No. 22-1959

BERKLEY NATIONAL INSURANCE COMPANY,

Plaintiff, Appellee,

v.

ATLANTIC-NEWPORT REALTY LLC,

Defendant, Appellant,

GRANITE TELECOMMUNICATIONS, LLC

Defendant/Third Party Plaintiff, Appellant.

APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MASSACHUSETTS

[Hon. Richard G. Stearns, U.S. District Judge]

Before

Barron, Chief Judge, Thompson and Gelpí, Circuit Judges.

Timothy H. Madden, with whom Nathaniel R.B. Koslof and Donnelly, Conroy & Gelhaar, LLP were on brief, for appellants Atlantic-Newport Realty LLC and Granite Telecommunications, LLC. Michael F. Aylward, with whom Morrison Mahoney LLP was on brief, for appellee Berkley National Insurance Company. Laura A. Foggan and Crowell & Moring LLP on the brief for amicus curiae Complex Insurance Claims Litigation Association.

February 22, 2024 BARRON, Chief Judge. The genesis of this appeal is a liability insurer's suit under Massachusetts law against two of its insureds. The insurer brought the suit in the United States District Court for the District of Massachusetts after it paid to settle a personal-injury suit against the insureds. The suit sought restitution for both the payment that the insurer made to settle the suit and the costs that it incurred to defend the insureds against that suit. The suit also sought a declaratory judgment that the insurer had no duty to defend or indemnify the insureds with respect to the personal-injury claims that the insureds were facing.

The District Court denied the insureds' motion for judgment on the pleadings and, in response to the insurer's summary-judgment motion, granted the motion in part and then issued a final judgment that ordered the insureds to pay restitution for both the insurer's defense costs and its settlement payment. See Berkley Nat'l Ins. Co. v. Granite Telecomms. LLC (Berkley II), 617 F. Supp. 3d 77, 84 (D. Mass. 2022) (granting partial summary judgment). The insureds now challenge both the denial of their motion for judgment on the pleadings and the grant of the insurer's motion for summary judgment. They do so on the ground that these rulings conflict with Massachusetts law governing when a liability insurer who has chosen to defend its insureds may seek reimbursement from its insureds. Because we agree with the

- 2 - insureds that the rulings are at odds with Massachusetts law, we reverse the District Court's order denying the motion for judgment on the pleadings. In consequence, we also vacate both the grant of summary judgment to the insurer on the insurer's claim for restitution and the judgment ordering the insureds to reimburse the insurer. Moreover, because of our determination that the insureds are entitled to judgment on the pleadings as to the insurer's claim for restitution, we dismiss the remainder of the appeal as moot.

I.

The plaintiff-insurer is Berkley National Insurance Company ("Berkley"). The defendants-insureds are Granite Telecommunications, LLC ("Granite"), which is the primary insured on its insurance policy with Berkley ("Policy"), and Atlantic- Newport Realty LLC ("Atlantic"), which the Policy names as an additional insured. Berkley also named Stephen Papsis as a defendant in the suit, though he is not a party to this appeal.

Papsis figured in Berkley's suit because he was the plaintiff in a personal-injury suit that he had brought against Atlantic and Granite in Massachusetts state court.