469_C327

INSURED HAS RIGHT TO CLAIM RECOVERED PROPERTY

Homeowner	Subrogation
Theft	Recovered Property

 

In 1975, Helen Thompson's house in Concord, Massachusetts, was burglarized. One of the stolen items was an ancestral portrait painted by artist Angelica Kauffmann in 1765. The painting, a family heirloom, had been appraised for $25,000. Thompson's homeowners policy, issued by Northern Assurance Company, covered the loss of stolen unscheduled personal property up to $32,500. Thompson submitted a claim and attached a list of the stolen property. She estimated that the value of the items totaled $65,000, but the painting was the only item for which she had an appraisal.

Northern agreed to pay the policy limit of $32,500, and, as part of the claims process, required Thompson to sign a subrogation agreement. The agreement provided that Thompson accepted the $32,500 "in full release and satisfaction in compromise settlement" of her claim. The agreement contained the following language: "In consideration of the payment to be made hereunder, the assured does hereby subrogate to said insurer all right, title and interest in and to the property for which claim is being made hereunder, and agrees to immediately notify said insurer in case of any recovery of the property for which claim is being made hereunder, and will render all assistance possible in any endeavor to recover said property. Assured also agrees to turn over to said insurer, any such recovery which may be made, or reimburse said insurer in full to the extent of the payment for such property which may be recovered."

In 2007, the painting was found by an art dealer and turned over to the Concord police. By this time, Thompson had died and Northern Assurance Company was now OneBeacon Insurance Group. Both OneBeacon and Thompson's estate claimed rights to the painting, now valued at no less than $400,000. OneBeacon claimed it was entitled to the painting under the terms of the subrogation agreement. Thompson's estate claimed it could obtain rights to the painting by reimbursing OneBeacon $25,000. Eventually William Apthorp, the executor of Thompson's estate, filed a lawsuit seeking a declaration that the estate was entitled to possession of the painting in exchange for payment of $25,000. The court found in favor of the estate; OneBeacon appealed.

On appeal, the Appeals Court of Massachusetts, Norfolk, found that the subrogation agreement unambiguously provided that if the stolen property was recovered, the insured had a choice: either turn it over to the insurer or pay the insurer back. According to the court, the right of subrogation merely allowed Northern to exercise any rights that Thompson may have had to the extent of the payment Northern had made. This arrangement had the effect of preventing the insured from double recovery and the insurer from obtaining a windfall. The court concluded that the estate could choose to take possession of the painting and pay OneBeacon $25,000.

As a side issue, OneBeacon argued that, if the estate took possession of the painting, it should pay OneBeacon interest on the $25,000. The court found no merit in this argument and stated that "there was nothing in the subrogation agreement to support OneBeacon's contention that, if the estate were allowed to have possession and ownership of the portrait in exchange for reimbursing the amount paid by Northern, OneBeacon also should recover compound interest on that amount."

The decision of the lower court in favor of the Thompson estate was affirmed.

Apthorp vs. OneBeacon Insurance Group, LLC-No. 09-P-1258-Appeals Court of Massachusetts, Norfolk-October 18, 2010-2010 Westlaw 4030566