Petition for Writ of Certiorari — Joan Stormo, as Assignee of Peter T. Clark, Petitioner v. State National Insurance Company

Supreme Court briefJan 15, 2025

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APPENDIX

Stormo v. State Nat’l Ins. Co., 116 F.4th 39 (1st

Cir. 2024) ............................................................. 2a

BARRON, Chief Judge, dissenting in part and

concurring in the judgment in part ............ 22a

Order of First Circuit denying rehearing and rehearing en banc, October 22, 2024.................... 39a

Stormo v. State Nat’l Ins. Co., Docket No. 1:19cv-10034 (U.S. D. Mass. August 25, 2023),

2023 WL 5515823 .............................................. 40a

Oral Ruling From the Bench, February 3, 2024

– U.S. District Court of Massachusetts ............ 56a

Johnson Controls, Inc. v. Bowes,

381 Mass. 278, 49 N.E.2d 185 (1980) ............... 57a

Chas. T. Main, Inc. v. Fireman’s Fund Ins. Co.,

46 Mass. 862, 551 N.E.2d 28 (1990) ................. 65a

Tenovsky v. Alliance Syndicate, Inc.

424 Mass. 678, 677 N.E.2d 1144 (1997) ........... 71a

Tenovsky v. Alliance Insurance Group, 40 Mass.

App. Ct. 204, 626 N.E.2d 716 (1996) ................ 77a

Stormo v. State Nat’l Ins. Co., 116 F.4th 39 (1st Cir.

2024)

Joan Stormo, as assignee of Peter T. Clark,

Plaintiff, Appellant,

State National Insurance Company, Defendant,

Appellee.

No. 23-1792.

United States Court of Appeals, First Circuit.

September 19, 2024.

116 F.4th 39 (2024)

[116 F.4th 41]

Appeal from the United States District Court for the

District of Massachusetts,

[Hon. F. Dennis Saylor, IV, U.S. District Judge].

[116 F.4th 42]

Zaheer A. Samee, with whom Frisoli & Associates

was on brief, for appellant.

Sean P. Mahoney, with whom Joanna L. Young, Erica Sanders, and Kennedys CMK LLP were on brief,

for appellee.

Before Barron, Chief Judge, Lynch and Kayatta, Circuit Judges.

KAYATTA, Circuit Judge.

Joan Stormo and her siblings hired attorney Peter

Clark to represent them in a real estate transaction.

Clark scuttled the deal, and Stormo sued him for malpractice. But Clark’s professional-liability insurer,

State National Insurance Company (“State National”), disclaimed coverage, contending that the

claim fell under a so-called prior-knowledge exclusion

contained in Clark’s policy. State National also reserved the right to later deny coverage based on

Clark’s fourteen-month delay in reporting the lawsuit.

Stormo prevailed in her lawsuit against Clark and

was assigned his claims against State National. She

then sued State National, arguing that the insurance

company had breached its contractual obligations to

indemnify Clark and, in so doing, violated Massachusetts law prohibiting unfair claim-settlement practices. For the reasons that follow, we affirm the district court’s judgments in favor of State National.

Twenty years ago, Stormo and her siblings hired

Clark to represent them in a planned real estate sale.

By the time they engaged Clark, the siblings had

signed a purchase-and-sale agreement to sell land to

real estate developer KGM Custom Homes (“KGM”).

Clark derailed the sale. He incorrectly believed that a

liquidated damages provision in the contract gave his

clients “a right to rescind the contract on payment of

KGM’s development costs.” See K.G.M. Custom

Homes, Inc. v. Prosky, No. BRCV200401414, 2010 WL

11534424 (Mass. Super. Ct. Mar. 25, 2010). So as

KGM finalized the approval process for its development plan, Clark informed the company that “his clients had another offer to purchase their property at a

substantially higher price” and that the Stormo siblings “did not intend to sell the property to KGM.” Id.

He also behaved bizarrely at the closing, where the

deal fell through.

Despite Clark’s representations to the contrary, the

Stormo siblings did intend to sell the property to KGM

and did not have a higher offer on the property. Id.

The family was reportedly stunned by the failure of

the closing and Clark’s conduct leading up to it. Id.

Clark’s actions kicked off no fewer than four lawsuits,

the last of which is the subject of this appeal.

First, in December 2004, KGM sued the Stormo siblings, alleging that they had wrongfully repudiated

the purchase-and-sale agreement by refusing to close

the sale. See id. 1 At the trial, the Stormo siblings testified that they had no other offer, and they did not

know why Clark had represented that they did. The

trial court sided with KGM on its claims, adding that

Clark’s actions in his representation of the siblings

“constituted a breach of both the implied covenant of

good faith and fair dealing and the express covenant

to sell the land.” Id. KGM won compensatory damages. K.G.M. Custom Homes, Inc. v. Prosky, 468 Mass.

247, 10 N.E.3d 117, 120 (2014).

[116 F.4th 43]

Second, KGM sued Clark in December 2010 in Massachusetts Superior Court. 2 In its complaint, KGM alleged that Clark engaged in unfair and deceptive practices by making representations that caused the

transaction with the Stormo siblings to fail. State National agreed to defend him in the action under his

professional-liability policy. It retained a lawyer to

represent Clark and settled the claim on his behalf. In

total, State National paid $694,801.40 to defend and

indemnify Clark in KGM’s action against him.

Third, in October 2014, the Stormo siblings sued

Clark in Massachusetts Superior Court for malpractice and several related claims arising out of Clark’s

For consistency, we will refer to this litigation as “KGM v.

Stormo.”

2 We will refer to this settled lawsuit as “KGM v. Clark.”

representation of them in the failed KGM sale. See

Stormo v. Clark, No. BRCV201401015, 2017 WL

9939783 (Mass. Super. Ct. Aug. 7, 2017). The complaint alleged that Clark had “actively worked to prevent the closing of the sale” through his fabrication of

a higher offer, his misrepresentation of the Stormos’

intentions, and his behavior at the closing. Complaint

and Jury Demand ¶¶ 13-18, Stormo, 2017 WL

9939783(No. BRCV201401015). It also described the

KGM v. Stormo lawsuit and alleged that Clark had

“misadvised the plaintiffs by telling them that interest on KGM’s damages would not begin to accrue until

after exhaustion of all appeals and entry of final judgment in [that] litigation.” 3 Id. ¶¶ 22, 26, 28.

Clark did not notify State National of the Stormos’

claim against him until December 2015 — over a year

after they filed their complaint. Once the insurance

company learned of the action, it retained attorney Peter Hermes to advise it about its potential coverage

obligations given Clark’s late notice, and because the

new action appeared related to the KGM v. Stormo

complaint. Based on Hermes’s advice, State National

disclaimed any coverage for Stormo v. Clark, citing

the policy’s prior-knowledge exclusion. Given the

KGM v. Stormo action — particularly the Stormo siblings’ testimony about Clark’s conduct leading up to

the failed transaction — State National contended

that “Clark knew or could have reasonably foreseen

before [the effective date of the policy] that his conduct

might be expected to be the basis of a claim.” The company likewise reserved the right to later disclaim

3 According to emails provided by Stormo, Clark no longer be-

lieved this by July 2010. At that point, he sent emails suggesting

interest would have begun to accrue when the Stormo siblings

breached the agreement.

coverage based on a provision in Clark’s policy requiring that State National be given “prompt written notice” of any claims made against the insured. Clark

objected to the denial of coverage via a demand letter

under Massachusetts’s consumer-protection statute,

Mass. Gen. Laws ch. 93A, but State National held

firm.

A jury found for Stormo against Clark, and the

court entered judgment totaling over $5 million. The

court also assigned to Stormo any claims of Clark’s

against State National. When State National refused

to indemnify Clark by paying the judgment Stormo

had won, Stormo (as Clark’s assignee) sued State National in the U.S. District Court for the District of

Massachusetts, beginning the lawsuit that ultimately

gave rise to this appeal.

Before delving further into the travel of this case

and the issues presented on appeal, we describe

Clark’s policy with State

[116 F.4th 44]

National. Clark was a named insured on a “claimsmade” professional-liability policy. The policy covered

claims made against Clark during a specified period

(March 16, 2010, through March 16, 2011) arising

from any misconduct committed by Clark on or after

March 1, 2002. The policy’s total liability limit was $1

million. It also contained the following provisions, the

relevance of which will become apparent:

First, it provided the “prior-knowledge exclusion”

relied upon by State National to disclaim coverage:

This policy does not apply to: ... any CLAIM

arising out of any WRONGFUL ACT occurring

prior to the effective date of this policy if ... the

INSURED at or before the effective date knew

or could have reasonably foreseen that such

WRONGFUL ACT might be expected to be the

basis of a CLAIM. However, this paragraph B.

does not apply to any INSURED who had no

knowledge of or could not have reasonably foreseen that any such WRONGFUL ACT might be

expected to be the basis of a CLAIM....

Second, under the heading “LIMITS OF LIABIITY

AND DEDUCTIBLE,” and the subheading “MULTIPLE OF INSUREDS, CLAIMS, AND CLAIMANTS,”

the policy decreed that if two or more claims were to

arise out of the same wrongful act, “[a]ll such CLAIMS

... shall be considered first made on the date on which

the earliest CLAIM arising out of such WRONGFUL

ACT was first made and all such CLAIMS are subject

to the same limits of liability and deductible.”

Finally, under the heading “CONDITIONS,” and

the subheading “INSURED’S DUTIES PRECEDENT

TO COVERAGE,” the policy stated that “[i]f a CLAIM

is made against any INSURED, the INSURED must

give prompt written notice to [State National].”

We return to Stormo’s litigation against State National in the District of Massachusetts. She pressed

two claims against State National: first, that the insurance company had breached its contract with

Clark; and second, that the insurance company had

done so in violation of Mass. Gen. Laws chs. 93A and

176D, which prohibit unfair trade practices (“93A176D claim”). The district court found that factual

questions surrounding Stormo’s breach-of-contract

claim necessitated a trial. See Stormo v. State Nat’l

Ins. Co., No. CV 19-10034-FDS, 2021 WL 11652293,

at *8 (D. Mass. Jan. 25, 2021). At the same time, it

found that while State National’s denial of coverage

might have been based on an incorrect interpretation

of its policy, the interpretation that Clark’s claim fell

under the prior-knowledge exclusion “was not unreasonable, and no evidence exist[ed] that [State National had] acted in bad faith.” Id. at *16. Because

such a showing would have been necessary to prove

Stormo’s 93A-176D claim, see Bos. Symphony Orchestra, Inc. v. Com. Union Ins. Co., 406 Mass. 7, 545

N.E.2d 1156, 1160 (1989), the district court granted

summary judgment to State National on Clark’s 93A176D claim.

Following a trial, a jury found for Stormo on her

breach-of-contract claim against State National. It

awarded Stormo $1,106,138.10 in damages, and judgment was entered accordingly. State National moved

for judgment as a matter of law, 4 arguing that Stormo

was not entitled to

[116 F.4th 45]

recover under Clark’s policy, since Clark had breached

his reporting obligations by failing to give prompt notice of Stormo’s claim against him. In opposing State

National’s motion, Stormo argued that State National

could not deny coverage for Clark’s late notice alone;

the insurance company had to prove it had been prejudiced by Clark’s late notice. The district court sided

with State National and granted judgment as a

4 We use the now-preferred phrase “judgment as a matter of law”

rather than the phrase “judgment notwithstanding the verdict”

used by the parties and the district court. See 9B Charles Alan

Wright & Arthur R. Miller, Federal Practice and Procedure §

2521 (3d ed. 2023).

matter of law. Stormo v. State Nat’l Ins. Co., No. CV

19-10034-FDS, 2023 WL 5515823, at *1 (D. Mass.

Aug. 25, 2023).

Stormo now appeals, urging us to reverse the judgment as a matter of law, to reinstate the jury’s verdict,

and to vacate the district court’s grant of summary

judgment to State National on her 93A-176D claim.

II.

A court may grant judgment as a matter of law “if

a reasonable person could not have reached the conclusion of the jury.” White v. N.H. Dep’t of Corr., 221

F.3d 254, 259 (1st Cir. 2000); see also Fed. R. Civ. P.

50(a)(1). “We review de novo the district court’s judgment as a matter of law under Rule 50.” Lawes v. CSA

Architects & Eng’rs LLP, 963 F.3d 72, 90 (1st Cir.

2020). We likewise “review a district court’s grant of

summary judgment de novo, viewing the record in the

light most favorable to the nonmovants and drawing

all reasonable inferences in their favor.” Martínez v.

Novo Nordisk Inc., 992 F.3d 12, 16 (1st Cir. 2021).

Summary judgment is appropriate “if the movant

shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a

matter of law.” Fed. R. Civ. P. 56(a). Finally, because

this case is before us by virtue of diversity jurisdiction,

see 28 U.S.C. § 1332, “we look to the relevant state law

— here, Massachusetts law — to supply the substantive rules of decision.” President & Fellows of Harvard

Coll. v. Zurich Am. Ins. Co., 77 F.4th 33, 37 (1st Cir.

2023) [hereinafter Harvard College].

III.

10a

An insurance company has two principal duties to

the insured: a duty to indemnify and a duty to defend.

Bos. Symphony Orchestra, Inc., 545 N.E.2d at 1158.

Generally, an insurance company’s duty to indemnify

is triggered when “a judgment within the policy coverage is rendered against” an insured. Id. By contrast,

the duty to defend is “antecedent to” and “broader

than” the duty to indemnify. Id. It 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.” Metro. Prop. &

Cas. Ins. Co. v. Morrison, 460 Mass. 352, 951 N.E.2d

662, 667 (2011) (quoting Billings v. Com. Ins. Co., 458

Mass. 194, 936 N.E.2d 408, 414 (2010)). In its disclaimer of coverage for Stormo’s claim against Clark,

State National “deni[ed] any obligation to defend or

indemnify Clark,” effectively renouncing both duties.

Count one of Stormo’s complaint challenges that renunciation in full, alleging that State National twice

breached its insurance policy, both by denying its duty

to defend Stormo’s suit against Clark and by denying

its duty to indemnify Clark. Count two then alleges

that State National’s refusal to indemnify and defend

Clark was so unreasonable as to give rise to liability

under Mass. Gen. Laws chs. 93A and 176D.

Count two presumes that State National’s denial

was wrongful in the first place. So in order to succeed

on that count, Stormo

[116 F.4th 46]

must show (among other things) that the insurance

company breached at least one of its duties to Clark.

See Home Ins. Co. v. Liberty Mut. Fire Ins. Co., 444

Mass. 599, 830 N.E.2d 186, 192 (2005). We therefore

begin by assessing whether State National was relieved of its duty to indemnify Clark by virtue of his

11a

untimely notice. We then consider whether Stormo

has successfully claimed that State National breached

its duty to defend.

In arguing that State National breached its duty to

indemnify, Stormo contends that Clark’s failure to

give prompt notice of Stormo’s claims against him did

not by itself absolve the insurance company of its coverage obligations. Rather, she asserts that State National must also show that it was prejudiced by the

late notice in order to disclaim coverage. And since the

district court found that “there is no evidence that

[State National] was prejudiced in any way,” Stormo

argues that the company improperly denied coverage.

Recall that Clark’s insurance policy required him

as a “condition precedent to... coverage” to give State

National “prompt written notice” “in the event of a

claim” against him. Massachusetts law provides that

when, as here, “the provisions of a policy are plainly

and definitively expressed, the policy must be enforced in accordance with the terms.” Somerset Sav.

Bank v. Chi. Title Ins. Co., 420 Mass. 422, 649 N.E.2d

1123, 1127 (1995). Nevertheless, in 1977, the Massachusetts legislature codified a notice-prejudice rule for

certain types of insurance policies (including, for example, motor-vehicle policies but not professional-liability policies) at Mass. Gen. Laws Ann. ch. 175, § 112.

That rule effectively precludes an insurer from raising

late notice as a defense unless the lateness prejudiced

the insurer.

In 1980, the Massachusetts Supreme Judicial

Court (“SJC”) extended the notice-prejudice rule to

certain liability policies not covered by the statute,

holding that “where an insurance company attempts

to be relieved of its obligations ... on the ground of

12a

untimely notice, the insurance company will be required to prove both that the notice provision was in

fact breached and that the breach resulted in prejudice to its position.” Johnson Controls, Inc. v. Bowes,

381 Mass. 278, 409 N.E.2d 185, 188 (1980).

But this notice-prejudice rule does not occupy the

field. Ten years after Johnson Controls, in Chas. T.

Main, Inc. v. Fireman’s Fund Ins. Co., the SJC determined that requiring a showing of prejudice did not

make sense in all circumstances. 406 Mass. 862, 551

N.E.2d 28, 30 (1990). To that end, it distinguished between “occurrence policies,” in which “[c]overage is effective... if the covered act ... occurs within the policy

period, regardless of the date of discovery,” and

“claims-made policies,” like the one at issue here,

which “cover[] the insured for claims made during the

policy year and reported within that period or a specified period thereafter regardless of when the covered

act or omission occurred.” Id. at 29. “[T]he purpose of

a claims-made policy,” Chas T. Main explained, “is to

minimize the time between the insured event and the

payment.” Id. at 30. Because that purpose is inherently “frustrated” by lengthy delays in reporting

claims, the SJC opined that “[p]rejudice for an untimely report” under the claims-made policy at issue

in the case was “not an appropriate inquiry.” Id.

Stormo does not dispute that the policy here is a

claims-made policy: It covers claims made against the

insured during the policy period rather than claims

arising from covered acts occurring during the

[116 F.4th 47]

policy period. Stormo also does not contend that Clark

gave State National prompt written notice of Stormo’s

claim against Clark. So, Chas T. Main on its face

13a

indicates that there is no need for State National to

prove that it was prejudiced by the late notice. Id.

Stormo contends, nevertheless, that if we more

carefully parse Massachusetts law, we will see that

whether prejudice is required to deny coverage for untimely notice actually does not turn solely on whether

the policy is a claims-made or occurrence-based policy.

Rather, Stormo says, it turns on the type of notice requirement in the policy.

Read by itself, the SJC opinion in Chas T. Main provides some support for this alternative reading. For in

addition to contrasting occurrence-based and claimsmade policies, the Chas T. Main court distinguished

between two different types of reporting requirements

commonly found in insurance policies: those requiring

notice within the policy period (or shortly thereafter),

and those requiring notice “as soon as practicable.” 5

551 N.E.2d at 29. In so doing, Chas T. Main linked the

rationale for not requiring proof of prejudice to the

function served by “policy period” notice language in a

claims-made policy. Id. at 30.

Like claims-made policies, policy-period reporting

requirements promote “fairness in rate setting” by reducing the amount of time between an insured event

and an insurance payout. Id. at 29-30. The SJC thus

opined in Chas T. Main that “the requirement that

5 An as-soon-as-practicable requirement “requires that notice of

the claim be given to the insurer ‘as soon as practicable’ after the

event which gives rise to coverage.” Chas T. Main, 551 N.E.2d at

29. Under a “policy-period” reporting requirement, insureds

must report claims “during the term of the policy or within a

short period of time (thirty or sixty days) following the expiration

of the policy.” Id. Occurrence-based policies almost always have

“as-soon-as-practicable” requirements, but either type of reporting requirement may appear in a claims-made policy. Id.; see also

Jordan Plitt et al., 14 Couch on Insurance § 199.113 (3d ed. 2024).

14a

notice of the claim be given in the policy period or

shortly thereafter in the claims-made policy is of the

essence in determining whether coverage exists.” Id.

at 30. Seizing on this discussion of reporting requirements, Stormo contends that the notice requirement

in Clark’s policy with State National (“prompt written

notice”) is more like an “as soon as practicable” notice

requirement and that Chas T. Main’s exception to the

notice-prejudice rule does not apply to the policy at issue even though it is a claims-made policy.

The problem for Stormo is that subsequent Massachusetts law has not viewed the language of the notice

requirement as the variable that distinguishes policies that require proof of prejudice from those that do

not. Indeed, the SJC has held that a claims-made policy with a notice requirement identical to Clark’s —

that the insurance company receive “prompt written

notice” of new claims — was “not materially different”

from the policy-period reporting requirement at issue

in Chas. T. Main. See Tenovsky v. All. Syndicate, Inc.,

424 Mass. 678, 677 N.E.2d 1144, 1146 (1997).

“Surely,” the SJC reasoned, “‘prompt’ notice of ‘claims

made’ requires that notice to the insurer be given no

later than sixty days following the expiration of the

policy period.” Id. As in Chas. T. Main, then, the SJC

in Tenovsky concluded that the insurance company

was under no obligation to show prejudice in order to

disclaim coverage based on the insured’s late reporting. Id.

Though the policy at issue in this case contains the

exact same “prompt written notice” requirement,

Stormo advances a

[116 F.4th 48]

clever argument to distinguish Tenovsky. Recall that

the policy in this case provides that, if two or more

15a

claims were to “aris[e] out of a single WRONGFUL

ACT or a series of WRONGFUL ACTS,” then “all such

CLAIMS ... shall be considered first made on the date

on which the earliest CLAIM arising out of such

WRONGFUL ACT was first made....” Stormo’s claim

against Clark — which was made in 2014 — is indisputably related to KGM’s 2010 claim against Clark.

After all, both claims arose out of Clark’s conduct as

the Stormo siblings’ attorney during their failed property sale to KGM. As a result, the policy treats

Stormo’s claim against Clark as having been “made”

at the same time as KGM’s claim against Clark: in

2010. It would have been impossible for Clark to report Stormo’s claim against him to State National in

2010; she would not file it for four more years. By contrast, the claim at issue in Tenovsky was made during

the policy period. 677 N.E.2d at 1146. Hence, it was

not impossible for the policyholder in Tenovsky to

timely report the claim.

Due to this difference, Stormo argues that it would

be “absurd” to treat the reporting requirement in

Clark’s policy the same as the reporting requirement

in Tenovsky, even though they share the same language. Rather, since it was impossible for Clark to report Stormo’s claim during the policy period, Stormo

argues that our only option is to treat it as an as-soonas-practicable requirement.

But the fact remains, no one contends that Clark

gave timely notice under any formulation of the notice

requirement. And we can find no indication that Massachusetts courts have construed Chas. T. Main as

Stormo proposes; i.e., to treat differences in the wording of the notice requirement as dictating whether the

notice-prejudice rule applies. Rather, we find in the

case law a simple and consistent focus on whether the

insurance policy is a “claims-made” or “occurrence-

16a

based” policy, with the latter subject to the notice-prejudice rule and the former exempt.

Boyle v. Zurich American Insurance Co. demonstrates this approach. 472 Mass. 649, 36 N.E.3d 1229

(2015). In Boyle, the SJC looked back at Johnson Controls — the case applying the notice-prejudice rule to

professional-liability policies — and stated that:

The approach to notice obligations prescribed

by Johnson Controls ... and its progeny concerns “occurrence”-based liability insurance

policies like the one at issue in this case. Different considerations apply to “claims-made” policies. See Chas. T. Main, Inc. v. Fireman’s Fund

Ins. Co., 406 Mass. 862, 863-64, 551 N.E.2d 28

(1990).

36 N.E.3d at 1236 n.8. In other words, the SJC in

Boyle clearly implied that the insured’s “notice obligations” hinged on whether the policy is a claims-made

policy or an occurrence-based policy.

Lower courts in Massachusetts have also concluded

that this is the governing rule. See, e.g., Meadows Constr. Co. LLC v. Westchester Fire Ins. Co., 100 Mass.

App.Ct. 1120, 180 N.E.3d 1032 (2022) (unpublished

table decision) (describing Chas. T. Main as holding

“that an insurer need not show it was prejudiced by

late notice in the case of a ‘claims made and reported’

policy”); Young Men’s Christian Ass’n of Greater

Worcester v. Nat’l Union Fire Ins. Co. of Pittsburgh, 65

Mass.App.Ct. 1121, 843 N.E.2d 722 (2006) (unpublished table decision) (citing Chas T. Main to support the proposition that “[p]rejudice ... is not a factor

in determining the effect of late notice under a claimsmade policy”).

Just recently, our court had the occasion to survey

this same case law. See Harvard Coll., 77 F.4th at 38-

17a

39. While our discussion of Massachusetts law in the

context of

[116 F.4th 49]

Harvard College does not control our decision here, it

does demonstrate that Massachusetts case law is most

easily read as limiting the prejudice requirement to

occurrence-based policies. In that case, we cited the

“critical distinction that the SJC has made between

occurrence-based and claims-made policies,” and reiterated that “the SJC promulgated a general rule that

an insurer need not demonstrate prejudice before

denying coverage under a claims-made policy for the

insured’s failure to provide timely notice.” Id. at 39.

No subsequent Massachusetts decisions have called

our reading into question. And this reading provides a

more administrable rule with clarity for insureds and

insurers.

Stormo suggests that “if there were any doubt”

about the application of the notice-prejudice rule to

policies like Clark’s, we “should certify a question of

law” to the SJC. But it was Stormo who chose to bring

this action in federal court, asking the district court to

find a prejudice requirement where the SJC has not.

As we admonished in Harvard College and cases before it, “a plaintiff who made a deliberate choice to sue

in federal court rather than in a Massachusetts state

court is not in a position to ask us to blaze a new trail

that the Massachusetts courts have not invited.” 77

F.4th at 39 (cleaned up). Nor is such a plaintiff well

positioned to seek a change in decisionmakers after

striking out with her original pick.

In sum, we agree with the district court that prejudice

is irrelevant to this case given that all parties agree

18a

that notice of Stormo’s claim against Clark was not

timely given under Clark’s claims-made policy.

“[B]ecause Clark’s notice to [State National] was too

late, the policy does not provide coverage.” Stormo,

2023 WL 5515823, at *7. As such, State National had

no duty to indemnify Clark and therefore could not

possibly have breached that duty. Stormo is thus not

entitled to recover based on State National’s refusal to

indemnify Clark.

Having found that State National had no duty to

indemnify Clark, we now consider the insurance company’s potential liability for refusing to defend him. In

Massachusetts, “a liability insurer owes a broad duty

to defend its insured against any claims that create a

potential for indemnity,” Boyle, 36 N.E.3d at 1235

(quoting Doe v. Liberty Mut. Ins. Co., 423 Mass. 366,

667 N.E.2d 1149, 1151 (2015)), even if the insurer

“could eventually be determined to have no duty to indemnify the insured,” Metro. Prop. & Cas. Ins. Co.,

951 N.E.2d at 668 (quoting 14 Couch on Insurance §

200:3 (3d ed. 2005)). “In order for the duty of defense

to arise, the underlying complaint need only show,

through general allegations, a possibility that the liability claim falls within the insurance coverage.”

Billings, 936 N.E. 2d at 414 (quoting Sterilite Corp. v.

Cont’l Cas. Co., 17 Mass.App.Ct. 316, 458 N.E.2d 338,

341 (1983)). Massachusetts courts have held that insurers are relieved of the duty to defend a claimant

only “when the allegations in the underlying complaint ‘lie expressly outside the policy coverage and its

purpose.’” Billings, 936 N.E.2d at 414 (quoting Herbert A. Sullivan, Inc. v. Utica Mut. Ins. Co., 439 Mass.

387, 788 N.E.2d 522, 531 (2003)).

19a

Explaining our disposition of the claim that State

National breached its duty to defend Clark requires

that we revisit in greater detail the travel of this case.

Stormo’s first count alleged that State National committed a breach of contract both by refusing to indemnify Clark and by refusing to defend Clark. In count

two, Stormo

[116 F.4th 50]

further alleged that both refusals were so unreasonable as to constitute an unfair claims-settlement practice under Mass. Gen. Laws chs. 93A and 176D. The

district court granted partial summary judgment to

State National dismissing Stormo’s 93A-176D claim

in its entirety, but the contractual claim for breaches

of the duties to defend and indemnify went to trial.

Following trial, the jury returned a general verdict for

Stormo on the breach-of-contract claim, without specifying which alleged duty or duties State National

breached. But on State National’s motion for judgment as a matter of law, the court set aside the verdict

and entered judgment for State National on count one

in its entirety based on Clark’s failure to give timely

notice of the claim.

Stormo opposed that disposition of the jury’s verdict, but she never argued that she was entitled to

hang on to the verdict based on a breach of the duty to

defend even if Clark’s late notice negated any duty to

indemnify him. Rather, in opposing the post-verdict

motion for judgment as a matter of law, she simply

repeated her argument that since the late notice

caused no prejudice, State National was obligated to

provide coverage of Clark’s claim. Her opposition motion mentioned the duty to defend only once, in service

of an argument that she was entitled to damages beyond the remaining policy balance. She never

20a

suggested — much less argued — that even if Clark’s

late notice defeated his indemnity coverage, State National was still liable for its failure to defend him. And

when the district court issued its decision to enter a

post-verdict judgment for State National because of

Clark’s late notice, Stormo did not complain that the

court had failed to consider whether the verdict might

rest on a finding that State National breached a duty

to defend. Thus, before the district court, Stormo at

least forfeited — if not waived — this argument. See

United States v. Delgado-Sánchez, 849 F.3d 1, 6 (1st

Cir. 2017).

Even on appeal, Stormo does not argue that the

jury verdict can stand based on a breach of the duty to

defend even if there was no duty to indemnify. Rather,

she focuses on (or rather, briefly mentions) the duty to

defend only in the context of challenging the district

court’s decision granting partial summary judgment

dismissing the 93A-176D claim. Stormo has thus

waived any standalone argument that State National

breached its duty to defend Clark. See id. We must

therefore affirm the judgment as a matter of law on

the count-one claim that State National breached its

policy either by failing to indemnify Clark or failing to

defend him.

In light of the foregoing, we have (1) a judgment by

the district court on all aspects of the count-one

breach-of-contract claim; (2) the assertion below and

on appeal of only one argument for reversing that

judgment (the notice-prejudice rule); (3) our rejection

of that argument given that the relevant policy is a

claims-made policy; and (4) the resulting affirmance

of the judgment in favor of State National on count

21a

one, including the claim for breach of the duty to defend.

This all means that the count-two 93A-176D claim

for unreasonably breaching the policy lacks the necessary predicate: that there was such a breach in the

first place. Because of the lack of timely notice under

the claims-made policy, there was no duty to indemnify. And because Stormo has waived any objection to

the dismissal of the contractual duty-to-defend claim,

we find no breach of that contractual duty. Massachusetts law is clear that the 93A-176D claims in count

two must therefore fail. See Home Ins. Co., 830 N.E.2d

at 192

[116 F.4th 51]

(“An insurer does not commit a violation of [chapter

93A] when it rightfully declines to defend a claim that

is not covered by its policy.”); see also Dryden Oil Co.

of New England v. Travelers Indem. Co., 91 F.3d 278,

290 (1st Cir. 1996) (holding that where “defendants

neither breached a contractual duty to defend ... nor a

duty to indemnify,” there was “[c]onsequently” no

claim to be made under chapters 93A and 176D). So

we therefore need not address Stormo’s other arguments, all contingent on there being a section 93A

claim.

IV.

For the foregoing reasons, we affirm the district

court’s judgments in favor of State National.

22a

BARRON, Chief Judge, dissenting in part and

concurring in the judgment in part.

I disagree with the majority’s decision to affirm the

grant of summary judgment to the insurer on the

wrongful-denial-of-coverage claim that is before us in

this appeal. The proper course, in my view, is to certify

the novel state-law question on which that portion of

the motion for summary judgment depends to the Supreme Judicial Court of Massachusetts (“SJC”). I

thus, respectfully, dissent in part but otherwise concur in the judgment.

This case involves a dispute over what is known as

a claims-made insurance policy. Claims-made policies

generally cover only claims made against the insured

during the policy period. Chas. T. Main, Inc. v. Fireman’s Fund Ins. Co., 406 Mass. 862, 551 N.E.2d 28, 29

(1990). This claims-made policy is no different, save

for one exception, the relevance of which will become

apparent. Claims-made policies also always have provisions that require the insured to provide notice of

the covered claims to the insurer. Id. This claimsmade policy is, again, no different. In fact, it has two

such provisions, a fact which, as I will explain, potentially bears on the proper resolution of this case.

One of the notice provisions — which I shall refer

to as the “within-policy-period” notice provision — appears in the section of the policy that defines the scope

of this policy’s coverage. It provides that, within sixty

days of the policy period’s end, the insured must provide the insurer with notice of any claim made against

the insured within the policy period. The other notice

provision — which I shall refer to as the “prompt-written” notice provision — appears in the section of the

23a

policy that identifies the insured’s responsibilities

prior to receiving payment, rather than the section

outlining what is covered. It requires the insured to

provide the insurer with “prompt-written” notice of

any claim against the insured, without regard to when

that claim was made against the insured.

The claim for which the insured here seeks coverage was first made against him only after the policy

period had expired. One might think that the insured

is therefore barred from obtaining coverage for that

claim for reasons that have nothing to do with this policy’s notice provisions. After all, as I have noted,

claims-made policies generally cover only claims made

against the insured during the policy period, and this

one was not.

This claims-made policy, however, has an express

provision that broadens the policy’s scope of coverage.

It does so by treating a claim made against the insured outside the policy period as having been made

against the insured within that period whenever that

claim is “related” to a prior within-the-policy-period

claim. Moreover,

[116 F.4th 52]

the parties agree that the claim that is at issue here

is such a “related” claim. They thus agree that — for

purposes of this claims-made policy — the insured is

seeking coverage for a claim that is deemed to have

been made against the insured within the policy period, though in fact it was not.

That being so, the coverage dispute over this claim

turns on the insured’s compliance — or noncompliance

— with the policy’s notice provisions. To be sure, the

insurer does not contend that the insured failed to

comply with the policy’s “within-policy-period” notice

provision. The insurer does not even contend that this

24a

notice provision applies to such a “related” claim —

and, understandably so. In their nature, claims of that

sort may not become known to the insured until much

later than sixty days after the end of the policy period.

It thus makes little sense to read the provision to require that notice of those claims be provided to the insurer within that period or sooner than sixty days

thereafter. To provide such notice in that time frame,

as to many “related” claims, would be factually impossible.

The insurer does contend, however, that this policy’s separate “prompt-written” notice provision applies to “related” claims, and the insured does not argue otherwise. Moreover, the insured does not dispute

the insurer’s contention that he failed to comply with

that provision, given that he first provided written notice to the insurer of this “related” claim more than a

year after he had first learned of the claim’s existence.

Thus, in the end, this coverage dispute turns on

whether the insurer is required to show that it was

prejudiced by the undisputed violation of the “promptwritten” notice provision. The insurer contends that it

need not do so, while the insured contends the opposite.

The majority resolves this dispute in the insurer’s

favor. It does so based on the SJC’s decision in

Tenovsky v. Alliance Syndicate, Inc., 424 Mass. 678,

677 N.E.2d 1144 (1997). It reads that decision to establish a general rule that an insurer need not show

prejudice to deny coverage based on an insured’s violation of a claims-made policy’s “prompt-written” notice provision. I do not read Tenovsky, however, to establish this rule. Nor do I read it to address, more narrowly, whether prejudice must be shown to deny coverage based on an insured’s violation of a claims-made

policy’s “prompt-written” notice provision that — like

25a

the one at issue here — stands alongside a separate

and express “within-policy-period” notice provision in

the same policy.

To explain why, I will first review the precedent on

which Tenovsky relied, Chas. T. Main. I will then return to Tenovsky itself. Finally, I will examine sources

of authority beyond Massachusetts, which, as I will

explain, themselves do little to assist us in predicting

how the SJC would resolve what neither Tenovsky nor

Chas. T. Main do.

II.

In Chas. T. Main, the SJC noted that there are generally two types of notice provisions to be found in insurance policies: “within-policy-period” notice provisions and “as-soon-as-practicable” notice provisions.

551 N.E.2d at 29. The SJC noted, too, that there are

generally two types of insurance policies: claims-made

policies and occurrence policies. Id. Finally, the SJC

explained that there is a relationship between each

type of notice provision and each type of insurance policy and that this relationship is of some relevance in

determining whether and when an insurer must show

prejudice to deny coverage based on an insured’s failure to comply

[116 F.4th 53]

with an insurance policy’s notice provision. Id. at 2930.

Chas. T. Main acknowledged that, under an occurrence policy, an insurer must show prejudice before

denying coverage based on an insured’s failure to comply with an “as-soon-as-practicable” notice requirement, which, Chas. T. Main observed, is the type of

notice provision that occurrence policies “almost always” have. Id. In doing so, the SJC reaffirmed its

26a

earlier decision in Johnson Controls, Inc. v. Bowes,

381 Mass. 278, 409 N.E.2d 185 (1980). There the SJC

held, in the context of an occurrence policy, that such

a notice provision is subject to the notice-prejudice

rule that Massachusetts law generally applies to notice provisions in insurance policies, even when a policy expressly makes compliance with that notice provision a condition precedent to coverage. Johnson

Controls, 409 N.E.2d at 188.

Chas. T. Main went on to explain, however, that the

notice-prejudice rule that applies to an “as-soon-aspracticable” notice provision does not apply to a

claims-made policy’s express “within-policy-period”

notice provision. 551 N.E.2d at 30. And that is so,

Chas. T. Main concluded, because of the role that

“within-policy-period” notice provisions play in

claims-made policies. Id.

In an occurrence policy, Chas. T. Main explained,

“[c]overage is effective ... if the covered act or covered

omission occurs within the policy period, regardless of

the date of discovery.” Id. at 29. As a result, in offering

an occurrence policy, the insurer is necessarily accepting the risk that inflation poses to accurate rate-setting for such a policy. See id. Chas. T Main explained

that, for this reason, a “within-policy-period” notice

provision is “never” found in an occurrence policy, as

that type of policy contemplates coverage for claims

that the insured might discover only long after the policy period has expired. See id.

In contrast, Chas. T. Main explained, coverage

works very differently in a claims-made policy. The

whole object of a claims-made policy, Chas. T. Main

noted, is to protect the insurer from the risk of inflation that inheres in insuring claims made long after

the policy period. Id. at 30. And so, as Chas. T. Main

put it, “the purpose of a claims-made policy” — unlike

27a

the purpose of an occurrence policy — “is to minimize

the time between the insured event and the payment.”

Id.

Therefore, Chas. T. Main explained, a “within-policy-period” notice provision is “always” found in a

claims-made policy, as the purpose of that kind of policy is to ensure “fairness in rate-setting.” Id. at 29. Indeed, Chas. T. Main went on to conclude, because the

receipt of such notice “is of the essence in determining

whether coverage exists,” a claims-made policy —

“[f]or that reason” — defines the “insured event [as

both] ... the claim being made against the insured during the policy period and the claim being reported to

the insurer within that same period or a slightly extended, and specified, period.” Id. at 30 (emphases

added).

In other words, Chas. T. Main reasoned, a notice

provision of the “within-policy-period” kind in a

claims-made policy is not — like an “as-soon-as-practicable” notice provision in an occurrence policy —

merely useful to the insurer. See id. Because the

“within-policy-period” notice provision supports the

very reason that an insurer chooses to offer a claimsmade policy rather than an occurrence policy, a

claims-made policy would be “frustrated” if that kind

of notice provision were not included in it. See id. at

30. Chas. T. Main therefore upheld the insurer’s denial of coverage for noncompliance with the policy’s

express “within-policy-period” notice provision —

[116 F.4th 54]

notwithstanding an absence of any showing of prejudice — because “[p]rejudice for an untimely report in

this instance ... is not an appropriate inquiry.” Id. (emphasis added).

28a

In so ruling, Chas. T. Main never directly addressed — at least in so many words — whether “assoon-as-practicable” notice provisions in claims-made

policies are subject to the same notice-prejudice rule

that applies when they are found in occurrence policies. But Chas. T. Main did observe that while such

notice provisions are “almost always” in occurrence

policies, they also are “frequently” found in claimsmade policies. Id. at 29. Moreover, as I have noted, in

describing “as-soon-as-practicable” notice provisions,

Chas T. Main noted that they enable the insurer’s investigation of “facts and occurrences relating to liability.” Id. Chas. T. Main also for that reason contrasted

such notice provisions with “within-policy-period” provisions, which Chas. T. Main described as serving the

very different and essential purpose of ensuring “fairness in rate-setting” in claims-made policies. Id. at 2930.

In my view, then, it is hard to read Chas. T. Main

to indicate that a “prompt-written” notice provision is

“not materially different from,” Tenovsky, 677 N.E.2d

at 1146, a “within-policy-period” notice provision

when both types of notice provisions are included in

the same claims-made policy. Chas. T. Main suggests

to me that, in such a policy, there is good reason to

treat the “prompt-written” notice provision the same

as the “as-soon-as-practicable” type of notice provision

that Chas. T. Main describes as being only “frequently” in claims-made policies but “almost always”

in occurrence policies. 551 N.E.2d at 29. In that situation, the “prompt-written” notice provision — if it is

not to be redundant of the “within-policy-period” notice provision — would appear to be merely serving

the nonessential end of facilitating the insurer’s

29a

investigatory capacity rather than ensuring the essential end of “fairness in rate-setting.” 6

Based on Chas. T. Main’s own analysis, in other

words, there would appear to be a strong case for concluding that, because the “prompt-written” notice provision here is a companion to an express “within-policy-period” notice provision, it merely serves such a

nonessential end, rather than the essential end of

“fairness in rate-setting.” See id. at 29-30. Accordingly, again based on Chas. T. Main’s own analysis,

there would appear to be a strong case for concluding

that this “prompt-written” notice provision is not “of

the essence” to this claims-made policy. It would

therefore appear to follow that, under Chas. T. Main,

this notice provision is just as subject to the noticeprejudice rule as an “as-soon-as-practicable” notice

provision in an occurrence policy. See id. at 30.

III.

If Chas. T. Main fails to show that the insurer here

is not required to show prejudice before denying coverage based on the insured’s violation of this policy’s

“prompt-written” notice provision, what does? The answer, according to the majority, is Tenovsky.

[116 F.4th 55]

6 Consistent with that conclusion, this policy’s “prompt-written”

notice provision, unlike this policy’s inapplicable express “withinpolicy-period” notice provision, appears in the policy’s section

outlining conditions precedent to payment and not in its section

defining the scope of its coverage. And the policy expressly states

that “[n]othing contained [in the ‘prompt-written’ notice provision] shall be construed as limiting the reporting requirements

of [the ‘within-policy-period’ notice provision],” further reinforcing the two provisions’ distinct functions.

30a

The majority reads that case to make clear that a

“prompt-written” notice provision in a claims-made

policy is always exempt from the notice-prejudice rule

in the exact same way that Chas. T. Main deemed a

“within-policy-period” notice provision to be exempt. It

is for that reason — and that reason alone — that the

majority holds that this insurer need not show prejudice to deny coverage based on the insured’s violation

of this claims-made policy’s “prompt-written” notice

provision. I cannot agree with that view of Tenovsky.

Tenovsky did hold that the insurer in the case before it was not required to show prejudice to deny coverage based on the insured’s violation of the “promptwritten” notice provision in the claims-made policy at

issue there. 677 N.E.2d at 1146. And it is true that the

words of the “prompt-written” notice provision here

are “identical” to the words in the “prompt-written”

notice provision in Tenovsky itself. See id. But, although the majority seizes on that fact, I fail to see why

that fact necessarily means that the two provisions

are “identical” in any way that matters for purposes of

determining whether prejudice need be shown to deny

coverage based on the violation at issue here.

As was the case in Tenovsky, the inquiry into

whether the insurer needs to show prejudice here necessarily hinges on the function — rather than the formal language — of the notice provision that the insured has violated. Because this notice provision appears in a claims-made policy that also has a “withinpolicy-period” notice provision, it seems most logical

to treat this notice provision as an “as-soon-as-practicable” notice provision, notwithstanding that this provision does not use those precise words in describing

when notice must be given. Indeed, it would be hard

to see how else to treat the provision if it is to have

any function independent of — and not superfluous to

31a

— the “within-policy-period” notice provision in this

policy, which the parties agree has no application to

the claim for which coverage is being sought here.

Nonetheless, the majority concludes that Tenovsky

instructs that an insurer may deny coverage based on

an insured’s violation of a “prompt-written” notice

provision without showing prejudice so long as — and

simply because — that provision is in a claims-made

policy. Of course, in the case before us, the insured reported the claim long after the policy period ended.

But I do not understand the majority to suggest that

its understanding of Tenovsky’s exemption is limited

to a circumstance in which notice is provided even

later than the period that the “within-policy-period”

itself gives for providing notice. The majority appears

to be adopting a general rule for “prompt-written” notice provisions in claims-made policies — and so to be

adopting a rule that applies even to a claims-made

policy that, like this one, already independently requires notice to be given no later than sixty days after

the policy period’s end. The majority’s logic therefore

necessarily suggests that it would read Tenovsky to

establish that an insurer could deny coverage without

showing prejudice under a claims-made policy when

the insured provides the insurer with notice within

the policy period, but simply fails to do so as soon as

practicable. 7

[116 F.4th 56]

7 To the extent the majority means to suggest that a different

case would be presented by a claims-made policy with a “withinpolicy-period” provision and a companion notice provision that

expressly requires notice to be provided “as soon as practicable,”

I cannot see why we would think the SJC would make the noticeprejudice rule’s application in such a case turn on that formal

difference in the wording of the companion notice provision.

32a

It is hard for me to see, though, how a “prompt-written” notice provision is ensuring “fairness in rate-setting” — rather than merely facilitating the insurer’s

investigatory interest — in requiring prompt notice of

a claim not only made but also reported during the

policy period. As a result, it is hard for me to see how

the majority’s view of Tenovsky accords with Chas. T.

Main.

As I have explained, Chas. T. Main strongly indicates that notice provisions that serve only that investigatory — rather than “fairness in rate-setting” —

end are not “of the essence” to either occurrence or

claims-made policies. I thus do not see why we would

interpret Tenovsky to embrace a rule that Chas. T.

Main suggests makes little sense when nothing in

Tenovsky so much as hints at an intention to deviate

from Chas. T. Main. Nor do I see any language in

Tenovsky that purports in any clear way to adopt the

broad rule the majority derives from that case. 8

8 Indeed, to the extent that Tenovsky can be read to suggest that

the language of the “prompt-written” notice provision is itself

outcome determinative, adhering to its literal interpretation

would counsel an exceedingly odd result here. That is so because

Tenovsky held that “[i]t is apparent from the language of the

[claims-made insurance policy at issue in Tenovsky] just as it is

apparent from the policy considered in Chas. T. Main, Inc., that

the purpose of both policies’ notice provision is to produce ‘fairness in rate setting’ by minimizing ‘the time between the insured

event and the payment.’” 677 N.E.2d at 1146. As such, Tenovsky

held that “prompt,” as used in that policy, must be interpreted to

“require[] that notice to the insurer be given no later than sixty

days following the expiration of the policy period.” Id. If we applied the same interpretation to the “identical” language of the

“prompt-written” notice provision at issue here, that provision

would be identical to, and wholly redundant of, the existing

“within-policy-period” notice provision that all agree does not apply to this specific claim. Insofar as the majority views Tenovsky

as controlling, taking that holding to its logical conclusion would

33a

Beyond that, the facts of Tenovsky gave the SJC no

reason to even contemplate — let alone adopt — the

categorical no-prejudice rule for “prompt-written notice” provisions that the majority attributes to that decision. Unlike the claims-made policy here, the one at

issue there had no express “within-policy-period” notice provision. 677 N.E.2d at 1145. Thus, the “promptwritten” notice provision at issue in that case was not

a mere companion notice provision, easily read to be

akin to the kind of “as-soon-as-practicable” notice provisions that Chas. T. Main took such pains to distinguish from “within-policy-period” notice provisions.

551 N.E.2d at 29-30. It was the only notice provision

in that policy at all. As such, it was the only provision

in the policy that could have functioned to impose the

kind of “within-the-policy” period reporting requirement that Chas. T. Main explained claims-made policies “always” have, see 551 N.E.2d at 29 (emphasis

added).

Thus, in applying Chas. T. Main in Tenovsky, the

SJC had distinct reasons — not present here — to

treat the “prompt-written” notice provision there as if

it were functionally “identical” to a “within-policy-period” notice provision, at least with respect to a claim

made against the insured within the policy period

(such as was at issue in that case) but only reported

years after that period’s end. 677 N.E.2d at 1145. And

so, in applying Chas. T. Main in Tenovsky, the SJC

had reasons — not present here — to conclude that

the insurer must not have needed to show prejudice to

deny coverage based on the insured’s failure to satisfy

the “prompt-written” notice provision there at issue.

seem to exempt the insured from having had to provide any notice at all.

34a

I recognize there is also nothing in Tenovsky to suggest that the SJC was contemplating

[116 F.4th 57]

a policy, like this one, with a relating-back provision

that would allow a claim, itself made long after the

expiration of the policy period, to nevertheless be

treated as having been made within that period. I thus

suppose, in consequence of this unique feature of this

case, the SJC could be moved to conclude that the insurer here would not need to show prejudice to deny

coverage based on the insured’s failure to provide

“prompt-written” notice, even if the insurer would indeed have to show prejudice to deny coverage on that

basis if the claim at issue were not such a “related”

one and instead had been made dilatorily but within

the policy period in its own right.

But the majority does not suggest that feature of

this case is relevant to the prejudice inquiry, given the

categorical nature of the no-prejudice rule that it attributes to Tenovsky. And, in any event, there is good

reason to doubt that the SJC would so rule. To do so,

the SJC would have to overlook this insurer’s choice,

in agreeing to this claims-made policy’s relating-back

provision, to provide coverage for some late-discovered

claims. The SJC thus would have to ignore this insurer’s seeming choice — through that provision — to

bargain away, at least as to such “related” claims, the

interest in ensuring fairness in rate-setting that Chas.

T. Main recognized that claims-made policy insurers

generally have. 9

9 The other precedents the majority cites do not conflict with my

understanding of the state of Massachusetts law, as they either

did not involve a claims-made policy at all, see Boyle v. Zurich

Am. Ins., 472 Mass. 649, 36 N.E.3d 1229 (2015), or concerned an

insured’s breach of a “within-policy-period” notice requirement,

35a

IV.

That Tenovsky does not compel, and Chas. T. Main

indeed points against, the majority’s view of Massachusetts insurance law would seem sufficient to

demonstrate that we confront the kind of state-law

ambiguity that favors certification. I must consider,

though, whether our own precedents or other sources

of authority might nonetheless bring the clarity that

is missing from the SJC’s own precedents. They do

not.

Starting with our own precedents, we have twice

addressed how Chas. T. Main applies when it comes

to the violation of a claims-made policy’s notice provision. But each time we considered only a failure to

comply with an express “within-policy-period” notice

provision of the kind addressed in Chas. T. Main itself. See President & Fellows of Harvard Coll. v. Zurich Am. Ins. Co. (“Harvard College”), 77 F.4th 33, 38

(1st Cir. 2023); Gargano v. Liberty Int’l Underwriters,

Inc., 572 F.3d 45, 50 (1st Cir. 2009). Thus, in neither

case did we have any reason to address — let alone

endorse — the approach the majority here derives

from Tenovsky. Nor have we otherwise had occasion to

address this area of Massachusetts insurance law.

There are high-court rulings from other states that

have addressed this area of insurance law. But, if anything, they only cast further doubt on the soundness

of the majority’s approach, because those precedents

suggest that a “prompt-written” notice provision is

subject to the notice-prejudice rule when it appears

see Meadows Constr. Co. v. Westchester Fire Ins., 100

Mass.App.Ct. 1120, 180 N.E.3d 1032 (2022) (unpublished table

decision); Young Men’s Christian Ass’n of Greater Worcester v.

Nat’l Union Fire Ins. Co. of Pittsburgh, 65 Mass.App.Ct. 1121,

843 N.E.2d 722 (2006) (unpublished table decision).

36a

alongside a claims-made policy’s express “within-policy-period” notice provision. 10 Indeed, one

[116 F.4th 58]

of those decisions expressly relied on Chas. T. Main in

so holding. See Prodigy, 288 S.W.3d at 381-82.

That said, I am aware of one state high court that

has gone the other way. But it hardly shows that the

SJC would rule for the insurer here, as that court held

no prejudice needed to be shown only while emphasizing “the importance of the characteristics of [the insured in that case:] ... an incorporated business entity

that engaged in complex financial transactions” and

had negotiated for and procured the commercial liability policy at issue there through an insurance broker. Templo Fuente de Vida Corp. v. Nat’l Union Fire

Ins. Co. of Pittsburgh, 224 N.J. 189, 129 A.3d 1069,

1080 (2016); see also id. at 1081 (“In this instance we

need not make a sweeping statement about the strictness of enforcing the ‘as soon as practicable’ notice requirement in ‘claims made’ policies generally.”).

Finally, there is some federal precedent — albeit

not binding on us — suggesting that a showing of prejudice is sometimes required when an insurer seeks to

deny coverage based on an insured’s noncompliance

10 See Prodigy Commc’ns Corp. v. Agric. Excess & Surplus Ins.

Co., 288 S.W.3d 374, 382 (Tex. 2009) (“In a claims-made policy,

when an insured gives notice of a claim within the policy period

or other specified reporting period, the insurer must show that

the insured’s noncompliance with the policy’s ‘as soon as practicable’ notice provision prejudiced the insurer before it may deny

coverage.”); Sherwood Brands, Inc. v. Great Am. Ins. Co., 418 Md.

300, 13 A.3d 1268, 1288 (2011) (holding that the prejudice requirement “does apply... to claims-made policies in which the act

triggering coverage occurs during the policy period, but the insured does not comply strictly with the policy’s notice provisions”).

37a

with a claims-made policy’s “as-soon-as-practicable”

notice requirement. See TRT Dev. Co. v. ACE Am. Ins.

Co., 566 F. Supp. 3d 118, 127 (D.N.H. 2021) (predicting New Hampshire law); Craft v. Phila. Indem. Ins.

Co., 560 F. App’x 710, 715 (10th Cir. 2014) (certifying

question to the Colorado Supreme Court). I note, too,

that treatise writers have consistently endorsed the

view that prejudice must be shown in such a circumstance. 11

Based on this survey of authorities beyond the SJC,

I would not go so far as to say that — at least given

the novelty of the question presented — it is evident

that the SJC would rule against the insurer here. But

I certainly cannot say, based on this survey, that I am

confident the SJC would, as the majority predicts, rule

in the insurer’s favor.

The majority is right that we have stated that “a

plaintiff who made a deliberate choice to sue in federal

11 See Restatement of the Law of Liability Insurance § 35 cmt. h

(2019) (“Prejudice is required when notice is late but given before

the end of the reporting period.”); 13 Steven Plitt, Daniel Maldonado, Joshua D. Rogers & Jordan R. Plitt, Couch on Insurance §

186:13 (3d ed. 2017) (“As a general statement, the prompt notice

of claim requirement and the ‘claims made’ within the policy period requirement serve such different purposes, and are of such

different basic character, that the principles applied to one

should have little or nothing to do with the principles applied to

the other.”); John H. Mathias, John D. Shugrue & Thomas A.

Marrinson, Insurance Coverage Disputes § 2.02[1][b] (2002)

(concluding that an “as soon as practicable” notice requirement

in claims-made policies “like ... in occurrence policies, is not an

integral part of the insuring agreement itself. Rather, its purpose

is to permit an insurer the opportunity to investigate facts relating to liability, and like similar notice requirements in occurrence policies, should not be read to bar coverage unless the insurer can show prejudice from noncompliance).

38a

court rather than in a Massachusetts state court is not

in a position to ask us to blaze a new trail that the

Massachusetts courts have not invited.” Harvard

Coll., 77 F.4th at 39 (cleaned

[116 F.4th 59]

up). Here, however, we have come to a fork in the road,

and the plaintiff is merely asking us to choose one asyet untrod state-law path over another. Thus, rather

than make that choice unaided, I think it sensible to

do what any prudent trekker would: ask for directions

from an unusually reliable guide, especially when that

guide’s own map suggests reasons to be wary of opting

for the road less traveled. Accordingly, because I

would certify the underlying question of Massachusetts law to the SJC, I respectfully dissent from the

decision to affirm the grant of summary judgment to

the insurer on the insured’s wrongful-denial-of-coverage claim. 12

12 Because the majority’s decision about the notice-prejudice issue is antecedent to its decision affirming the grant of summary

judgment on the plaintiff’s Mass. Gen. Laws chs. 93A and 176D

claim, I concur only in the judgment as to that claim, as I do agree

with the district court’s reasons for granting summary judgment

on that claim.

39a

Order of First Circuit denying rehearing and rehearing en banc, October 22, 2024

United States Court of Appeals

For the First Circuit

No. 23-1792

Joan Stormo, as assignee of Peter T. Clark,

Plaintiff - Appellant,

State National Insurance Company,

Defendant - Appellee.

____________________

Before

Barron, Chief Judge

Lynch, Kayatta, Gelpi, Montecalvo,

Rikelman, and Aframe, Circuit Judges

ORDER OF COURT

Entered: October 22, 2024

The petition for rehearing having been denied by

the panel of judges who decided the case, and the petition for rehearing en banc having been submitted to

the active judges of this court and a majority of the

judges not having voted that the case be heard en

banc, it is ordered that the petition for rehearing and

the petition for rehearing en banc be denied.

By the Court:

Anastasia Dubrovsky, Clerk

40a

Stormo v. State Nat’l Ins. Co., Docket No. 1:19-cv10034 (U.S.D. Mass. August 25, 2023), 2023 WL

5515823

Joan Stormo, as assignee of Peter T. Clark,

Plaintiff,

State National Insurance Company, Defendant.

Civil Action No. 19-10034-FDS.

United States District Court, D. Massachusetts.

August 25, 2023

2023 WL 5515823

Order on Defendant’s Motion for Judgment

Notwithstanding Verdict

Docket #230

F. DENNIS SAYLOR, IV, Chief District Judge.

This is a dispute over coverage under a “claims

made” insurance policy with a “prompt written notice”

requirement. Jurisdiction is based on diversity of citizenship.

After a trial, a jury found that defendant State National Insurance Company breached its legal-malpractice policy with its insured, Peter T. Clark. The

jury awarded $1,106,138.10 to plaintiff Joan Stormo,

Clark’s assignee.

State National has moved for judgment notwithstanding the verdict. It argues that Stormo was not

entitled to recover because Clark failed to give timely

notice of the claim, as required by the policy. 1

1 It further argues, in the alternative, that its liability to Stormo

must be limited to $305,198.60, the amount remaining under the

41a

The policy at issue is a “claims made” policy (as opposed to an “occurrences” policy)

Page 2

that provides coverage for claims made against the insured within the relevant period. The policy requires

that notice of such a claim be given to the insurer during the policy period or within 60 days thereafter, and

that in any event the insured must give “prompt written notice” of such a claim.

Here, the claim was made in October 2014, and notice was not given by the insured until December

2015, nearly fourteen months later. The notice was

therefore provided well outside the time limits of the

policy.

Unfortunately for plaintiff, Massachusetts law provides for strict enforcement of specific notice requirements in a “claims made” policy. That is true even if

the insurer had actual notice of the claim; even if it

suffered no prejudice from the late notice; and without

regard to the possibility that strict enforcement might

lead to an unfair result. Indeed, earlier this month,

the First Circuit, applying Massachusetts law, affirmed those very principles. See President and Fellows of Harvard College v. Zurich American Insurance

Co., 2023 WL 5089317 (1st Cir. Aug. 9, 2023).

Whether that is a sound policy is certainly open to

question. But as the same First Circuit opinion noted,

any modification of the policy is a matter for the Supreme Judicial Court, not a federal court sitting in diversity. Id. at *5. Accordingly—and with considerable

sympathy for plaintiff and her family, who have suffered significant financial harm that may never be

policy. Because the Court is granting the motion for failure to

give timely notice, it does not reach the alternative ground.

42a

redressed—the Court will grant the motion for judgment notwithstanding the verdict.

I. Background

In simplified terms, the factual background is as

follows.

Joan Stormo hired Peter Clark, an attorney, to represent her in the sale of real estate to KGM Custom

Homes, Inc., in 2004 and 2005. The sale failed to close,

due in substantial part to the conduct of Clark. KGM

then sued Stormo and Clark. See First Amended Complaint, K.G.M.

Page 3

Custom Homes Inc. v. Peter T. Clark., Bristol Superior

Ct., BRCV2010-1084.

State National had issued a legal malpractice policy

to Clark. The policy required State National to

pay on behalf of any INSURED all DAMAGES

in excess of the deductible which any INSURED becomes legally obligated to pay as a

result of CLAIMS first made against any INSURED during the POLICY PERIOD and reported to the Company in writing during the

POLICY PERIOD or within sixty (60) days

thereafter, by reason of any WRONGFUL ACT

occurring on or after the RETROACTIVE

DATE, if any.

(Policy at 1). The policy had a $1,000,000 limit on each

claim.

The policy provided that

[i]f a CLAIM is made against any INSURED,

the INSURED must give prompt written notice

to the Company. However, breach of this condition shall not result in a denial of coverage with

43a

respect to any INSURED

knowledge of the CLAIM.

who

had

(Id. at 6). 2

State National investigated, defended, and settled

KGM v. Clark on behalf of Clark, which reduced the

amount available under the policy to $305,198.60.

On October 6, 2014, after KGM v. Clark had settled,

Stormo sued Clark for legal malpractice and violation

of Mass. Gen. Laws. ch. 93A in Massachusetts Superior Court. Clark did not report the malpractice action

against him to State National until December 1, 2015,

almost fourteen months later.

On January 7, 2016, State National disclaimed coverage for the malpractice action pursuant to the policy’s prompt-written-notice requirement and the

prior-knowledge exclusion. Clark retained his own defense counsel.

On June 27, 2018, the Superior Court entered two

judgments in favor of Stormo in her action against

Clark: judgment on her malpractice claim for

$1,243,416.62 and judgment on her Chapter 93A

claim that was later amended to $3,769,627.53. The

court also assigned to Stormo any claims that Clark

2 It also provided that it does not apply to

any CLAIM arising out of any WRONGFUL ACT occurring prior to the effective date of this policy if ... the INSURED at or before the effective date knew or could have

reasonably foreseen that such WRONGFUL ACT might

be expected to be the basis of a CLAIM. However, this

paragraph B. does not apply to any INSURED who had

no knowledge of or could not have reasonably foreseen

that any such WRONGFUL ACT might be expected to be

the basis of a CLAIM.

(Id. at 4).

44a

may have had against his professional-liability insurance carriers. 3

Page 4

On January 7, 2019, Stormo filed this action

against State National, contending that it breached

the insurance contract with Clark by refusing to defend and indemnify him in the malpractice action. Her

complaint asserted two claims: breach of contract and

violation of Mass. Gen. Laws ch. 93A. The Court

granted summary judgment in favor of State National

on the Chapter 93A claim.

On February 14, 2023, following a five-day trial, a

jury found in favor of Stormo on her breach of contract

claim. The jury awarded Stormo $1,106,138.10.

State National has moved for judgment notwithstanding the verdict under Fed. R. Civ. P. 50(b), arguing (1) that Stormo was not entitled to recover under

the malpractice-insurance policy because Clark

breached its reporting requirements, and (2) in the alternative, that its liability to Stormo must be limited

to $305,198.60, the coverage amount remaining under

the policy. 4

II. Legal Standard

A court may grant judgment as a matter of law after a trial. Fed. R. Civ. P. 50(b).

Page 5

3 “It is permissible and not uncommon for an insured to assign

his or her rights against an insurer to the injured party.” Boyle

v. Zurich American Ins. Co., 472 Mass. 649, 653 n.6 (2015).

4 State National moved for judgment as a matter of law on those

issues at the close of Stormo’s evidence at trial and has properly

renewed that motion under Rule 50(b).

45a

A court should grant judgment as a matter of law

“if a reasonable person could not have reached the conclusion of the jury.” White v. New Hampshire Dep’t of

Corrections, 221 F.3d 254, 259 (1st Cir. 2000). The

court must “construe the facts in the light most favorable to the jury verdict and draw any inferences in favor of the non-movant.” Sánchez v. Foley, 972 F.3d 1,

10 (1st. Cir. 2020).

III. Analysis

State National contends that because Clark did not

provide timely notice of the malpractice action, it was

not obligated to defend and indemnify him. It further

argues that it was not required to demonstrate prejudice to avoid coverage.

As noted, the policy requires the insured to give notice to State National within certain time constraints

if a claim is made against the policyholder. (Policy at

6). A Massachusetts statute, Mass. Gen. Laws ch. 175,

§ 112, provides that the failure of an insured to “seasonably notify” the insurer may not result in a denial

of coverage unless the insurer “has been prejudiced

thereby.” 5 Nonetheless, Massachusetts case law

draws a distinction between different types of policies

and different types of notice requirements, and the

Supreme Judicial Court has held that § 112 does not

5 Specifically, the last sentence of § 112 provides as follows:

An insurance company shall not deny insurance coverage

to an insured because of failure of an insured to seasonably notify an insurance company of an occurrence, incident, claim or of a suit founded upon an occurrence, incident or claim, which may give rise to liability insured

against unless the insurance company has been prejudiced thereby.

Mass. Gen. Laws ch. 175, § 112.

46a

apply to “claims made” policies with specific notice requirements. A review of the principal cases is set forth

below.

Page 6

A. Supreme Judicial Court Decisions

1. Johnson Controls, Inc. v. Bowes

In Johnson Controls, Inc. v. Bowes, 381 Mass. 278

(1980), the plaintiff sued an insurer to enforce a legalmalpractice judgment against its insured. The insured had waited seven months after being sued to notify his insurer of the claim. Id. at 279. The insurer

disclaimed coverage, asserting that the insured had

failed to provide timely notice as required by the policy. Id.

The policy at issue provided that “[i]n the event of

an occurrence, written notice [with information concerning the occurrence] shall be given by or for the Insured to the [insurer] ... as soon as practicable” and

that “[i]f claim is made or suit is brought against the

Insured, the Insured shall immediately forward to the

Company every demand, notice, summons or other

process received by him or his representative.” Id. at

279 n.2. The policy was thus an “occurrence” policy

with an “as soon as practicable” notice requirement.

The court held as follows:

[W]here an insurance company attempts to be

relieved of its obligations under a liability insurance policy not covered by [Mass. Gen.

Laws. ch. 175, § 112], on the ground of untimely

notice, the insurance company will be required

to prove both that the notice provision was in

fact breached and that the breach resulted in

prejudice to its position.

47a

Id. at 282. 6 In explaining its rationale for that holding,

the court noted that “[a]lthough a majority of courts

adhere to a strict contractual interpretation of notice

provisions as a condition precedent to an insurer’s liability, there is a recent trend to issue eschew technical forfeitures of insurance coverage unless the insurer has been materially prejudiced by virtue of late

Page 7

notification.” Id. at 280. It quoted from a Pennsylvania

Supreme Court opinion observing that an insurance

policy is not a “private contract[] in the traditional

sense,” because it is “not a negotiated agreement; rather[,] its conditions are by and large dictated by the

insurance company to the insured.” Id. at 281 (quoting

Brakeman v. Potomac Ins. Co., 472 Pa. 66, 72 (1977).

The Johnson Controls court did not distinguish between claims-made and occurrence-based policies, or

between different types of notice requirements. Id. at

280-82 (discussing various cases and secondary

sources addressing notice clauses in insurance generally).

2. Chas T. Main, Inc. v. Fireman’s Insurance Co.

6 The first two sentences of § 112 apply to any “motor vehicle liability policy ... [and] any other policy insuring against liability for

loss or damage on account of bodily injury or death, or for loss or

damage resulting therefrom, or on account of damage to property,” and address certain matters not relevant here. Mass. Gen.

Laws. ch. 175, § 112. The last sentence, as noted above, provides

that an insurer may not deny coverage due to a late notice unless

it has been prejudiced; that sentence is not, on its face, limited to

the types of policies identified in the first two sentences. The

Johnson Controls court suggested, but did not expressly hold,

that the third sentence was so limited. 381 Mass. at 280.

48a

Ten years later, the SJC narrowed that holding considerably. In Chas. T. Main, Inc. v. Fireman’s Fund

Ins. Co., 406 Mass. 862 (1990), the insured plaintiff

had performed engineering services for a city. The city

was sued by a subcontractor on that project, and in

September 1984, the city brought suit against the insured. Id. at 863. The insured provided notice to its

primary insurer, but did not provide it to its excess

insurer until March 1987. Id. The excess insurer denied coverage on the ground that the notice was not

timely. Id.

Although the reported opinion does not contain the

exact language of the policy, the court noted that it

was a “claims made” policy that required the insured

to “report a claim within the policy period or a stated

period thereafter.” Id. at 866.

The court began its analysis by noting that

[t]here are, in general, two types of notice requirements found in policies. One is a requirement that notice of the claim be given to the insurer “as soon as practicable” after the event

which gives rise to coverage. This type of notice

requirement is almost always found in occurrence policies and frequently is found in claimsmade policies. The other type of notice provision requires reporting of the claim during the

term of the policy or within a short period of

time (thirty or sixty days) following the expiration of the policy. This type of notice is always

found in claims-made policies and is never

found in occurrence policies.

Id. at 864. The court concluded that the second type of

notice provision (that requires reporting

Page 8

49a

of the claim during the term of the policy or within a

short period of time thereafter) is intended to allow an

insurer to “minimize the time between the insured

event and the payment” so that the insurer can prospectively set accurate rates. Id. at 865. It then held

that an insurer was not required to show prejudice if

a claim was reported outside of the time period specified in the policy, because the filing of a late claim undermines “the primary purpose of insuring claims rather than occurrences.” Id.

The court rejected the argument that the last sentence of Mass. Gen. Laws ch. 175, § 112—”An insurance company shall not deny insurance coverage to an

insured because of failure of an insured to seasonably

notify an insurance company of ... [a] claim ... unless

the insurance company has been prejudiced

thereby”—required a different result. Instead, it

stated:

We think, however, that § 112 applies only to

the “as soon as practicable” type of notice and

not to the “within the policy year” type of reporting requirement which is contained in the

policy under review... . A requirement that an

insurer on a claims-made policy must show that

it was prejudiced by its insured’s failure to report a claim within the policy period or a stated

period thereafter would defeat the fundamental

concept on which claims-made policies are

premised. The likely result would be that

claims-made policies, which offer substantial

benefits to purchasers of insurance as well as

insurance companies, would vanish from the

scene. It would be unreasonable to think that

the legislature intended such a result.

50a

Chas. T. Main, 406 Mass. at 865-66. Finally, it rejected “any suggestion that we should declare as a

matter of common law, see [Johnson Controls], that, to

defeat coverage under a claimsmade policy, an insurer

must show that it was prejudiced by its insured’s noncompliance with a ‘within the policy year’ notice requirement.” Id. at 866 n.3. 7

Page 9

3. Tenovsky v. Alliance Syndicate, Inc.

In Tenovsky v. Alliance Syndicate, Inc., 424 Mass.

678 (1997), the plaintiff was injured at a construction

site. He alleged that the insured, a subcontractor, was

responsible for his injury. Id. at 678. The plaintiff

sought a declaratory judgment that the insurer was

obliged to defend and indemnify the subcontractor. Id.

at 679. The insurer argued that it was not so obligated

because it had not received notice of the lawsuit

against the insured until two and one-half years after

the plaintiff had sent claims letters to the insured, and

one and one-half years after the policy period expired.

Id. at 680.

The policy at issue was a “claims made” policy,

providing that “in the event that a claim is made

against the insured, the insured must ensure that the

insurer receives ‘prompt written notice’ of the claim.”

Id.

7 The SJC has reaffirmed the holding of Johnson Controls—that

the insurer must demonstrate prejudice to avoid coverage even if

the insured failed to comply with the notice requirements of the

policy—with respect to “occurrence”-based policies on multiple

occasions. See, e.g., Darcy v. Hartford Ins. Co., 407 Mass. 481

(1990); Sarnafil v. Peerless Ins. Co., 418 Mass. 295 (1994); Boyle

v. Zurich American Ins. Co., 472 Mass. 649 (2015).

51a

The court held that the insurer was not required to

provide coverage. It noted that “[s]urely[ ] ‘prompt’ notice of ‘claims made’ requires that notice to the insurer

be given no later than sixty days following the expiration of the policy period.” Id. at 681. It found that the

policy at issue was “not materially different from the

policy considered” in Chas. T. Main. Id.

Both policies require that the claim, the insured

event, be reported to the insurer during the

term of the policy or at least promptly after its

expiration. It is apparent from the language of

the [policy], just as it is apparent from the policy considered in Chas T. Main, Inc., that the

purpose of both policies’ notice provision is to

produce “fairness in rate setting” by minimizing “the time between the insured event and the

payment.” This case is controlled by Chas. T.

Main, Inc. No further determination of prejudice to the insurer need be made.

Id.

B. Harvard v. Zurich American

That line of Massachusetts cases was recently applied by the First Circuit in President and Fellows of

Harvard College v. Zurich American Insurance Co.,

2023 WL 5089317 (1st Cir. Aug. 9, 2023). There, Harvard was the insured on an excess policy that provided

coverage on a

Page 10

“claims made and reported” basis. Id. at *1. The policy

covered claims that were made and reported to the insurer within the policy period (one year) and for a 90day period thereafter. Id. at *2.

52a

The university was sued in November 2014 for violating federal anti-discrimination law in its admissions processes, and promptly notified its primary insurance carrier. Id. It neglected, however, to notify the

excess carrier until May 2017, long after the relevant

policy period and the 90-day window had expired. Id.

The excess insurer denied coverage on the ground that

Harvard had failed to provide timely notice. Id.

Harvard then filed suit in federal district court, alleging breach of the policy. The district court granted

summary judgment to the insurer. Id. On appeal, Harvard argued (1) that “the district court misapplied

Massachusetts law when it determined that strict

compliance with the excess policy’s notice requirement was a prerequisite to coverage,” and (2) “as a fall

back ... propose[d] an alternative interpretation of the

notice requirement and contend[ed] that issues of material fact remain as to whether that requirement was

satisfied.” Id. at *3. The First Circuit rejected both

contentions.

As to the first argument, the court found that under

Massachusetts law, “an insurer is not required to

show prejudice before denying coverage due to an insured’s failure to comply with the notice requirement

of a claims-made policy.” Id. Harvard argued that because the principal purpose of the notice requirement

is to permit the insurer to set its rates based on accurate information, strict enforcement of the requirement “[should] not apply to circumstances in which in

insurer has actual notice of a claim and can use that

information to set its rates, notwithstanding the insured’s failure to comply with the policy’s notice requirement.” Id. at *4. The court rejected that position

summarily:

Page 11

53a

Arguing that the policy’s notice requirement

should not be enforced because Zurich may

have had actual notice of the claim is simply another way of arguing that Zurich was not prejudiced by the lack of timely written notice. To

honor such an argument would impermissibly

collapse the critical distinction that the SJC

has made between occurrence-based and

claims-made policies.

Id. (footnote omitted).

Harvard further argued that “to enforce the notice

requirement in Zurich’s excess policy would contravene sound public policy,” because “[o]pportunistic insurers would be incentivized ... to draft convoluted notice provisions in the hope of duping customers into

defaulting on their coverage.” Id. at *5. As to that argument, the court observed:

Whatever the merits of this contention—and

we take no position on it—it is for Massachusetts courts, not for a federal court, to weight

the policy implications of Massachusetts law.

In diversity cases, we are followers: we must

apply clear rules of law as those rules have been

articulated by the highest court of the relevant

state.

Id. (citation omitted). 8

Finally, Harvard attempted to argue on appeal that

the policy’s notice requirement was ambiguous as to

how a claim is to be “reported” to the insurer, and that

8 The court also noted that Harvard had elected to file the action

in federal, rather than state, court, thereby forgoing the opportunity to argue for a modification of Massachusetts substantive

law. Id. at *5.

54a

“further discovery might reveal that a newspaper or

other media outlet ‘reported’ the claim to Zurich by

covering the story for the general public.” Id. As to

that claim, the court held that Harvard had forfeited

the argument by raising it for the first time on appeal.

Id.

C. Whether Clark Complied with the Policy’s Notice Requirements

In light of that legal framework—and particularly

in light of the First Circuit’s opinion in Harvard—it is

difficult to see how the jury verdict here can stand.

As noted, the policy is a “claims made” policy; it covers claims “made ... during the

Page 12

POLICY PERIOD.” (Policy at 1). It requires that such

claims be “reported ... during the POLICY PERIOD or

within sixty [ ] days thereafter.” (Id.). It further requires that the insured “give prompt written notice [of

a claim] to [defendant].” (Id. at 6).

It is undisputed that notice of the claim was not

given during the policy period, or within the sixty days

that followed. And while it is unlikely that State National did not have actual notice of the claim, and

there is no evidence that it was prejudiced in any way,

those facts are legally irrelevant; all that matters, in

this context, is the date that the claim was reported.

And that date—which was fourteen months after the

end of the coverage period—was well outside the time

limits of the policy.

Under the circumstances, the Court sees no alternative but to grant the motion for judgment notwithstanding the verdict. While that is not an obviously

sensible result, it is required by the terms of the policy

and by Massachusetts law.

55a

In short, because Clark’s notice to the insurer of the

malpractice action was too late, the policy does not

provide coverage. By extension, plaintiff Stormo, as

his assignee, cannot claim the benefits of the policy.

Defendant is therefore entitled to judgment notwithstanding the verdict.

IV. Conclusion

For the foregoing reasons, the motion of defendant

State National Insurance Company for judgment notwithstanding the verdict is GRANTED.

So Ordered.

56a

Oral Ruling From the Bench, February 3, 2024 – U.S.

District Court of Massachusetts

On the notice issue, as near as I can

make out, and reading Charles [sic] T.

Main, Gargano, and the other cases

cited, there are two types of notice that

typically need to be made certainly under

a claims made policy.

Those cases make clear that with a

claims made policy, notice must be made

within the period of the policy or whatever time beyond that is permitted under

the agreement, here 60 days, and that

that notice is of the essence in the sense

that failure to give that notice prohibits

any claim.

… There is also a separate notice requirement under this policy of giving

prompt notice. The case law talks about

notice given as soon as practicable. … I

think under the case law, as I see it, even

in a claims made policy, the insurer must

show prejudice that the notice was not

given promptly.

And it’s not -- I won’t say that’s 100

percent clear that that’s correct, but I’m

reasonably confident that that is true,

and I’m going to proceed in accordance

with that theory.

Stormo v. State Nat’l Ins. Co., Docket No. 1:19-cv10034 (U.S.D.Mass., February 3, 2023) (four days before trial) (RA 759-60 in First Circuit record appendix)

57a

Johnson Controls, Inc. v. Bowes, 381 Mass. 278,

49 N.E.2d 185 (1980)

Johnson Controls, Inc.

vs.

John T. Bowes & another. 1

April 9, 1980 - August 5, 1980

Middlesex County

49 N.E.2d 185

381 Mass. 278

Present: HENNESSEY, C.J., QUIRICO, WILKINS, &

ABRAMS, JJ.

An insurance company attempting to be relieved of its

obligations under a liability insurance policy not covered by G. L. c. 175, Section 112, on the ground of untimely notice will be required, as to claims arising after the date of this opinion, to prove both that the notice provision was in fact breached and that the breach

resulted in prejudice to its position. [280-283]

CIVIL ACTION commenced in the Superior Court

on November 12, 1976.

The case was heard by Ronan, J., on motion for

summary judgment.

After review was sought in the Appeals Court, the

Supreme Judicial Court, on its own initiative, ordered

direct appellate review.

Evan T. Lawson (Howard J. Wayne with him) for

the plaintiff.

Stephen A. Moore (Jean F. Farrington with him) for

the St. Paul Fire and Marine Insurance Company.

1 St. Paul Fire and Marine Insurance Company.

58a

HENNESSEY, C.J. This is an action by Johnson Controls, Inc. (Johnson), to reach and apply the proceeds

of legal malpractice insurance policies issued by St.

Paul Fire and Marine Insurance Company (St. Paul)

to attorney John T. Bowes (Bowes). See G. L. c. 214,

Section 3 (6). A judge of the Superior Court in Middlesex County granted St. Paul’s motion for summary

judgment and entered a judgment dismissing

[381 Mass. 279]

Johnson’s claim. The appeal was transferred to this

court on our own motion.

Between 1960 and 1972 Bowes, then a member of

the Massachusetts bar, was retained by Johnson to

perform legal services in its behalf. St. Paul issued

Bowes legal malpractice insurance policies, which

were in effect from July, 1962, to July, 1968, and had

a $1,000,000 an occurrence limit of liability.

On June 4, 1973, Johnson brought an action

against Bowes in the Superior Court in Norfolk

County charging six counts of negligence in his performance of legal services. On January 10, 1974, counsel

for Johnson notified St. Paul of the malpractice action

against Bowes. Counsel also provided St. Paul with

copies of the declaration and writ and rescheduled a

deposition of Bowes from January 30 to February 13,

1974, at the request of St. Paul’s representative. On

February 7, 1974, St. Paul notified Bowes that it disclaimed coverage and would not honor the claim or

provide a defense. St. Paul based its disclaimer on

Bowes’s failures to give written notification of the

claim and to forward suit papers to the company in

violation of the provisions of his insurance contract. 2

2 The insurance contract between Bowes and St. Paul provided,

in part: (1) “In the event of an occurrence, written notice

59a

A copy of St. Paul’s letter to Bowes was sent to attorneys for Johnson.

Subsequently, Johnson’s action in Norfolk County

against Bowes was referred to a master, who found

that Bowes had been negligent in all six instances

claimed by Johnson. The master’s report was confirmed, and Johnson was awarded judgment against

Bowes in the amount of $31,698.28 plus $27.50 for

costs. The judgment has not been satisfied.

[381 Mass. 280]

Johnson raises several issues in this appeal, but we

reach only the first wherein Johnson urges this court

to reexamine the present rule, applicable to some liability insurance, that the failure of an insured to comply with the notice requirements of a policy, in the absence of estoppel or waiver and regardless of lack of

prejudice to the insurer, bars recovery. See Spooner v.

General Accident Fire & Life Assurance Corp., 379

Mass. 377, 378 (1979), and cases cited. In Spooner v.

General Accident Fire & Life Assurance Corp., supra

at 379, we noted that the notice requirement was “an

aspect of contract law that we [had] not previously

questioned.” In sharp contrast to the case at bar, however, Spooner involved a motor vehicle liability insurance policy, one of the types of policies affected by a

prospective legislative amendment of the notice

containing particulars sufficient to identify the Insured and also

reasonably obtainable information with respect to the time, place

or circumstances thereof, and the names and address [sic] of the

injured and of available witnesses shall be given by or for the

Insured to the Company or any of its authorized agents as soon

as practicable.” (2) “If claim is made or suit is brought against

the Insured, the Insured shall immediately forward to the Company every demand, notice, summons or other process received

by him or his representative.”

60a

requirement. 3 Id. at 379-380. This court deferred to

the Legislature’s determination that the change in

common law should be prospective only and refused

the plaintiff’s request that we “depart retroactively

from the meaning and import that we have given for

at least two generations to a significant condition of

contracts of insurance.” Id. The policy in the instant

case does not come within the confines of the legislative amendment. Consequently, it presents a more appropriate vehicle for reconsideration of our common

law.

Although a majority of courts adhere to a strict contractual interpretation of notice provisions as a condition precedent to an insurer’s liability, there is a recent trend to eschew such technical forfeitures of insurance coverage unless the insurer has been materially prejudiced by virtue of late notification. See generally 8 J.A. Appleman, Insurance Law and Practice

Section 4732 (1962); 13 G. Couch, Insurance Section

49:88 (2d ed. 1965); Comment, The Materiality of Prejudice to the Insurer as a Result of the Insured’s

[381 Mass. 281]

Failure to Give Timely Notice, 74 Dick. L. Rev. 260

(1970). In rejecting the strict contractual approach,

the Supreme Court of Pennsylvania stated: “The rationale underlying the strict contractual approach reflected in our past decisions is that courts should not

presume to interfere with the freedom of private contracts and redraft insurance policy provisions where

3 The Legislature’s passage of St. 1977, c. 437, amending G. L. c.

175, Section 112, prohibits an insurer from denying coverage on

a motor vehicle insurance policy or other policy compensating for

bodily injury, death, or property damage because of failure of the

insured to give seasonable notice, unless the insurer has been

prejudiced thereby.

61a

the intent of the parties is expressed by clear and unambiguous language. We are of the opinion, however,

that this argument, based on the view that insurance

policies are private contracts in the traditional sense,

is no longer persuasive. Such a position fails to recognize the true nature of the relationship between insurance companies and their insureds. An insurance contract is not a negotiated agreement; rather its conditions are by and large dictated by the insurance company to the insured. The only aspect of the contract

over which the insured can ‘bargain’ is the monetary

amount of coverage.” Brakeman v. Potomac Ins. Co.,

472 Pa. 66, 72 (1977). Courts have also been influenced to adopt a more liberal approach to the notice

question because the classic contractual approach involves a forfeiture. In Cooper v. Government Employees Ins. Co., 51 N.J. 86, 93-94 (1968), the court commented: “[A]lthough the policy may speak of the notice

provision in terms of ‘condition precedent,’... nonetheless what is involved is a forfeiture, for the carrier

seeks, on account of a breach of that provision, to deny

the insured the very thing paid for. This is not to belittle the need for notice of an accident, but rather to

put the subject in perspective. Thus viewed, it becomes unreasonable to read the provision unrealistically or to find that the carrier may forfeit the coverage, even though there is no likelihood that it was

prejudiced by the breach. To do so would be unfair to

insureds.” See Miller v. Marcantel, 221 So. 2d 557, 559

(La. App. 1969); Restatement (Second) of Contracts

Section 255 (Tent. Draft No. 7, 1972).

The basic purpose of a strict interpretation of a notice clause is to enable an insurer to make “seasonable

investigation of the facts relating to liability.” Bayer &

Mingolla

62a

[381 Mass. 282]

Constr. Co. v. Deschenes, 348 Mass. 594, 600 (1965).

“Such a requirement protects the insurance company

from fraudulent claims, as well as invalid claims made

in good faith, by allowing the insurance company to

gain early control of the proceedings... . [A] reasonable

notice clause is designed to protect the insurance company from being placed in a substantially less favorable position than it would have been in had timely notice been provided, e.g., being forced to pay a claim

against which it has not had an opportunity to defend

effectively. In short, the function of a notice requirement is to protect the insurance company’s interests

from being prejudiced. Where the insurance company’s interests have not been harmed by a late notice, even in the absence of extenuating circumstances

to excuse the tardiness, the reason behind the notice

condition in the policy is lacking, and it follows neither

logic nor fairness to relieve the insurance company of

its obligations under the policy in such a situation.”

Brakeman v. Potomac Ins. Co., supra at 74-75. See

Miller v. Marcantel, supra at 559.

In light of the foregoing reasoning, we are of the

opinion that our prior decisions relative to the delayed

notice of an accident and the delayed notice of the institution of a suit have been too restrictive and should

be changed. Accordingly, we hold that where an insurance company attempts to be relieved of its obligations

under a liability insurance policy not covered by G. L.

c. 175, Section 112, on the ground of untimely notice,

the insurance company will be required to prove both

that the notice provision was in fact breached and that

the breach resulted in prejudice to its position. See,

e.g., Lindus v. Northern Ins. Co., 103 Ariz. 160 (1968);

Miller v. Marcantel, supra; Cooper v. Government Employees Ins. Co., supra; Fox v. National Sav. Ins. Co.,

63a

424 P.2d 19 (Okla. 1967); Lusch v. Aetna Cas. & Sur.

Co., 272 Or. 593 (1975); Pickering v. American Employers Ins. Co., 109 R.I. 143 (1971); Factory Mut.

Liab. Ins. Co. v. Kennedy, 256 S.C. 376 (1971); Oregon

Auto. Ins. Co. v. Salzberg, 85 Wash. 2d 372 (1975).

However, because our reform of the notice requirement constitutes “a drastic or

[381 Mass. 283]

radical incursion upon existing law,” which would disturb retroactively the contractual arrangements of the

insurer and the insured, we confine our decision to

claims arising after the date of this opinion. 4 Diaz v.

4 We note that an alternative to our wholly prospective overruling would be a limited retroactive application to the claim before

us. Such selective retroactive application has been justified, in

part, because it encourages socially beneficial attacks on outmoded doctrines. E.g., Molitor v. Kaneland Community Unit

Dist. No. 302, 18 Ill. 2d 11, 28 (1959), cert. denied, 362 U.S. 968

(1960) (charitable immunity); Kojis v. Doctors Hosp., 12 Wis. 2d

367, 374 (1961) (charitable immunity). However, the unevenness

of such a change in doctrine has been criticized: “This combination of partly prospective and partly retroactive overruling offers

only a little more encouragement to attacks on outmoded doctrine than the inducement a claimant and his attorney would

find in the hope of persuading the court to overrule retroactively.

The advantage from this added degree of encouragement, such

as it may be, probably is outweighed by the disadvantage of uneven treatment ... . It is true that some unevenness is an inevitable consequence of any change in doctrine, regardless of the

choice among methods of change. But it seems preferable that a

court reduce the element of unevenness more than is possible under decisions applying a new rule retroactively only to the case

before the court, or to that and closely related cases.” R.E.

Keeton, Venturing to Do Justice 36 (1969). As we have stated,

the change of existing law involves a previously unquestioned aspect of contract law, in which reliance interests exert a strong

influence. We conclude, therefore, that a wholly prospective overruling is more appropriate in the instant case. We are cognizant

64a

Eli Lilly & Co., 364 Mass. 153, 167 (1973). R.E.

Keeton, Venturing to Do Justice 25-53 (1969). It follows that the Superior Court’s order dismissing Johnson’s claim is affirmed.

So ordered.

of the fact that in spite of our prospective limitation there will be

a period of adjustment in which insurers may be exposed to increased liability, but we do not think such a limited impact justifies a strict adherence to precedent.

65a

Chas. T. Main, Inc. v. Fireman’s Fund Ins. Co.,

46 Mass. 862, 551 N.E.2d 28 (1990)

Chas. T. Main, Inc.

vs.

Fireman’s Fund Insurance Company &

another. 1

Suffolk County

December 5, 1989 - March 8, 1990

551 N.E.2d 28

406 Mass. 862

Present: LIACOS, C.J., ABRAMS, NOLAN, O’CONNOR, & GREANEY, JJ.

An insurance company attempting to be relieved of its

obligations under a professional liability insurance

policy written on a “claims made” basis and not covered by G. L. c. 175, Section 112, on the ground of untimely notice was not required to demonstrate that

the breach resulted in prejudice to its position. [863866]

CIVIL ACTION commenced in the Superior Court

Department on September 29, 1987.

The case was heard by Paul K. Connolly, J., on motions for summary judgment.

The Supreme Judicial Court on its own initiative

transferred the case from the Appeals Court.

Kenneth J. Mickiewicz (Richard S. Nicholson with

him) for the plaintiff.

American Insurance Company which is affiliated with Fireman’s Fund Insurance.

66a

John P. Ryan (Robert G. Eaton with him) for the

defendants.

Acheson H. Callaghan, Jr., Steven L. Schreckinger

& Michael T. Gass, for Medical Malpractice Joint Underwriting Association of Massachusetts & another,

amici curiae, submitted a brief.

NOLAN, J. In a complaint which contains counts for

breach of contract, and violations of G. L. c. 93A, Sections 2, 11 (1988 ed.) (Consumer Protection Act), and

G. L. c. 176D, Section 3 (1988 ed.) (unfair or deceptive

acts in the insurance industry),

[406 Mass. 863]

the plaintiff seeks recovery based on its insurance policy with the defendants.

The plaintiff’s motion for summary judgment was

denied and summary judgment was entered for the

defendants. See Mass. R. Civ. P. 56 (c), 365 Mass. 824

(1974). The plaintiff appealed and we transferred the

case to this court on our own motion. We affirm.

From the material presented to the judge, we learn

that in 1977, the city of Lakeland, Florida, hired the

plaintiff to provide professional services as consulting

engineer for the design and construction of an extension to a power generation facility. On September 14,

1984, when sued by a subcontractor on this job, Lakeland named the plaintiff as a “counter-defendant.” At

the time that this claim was asserted by Lakeland, the

plaintiff maintained primary professional liability

coverage with CNA Insurance Companies (CNA) and

excess insurance coverage with the defendants. These

policies were in effect during the period May 1, 1984,

to May 1, 1985, and all were written on a “claims

made” basis, as we shall discuss. The plaintiff gave

notice of the Lakeland claim to CNA on or about

67a

September 20, 1984. However, the plaintiff did not

give notice of the Lakeland claim to the defendants

until March, 1987. The defendants denied coverage

because, they contended, the notice was untimely. We

agree.

The only issue is whether the defendants are required to demonstrate prejudice resulting from the

untimeliness of the notice. Although the parties argue

the issue of choice of law as between the law of Massachusetts and the law of Florida, we need not discuss

this issue because we decide that Massachusetts law

coincides with Florida law on the relevant issues and

we, accordingly, apply Massachusetts law.

Requirement of timely notice. This case involves a

claims-made insurance policy. Our analysis requires

an understanding of the difference between such policies and occurrence policies. Coverage is effective in

an occurrence policy if the covered act or covered omission occurs within the policy period, regardless of the

date of discovery. A claims-made policy

[406 Mass. 864]

covers the insured for claims made during the policy

year and reported within that period or a specified period thereafter regardless of when the covered act or

omission occurred.

There are, in general, two types of notice requirements found in policies. One is a requirement that notice of the claim be given to the insurer “as soon as

practicable” after the event which gives rise to coverage. This type of notice requirement is almost always

found in occurrence policies and frequently is found in

claims-made policies. The other type of notice provision requires reporting of the claim during the term of

the policy or within a short period of time (thirty or

sixty days) following the expiration of the policy. This

68a

type of notice is always found in claims-made policies

and is never found in occurrence policies.

The purposes of the two types of reporting requirements differ sharply. The purpose of a notice requirement, “as soon as practicable,” is to permit an insurer

to make an investigation of the facts and occurrence

relating to liability. See Bayer & Mingolla Constr. Co.

v. Deschenes, 348 Mass. 594, 600 (1965). However,

fairness in rate setting is the purpose of a requirement

that notice of a claim be given within the policy period

or shortly thereafter, as we explain below.

An insurer has a difficult time setting rates in these

inflationary, and otherwise rapidly changing, times,

especially in connection with occurrence policies. The

insurer may not be in a position to make good on its

promise to indemnify the insured until many years after the insurced event, that is, the occurrence, has

happened. For example, in 1990, an insurer may

promise to indemnify its insured for losses the insured

may incur due to occurrences during that calendar

year. Assume that, in 1990 the average broken leg

brings $10,000 in settlement or verdict. The rate is

likely to be based on that hypothesis or on an assumption of a rate of inflation that may be too low. Also, the

rate setter must guess at the likely period between occurrences and payoff dates. If the claim for the broken

leg is not made against the insured until 1995 (or

2000), the insurer may end up paying $30,000 for that

injury, an amount no one could have predicted.

[406 Mass. 865]

The closer in time that the insured event and the insurer’s payoff are, the more predictable the amount of

the payment will be, and the more likely it is that

rates will fairly reflect the risks taken by the insurer.

The purpose of a claims-made policy is to minimize the

69a

time between the insured event and the payment. For

that reason, the insured event is the claim being made

against the insured during the policy period and the

claim being reported to the insurer within that same

period or a slightly extended, and specified, period. If

a claim is made against an insured, but the insurer

does not know about it until years later, the primary

purpose of insuring claims rather than occurrences is

frustrated. Accordingly, the requirement that notice of

the claim be given in the policy period or shortly thereafter in the claims-made policy is of the essence in determining whether coverage exists. Prejudice for an

untimely report in this instance is not an appropriate

inquiry.

The plaintiff relies heavily on the last sentence of

G. L. c. 175, Section 112, 2 in support of its argument

that an insurer may not rely on lateness of notice to

avoid coverage in the absence of demonstrated

2 General Laws c. 175, Section 112 (1988 ed.), provides: “The liability of any company under a motor vehicle liability policy, as

defined in section thirty-four A of chapter ninety, or under any

other policy insuring against liability for loss or damage on account of bodily injury or death, or for loss or damage resulting

therefrom, or on account of damage to property, shall become absolute whenever the loss or damage for which the insured is responsible occurs, and the satisfaction by the insured of a final

judgment for such loss or damage shall not be a condition precedent to the right or duty of the company to make payment on

account of said loss or damage. No such contract of insurance

shall be cancelled or annulled by any agreement between the

company and the insured after the said insured has become responsible for such loss or damage, and any such cancellation or

annulment shall be void. An insurance company shall not deny

insurance coverage to an insured because of failure of an insured

to seasonably notify an insurance company of an occurrence, incident, claim or of a suit founded upon an occurrence, incident or

claim, which may give rise to liability insured against unless the

insurance company has been prejudiced thereby.”

70a

prejudice. We think, however, that Section 112 applies

only to the “as soon as practicable” type of notice and

not to the “within the policy year” type of reporting

requirement which is contained in the policy under

[406 Mass. 866]

review in this case and was not met. A requirement

that an insurer on a claims-made policy must show

that it was prejudiced by its insured’s failure to report

a claim within the policy period or a stated period

thereafter would defeat the fundamental concept on

which claims-made policies are premised. The likely

result would be that claims-made policies, which offer

substantial benefits to purchasers of insurance as well

as insurance companies, would vanish from the scene.

It would be unreasonable to think that the Legislature

intended such a result. 3

Judgment affirmed.

3 For the same reason, we reject any suggestion that we should

declare as a matter of common law, see Johnson Controls, Inc. v.

Bowes, 381 Mass. 278 (1980), that, to defeat coverage under a

claims-made policy, an insurer must show that it was prejudiced

by its insured’s noncompliance with a “within the policy year”

notice requirement.

71a

Tenovsky v. Alliance Syndicate, Inc. 424 Mass. 678,

677 N.E.2d 1144 (1997)

Norman Tenovsky & another 1

vs.

Alliance Syndicate, Inc., & others. 2

December 4, 1996 - April 9, 1997

Suffolk County

677 N.E.2d 1144

424 Mass. 678

Present: WILKINS, C.J., ABRAMS, LYNCH, O’CONNOR, & GREANEY, JJ.

Related Cases: 40 Mass. App. Ct. 204

“Prompt” notice of a claim under a “claims-made”

policy of insurance requires notice to the insurer be

given during the policy period or no later than sixty

days after the expiration of the policy period: where

an insured under such a policy failed to give the insurer notice for more than two and one-half years after the insured received the claims and more than a

year and one-half after the policy period expired, the

insurer had no liability under the policy. [679-681]

CIVIL ACTION commenced in the Superior Court

Department on July 19, 1991.

The case was heard by Hiller B. Zobel, J., on motions for summary judgment.

1 Cecile A. Tenovsky.

2 G & H Steel Services, Inc.; Liberty Mutual Insurance Company;

and Turner Construction Company. This appeal does not involve

Liberty Mutual Insurance Company or Turner Construction

Company.

72a

After review by the Appeals Court, the Supreme Judicial Court granted leave to obtain further appellate

review.

Richard J. Riley for Alliance Syndicate, Inc.

Nancy M. McLean for the plaintiffs.

O’CONNOR, J. On October 15, 1987, the plaintiff Norman Tenovsky (Tenovsky), while employed by United

Steel Erectors, Inc., as an ironworker, was seriously

injured at a construction site. He alleges that the negligence of the defendant G & H Steel Services, Inc. (G

& H Steel), caused his injuries. G & H Steel was a subcontractor on the job and was insured against personal injury liability by the defendant Alliance Syndicate, Inc. (Alliance).

[424 Mass. 679]

Tenovsky and his wife, Cecile A. Tenovsky, brought a

tort action alleging personal injuries and loss of consortium against Turner Construction Company, the

general contractor at the site of the accident, and G &

H Steel. That action is not before us. In the action that

is before us, the plaintiffs sought a declaratory judgment in the Superior Court that would establish that

Alliance must defend G & H Steel in the plaintiffs’ tort

action and, subject to the limits of its coverage, must

pay the plaintiffs whatever damages the plaintiffs

may be awarded in their tort action against G & H

Steel.

The plaintiffs and Alliance filed cross motions for

summary judgment. Relying principally on Chas. T.

Main, Inc. v. Fireman’s Fund Ins. Co., 406 Mass. 862

(1990), a Superior Court judge concluded that the liability insurance policy issued by Alliance to G & H

Steel was a claims-made policy and that G & H Steel’s

notice to Alliance of the plaintiffs’ claims against G &

73a

H Steel as a matter of law was too late to entitle G &

H Steel to a defense or indemnification, thus defeating

the plaintiffs’ “reach and apply” claims. The judge denied the plaintiffs’ motion for summary judgment and

allowed Alliance’s cross motion. The following judgment was entered on the docket: “Neither Alliance Insurance Group nor Alliance Syndicate, Inc. has any liability, whether by way of indemnity or otherwise, to

any party herein on account of any injury said to have

been suffered by Norman Tenovsky on or about Oct.

15, 1987.”

The plaintiffs appealed. Reasoning that the insurance policy in this case was materially different from

the policy involved in Chas T. Main, Inc. v. Fireman’s

Fund Ins. Co., supra, the Appeals Court, 40 Mass.

App. Ct. 204 (1996), reversed the judgment in favor of

Alliance and ordered that the case be remanded to the

Superior Court for further proceedings to be focused

in large measure on whether any late notice of claim

prejudiced Alliance. See G. L. c. 175, s. 112. We

granted Alliance’s application for further appellate review. We now affirm the judgment entered in the Superior Court.

The significant provisions of the Alliance policy are

as follows. Section I, entitled “Coverages,” states that

coverage is provided “only if a claim for damages because of the ‘bodily injury’ or ‘property damage’ is first

made against any insured during the policy period. (1)

A claim by a person or organization seeking damages

will be deemed to have been made

[424 Mass. 680]

when notice of such claim is received and recorded by

any insured or by us, whichever comes first.” With regard to the policy’s notice requirement, Section IV of

the policy, entitled “Commercial General Liability

74a

Conditions,” provides that, in the event that a claim is

made against the insured, the insured must ensure

that the insurer receives “prompt written notice” of

the claim. That section also requires the insured to

“[i]mmediately send [Alliance] copies of any demands,

notices, summonses or legal papers received in connection with the claim or ‘suit.’”

On June 23, 1988 and July 8, 1988, the plaintiffs

advised G & H Steel by certified mail of their claims

arising out of Tenovsky’s injuries sustained on October 15, 1987. As the Appeals Court observes, id. at

205, “Alliance does not appear to dispute that the

claim letters written by the plaintiffs to G & H Steel

in June and July of 1988 were during the policy period

and constituted a valid claim under the policy.” However, G & H Steel did not forward the plaintiffs’ letters

to Alliance or notify Alliance in any way of the plaintiffs’ claims.

The plaintiffs commenced their tort action against

G & H Steel and Turner Construction Company on October 9, 1990. Alliance received copies of the summons

and complaint on or about December 17, 1990, which

was two and one-half years after G & H Steel received

the plaintiffs’ claim letters and one and one-half years

after the policy period expired. This was Alliance’s

first notice of the claims.

In this case and in Chas. T. Main, Inc., personal injury claims were first made known to the insured during the policy period but the insurer first received notice of those claims two to three years after the claims

were made. The policies in both cases purported to be,

and were, claims-made policies. The Chas. T. Main,

Inc., policy provided that for coverage, the insurer

must receive notice of claim during the policy period

or within sixty days after the expiration of the policy.

In the present case, the policy requires that the

75a

insured, G & H Steel, provide the insurer, Alliance,

“prompt written notice” of a claim and “[i]mmediately

send [Alliance] copies of any demands, notices, summonses or legal papers received in connection with the

claim or ‘suit.’”

“[F]airness in rate setting is the purpose of a requirement that notice of a claim be given within the

policy period or

[424 Mass. 681]

shortly thereafter,” id. at 864, and, to that end, a typical claims-made policy “minimize[s] the time between

the insured event and the payment.” Id. at 865. “The

closer in time that the insured event and the insurer’s

payoff are, the more predictable the amount of the

payment will be, and the more likely it is that rates

will fairly reflect the risks taken by the insurer.... If a

claim is made against an insured, but the insurer does

not know about it until years later, the primary purpose of insuring claims rather than occurrences is

frustrated. Accordingly, the requirement that notice of

the claim be given in the policy period or shortly thereafter in the claims-made policy period is of the essence

in determining whether coverage exists. Prejudice [to

the insurer as a result of] an untimely report in [such

an] instance is not an appropriate inquiry.” Id.

Surely, “prompt” notice of “claims made” requires

that notice to the insurer be given no later than sixty

days following the expiration of the policy period. The

policy in this case, then, calling for promptness in notification, is not materially different from the policy

considered in Chas. T. Main, Inc., supra. Both policies

require that the claim, the insured event, be reported

to the insurer during the term of the policy or at least

promptly after its expiration. It is apparent from the

language of the Alliance policy, just as it is apparent

76a

from the policy considered in Chas T. Main, Inc., that

the purpose of both policies’ notice provision is to produce “fairness in rate setting” by minimizing “the time

between the insured event and the payment.” This

case is controlled by Chas. T. Main, Inc., supra. No

further determination of prejudice to the insurer need

be made. “Prejudice for an untimely report in this instance is not an appropriate inquiry.” Id. at 865. The

judgment entered in the Superior Court is affirmed.

So ordered.

77a

Tenovsky v. Alliance Insurance Group,

40 Mass. App. Ct. 204, 626 N.E.2d 716 (1996)

Norman Tenovsky & another 1

vs.

Alliance Insurance Group & others. 2

January 18, 1995 - March 22, 1996

Suffolk County

626 N.E.2d 716

40 Mass. App. Ct. 204

Further appellate review granted,

422 Mass. 1108 (1996).

Related Cases: 424 Mass. 678

Present: BROWN, SMITH, & JACOBS, JJ.

Where the provisions of an insurance policy required that claims be made during the policy period

but did not expressly require the insured to give notice

to the insurer of such claims within the policy period,

a Superior Court judge erred in ordering judgment in

favor of an insurer with respect to its obligation to indemnify or defend claims that were properly made

within the policy period but which the insured did not

1 Cecile A. Tenovsky.

2 The other defendants named in the complaint are G & H Steel

Services, Inc., Liberty Mutual Insurance Company, and Turner

Construction Company. The defendant Alliance Insurance Group

is also referred to by the parties and in some pleadings as Alliance Syndicate, Inc. The judgment appealed from states that

“[n]either Alliance Insurance Group nor Alliance Syndicate, Inc.

has any liability ... on account of any injury said to have been

suffered by Norman Tenovsky on or about October 15, 1987.”

78a

report to the insurer until more than two years later,

when a civil action was filed. [205-208]

CIVIL ACTION commenced in the Superior Court

Department on July 19, 1991.

The case was heard by Hiller B. Zobel, J., on motions for summary judgment.

Nancy M. McLean for the plaintiffs.

Richard J. Riley for Alliance Syndicate, Inc.

BROWN, J. The plaintiffs, Norman and Cecile A.

Tenovsky, appeal from summary judgment entered

for the defendant Alliance Insurance Group (Alliance),

in a declaratory judgment action in which cross motions for summary judgment were filed. A Superior

Court judge concluded that the insurance

[40 Mass. App. Ct. 205]

policy at issue is a so-called claims-made policy, that

the case was controlled by Chas. T. Main, Inc. v. Fireman’s Fund Ins. Co., 406 Mass. 862 (1990), and that,

since the insured, G & H Steel Services, Inc. (G & H

Steel), failed to notify Alliance until over three years

after the incident giving rise to the claim, Alliance, as

matter of law, was under no obligation to indemnify or

defend G & H Steel in a tort action brought by the

plaintiffs.

The material before the judge discloses the following pertinent facts. On October 15, 1987, the plaintiff

Norman Tenovsky was injured on the job while walking through a partially constructed building. He alleges that G & H Steel was responsible for defective

workmanship that caused his injury. On June 23,

1988, and again on July 8, 1988, the plaintiffs, by certified mail, advised G & H Steel of their “claim.” G &

H Steel, however, never forwarded the plaintiffs’

claim letters to Alliance.

79a

On October 1, 1990, the plaintiffs filed an action in

the Superior Court. Alliance, until this point unaware

of the claim, received a copy of the summons and complaint from G & H Steel in November of 1990. On December 19, 1990, Alliance-not having seen the 1988

claim letters-wrote G & H Steel that the plaintiffs’

claim did not appear to be covered by the policy. According to Alliance’s December 19 letter, “[a]s this is a

claims made policy, any claim must be made and reported during the policy period.... [I]t is clear that a

claim was not made until after your policy had expired.”

We turn to the policy. Alliance had issued the policy

to G & H Steel for the period of June 16, 1988, through

June 16, 1989. It appears that the policy is some species of claims-made policy. 3 On appeal, Alliance does

not appear to dispute that the claim letters written by

the plaintiffs to G & H Steel in June and July of 1988

were during the policy period and

[40 Mass. App. Ct. 206]

constituted a valid claim under the policy. 4 There remains, however, the issue whether Alliance also had

3 G & H Steel had specifically requested a claims-made policy,

and, in so doing, paid a lower premium rate than it would have

if the policy were an occurrence policy. The policy, in two instances, purports to provide claims-made coverage. The words

“Provides Claims Made Coverage” appear at the top of page one

of the policy. In addition, the words “Commercial General Liability (Claims-Made)” appear in the policy’s declarations. Additional language in the policy consistent with typical claims-made

policies is discussed in note 5, infra. See generally Chas. T. Main,

Inc. v. Fireman’s Fund Ins. Co., 406 Mass. at 863-864; National

Union Fire Ins. Co. v. Talcott, 931 F.2d 166, 168 (1st Cir. 1991).

4 The first section of the policy, entitled “Coverages,” provides

that “this insurance applies to ‘bodily injury’ ... only if a claim for

damages is first made against any insured during the policy

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to receive notice of the plaintiffs, claim within the policy period.

By its terms, the policy requires only that G & H

Steel provide Alliance with “prompt written notice” of

any claims or suits and “immediately send [Alliance]

copies of any demands, notices, summonses or legal

papers received in connection with the claim or ‘suit.’”

Compare Johnson Controls, Inc. v. Bowes, 381 Mass.

278, 279 n.2 (1980) (policy provided, in part, that, “[i]f

claim is made or suit is brought against the Insured,

the Insured shall immediately forward to the Company every demand, notice, summons or other process

received by him or his representative”). Again, while

the policy has elaborate provisions requiring that

claims be received in the policy year (or within a

slightly extended, and specified, period), nowhere in

the policy is it expressly stated that G & H Steel is

required to report claims to Alliance within the policy

period. 5 We must be careful not to blur the distinction

period... . A claim by a person or organization seeking damages

will be deemed to have been made when notice of such claim is

received and recorded by any insured or by us [Alliance], whichever comes first.”

5 G & H Steel’s insurance with Alliance was canceled as of January 1, 1989 (and, consequently, G & H Steel received a “return

premium” of $67,485). Alliance argues that, under a provision of

the policy applicable in the event of cancellation, “G & H Steel

had sixty days after cancellation in which to notify Alliance of the

claim made against it by the [plaintiffs]. Yet G & H Steel failed

to report the [plaintiffs’] claim within the extended reporting period.” Provisions for an extended reporting period are typical in

claims-made policies, Chas. T. Main v. Fireman’s Fund Ins. Co.,

406 Mass. at 864, and the presence of such a provision in the

policy before us supports our conclusion that this is a claimsmade policy. (If the Alliance policy were an occurrence policy, as

opposed to a claims-made policy, this language would have been

inappropriate. “Coverage is effective in an occurrence policy if the

covered act or covered omission occurs within the policy period,

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between making a claim and notifying an insurer of a

claim that has been made. The two acts are different

in many ways, and the policy before us has requirements for

[40 Mass. App. Ct. 207]

making a claim (to the insured or the insurer) that are

separate and distinct from the requirements for notifying the insurer of a claim that has been made. See

Cardin v. Royal Ins. Co., 394 Mass. 450, 453 (1985)

(language in policy will be construed according to its

ordinary meaning).

Our reading of Chas. T. Main, Inc. v. Fireman’s

Fund Ins. Co., 406 Mass. at 864-865, leads us to conclude that the policy in that case differed materially

from the policy before us. That opinion speaks of “two

types of notice requirements found in policies. One is

a requirement that notice of the claim be given to the

insurer ‘as soon as practicable, after the event which

gives rise to coverage.... The other type of notice provision requires reporting of the claim during the term

of the policy or within a short period of time (thirty or

sixty days) following the expiration of the policy.” Id.

at 864. The policy in the Chas. T. Main case had a

“‘within the policy year, type of reporting requirement

which ... was not met.” Id. at 865-866. See also National Union Ins. Co. v. Talcott, 931 F.2d 166, 167 (1st

Cir. 1991) (“policy specifically provided that all claims

brought against the insured had to be reported during

the policy period in which the claim was first made”).

regardless of the date of discovery.” Id. at 863.) We do not, however, agree with Alliance’s interpretation of the provision. The

extended reporting period provision in the policy before us applies only to the making of a claim; there is no language providing

for an extension of any reporting period for notice to an insurer

of a claim having been made.

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As we have made clear above, the policy before us does

not have a requirement that notice be given to the insurer “within the policy year”; rather, it has a requirement that G & H Steel provide Alliance with “prompt

written notice” of a claim and “immediately send [Alliance] copies of any demands, notices, summonses or

legal papers received in connection with the claim or

‘suit.’”

There is also the argument that a claims-made policy need not contain an express requirement that the

insurer receive notice within the policy period; according to Alliance, Chas. T. Main, Inc. v. Fireman’s Fund

Ins. Co., 406 Mass. at 864-866, teaches that all claimsmade policies require notice to the insurer within the

policy period. We are unwilling to read that opinion so

broadly, especially where the policy in that case is distinguishable in critical respects from the policy before

us.

Accordingly, G & H Steel’s failure to notify Alliance

of the plaintiffs’ claim within the policy year did not

justify Alliance’s denial of coverage, and summary

judgment in favor of Alliance on that basis should not

have entered. There may be other grounds for denial

of coverage: specifically, Alliance

[40 Mass. App. Ct. 208]

could argue that G & H Steel failed to provide Alliance

with “prompt written notice” of the plaintiffs, claim.

As to this issue, however, Alliance may not rely on

lateness of notice to avoid coverage in the absence of

demonstrated prejudice. See Chas. T. Main, Inc. v.

Fireman’s Fund Ins. Co., 406 Mass. at 865-866 (G. L.

c. 175, s. 112, while not applicable to the “within the

year” reporting requirement, does apply to the “soon

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as practicable” type of notice). See also Johnson Controls, Inc. v. Bowes, 381 Mass. at 282. 6

The judgment is reversed, and the case is remanded

to the Superior Court for further proceedings consistent with this opinion. 7

So ordered.

6 The motion judge did not base his finding of no coverage on a

determination that Alliance was prejudiced by late notification,

as evidenced by his statement that, “given the applicable controlling authority, Chas. T. Main, Inc. v. Fireman’s Fund Insurance

Co., supra at 865-866, this Court need not enter into such a calculus.” In dictum, however, he noted that “an unexplained threeyear hiatus is per se unfairly prejudicial.” We disagree. A threeyear delay is not uncommon in tort cases given the generally applicable statute of limitations, G. L. c. 260, s. 2A. Any analysis of

the prejudice issue in this case appears to be quite complex and

could involve deciding issues of disputed fact.

7 Deciding as we do, we decline the plaintiffs’ invitation to find

that claims-made policies violate the public policy of the Commonwealth.

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.