Title: Mount Vernon Fire Insurance Co. v. Visionaid, Inc.

State: massachusetts

Issuer: Massachusetts Supreme Court

Document:

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SJC-12142 
 
MOUNT VERNON FIRE INSURANCE COMPANY  vs.  VISIONAID, INC.1 
 
 
 
Suffolk.     December 5, 2016. - June 22, 2017. 
 
Present:  Gants, C.J., Lenk, Hines, Gaziano, Lowy, Budd, & 
Cypher, JJ. 
 
 
Insurance, Insurer's obligation to defend. 
 
 
 
 
Certification of questions of law to the Supreme Judicial 
Court by the United States Court of Appeals for the First 
Circuit. 
 
 
 
Kenneth R. Berman (Heather B. Repicky also present) for the 
defendant. 
 
James J. Duane, III (Scarlett M. Rajbanshi also present) 
for the plaintiff. 
 
The following submitted briefs for amici curiae: 
 
Marshall Gilinsky for United Policyholders. 
 
Laura Foggan, of the District of Columbia, & Rosanna 
Sattler for American Insurance Association & others. 
 
Michael F. Aylward for American International Group, Inc., 
& another. 
 
 
 
GAZIANO, J.  In this case we are called upon to answer 
three certified questions from the United States Court of 
                                                 
1 Formerly known as H.L. Bouton Co., Inc. 
2 
 
 
 
 
Appeals for the First Circuit involving the scope of an 
insurer's duty to defend, and whether that duty extends to a 
counterclaim brought by the insured.  For the reasons that 
follow, we conclude that where an insurance policy provides that 
the insurer has the "duty to defend any claim" initiated against 
the insured, the insurer's duty to defend does not require it to 
prosecute affirmative counterclaims on behalf of its insured.2 
 
1.  Facts and prior proceedings.  We recite the facts based 
on the United States District Court judge's memorandum of 
decision, the decision by the United States Court of Appeals for 
the First Circuit, and the undisputed documents in the record.  
Visionaid, Inc. (Visionaid),3 is a manufacturer of lens cleaning 
and eye safety products.  It purchased an employment practices 
liability insurance policy from Mount Vernon Fire Insurance 
Company (Mount Vernon), which covered, among other things, 
wrongful termination claims brought against Visionaid from May, 
2011, through May, 2012. 
 
As relevant here, the policy imposed two duties on Mount 
Vernon with respect to any wrongful termination claim brought 
                                                 
 
2 We acknowledge the amicus briefs submitted by United 
Policyholders; American Insurance Association, Complex Insurance 
Claims Litigation Association, and Property Casualty Insurers 
Association of America; and American International Group, Inc., 
and Massachusetts Insurance Federation, Inc. 
 
 
3 When it obtained the insurance policy at issue, Visionaid 
was known as H.L. Bouton, Co., Inc.  The company changed its 
name shortly after the policy was issued. 
3 
 
 
 
 
against Visionaid.  The policy provided that Mount Vernon had 
"the right and duty to defend any Claim to which this insurance 
applies," and that it was obligated to "pay one hundred percent 
(100%) of the Defense Costs for the [covered] Claim" up to the 
policy limit.  Under the terms of the policy, "Claim" was 
defined as "any proceeding initiated against [Visionaid] . . . 
seeking to hold [Visionaid] responsible for a Wrongful Act."  
"Defense costs" was defined as "reasonable and necessary legal 
fees and expenses incurred by [Mount Vernon], or by any attorney 
designated by [Mount Vernon] to defend [Visionaid], resulting 
from the investigation, adjustment, defense, and appeal of a 
Claim."4 
                                                 
 
4 The policy also provided: 
 
 
"Notice:  This is a Claims Made Policy.  This Policy covers 
only those Claims first made against the Insured during the 
Policy Period or Extended Reporting Period, if purchased.  
Defense Costs shall be applied against the Retention. 
 
". . . 
 
 
"I.  Insuring Agreement 
 
"A.  The Company will pay on behalf of the Insured, Loss in 
excess of the Retention not exceeding the Limit of 
Liability shown on the policy Declarations for which this 
coverage applies that the Insured shall become legally 
obligated to pay because of Claims first made against the 
Insured during the Policy Period or during any Extended 
reporting Period, if applicable, for Wrongful Acts arising 
solely out of an Insured's duties on behalf of the 
Organization. 
 
"B.  The Company has the right and duty to defend any Claim 
4 
 
 
 
 
 
In September, 2011, Visionaid discovered through a forensic 
audit that one of its employees, Gary Sullivan, appeared to have 
misappropriated several hundred thousand dollars of company 
funds.  In October, 2011, Visionaid terminated Sullivan.  In 
August, 2012, Sullivan commenced an action for wrongful 
termination before the Massachusetts Commission Against 
Discrimination (MCAD), asserting that Visionaid had terminated 
him due to his age.  Pursuant to the insurance policy, Mount 
Vernon appointed panel attorney Todd Bennett to defend 
Visionaid.5  Bennett filed an answer stating that Visionaid had 
                                                                                                                                                             
to which this insurance applies, even if the allegations of 
the Claim are groundless, false or fraudulent. 
 
". . . 
 
 
"VIII.  Defense and Settlement. 
 
". . . 
 
"B. . . .  [I]f a Claim is made against an Insured for Loss 
that is both covered and uncovered by this Policy, the 
Company will pay one hundred percent (100%) of the Defense 
Costs for the Claim, until such time that the Limits of 
Liability of this policy are exhausted by payment of a 
covered Loss or the Claim for the covered Loss is resolved 
by settlement, verdict or summary judgment." 
 
 
5 Law firms that agree to become "panel counsel" "sign a 
standard retainer agreement" with an insurer.  The agreement 
limits the amount of fees and expenses that panel counsel may 
incur over a given period of time, requires preapproval from the 
insurer for any fees in excess of a specified amount, and 
restricts the number of partners, associates, and paralegals who 
may work on a given case.  Bennett was appointed as panel 
counsel in December, 2011, when Visionaid first informed Mount 
Vernon that Sullivan was asserting an age discrimination claim. 
5 
 
 
 
 
had three nondiscriminatory reasons for terminating Sullivan's 
employment:  his poor job performance, insubordination, and 
suspected misappropriation of company funds. 
 
Bennett then attempted to reach a settlement with Sullivan.  
Initially, Sullivan demanded $400,000, but eventually agreed to 
dismiss his complaint if Visionaid signed a mutual release 
agreement that it would not pursue him for the misappropriated 
funds.  Visionaid would not agree to the mutual release, as it 
intended to bring a claim against Sullivan for the 
misappropriation. 
 
In February, 2013, Sullivan filed a complaint in the 
Superior Court, and the MCAD action was dismissed.  He asserted 
claims of age discrimination; unlawful termination, in violation 
of the covenant of good faith and fair dealing; breach of 
contract; and promissory estoppel.  Mount Vernon again appointed 
Bennett to defend Visionaid, this time under a "reservation of 
rights," in which Mount Vernon disputed whether Visionaid's 
insurance policy obligated Mount Vernon to defend against the 
wrongful termination claim.6  Bennett filed an answer again 
                                                                                                                                                             
 
 
6 A "reservation of rights" allows an insurer to defend an 
insured while disputing whether the policy requires the insurer 
to defend the underlying claim.  Sarnafil, Inc. v. Peerless Ins. 
Co., 418 Mass. 295, 309 (1994) (O'Connor, J., dissenting in 
part).  If an insurer defends under a reservation of rights, the 
insured may elect to proceed with its own defense counsel, at 
the insurer's expense.  Herbert A. Sullivan, Inc. v. Utica Mut. 
6 
 
 
 
 
asserting that Sullivan had been terminated as a result of poor 
job performance, insubordination, and misappropriation of 
Visionaid's funds.  Bennett did not file a counterclaim for 
misappropriation. 
 
Visionaid informed Mount Vernon that if Bennett did not 
prosecute the counterclaim, it would exercise its rights 
pursuant to the reservation of rights, and select independent 
counsel for its representation, at Mount Vernon's expense.  
Mount Vernon then withdrew its reservation of rights, but 
continued to maintain that the policy did not require it to 
prosecute the counterclaim for misappropriation of funds, 
arguing that the duty to defend did not include the duty to 
prosecute an affirmative counterclaim. 
 
Mount Vernon filed a complaint for declaratory judgment in 
the United States District Court for the District of 
Massachusetts, seeking a ruling that its duty to Visionaid did 
not require that it prosecute or pay for the prosecution of the 
counterclaim for misappropriation of funds.  Visionaid filed a 
counterclaim seeking a judgment declaring that Mount Vernon's 
duty to defend included an obligation to prosecute Visionaid's 
counterclaim for misappropriation of funds, and that Mount 
Vernon was required to appoint Visionaid independent counsel 
because Mount Vernon's position that it was not obligated to 
                                                                                                                                                             
Ins. Co., 439 Mass. 387, 406-407 (2003). 
7 
 
 
 
 
prosecute the counterclaim had created a conflict of interest 
with Visionaid. 
 
A United States District Court judge issued a judgment 
declaring that Mount Vernon's duty to defend Visionaid did not 
require it to prosecute the counterclaim for misappropriation of 
funds, and that the absence of such a duty did not create a 
conflict of interest with Visionaid, so that Mount Vernon was 
not required to pay the costs of independent counsel. 
 
Visionaid appealed to the United States Court of Appeals 
for the First Circuit.  That court concluded that the appeal 
raised an issue of State law that had yet to be addressed by 
this court, and certified three questions to us. 
2.  Discussion.  The United States Court of Appeals for the 
First Circuit certified the following questions: 
 
1.  "Whether, and under what circumstances, an insurer 
(through its appointed panel counsel) may owe a duty to its 
insured -- whether under the insurance contract or the 
Massachusetts 'in for one, in for all' rule -- to prosecute 
the insured's counterclaim(s) for damages, where the 
insurance contract provides that the insurer has a 'duty to 
defend any Claim,' i.e., 'any proceeding initiated against 
[the insured]'?" 
 
 
2.  "Whether, and under what circumstances, an insurer 
(through its appointed panel counsel) may owe a duty to its 
insured to fund the prosecution of the insured's 
counterclaim(s) for damages, where the insurance contract 
requires the insurer to cover 'Defense Costs,' or the 
'reasonable and necessary legal fees and expenses incurred 
by [the insurer], or by any attorney designated by [the 
insurer] to defend [the insured], resulting from the 
investigation, adjustment, defense, and appeal of a 
Claim'?" 
8 
 
 
 
 
 
 
3.  "Assuming the existence of a duty to prosecute the 
insured's counterclaim(s), in the event that it is 
determined that an insurer has an interest in devaluing or 
otherwise impairing such counterclaim(s), does a conflict 
of interest arise that entitles the insured to control 
and/or appoint independent counsel to control the entire 
proceeding, including both the defense of any covered 
claims and the prosecution of the subject counterclaim(s)?" 
 
We conclude that (1) an insurer with a contractual duty to 
defend an insured is not required to prosecute an affirmative 
counterclaim on the insured's behalf, pursuant either to the 
contractual language in the policy at issue or the common-law 
"in for one, in for all" doctrine; (2) the duty to pay defense 
costs has the same scope as the duty to defend, and thus does 
not require an insurer to pay the costs of prosecuting a 
counterclaim on behalf of the insured; and (3) because of our 
answers to the first two questions, we do not reach the third 
question. 
a.  Insurer's duty to defend.  i.  Contractual duty.  We 
turn first to the insurer's contractual duties arising from the 
insurance policy.  As with any contract, in interpreting an 
insurance policy, we begin with the plain language of the 
policy.  Boston Gas Co. v. Century Indem. Co., 454 Mass. 337, 
355 (2009).  "We interpret the words of the standard policy in 
light of their plain meaning, . . . giving full effect to the 
document as a whole[,] . . . consider[ing] 'what an objectively 
reasonable insured, reading the relevant policy language, would 
9 
 
 
 
 
expect to be covered’ . . . [and] interpret[ing] the provision 
of the standard policy in a manner consistent with the statutory 
and regulatory scheme that governs such policies" (citation 
omitted).  Golchin v. Liberty Mut. Ins. Co., 466 Mass. 156, 159-
160 (2013). 
Visionaid's employment practices liability insurance policy 
obligates Mount Vernon to "defend" Visionaid against any "Claim" 
i.e., "any proceeding initiated against [Visionaid] . . . 
seeking to hold [Visionaid] responsible for a Wrongful Act."  
While the meaning of "Claim" thus is defined in the policy, the 
policy is silent on the definition of the term "defend."  
Therefore, we construe the word "defend" using its "usual and 
accepted meaning."  See Federal Nat'l Mtge. Ass'n v. Rego, 474 
Mass. 329, 334 (2016), citing Seideman v. Newton, 452 Mass. 472, 
477-478 (2008).  In common usage, to "defend" means to "deny or 
oppose the right of a plaintiff in . . . a suit or wrong 
charged."  Webster's Third New International Dictionary 591 
(1993).  "Defense," in ordinary usage, is defined as "a 
defendant's denial, answer, or plea . . . an opposing or denial 
of the truth or validity of the plaintiff's . . . case."7  Id.  
                                                 
7 "Prosecute," on the other hand, is defined as "to 
institute legal proceedings against; [especially] to accuse of 
some crime or breach of law or to pursue for redress or 
punishment of a crime or violation of law in due legal form 
before a legal tribunal."  Webster's Third New International 
Dictionary 1820 (1993). 
10 
 
 
 
 
As the plain meaning of the word "defend" is clear, we do not 
deviate from it.  See Certain Interested Underwriters at 
Lloyd's, London v. Stolberg, 680 F.3d 61, 66 (1st Cir. 2012) 
("ambiguity -- unlike beauty -- does not lie wholly in the eye 
of the beholder. . . .  A policy provision will not be deemed 
ambiguous simply because the parties quibble over its meaning"). 
Accordingly, in the language of Visionaid's contract, the 
essence of what it means to defend is to work to defeat a claim 
that could create liability against the individual being 
defended.  Visionaid and Mount Vernon entered into a contractual 
agreement that Visionaid would pay a certain amount of money to 
insure against a particular risk.  See Red Head Brass, Inc. v. 
Buckeye Union Ins. Co., 135 Ohio App. 3d 616, 629 (1999) 
(insured "bargained only for the insurer to pay for defending 
the insured against litigation.  It did not bargain for legal 
representation where the insured is the plaintiff").  The 
agreement in this case, memorialized in the written insurance 
policy, required Mount Vernon to "defend" Visionaid in any claim 
"first made against [it] during the Policy Period," and no more.  
See 1 A.D. Windt, Insurance Claims and Disputes:  Representation 
of Insureds & Insurers § 4:41 (6th ed. 2013) ("An insurer, being 
obligated only to defend claims brought 'against' the insured, 
is not required to bear the cost of prosecuting a counterclaim 
on behalf of the insured"). 
11 
 
 
 
 
Visionaid advances a number of policy arguments in support 
of its position, some of which the dissent urges upon us, that 
an insurer should be obligated to prosecute an affirmative 
counterclaim on behalf of its insured.  In light of the plain 
language of the policy, however, even if we were inclined to do 
so, we are unable to adopt these suggestions.  Where the 
language of an insurance policy is clear and unambiguous, we 
rely on that plain meaning, and do not consider policy arguments 
in interpreting the plain language.  "[T]he question whether a 
bargain is smart or foolish, or economically efficient or 
disastrous, is not ordinarily a legitimate subject of judicial 
inquiry."  11 R.A. Lord, Williston on Contracts § 31:5, at 455 
(4th ed. 2012).  See Towne Realty, Inc. v. Zurich Ins. Co., 193 
Wis. 2d 544, 569-570 (Ct. App. 1995) (Cane, P.J., dissenting) 
(pursuing affirmative counterclaim "might be a good defense 
strategy . . . but . . . [there is no] obligation beyond the 
terms of the insurance policy which is to defend against any 
suits filed against its insured"). 
We note that courts in a number of other jurisdictions have 
considered similarly worded insurance policies, and have reached 
a similar determination that the meaning of the word "defend" is 
not ambiguous.  Those courts have concluded that the duty to 
"defend" requires an insurer to work to defeat a claim brought 
against the insured, but not to prosecute an affirmative claim 
12 
 
 
 
 
against the plaintiff in the underlying suit, no matter how 
advantageous that claim would be to the insured.  See, e.g., 
Morgan, Lewis & Brockius LLP v. Hanover Ins. Co., 929 F. Supp. 
764, 771 (D.N.J. 1996) ("Nowhere in the policy is there any 
mention that [the insurer] would pay for affirmative prosecution 
of a civil action by [the insured].  The court finds the policy 
language to be clear and unambiguous"); Shoshone First Bank v. 
Pacific Employers Ins. Co., 2 P.3d 510, 516 (Wyo. 2000) ("We 
accept the general premise that '[a]n insurer, being obligated 
to defend claims "against" the insured, is not required to bear 
the cost of prosecuting a counterclaim on behalf of the 
insured'" ; "if an insurance policy fails to specify coverage 
for prosecuting counterclaims, the policy language will not be 
'tortured' to create an ambiguity").  See Aldous v. Darwin Nat'l 
Assur. Co., 851 F.3d 473, 483 (5th Cir. 2017) (under Texas law, 
duty to defend entire lawsuit does not give rise to duty to 
prosecute helpful or inextricably intertwined claims). 
By contrast, courts in some jurisdictions have concluded 
that the meaning of the word "defend" in an insurance contract 
was ambiguous, and therefore have interpreted the duty to 
"defend" in the manner the dissent suggests, to require insurers 
to prosecute affirmative counterclaims in certain instances.  
See Great West Cas. Co. v. Marathon Oil Co., 315 F. Supp. 2d 
879, 882 (N.D. Ill. 2003) (duty to defend requires insurer to 
13 
 
 
 
 
bring affirmative counterclaims that would reduce insured's 
liability on underlying claim); Potomac Elec. Power Co. v. 
California Union Ins. Co., 777 F. Supp. 980, 984 (D.D.C. 1991) 
(duty to defend requires insurer to bring any claim that 
reasonable defense attorney would bring); Safeguard Scientifics, 
Inc. v. Liberty Mut. Ins. Co., 766 F. Supp. 324, 333-334 (E.D. 
Pa. 1991) (duty to defend requires insurer to bring any 
counterclaim that is factually "inextricably intertwined" with 
underlying claim). 
Visionaid maintains that the duty to "defend" under its 
insurance policy may be understood as meaning anything a 
reasonable defense attorney would do to reduce the liability of 
the insured.  Visionaid does not contend that this definition of 
"defend" was intended by the parties but, rather, that it is one 
possible reasonable interpretation of the contract language.  In 
support of this argument, Visionaid relies on a canon of 
contract interpretation for insurance contracts requiring that, 
where "the language [of an insurance policy] permits more than 
one rational interpretation," a reviewing court must interpret 
the contract in the light most favorable to the insured, see 
Boston Symphony Orch., Inc. v. Commercial Union Ins. Co., 406 
Mass. 7, 12 (1989), quoting Palmer v. Pawtucket Mut. Ins. Co., 
352 Mass. 304, 306 (1967), and argues that thus we must embrace 
Visionaid's interpretation of the policy language. 
14 
 
 
 
 
The plain language here, however, does not, by itself, 
permit the interpretation that Visionaid propounds.  To adopt 
this interpretation would require us to read in a number of 
provisions that the parties did not include in the policy and, 
as the dissent puts it, place an additional duty on the insurer 
"[w]here the insured's defense is intertwined with a compulsory 
counterclaim, where any reasonable attorney defending that 
proceeding would bring such a counterclaim, and where the 
insured agrees that any damages awarded to the insured on that 
counterclaim will offset any award of damages against the 
insured that the insurer is required to indemnify."  Post 
at    .  Not only is this proposition found nowhere in the 
language of the contract, it would result in extensive 
preliminary litigation to determine what claims are sufficiently 
intertwined, litigation that would be brought by "any reasonable 
attorney."  This, in turn, would require a fact finder to 
undertake a cost benefit analysis of, among other things, the 
additional attorney's fees that would be required to pursue the 
counterclaim, where the insurer bears the burden of persuasion 
and the likelihood of recovery from an insured who might be 
judgment proof.  Parties who wish to require such calculations 
are of course free to do so in their written contracts.  
Imposing such requirements where none was included explicitly is 
far beyond interpreting the language of the contract. 
15 
 
 
 
 
 
ii.  The "in for one, in for all" rule.  The "in for one, 
in for all" rule requires that, where an insurer is obligated to 
defend an insured on one of the counts alleged against it, the 
insurer must defend the insured on all counts, including those 
that are not covered.  See GMAC Mtge., LLC v. First Am. Title 
Ins. Co., 464 Mass. 733, 738 (2013); 3 J.E. Thomas, New Appleman 
on Insurance Law Library Edition § 17.01[3][a] (2016) 
("Virtually all courts agree that if an action involves both 
potentially covered and noncovered claims -- a so-called 'mixed' 
action -- the insurer must defend the entire action").  The 
"central policy behind 'in for one, in for all' . . . [is] that 
parsing multiple claims is not feasible."  GMAC Mtge., LLC, 
supra at 741.  This rule greatly enhances efficiency for 
litigants, attorneys, and judges, where there are multiple 
claims and a question whether one or more of the claims is 
covered by a particular insurance policy.  It allows the parties 
to reach the merits of the underlying action quickly, rather 
than litigating whether the insurer had a duty to defend and the 
extent of that duty, prior to placing the matter before the fact 
finder.  Id.  See Simplex Techs., Inc. v. Liberty Mut. Ins. Co., 
429 Mass. 196, 199 (1999) ("That some, or even many, of the 
underlying claims may fall outside the coverage does not excuse 
[the insurer] from its duty to defend these actions"); PTC, Inc. 
v. Charter Oak Fire Ins. Co., 123 F. Supp. 3d 206, 216 (D. Mass. 
16 
 
 
 
 
2015) ("Under Massachusetts law, if an insurer has a duty to 
defend any aspect of a litigation, it is 'in for one, in for 
all,' meaning that it must defend all other claims within the 
litigation"). 
Visionaid argues that because the "in for one, in for all" 
rule expands the duties of an insurer beyond those explicitly 
set forth in the contract, the policy also expands the insurer's 
duty to include the obligation to prosecute an affirmative 
counterclaim.  While the "in for one, in for all" rule did 
expand the class of actions that an insurer is obligated to 
defend, it did not change the meaning of the word "defend."  We 
are persuaded that the better course under the "in for one, in 
for all" rule is to require an insurer to defend claims brought 
against its insured, but not to require an insurer to assert 
affirmative claims on behalf of that insured.  See Duke Univ. v. 
St. Paul Mercury Ins. Co., 95 N.C. App. 663, 680 (1989) (even in 
State with "in for one, in for all" rule, insurer's duty to 
defend did not compel it to bring affirmative counterclaim on 
behalf of insured). 
Expanding the "in for one, in for all" rule in the manner 
that Visionaid urges misaligns the interests of the party who 
stands to benefit from the counterclaim (the insured) and the 
party who bears the cost of prosecuting the counterclaim (the 
insurer).  As a result, allowance of such a rule would increase 
17 
 
 
 
 
the total number of counterclaims brought by insured parties.  
It also, in effective, would result in additional litigation in 
virtually every case involving insurance on whether a 
"reasonable" attorney hired separately by (and paid by) the 
insured would file the counterclaim in the given circumstances.  
Such an expansion of the "in for one, in for all" rule also 
would lead to increased litigation between insurers and insured 
parties on the question whether a successful counterclaim would 
result in reduced liability on the underlying claim.  See 
International Ins. Co. v. Rollprint Packaging Prods., Inc., 312 
Ill. App. 3d 998, 1015 (2000); Red Head Brass, Inc., 135 Ohio 
App. 3d at 629.  An increase in litigation between insurer and 
insured is precisely what "in for one, in for all" seeks to 
avoid.  See Shoshone First Bank, 2 P.3d at 517 (allowing 
insurers to defend only covered claims "would lead to judicial 
inefficiency and a failure to resolve actions timely and 
consistently"). 
We are persuaded by the analysis of a judge of the United 
States District Court for the District of Massachusetts, 
describing the particular policy reasons for not including 
counterclaims among insurers' duties to defend.  See Barletta 
Heavy Div., Inc. vs. Travelers Ins. Co., No. 12-11193-DPW (D. 
Mass. Oct. 25, 2013).  In that case, the Federal District Court 
judge declined to expand an insurer's duty to defend, noting 
18 
 
 
 
 
that if insurers were obligated to prosecute affirmative 
counterclaims on behalf of insured parties, "an insured would 
have every incentive -- and little disincentive -- to file suit, 
knowing that it could reap the benefits of success -- however 
unlikely -- while transferring the costs of an otherwise 
predictably unsuccessful suit onto its insurer."  Id.  See 
Reynolds v. Hartford Acc. & Indem. Co., 278 F. Supp. 331, 333 
(S.D.N.Y. 1967) (requiring insurer to "prosecut[e] . . . 
counterclaims would no doubt entail extra expenditures on the 
part of the insurance carrier . . . [and] would be manifestly 
unfair"); Towne Realty, Inc., 193 Wis. 2d at 570 (Cane, P.J., 
dissenting) (duty to defend does not compel insurers "to pursue 
counterclaims which by their very nature are for the benefit of 
the person pursuing the counterclaim":  the insured). 
b.  Insurer's obligation to pay for defense costs.  The 
second certified question asks whether an insurer's obligation 
to pay for an insured's "defense costs" requires the insurer to 
fund counterclaims on behalf of the insured.  The policy at 
issue here defines "defense costs" as "reasonable and necessary 
legal fees and expenses incurred by [Mount Vernon] to defend 
[Visionaid], resulting from the investigation, adjustment, 
defense, and appeal of a [c]laim."  By defining "defense costs" 
in this way, the policy creates a duty to pay the costs of 
defense that is coextensive with the duty to defend.  The duty 
19 
 
 
 
 
to defend arises when the insurer is involved in a case at the 
beginning of the litigation; the duty to pay defense costs 
arises if the insurer becomes involved in the matter after a 
verdict has been reached (or, regardless of timing, if there is 
a conflict of interest between the insurer and insured). 
Although courts in some other jurisdictions have 
distinguished the duty to pay defense costs from the duty to 
defend, in Massachusetts, where an insurer has both the duty to 
defend and the duty to pay defense costs, the scope of the duty 
to defend and the scope of the duty to pay defense costs are 
identical.  Rubenstein v. Royal Ins. Co. of Am., 429 Mass. 355, 
356 (1999) (insurer who failed to comply with its duty to defend 
was required to pay costs of defense and costs of declaratory 
judgment action to determine that it had duty to defend); 
Polaroid Corp. v. Travelers Indem. Co., 414 Mass. 747, 762 
(1993) (breach of duty to defend requires insurer to pay defense 
costs).  Cf. Health Net, Inc. v. RLI Ins. Co., 206 Cal. App. 4th 
232, 259 (2012) (duty to pay defense costs, without more, 
requires insurer to pay for costs of defending only covered 
claims, while duty to defend requires insurer to defend entire 
lawsuit, as long as at least one claim is covered). 
Because the duty to pay defense costs is coextensive with 
the duty to defend, we apply the same analysis to question two 
that we applied to question one, and conclude that the duty to 
20 
 
 
 
 
pay defense costs does not require an insurer to fund the 
prosecution of any counterclaim on behalf of the insured.8 
3.  Conclusion.  We answer the certified questions as 
follows. 
Question one:  An insurer with a contractual duty to 
defend an insured is not required to prosecute an 
affirmative counterclaim on the insured's behalf, pursuant 
to either the contractual language or the "in for one, in 
for all" rule. 
 
Question two:  The duty to pay defense costs has the 
same scope as the duty to defend; accordingly, it does not 
require the insurer to pay the costs of prosecuting a 
counterclaim on behalf of the insured. 
 
Question three:  Because of our responses to the other 
questions, we do not reach this question. 
 
 
The Reporter of Decisions is to furnish attested copies of 
this opinion to the clerk of this court.  The clerk in turn will 
transmit one copy, under the seal of the court, to the clerk of 
the United States Court of Appeals for the First Circuit, as the 
answer to the questions certified, and will also transmit a copy 
to each party. 
 
                                                 
 
8 Because of the decision we reach on the first two 
questions, we do not reach the third question. 
 
 
 
 
GANTS, C.J. (dissenting, with whom Lenk, J., joins).  In 
answer to the certified questions submitted by the United States 
Court of Appeals for the First Circuit, the court concludes 
"that where the insurance policy provides that an insurer has 
the 'duty to defend any claim' initiated against the insured, 
the insurer's duty to defend does not require it to prosecute 
affirmative counterclaims on behalf of its insured."  I 
respectfully disagree.  Based on the language of the insurance 
policy, an insurer's "duty to defend any claim" means the duty 
to defend the insured in "any proceeding initiated against any 
Insured . . . seeking to hold such Insured responsible for a 
Wrongful Act."  Where the insured's defense is intertwined with 
a compulsory counterclaim, where any reasonable attorney 
defending that proceeding would bring such a compulsory 
counterclaim, and where the insured agrees that any damages 
awarded to the insured on that counterclaim will offset any 
award of damages against the insured that the insurer is 
required to indemnify, I conclude that an insurer's duty to 
defend the insured in "any proceeding" includes the duty to 
prosecute such a compulsory counterclaim. 
 
I agree with the court that, "in interpreting an insurance 
policy, we begin with the plain language of the policy."  Ante 
at    .  See Golchin v. Liberty Mut. Ins. Co., 466 Mass. 156, 
159-160 (2013) ("We interpret the words of the standard policy 
2 
 
 
 
 
in light of their plain meaning, . . . giving full effect to the 
document as a whole[,] . . . consider[ing] 'what an objectively 
reasonably insured, reading the relevant policy language, would 
expect to be covered' . . ." [citation omitted]).  But where the 
language of an insurance agreement permits more than one 
rational interpretation, we apply the interpretation most 
favorable to the insured.  See Boston Symphony Orch., Inc. v. 
Commercial Union Ins. Co., 406 Mass. 7, 12 (1989). 
 
Under Mount Vernon Fire Insurance Company's policy with 
Visionaid, Inc. (Visionaid), the insurer's duty to defend is not 
limited to defending causes of action arising from a wrongful 
act as defined in the agreement.  It includes the "duty to 
defend any Claim to which this insurance applies."  A claim is 
not defined under the policy as a cause of action; rather, it is 
defined under the policy as "any proceeding initiated against 
any Insured . . . seeking to hold such Insured responsible for a 
Wrongful Act."  Therefore, the duty to defend a claim under the 
policy means the duty to defend the insured in a proceeding 
where the insured is alleged to be responsible for a wrongful 
act covered by the policy. 
 
We have held under our so-called "in for one, in for all" 
rule that, where a proceeding includes one cause of action 
alleging a wrongful act covered under a general liability 
policy, an insurer's duty is not limited to defending that 
3 
 
 
 
 
specific cause of action but encompasses the duty to defend the 
insured against all the causes of action in that proceeding.  
See GMAC Mtge., LLC v. First Am. Title Ins. Co., 464 Mass 733, 
738 (2013), quoting Liberty Mut. Ins. Co. v. Metropolitan Life 
Ins. Co., 260 F.3d 54, 63 (1st Cir. 2001) ("Because '[i]t is not 
uncommon for a lawsuit against an insured to assert some claims 
that are covered by the insurance policy and others that are 
not,' the general rule in Massachusetts in the general liability 
insurance context is that 'an insurer must defend the entire 
lawsuit if it has a duty to defend any of the underlying counts 
in the complaint'"); Symplex Techs., Inc. v. Liberty Mut. Ins. 
Co., 429 Mass. 196, 199 (1999) ("that some, or even many, of the 
underlying claims may fall outside the coverage does not excuse 
[the insurer] from its duty to defend").1 
 
The "in for one, in for all" rule is needed in general 
liability policies because it would be impractical and 
deleterious to an effective defense to parse the various counts 
and have one attorney appointed by the insurer defend against 
some and an attorney retained by the insured defend against 
others.  See GMAC Mtge., LLC, 464 Mass at 739, citing A.D. 
Windt, Insurance Claims and Disputes:  Representation of 
                                                 
 
1 The "in for one, in for all" rule of general liability 
insurance defense does not apply to title insurance because 
"title insurance is fundamentally different from general 
liability insurance."  GMAC Mtge., LLC v. First Am. Title Ins. 
Co., 464 Mass 733, 740 (2013). 
4 
 
 
 
 
Insureds & Insurers § 4.13, at 128 (1982) (dividing 
representation between covered and noncovered claims is 
impractical); Narragansett Elec. Co. v. American Home Assur. 
Co., 999 F. Supp. 2d 511, 526 (S.D.N.Y. 2014), rev'd on other 
grounds 667 Fed. Appx. 8 (2d Cir. 2016) (applying Massachusetts 
law; "a defense of an action with both covered and uncovered 
claims may benefit from a unified defense and legal arguments, 
and it is illogical to separate them based on insurance 
coverage").  As the California Supreme Court noted in Buss v. 
Superior Court of Los Angeles County, 16 Cal. 4th 35, 49 (1997): 
"To defend meaningfully, the insurer must defend 
immediately. . . .  To defend immediately, it must defend 
entirely.  It cannot parse the claims, dividing those that 
are at least potentially covered from those that are not.  
To do so would be time consuming.  It might also be futile:  
The 'plasticity of modern pleading' . . . allows the 
transformation of claims that are at least potentially 
covered into claims that are not, and vice versa."  
(Citations omitted.) 
 
 
Without the "in for one, in for all" rule, the insured 
would be represented by two attorneys who would prepare and 
respond to discovery and other pretrial motions, prepare and 
depose witnesses, and try the case.  The attorneys would need to 
coordinate settlement discussions and pretrial strategy, and at 
trial might provide separate opening statements and closing 
arguments, examine witnesses separately, raise separate 
objections to questions and answers, and proffer separate jury 
instructions and objections to the judge's instructions.  For 
5 
 
 
 
 
these and other reasons, one prominent insurance defense counsel 
has concluded that "[i]n almost all situations it is totally 
impracticable to have two lawyers defending the same client."  
See Neumeier, Serving Two Masters:  Problems Facing Insurance 
Defense Counsel and Some Proposed Solutions, 77 Mass. L. Rev. 
66, 80 (1992).  Such duplication, of course, also would lead to 
longer, more expensive litigation and adjudication, and would 
place greater strain on judicial resources.2 
 
The same reasoning that yielded the "in for one, in for 
all" rule compels the conclusion that the insurer's duty to 
defend a proceeding includes an obligation to prosecute 
compulsory counterclaims that are intertwined with the insured's 
defense, where any reasonable attorney defending that proceeding 
would bring such a compulsory counterclaim, and where the 
insured agrees that any damages awarded to the insured on that 
counterclaim will offset any award of damages against the 
insured that the insurer is required to indemnify.  In such 
circumstances, the insurer cannot reasonably fulfil its duty to 
                                                 
 
2 Without the "in for one, in for all" rule, the presence of 
two attorneys separately representing the defendant might also 
cause a jury to infer that at least some portion of liability is 
covered by an insurer.  We generally do not allow plaintiffs to 
introduce evidence demonstrating that the defendant is covered 
by insurance because such evidence may "lead to undeserved 
verdicts for plaintiffs and exaggerated awards which jurors will 
readily load on faceless insurance companies supposedly paid for 
taking the risk."  Goldstein v. Gontarz, 364 Mass. 800, 808 
(1974), citing 2 J. Wigmore, Evidence § 282(a) (3d ed. 1940).  
See Mass. G. Evid. § 411 (2017). 
6 
 
 
 
 
defend the insured in the proceeding without also prosecuting 
such counterclaims because it would be impractical and 
deleterious to an effective defense to fail to do so. 
 
The facts of this case amply demonstrate why this is true.  
As the court notes, Visionaid, through the insurer's appointed 
attorney, filed an answer identifying the suspected 
misappropriation of company funds by one of its employees, Gary 
Sullivan, as a defense to Sullivan's claim of a wrongful 
termination based on age discrimination.  There is no dispute 
that Visionaid's affirmative claim for misappropriation of 
company funds is a compulsory counterclaim that Visionaid must 
either timely bring or waive.  See Mass. R. Civ. P. 12 (a) (1), 
365 Mass. 754 (1974); Mass. R. Civ. P. 13 (a), as amended, 423 
Mass. 1405 (1996).  Visionaid's defense is intertwined with the 
compulsory counterclaim because, if Visionaid can prove that it 
terminated Sullivan because it learned that he was stealing 
company funds, it will defeat Sullivan's claim that his 
termination was motivated by age discrimination.  Even if 
Sullivan were to prevail on his age discrimination claim because 
Visionaid did not know of Sullivan's theft until after his 
termination, Visionaid might still be able to limit the scope of 
damages that Sullivan can recover because an employee who 
suffered a discriminatory termination might not be entitled to 
front pay beyond the date that he or she would have been 
7 
 
 
 
 
terminated for another, legitimate reason, such as stealing 
company funds.  See McKennon v. Nashville Banner Pub. Co., 513 
U.S. 352, 361-362 (1995); Springfield v. Civil Serv. Comm'n, 469 
Mass. 370, 378 n.14 (2014).  No reasonable attorney representing 
a defendant in this proceeding under these circumstances would 
fail to file this compulsory counterclaim.  Prosecuting such a 
counterclaim would be entirely consistent with the defense, and 
would substantially strengthen the insured's negotiating 
position, as reflected in this case by the plaintiff's 
willingness to dismiss his complaint in return for a release 
from Visionaid.3  Where the insured agrees that any award of 
damages arising from the compulsory counterclaim would offset 
any such award arising from the complaint that the insurer would 
be obligated to indemnify, a successful compulsory counterclaim 
would benefit both the insured and the insurer. 
 
The court takes a narrower view of the duty to defend by 
focusing on the meaning of the word "defend" in isolation and 
declaring that, "in the language of Visionaid's contract, the 
essence of what it means to defend is to work to defeat a claim 
                                                 
 
3 Under the insurance policy, the insurer "has the right to 
. . . negotiate the settlement of any Claim whether within or 
above Retention."  Where the terms of any settlement for the 
insured would be significantly and favorably affected by the 
existence of a compulsory counterclaim that is intertwined with 
the defense, the insurer's obligation to act in good faith 
towards its insured in settlement negotiations suggests an 
obligation to bring such a counterclaim. 
8 
 
 
 
 
that could create liability against the individual being 
defended."  Ante at    .  I take a broader view of the duty to 
defend because I focus on what it means to defend a proceeding, 
which is the duty the insurer agreed to assume in the insurance 
contract.  Because the duty to defend a "claim" under the 
contract means to defend the insured in any proceeding where a 
wrongful act is alleged, not simply to defend the insured 
against the causes of action alleging wrongful acts, the broader 
view of the duty to defend includes the duty to prosecute 
compulsory counterclaims that are intertwined with the insured's 
defense.  This broader view is consonant with what any 
reasonable attorney representing the insured would do to defend 
a proceeding; the narrower view is not. 
 
The concerns raised by the court if we were to recognize a 
duty to prosecute a counterclaim within the scope of the duty to 
defend do not apply where that duty is limited to the 
prosecution of compulsory counterclaims that are intertwined 
with the insured's defense, where any reasonable attorney 
defending that proceeding would bring such a compulsory 
counterclaim, and where the insured agrees that any damages 
awarded to the insured on that counterclaim will offset any 
award of damages against the insured that the insurer is obliged 
to indemnify.  This limited duty would not expand the total 
number of counterclaims brought by insureds, because it is 
9 
 
 
 
 
limited to compulsory counterclaims that must be brought or 
waived.  See ante at    .  Nor would it result in any 
significant increase in litigation between insured parties and 
insurers over who must prosecute the counterclaim because it 
will be clear in most cases whether a compulsory counterclaim 
that any reasonable attorney defending that proceeding would 
bring is intertwined with the insured's defense.  See id.  Nor 
would it "misalign[] the interests of the party who stands to 
benefit from the counterclaim (the insured) and the party who 
bears the cost of prosecuting the counterclaim (the insurer)," 
see ante at    , because the insurer would be obligated to 
prosecute the compulsory counterclaim only where the insured 
agrees that any award of damages arising from the compulsory 
counterclaim would offset any such award arising from the 
complaint that the insurer would be obligated to indemnify. 
 
The court also notes that "courts in a number of other 
jurisdictions have considered similarly worded insurance 
policies, and have reached a similar determination that the 
meaning of 'defend' is not ambiguous" and excludes the 
prosecution of any counterclaim.  See ante at    .  But, as the 
court also notes, other courts in other jurisdictions have 
determined that the meaning of the word "defend" in the 
insurance contract was ambiguous, and have held that an 
insurer's duty to defend may include the prosecution of certain 
10 
 
 
 
 
counterclaims that are defensive in nature.  See ante at    .  
See also Hartford Fire Ins. Co. v. Vita Craft Corp., 911 F. 
Supp. 2d 1164, 1183 (D. Kan. 2012); Ultra Coachbuilders, Inc. v. 
General Sec. Ins. Co., 229 F. Supp. 2d 284, 289 (S.D.N.Y. 2002); 
Oscar W. Larson Co. v. United Capitol Ins. Co., 845 F. Supp. 
458, 461 (W.D. Mich. 1993), aff'd, 64 F.3d 1010 (6th Cir. 1995).  
In fact, at least one insurance law treatise describes such 
decisions as embodying the majority rule.  See 1 D.L. Leitner, 
R.W. Simpson, & J.M. Bjorkman, Law and Practice of Insurance 
Coverage Litigation § 4.22 (2016 Supp.) ("While some courts rule 
otherwise, the general test to determine whether the insurer 
must bear such "offense costs" is whether the claims are [1] 
defensive in nature, as well as [2] reasonable and necessary to 
limit liability" [footnote omitted]).  If the meaning of 
"defend" were truly without ambiguity, it is doubtful that so 
many courts would define the term so differently. 
 
Because I would interpret the insurer's duty under the 
insurance policy to defend the insured in "any proceeding 
initiated against any Insured" to include a duty to prosecute 
Visionaid's compulsory counterclaim for misappropriation of 
funds, I respectfully dissent.