Mount Vernon Fire Ins. Co. v. Visionaid, Inc.

Gary Sullivan filed suit against VisionAid, Inc., his former employer and a Massachusetts-based company, in Massachusetts state court alleging that he was terminated as the result of illegal age discrimination. In its defense, VisionAid alleged that it terminated Sullivan because it discovered that he had misappropriated several hundred thousand dollars of corporate funds. VisionAid sought to have its insurer, Mount Vernon Fire Insurance Company, cover not only the defense against the age discrimination claim but also the prosecution of the state-court misappropriation counterclaim. VisionAid then filed the underlying suit for a declaratory judgment, arguing that it was not required to pay for the prosecution of VisionAid’s proposed misappropriation counterclaim. The district court entered judgment in Mt. Vernon’s favor, concluding that, according to the plain language of the policy, Mt. Vernon was not required to fund an affirmative counterclaim. The First Circuit certified three dispositive state law questions to the Massachusetts Supreme Judicial Court regarding when an insurer may owe a duty to its insured to prosecute and fund the insured’s counterclaim for damages. View "Mount Vernon Fire Ins. Co. v. Visionaid, Inc." on Justia Law