Joseph Bertrand, and another vs. Merrimack Mutual Fire Insurance Company, March 30, 2010
Referee’s Award, Summary Judgment
The plaintiff-homeowners (“Bertrands”) filed this action against Merrimack Mutual Fire Insurance Company (“Merrimack”) for benefits they alleged were due under their insurance policy for damage caused to their home by a fire. The insurance policy the Bertrands had with Merrimack contained different coverage sections that were supposed to pay for different types of losses or expenses. Merrimack paid amounts that exhausted the coverage maximums of the sections covering loss or damage to property and loss of use of property, but there was still $19,000 dollars available to the Bertrands under the section that covered additional living expenses. The Bertrands had placed some of their property into a storage unit after the fire and were seeking the $260 dollars a month that the unit cost to rent from this latter section of Merrimack’s policy. Merrimack argued that this section was only designed for temporary living expenses in case the family could not live in the house, and was not meant to cover storage fees. Merrimack believed that this cost was included in an earlier section covering loss of use of property, and the maximum coverage on that section having already been paid, Merrimack refused to pay these storage fees.
In accordance with G.L.c. 175 §99, the Bertrands agreed to a three member board of referees to determine amount of loss owed to them. This referee board concluded that Merrimack owed the Bertrands $0.00. The Bertrands then took their claim to court where the trial judge awarded summary judgment for Merrimack. The Appellate Division vacated the summary judgment order.
Referee’s Award and Summary Judgment
The Appellate Division started its decision by saying that any provision in a standard homeowner’s insurance policy stating that the decision of the board of referees is “binding” is of limited effect and does not preclude a lawsuit. Section 99 of G.L.c. 175 actually refers to the referee procedure as a “condition precedent” to a lawsuit. The court cited two cases discussing the applicable law. See Fox v. Employer’s Fire Insurance Co., 330 Mass. 30 (1977), and Augenstein v. Insurance Co. of N. America, 372 Mass. (1972). The court found that based on those cases, where the question is one of amount of damages or cause of the damage, a referee board’s decision is binding. However in the Bertrand’s case the question was one of interpretation of the actual language of the policy (a “question of construction”), thus the judge should have been able to interpret the contract “unfettered by the decision of the referees”.
-Prepared by AEK
