Court Opinion

ID: 4212000
Source: CourtListenerOpinion
Date Created: 2017-10-16 20:09:50.129771+00
Date Added: 2024-06-11T12:39:31.395874
License: Public Domain

NOTICE: All slip opinions and orders are subject to formal
revision and are superseded by the advance sheets and bound
volumes of the Official Reports. If you find a typographical
error or other formal error, please notify the Reporter of
Decisions, Supreme Judicial Court, John Adams Courthouse, 1
Pemberton Square, Suite 2500, Boston, MA, 02108-1750; (617) 557-
1030; SJCReporter@sjc.state.ma.us

16-P-203                                            Appeals Court

 ONEBEACON AMERICA INSURANCE COMPANY   vs.   CELANESE CORPORATION.

                          No. 16-P-203.

      Suffolk.      November 18, 2016. - October 16, 2017.

            Present:   Trainor, Meade, & Hanlon, JJ.

Insurance, Defense of proceedings against insured, Insurer's
     obligation to defend. Contract, Insurance. Conflict of
     Interest. Practice, Civil, Summary judgment, Attorney's
     fees.

     Civil action commenced in the Superior Court Department on
March 2, 2010.

     The case was heard by Christine M. Roach, J., on motions
for summary judgment, and an award of attorney's fees was
entered by her.

     Kevin J. O'Connor (Kara A. Loridas also present) for the
plaintiff.
     Michael John Miguel for the defendant.

    TRAINOR, J.   This appeal arises from a series of cross

motions for summary judgment.   The plaintiff, OneBeacon America

Insurance Company (OneBeacon), appeals from so much of the final

judgment as awarded reasonable and necessary defense costs to
                                                                     2

its insured, Celanese Corporation (Celanese), that Celanese

incurred from April 13, 2009, through May 27, 2011.1    On May 27,

2011, a judge of the Superior Court determined that OneBeacon

was entitled to take control of Celanese's defense as of April

13, 2009 (see note 1, supra).   The issue on appeal is whether

that determination precludes Celanese from receiving any

reimbursement for defense of the underlying claims during the

period of time when the question of control over the defense was

being litigated.   OneBeacon argues that it is not liable for any

defense costs incurred by Celanese during that period of time

because OneBeacon offered to defend Celanese without a

reservation of rights.   Celanese, on cross appeal, contends that

the judge committed an abuse of discretion by not awarding the

full amount of defense costs that Celanese requested.    We vacate

so much of the judgment that held OneBeacon liable for

Celanese's defense costs for the period of time at issue, and

therefore do not reach the issues raised in Celanese's cross

appeal.

     Background.   The following undisputed facts are taken from

the summary judgment record.    See Augat, Inc. v. Liberty Mut.

     1
       On April 13 Celanese elected to revert to defense under
OneBeacon's general policies. The parties then engaged in
litigation to determine, inter alia, whether, upon its offer to
defend Celanese without a reservation of rights, OneBeacon was
also entitled to take control of the defense of underlying
claims against Celanese.
                                                                   3

Ins. Co., 410 Mass. 117, 120 (1991) ("The standard of review of

a grant of summary judgment is whether, viewing the evidence in

the light most favorable to the nonmoving party, all material

facts have been established and the moving party is entitled to

a judgment as a matter of law").

     Over the years, Celanese has been subject to numerous legal

actions involving claims of bodily injury from asbestos and

chemicals allegedly contained in Celanese's products or

facilities.   In an effort to seek coverage under its insurance

policies in April, 2009, Celanese sent a letter to OneBeacon

stating that it was terminating the parties' then-existing

defense cost-sharing agreements2 and demanding that OneBeacon

instead defend the ongoing asbestos and chemical product injury

claims under its original general liability policies.3

OneBeacon's general policies provided:

     "DEFENSE, SETTLEMENT, SUPPLEMENTARY PAYMENTS. As respects
     the insurance afforded by the terms of this policy
     [OneBeacon] shall:

          "A. defend any suit against [Celanese] alleging
     bodily injury or property damage, even if such suit is

     2
       These agreements superseded the defense cost provisions of
OneBeacon's general policies and provided that OneBeacon would
pay a specified percentage of Celanese's defense costs for
certain specified claims. Celanese terminated these agreements
as a result of prior litigation with OneBeacon concerning the
agreements. That litigation commenced in 2006, and was tried to
a jury in 2009. See note 6, infra.
     3
       The termination letter was dated February 11, 2009, with
the withdrawal effective April 14, 2009.
                                                                    4

     groundless, false or fraudulent; but [OneBeacon] may make
     such investigation, negotiation and settlement of any claim
     or suit as it deems expedient;

          "B. pay in addition to the applicable policy limits
     of liability:

          "(1) all expenses incurred by [OneBeacon]."4

     In response to Celanese's letter, OneBeacon agreed to

defend Celanese against the underlying asbestos and chemical

product injury claims without a reservation of rights.   To this

effect, OneBeacon offered to waive any issues of coverage5 and to

indemnify Celanese from any settlements or judgments up to its

full liability limits.   However, OneBeacon also sought to assume

full control of Celanese's defense of these claims.

     In response, Celanese refused to cede its control of the

defense or replace the counsel it had employed for the past

fourteen years with the representation selected by OneBeacon.

     4
       The general policies also provided that Celanese had a
duty of assistance and cooperation with OneBeacon:

     "Assistance and Cooperation of the Insured. The insured
     shall cooperate with [OneBeacon] and, upon [OneBeacon's]
     request, shall attend hearings and trials and shall assist
     in effecting settlements, securing and giving evidence,
     obtaining the attendance of witnesses and in the conduct of
     suits. The insured shall not, except at his [sic] own
     cost, voluntarily make any payment, assume any obligation
     or incur any expenses other than for such immediate medical
     and surgical relief to others as shall be necessary at time
     of accident."
     5
       OneBeacon stated that it would defend Celanese in all
pending cases that potentially alleged exposure during the
policy periods of 1965-1971.
                                                                    5

Celanese alleged that because a "demonstrated conflict of

interest" existed, it was not required to yield control of its

defense.6

     OneBeacon replied by advising Celanese that, as Celanese's

insurer, it did not consent to Celanese's retention of

independent counsel and was not contractually obligated to

compensate Celanese for such defense costs.

     In March, 2010, OneBeacon filed an action for declaratory

relief.7    A judge entered an order in May, 2011,8 ruling on the

     6
       Celanese's letter provided three reasons for which a
conflict of interest existed and therefore for refusing to allow
OneBeacon to control the defense: (1) a jury verdict in the
2009 litigation between the parties found OneBeacon and Resolute
Management, Inc. - New England Division (OneBeacon's third-party
administrator) liable to Celanese under G. L. c. 93A, thus
demonstrating those entities' conflict of interest in
representing Celanese; (2) OneBeacon's proposal would result in
multiple defense firms handling the same cases, where some
claims alleged exposures during periods of time not covered by
the OneBeacon policies, thus creating a wasteful duplication of
effort; and (3) since some of the underlying cases fell outside
of OneBeacon's defense obligation, it did not have the right to
control the defense. However, on appeal, it appears that
Celanese has withdrawn its second and third arguments alleging a
conflict of interest.

     As further evidence of OneBeacon's conflict of interest,
Celanese argued that, in testimony at the 2009 trial, OneBeacon
had "publicly disparaged Celanese for its defense strategy"
(which was designed to protect Celanese's reputation). Celanese
argued that its "interests" would be impaired by OneBeacon's
strategy of "limit[ing] its [own] financial exposure by settling
cases at fair value before incurring significant defense costs,"
irrespective of the merits of the cases.
     7
       OneBeacon sought declarations that: (1) under its
policies, OneBeacon had the right to control the defense of
                                                                   6

parties' cross motions for summary judgment, and declaring that

OneBeacon had the right to control the defense of Celanese's

underlying claims as a result of its offer to defend without a

reservation of rights.9   The parties then filed further cross

motions for summary judgment on the issues underlying this

appeal, particularly whether OneBeacon was liable to Celanese

for the defense costs Celanese incurred during the period of

April 13, 2009, (when Celanese elected to revert to defense

under OneBeacon's general policies) through May 27, 2011 (when

the judge ruled that OneBeacon had the right to control

Celanese and select counsel as a result of its offer to defend
without a reservation of rights; (2) Celanese breached its
contractual obligations under the policies by refusing to cede
control; and (3) to the extent that OneBeacon's duties were not
extinguished by Celanese's actions, OneBeacon's liability is
limited to its pro rata share of the cost to defend and
indemnify Celanese with respect to the underlying actions. In
response, Celanese claimed that OneBeacon breached its
contractual obligations by insisting on controlling Celanese's
defense and failing to pay the defense costs Celanese incurred;
breached its duty of good faith and fair dealing; and committed
unfair and deceptive business practices in violation of G. L.
c. 93A. Celanese also sought a declaratory judgment that, "due
to a conflict," it had the right to control its own defense in
the underlying actions and that OneBeacon was required to pay
all defense costs necessary to carry out that defense.
     8
       This order was a part of a series of orders, resulting
from several cross motions for summary judgment brought by the
parties.
     9
       In making this ruling, the judge also found that Celanese
did not breach its contractual duties to OneBeacon by refusing
to cede control of its defense.
                                                                   7

Celanese's defense.10   On the further cross motions, the judge

ruled that OneBeacon was liable for reasonable and necessary

defense costs incurred by Celanese during this period of time as

part of OneBeacon's duty to defend.11   The judge further referred

the issue of the amount of reasonable and necessary legal fees

to a special master, and ultimately awarded Celanese

$2,435,921.49 in attorney's fees, plus prejudgment interest from

May 27, 2011, to May 31, 2013.12

     Discussion.   Whether OneBeacon is liable for the defense

costs incurred by Celanese is dependent on our answer to four

questions:   (1) Does OneBeacon have the right to control

Celanese's defense if OneBeacon has offered to defend without a

reservation of rights? (2) Does Celanese have the right to

refuse OneBeacon's control of the defense if a sufficient

conflict of interest exists? (3) Does a sufficient conflict of

interest exist? and (4) Is OneBeacon liable for defense costs

where Celanese has refused OneBeacon's control of the defense?

     10
       The parties represented to the judge, at a hearing on
November 3, 2011, that they had entered into an agreement with
respect to defense costs going forward from the date of the May
27, 2011, order.
     11
       The judge stated in her order, "By making the offer it
did to defend, OneBeacon was not excused from further (and full)
performance of this duty."
     12
       The judge's award was based on her adoption of the
special master's report in full.
                                                                      8

    1.    Insurer's defense without a reservation of rights.

Massachusetts courts have not explicitly commented on an

insurer's rights in seeking to defend an insured without a

reservation of rights.   However, such rights are logically

inferred from Massachusetts case law that discusses the rights

and limitations of an insurer's defense under a reservation of

rights.

    In Massachusetts, "[w]hen an insurer seeks to defend its

insured under a reservation of rights, and the insured is

unwilling that the insurer do so, the insured may require the

insurer either to relinquish its reservation of rights or

relinquish its defense of the insured and reimburse the insured

for its defense costs" (emphasis added).   Herbert A. Sullivan,

Inc. v. Utica Mut. Ins. Co., 439 Mass. 387, 406-407 (2003).      In

other words, "an insurer may [not] reserve its rights to

disclaim liability in a case and at the same time insist on

retaining control of its defen[s]e."   Three Sons, Inc. v.

Phoenix Ins. Co., 357 Mass. 271, 276 (1970) (quotation omitted).

Thus, when an insurer offers to defend the insured without a

reservation of rights, it may retain control of that defense.

See id. at 276-277; Sullivan, supra.   See also Mount Vernon Fire

Ins. Co. v. VisionAid, Inc., 91 F. Supp. 3d 66, 73 (D. Mass.

2015) (VisionAid) ("[The insured] admits, however, that [the

insurer] has already withdrawn its reservation.   Accordingly,
                                                                    9

[the insurer] has no obligation to relinquish its defense of

[the insured] or to permit [the insured] to utilize independent

counsel at its expense"); 1 Windt, Insurance Claims & Disputes

§ 4.25, at 225 (6th ed. 2013) (Windt) (A duty to defend

provision "not only obligate[s] the insurance company to provide

a defense, but also give[s] it the right to control the

insured's defense").

    Here, OneBeacon offered to defend Celanese against the

remaining asbestos and chemical product injury claims without a

reservation of rights.     To this effect, OneBeacon offered to

waive any issues of coverage and to indemnify Celanese from any

settlements or judgments up to its full liability limits.     In

offering to defend Celanese without a reservation of rights,

OneBeacon has the right to control Celanese's defense of those

claims.   See Three Sons, 357 Mass. at 276-277; Sullivan, 439
Mass. at 406-407.   This right to control Celanese's defense

includes the authority to choose the counsel who will defend the

claims and to make other decisions related to control of the

defense that would traditionally be vested in the insured, as a

named party in the case.    See Sullivan, supra at 407; Northern

County Mut. Ins. Co. v. Davalos, 140 S.W.3d 685, 688 (Tex.

2004).

    2.    Insured's right to justifiably refuse insurer's control

of defense when a sufficient conflict of interest exists.      While
                                                                     10

OneBeacon has a right to control Celanese's defense as a result

of its offer to defend without a reservation of rights, such

right is not absolute.13    See Magoun v. Liberty Mut. Ins. Co.,

346 Mass. 677, 684 (1964) ("Nevertheless, the insurer's

discretion under the covenant to defend is not unlimited");

Davalos, 140 S.W.3d at 688 ("Under certain circumstances,

however, an insurer may not insist upon its contractual right to

control the defense").     See also Windt, supra at §§ 4:20, 4:25

(recognizing circumstances where insured may justifiably refuse

insurer's control of defense).    Massachusetts courts have

recognized that an insured may rightfully refuse the insurer's

control of the defense when a conflict of interest arises.     See

J. D'Amico, Inc. v. Boston, 345 Mass. 218, 227 (1962); Magoun,
346 Mass. at 685 (recognizing a "possible divergence of

interests" between the insurer and the insured).    See also

VisionAid, 91 F. Supp. 3d at 73, citing Sullivan, 439 Mass. at

406-407 ("Absent a conflict of interest, in order to entitle an

insured to independent counsel at the insurer's expense, an

insured must demonstrate that the insurer is defending it under

a reservation of rights").    However, Massachusetts courts have

     13
       Some authorities, however, have stated that there can be
no conflict of interest when an insurer offers to defend without
a reservation of rights. See, e.g., Federal Ins. Co. v. MBL,
Inc., 219 Cal. App. 4th 29, 45 (2013) ("Without an express
reservation of a right under the policy, there can be no
conflict of interest based on the application of that exclusion
or policy term during the pendency of the action").
                                                                  11

not yet addressed the question of what circumstances would

create a conflict of interest sufficient to justify an insured's

refusal of an insurer's control of the defense when the insurer

has offered to defend without a reservation of rights.14

     Other authorities have shed light on this issue.

Circumstances in which a conflict of interest may arise between

an insured and an insurer, other than a dispute over the scope

of coverage,15 include:   "(1) when the defense tendered is not a

     14
       Indeed, the United States Court of Appeals for the First
Circuit certified a similar question to the Supreme Judicial
Court in 2016. See Mount Vernon Fire Ins. Co. v. VisionAid,
Inc., 825 F.3d 67, 72 (1st Cir. 2016) ("Assuming the existence
of a duty to prosecute the insured's counterclaim[s] [as a part
of the insurer's agreement to defend without a reservation of
rights], in the event 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]?"). However, because of the Supreme Judicial
Court's responses to other certified questions in the case, that
question was not reached. See Mount Vernon Fire Ins. Co. v.
VisionAid, Inc., 477 Mass. 343, 347-348 (2017).
     15
       Massachusetts has "adopted a per se rule that where an
insurance company reserves the right to deny coverage for a
particular claim, then a conflict of interest between the
insurance company and insured exists." Twin City Fire Ins. Co.
v. Ben Arnold-Sunbelt Bev. Co. of S.C., LP, 433 F.3d 365, 370
(4th Cir. 2005). See Sullivan, 439 Mass. at 406-407. Under
this per se rule, "the insured may require the insurer either to
relinquish its reservation of rights or relinquish its defense
of the insured and reimburse the insured for its defense costs."
Id. at 407. We are faced with different circumstances here,
where OneBeacon has offered to defend Celanese without a
reservation of rights and does not deny that the claims against
Celanese are covered under OneBeacon's general policies.
                                                                        12

complete defense under circumstances in which it should have

been, (2) when the attorney hired by the carrier acts

unethically and, at the insurer's direction, advances the

insurer's interests at the expense of the insured's, (3) when

the defense would not, under the governing law, satisfy the

insurer's duty to defend, and (4) when, though the defense is

otherwise proper, the insurer attempts to obtain some type of

concession from the insured before it will defend."     Davalos,
140 S.W.3d at 689 (quotation omitted).     See Windt, supra at

§ 4:25, at 226-228 (recognizing these circumstances as types of

conflicts of interest).     Another type of conflict of interest

arises "if the defense provided by the counsel selected by the

insurer was materially inadequate."     Id. at § 4:25, at 228.     An

insured may justifiably refuse an insurer's control of the

defense if one of these conflicts of interest exists.     In such a

circumstance, the insured is entitled to coverage of the costs

it incurs by hiring its own counsel to defend the claims against

it.   See Davalos, supra.    See also Windt, supra at § 4:25, at

225-228.

      3.   Has Celanese demonstrated that a sufficient conflict of

interest exists?    Celanese suggests that the third type of

conflict of interest listed above exists in this case -- that

OneBeacon's defense would not satisfy its duty to defend under
                                                                   13

governing law.   Celanese offers several reasons to support its

argument.

    Celanese first argues that OneBeacon's defense did not

satisfy its duty to defend because it made a "conditional offer

[that] required Celanese to terminate . . . counsel [that had

been representing Celanese] in these types of chemical cases for

the past fourteen years."   Despite Celanese's contentions,

OneBeacon's offer did not demand the type of extra-contractual

conditions that courts have recognized as resulting in a

conflict of interest.   See Motorists Mut. Ins. Co. v. Trainor,

33 Ohio St. 2d 41, 47-48 (1973); Davalos, 140 S.W.3d at 689.

Instead, OneBeacon offered to defend Celanese without a

reservation of rights and notified Celanese that it would choose

the attorney that would conduct that defense.   This is the type

of authority that is inherent in the insurer's control of the

defense as a part of its duty to defend.    See Sullivan, 439
Mass. at 407 ("The policy language not only obligated [the

insurer] to defend [the insured], but also, by extension, gave

it the right to choose defense counsel").   See also Davalos,

supra at 688 ("The right to conduct the defense includes the

authority to select the attorney who will defend the claim and

to make other decisions that would normally be vested in the

insured as the named party in the case").
                                                                  14

    Celanese also argues that a conflict of interest existed

because OneBeacon had demonstrated, through a 2009 jury verdict

and trial testimony, that it would put its own interests before

Celanese's interests in controlling the defense.   Celanese urges

that the 2009 jury verdict supports its contentions because the

jury found OneBeacon and OneBeacon's third-party administrator

liable for unfair and deceptive practices under G. L. c. 93A, in

relation to the parties' prior cost-sharing agreement.    However,

as the judge noted, the violations under G. L. c. 93A found by

the jury in the 2009 verdict involved "a very finite issue

[concerning] only . . . delayed payments on certain claims."

Despite Celanese's contentions, these findings by the jury do

not concern the manner in which OneBeacon would conduct its

defense and certainly do not "'create[] the inescapable

conclusion' that OneBeacon cannot fairly evaluate and defend the

underlying claims on their merits."   Moreover, any such nexus to

a potential conflict of interest is further attenuated where

Celanese had terminated the cost-sharing agreement that

OneBeacon was found in breach of by the 2009 verdict, and

instead, requested that OneBeacon provide a defense against the

underlying asbestos and chemical product injury claims under its

general policies.

    As to the trial testimony complained of by Celanese, the

judge reasoned that the record contained no evidence suggesting
                                                                   15

that "OneBeacon has a policy of exhausting liability limits

rapidly to avoid paying defense costs."16   While the statements

made by OneBeacon at the 2009 trial did acknowledge the

possibility that the amount of indemnity resulting from the

defense of the case may exceed the insured's policy limit, this

concern does not create a conflict of interest to justify

Celanese's refusal of OneBeacon's control of Celanese's defense.

     "A conflict of interest does not exist with regard to the

conduct of the [insurer's] defense simply because the insured

and the insurer have a different view as to the insured's

potential liability.    The parties still have a common interest

in defense counsel providing a vigorous defense."    Windt, supra

at § 4:20, at 205.    See Davalos, 140 S.W.3d at 690 ("[An

insurer's] lawyer owes unqualified loyalty to the insured . . .

[and] must at all times protect the interests of the insured if

those interests would be compromised by the insurer's

     16
          The judge reasoned:

     "'[T]he volume of defense billings in the absence of any
     tendered indemnity,' is a perfectly legitimate and rational
     consideration for an insurer in the overall scheme of
     investigating and assessing a set of risks presented under
     a policy. The further statement[,] 'We're entitled to
     apply indemnity responsible dollars in a way that exhausts
     our limits' is also on its face a truism. It does not
     follow from this testimony, and I cannot infer on the
     record before me, that as a result of this truism
     OneBeacon's approach to these claims would necessarily be
     rapidly to exhaust the limits of liability, regardless of
     the merits of the claim."
                                                                    16

instructions" [quotation omitted]).    Indeed, "[t]o mitigate the

danger . . . that the insurer will favor its own interest to the

exclusion of the insured's, good faith requires that it make the

decision (whether to settle a claim within the limits of the

policy or to try the case) as it would if no policy limit were

applicable to the claim."   Murach v. Massachusetts Bonding &

Ins. Co., 339 Mass. 184, 187 (1959).    Finally, Celanese argues

that a sufficient conflict of interest exists to justify its

refusal of OneBeacon's control of the defense without a

reservation of rights, because the parties have disparate

viewpoints as to how the defense should be conducted.

Particularly, Celanese emphasizes its right to protect its

reputation in the ongoing asbestos and chemical product

litigation.

    Celanese argues that a conflict of interest exists because

of the parties' dispute "as to the appropriate way to conduct

[the] defense of the underlying claims."    The judge summarized

the parties' approach to Celanese's defense as follows:

    "Celanese understandably places a high priority on its
    reputation, and seeks publicly to defend and to rebut
    any and all claims that its products or premises
    contain carcinogenic or other poisonous material.
    OneBeacon's business view is, equally unsurprisingly,
    a more pragmatic one. OneBeacon's focus is on
    reducing the volume and cost of pending cases wherever
    possible, by seeking out reasonable settlements and
                                                                   17

    thus incurring and applying indemnity payments towards
    the policy limits, not solely defense payments."17

These opposing tactics of defense, however, do not give rise to

a sufficient conflict of interest under our law to justify

Celanese's refusal of OneBeacon's control of the defense.

    "As with any contract, in interpreting an insurance policy,

we begin with the plain language of the policy."   Mount Vernon

Fire Ins. Co. v. VisionAid, Inc., 477 Mass. 343, 348 (2017).

OneBeacon's general policies explicitly provide that OneBeacon

will "defend any suit against [Celanese] alleging bodily injury

or property damage, even if such suit is groundless, false or

fraudulent; but [OneBeacon] may make such investigation,

negotiation and settlement of any claim or suit as it deems

expedient."   Accordingly, "[Celanese] and [OneBeacon] entered

into a contractual agreement that [required Celanese to] pay a

certain amount of money to insure against a particular risk."

Id. at 349.   Here, that risk solely concerned claims of "bodily

    17
         Celanese summarizes its preferred approach as follows:

    "Celanese's former assistant general counsel testified
    regarding Celanese's defense strategy, whereby Celanese
    would 'defend cases where [the company does not] believe
    that [its] products hurt somebody [and] defend them to the
    max, [but] if somebody got hurt by one of our products,
    then [the company's] strategy would change . . . to try to
    compensate that particular plaintiff . . . .' This valid
    strategy [was to] admit[] liability where appropriate, but
    otherwise vigorously defend[] baseless claims [to] protect
    Celanese's safety reputation."
                                                                    18

injury or property damage" against Celanese, and nothing more.

See ibid.    Protecting Celanese's reputation was not something

that OneBeacon was required to insure or defend.     See Golchin v.

Liberty Mut. Ins. Co., 466 Mass. 156, 159-160 (2013) ("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 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" [quotation

omitted]).

    Moreover, our courts have addressed several safeguards

available to an insured for protection against unreasonable

settlements by an insurer that exceed the insured's policy

limits.     For example, an insured can sue an insurer for breach

of its duty to defend if an insurer fails to settle the

underlying suit for the policy limit and a reasonable insurer

would have done so in such circumstances.     See Boyle v. Zurich

Am. Ins. Co., 472 Mass. 649, 659 (2015) ("[The insurer]

committed a breach of th[e] duty [to defend] by failing to

settle the suit for the policy limit, an endeavor that, the

judge found, any reasonable insurer would have undertaken").

Further, an insurer's decision whether to settle or try the case
                                                                  19

is measured by good faith.   See Murach, 339 Mass. at 187; Home

Indem. Ins. Co. v. Merchants Distribs., Inc., 396 Mass. 103, 105

(1985) ("We have upheld a settlement by an insurance company

where the amount paid was fully recoverable from the insured

. . . .   We said in that context that the insurer's judgment was

final unless the insured showed fraud, negligence, or an absence

of good faith in the making of the settlement" [quotation

omitted]).   See also Aetna Cas. & Surety Co. v. Sullivan, 33
Mass. App. Ct. 154, 157-158 (1992) ("For example, [under the

policy language,] in the case of multiple claims against an

insured, good faith settlement with one claimant, or payment of

all or part of a judgment favoring one claimant . . . would have

the effect of discharging the insurer from defending additional

claims beyond the policy limits. . . .   The insurer, having

exhausted the policy limits and provided a defense, the insured

could not reasonably expect more" [emphasis omitted]).   These

protections mitigate, if not alleviate, any conflict of interest

that Celanese argues is present in this case.   The insurance

policies allow OneBeacon to seek out settlements instead of

defending Celanese's reputation by trying each case and denying

Celanese's liability.   Here, significantly, Celanese did not

obtain insurance for the defense of its reputation.
                                                                  20

    Since Celanese has not demonstrated that a sufficient

conflict of interest exists, it unjustifiably refused

OneBeacon's offer to defend without a reservation of rights.

    4.    Insured's refusal of insurer's control of defense.

Despite finding that Celanese had failed to demonstrate that a

sufficient conflict of interest existed, the judge concluded

that OneBeacon was liable to pay for the defense costs that

Celanese incurred from April 13, 2009, when it refused

OneBeacon's control of the defense and hired its own counsel,

through May 27, 2011, when the judge ruled against Celanese on

this point.   This conclusion is contrary to authority commenting

on an insured's unjustified refusal of an insurer's right to

control the defense when defending without a reservation of

rights.

    Here, Celanese rejected OneBeacon's offer to defend without

a reservation of rights and conducted its own defense because it

believed that its own attorney would provide a better defense.

That was Celanese's right.   However, absent a sufficient

conflict of interest on the part of OneBeacon, Celanese lost its

right to obtain reimbursement for defense costs when it refused

to accept OneBeacon's defense, offered without a reservation of

rights.   See VisionAid, 91 F. Supp. 3d at 73; Davalos, 140
S.W.3d at 690 ("But having rejected the insurer's defense

without a sufficient conflict, [the insured] lost his right to
                                                                   21

recover the costs of that defense").18   See also Finley v. Home

Ins. Co., 90 Haw. 25, 35 (1998) ("If the insured chooses to

conduct its own defense, the insured is responsible for all

attorneys' fees related thereto. . . .   A contrary holding would

effectively nullify our determination that the insurer, even in

a reservation of rights situation, retains the contractual right

to select the counsel whom it will pay to defend the insured");

Windt, supra at § 4:1A, at 54 ("An insurer should not have to

pay for the attorney fees incurred by the insured after the

insured has wrongfully rejected the defense tendered by the

insurer").

     Therefore, OneBeacon satisfied its duty to defend by

offering to defend Celanese without a reservation of rights.    As

a result of Celanese's unjustified refusal of OneBeacon's

     18
       Celanese argues that it is entitled to recover defense
costs for this interim period because the verdict on the c. 93A
claim in the 2009 trial (see note 6, supra) gave Celanese a good
faith basis to believe that a sufficient conflict of interest
existed. However, Celanese has not cited persuasive authority
to support its position. Indeed, even the case that Celanese
relies on affirms that an insured will be unable to recover
defense costs absent a sufficient conflict of interest. See
Partain v. Mid-Continent Specialty Ins. Servs., Inc., U.S. Dist.
Ct., No. H-10-2580, slip op. (S.D. Tex. Feb. 15, 2012), citing
Davalos, 140 S.W.3d at 690 ("[I]f an insured rejects an
insurer's defense without sufficient conflict, it loses its
right to recover the costs of that defense -- the one that it
elects to use in the underlying suit. Here, for example, if
[the insureds] elect to proceed in the underlying suit using
their own counsel to defend them, they will be unable recover
the costs of that defense, as the Court has concluded there was
not a sufficient conflict of interest").
                                                                22

control of that defense, OneBeacon is not liable for the

attorney's fees that Celanese incurred in conducting its own

defense.

    Conclusion.   So much of the judgment that awarded Celanese

defense costs for the period April 13, 2009, through May 27,

2011, and prejudgment interest is vacated, and the judgment

shall be modified to declare that OneBeacon has no duty to

reimburse Celanese for defense costs that Celanese incurred

during that period of time.   As so modified, the judgment is

affirmed.

                                   So ordered.