Frohberg v. Merrimack Mutual Fire Insurance

Citations: 612 N.E.2d 273; 34 Mass. App. Ct. 462; 1993 Mass. App. LEXIS 473Docket: 92-P-792

Court: Massachusetts Appeals Court; May 7, 1993; Massachusetts; State Appellate Court

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Helen M. Frohberg sold her residence to Joan and Barry Roth for $600,000 on June 2, 1988, while holding a homeowner's insurance policy through Merrimack Mutual Fire Insurance Company, effective from April 6, 1988, to April 6, 1989. Frohberg canceled the policy at the time of the sale. In January 1990, the Roths discovered urea formaldehyde foam insulation (UFFI) in the home and subsequently sued Frohberg, alleging various claims including fraudulent misrepresentation and seeking damages for respiratory injuries and the estimated $127,000 cost to remove the UFFI.

Merrimack was notified of Frohberg's request for defense and indemnification in November 1990 but declined, asserting the policy did not cover the Roths' claims. Frohberg then filed a legal action in December 1990 for a declaratory judgment to compel Merrimack to defend and indemnify her, along with claims for violations of G.L.c. 93A and c. 176D and intentional infliction of emotional distress.

In November 1991, Frohberg sought summary judgment, while Merrimack cross-moved for summary judgment on all counts. In March 1992, the Superior Court judge denied Frohberg’s motion and granted Merrimack’s, concluding that the policy did not cover the Roths' allegations as they occurred after Frohberg’s cancellation of the policy. The court noted that the policy only covered damages resulting from occurrences during the policy period and that there were no claims of damages sustained during that timeframe. The decision affirmed that insurers are only obligated to indemnify against judgments obtained within policy coverage and have no duty to defend if the claims do not fall within that coverage.

In Lumbermens Mut. Cas. Co. v. Belleville Indus. Inc., the First Circuit interpreted an insurance policy under Massachusetts law concerning asbestos exposure, clarifying that an occurrence consists of two components: exposure and resulting bodily injury, with coverage applying only if the injury occurs during the policy period. The Roths' claims for personal injury arose only after their exposure to UFFI, which occurred post-termination of the Merrimack policy. Their property damage claims were not realized until 1990, following their discovery of UFFI and subsequent relocation costs, again outside the policy period. The court upheld the dismissal of Frohberg's derivative claims for violations of G.L.c. 93A and c. 176D, and intentional infliction of emotional distress, as they were based on Merrimack’s alleged failure to defend or indemnify Frohberg in the Roths' suit. The ruling was supported by the acknowledgment of a misrepresentation regarding the absence of UFFI in the residence sold by Frohberg. The court noted that while misrepresentation typically does not constitute bodily injury or property damage under liability policies, this principle was not pivotal to their decision. Additionally, Frohberg's receipt of $600,000 for the house, despite misrepresentations, raised equity concerns; allowing her to pass removal costs to the insurer while retaining the full sale price would unjustly expand policy obligations. Furthermore, even if coverage existed at the UFFI installation, Frohberg would not have been covered for damages due to express policy exclusions related to owned property and renovation issues. The judgment was affirmed.