Mount Vernon Fire Insurance Co v. VisionAid, Inc.

This case was once again before the First Circuit after the court certified to the Massachusetts Supreme Judicial Court (SJC) some state-law questions arising from this diversity-based declaratory-judgment action governed by Massachusetts substantive law. The case was brought by Mount Vernon Fire Insurance Company, the employment-practices liability insurer of VisionAid, Inc., seeking a declaratory judgment that it had no duty to prosecute VisionAid’s embezzlement counterclaim in litigation brought against VisionAid alleging age discrimination. The federal district court ruled that Mount Vernon did not have to foot the bill for VisionAid’s affirmative counterclaim. On appeal, the First Circuit certified three questions to the SJC, two on the duty-to-defend issue and one on a conflict-of-interest issue, which was the only question left for the court to decide in the instant appeal. At issue was whether a conflict of interest existed between the parties that permitted VisionAid to choose the attorney to defend the suit brought against it by the ex-employee, with Mount Vernon paying for that defense. The First Circuit answered in the negative, holding that the presence of the embezzlement counterclaim did not generate a conflict of interest entitling VisionAid to separate counsel to defend against the ex-employee’s suit at Mount Vernon’s expense. View "Mount Vernon Fire Insurance Co v. VisionAid, Inc." on Justia Law