July 6, 2009

A pre-July 4 sparkler

In an illuminating pre-Independence Day display of judicial clarity, U.S. District Judge Patti Saris has disposed of former Massachusetts Superior Court judge Ernest Murphy's attempt to obtain $6.8 million dollars from Mutual Insurance Company Limited, an insurer for the Boston Herald.

Murphy's consumer protection law claim against the insurer arose out of his successful 2005 defamation trial against the Herald and one of its reporters. That case concerned reports in the Herald attributing certain comments to Murphy regarding cases before him.

The 2005 defamation trial resulted in an award to Murphy of more than $2 million. The Herald appealed the verdict, but it was upheld in a 2007 decision by the Massachusetts Supreme Judicial Court.

Within days of that SJC's decision, Mutual Insurance paid Murphy more than $3.4 million in satisfaction of the judgment, which amount included interest and costs. A month later, however, Murphy demanded an additional $6.8 million from the insurer, claiming that it had violated Massachusetts law concerning insurance claims practices and consumer protection. The amount demanded by Murphy was three times the amount of the jury verdict with interest.

Mutual Insurance subsequently commenced a declaratory judgment action against Murphy in federal court.

In that action, in which Murphy filed a counterclaim, Mutual Insurance ultimately moved for summary judgment seeking a declaration that it had no liability to Murphy under the pertinent insurance and consumer protection laws, and also seeking a dismissal of Murphy's counterclaim. Saris's July 1 decision did both.

In reaching her decision, Saris concluded that "because Mutual did not exercise exclusive control over the defense or settlement of the claim and the Herald never agreed to settle, Mutual did not have a duty to “effectuate prompt, fair, and equitable settlement” under Massachusetts law."

In the aftermath of the 2005 jury verdict in the defamation case, Murphy sent two letters on state court stationery to the Herald's publisher demanding a settlement. The letters ultimately resulted in an ethics investigation and reprimand of Murphy, who subsequently left the bench on a disability retirement.

Mutual Insurance was represented by Joseph Sano, a partner in the Boston firm Prince Lobel Glovsky & Tye.

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