance of
such undertaking
(a) to refrain from himself taking the necessary
steps to secure his safety or from securing the
then available protective action by third persons,
or
(b) to enter upon a course of conduct which is
dangerous unless the undertaking is carried out,
is subject to liability to the other for bodily harm
resulting from the actor's failure to exercise
reasonable care to carry out his undertaking.
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Extending the type of voluntary undertaking of another's care that
section 325 contemplates to participants in an on-again/off-again
romantic relationship would involve mental gymnastics that we are
not prepared to undertake. For present purposes, it suffices to
say that such a leap in logic is far from reasonably clear.
III. CONCLUSION
We need go no further. For the reasons elucidated above,
the judgment is
Affirmed.
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