Splitting One Fire Claim into Three Suits Leads to Dismissal

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LaBranche v. United States Liability Insurance Demonstrates Claim-Splitting Doctrine’s Power to Prevent Piecemeal Litigation

The United States District Court for the District of Massachusetts recently issued a comprehensive ruling in LaBranche v. United States Liability Insurance Company (Case 1:24-cv-12190-MJJ) that illustrates how complex property damage claims can become when insurers allege arson and policyholders attempt to pursue multiple avenues of recovery. Judge Myong J. Joun’s May 29, 2025, decision provides valuable insights into claim-splitting doctrine, motion practice, and the challenges facing insureds when coverage is denied based on intentional acts.

The Fire and Its Investigation

On May 11, 2021, a fire occurred in the basement of a two-family condominium at 31 Nazing Street in Dorchester, Massachusetts. Jean and Marie LaBranche, who owned and occupied the second-floor unit, filed an insurance claim with the United States Liability Insurance Company (USLI), which had issued a commercial policy to the condominium trust.

The subsequent investigation by USLI, conducted with assistance from the Boston Fire Department, State Fire Marshal’s Office, Envista Forensics LLC, and GAI Engineering, revealed troubling findings. Fire scene examinations conducted on three separate dates found evidence of an intentionally created natural gas leak, with investigators determining that someone had unthreaded a pipe and cap from a reducing tee fitting in the basement utility room.

The investigation also uncovered surveillance footage showing two individuals exiting the basement and departing in a white SUV on the morning of the fire. Based on these findings, the cause classification of the fire was determined to be “incendiary,” meaning it was intentionally set.

Coverage Denial and Litigation Strategy

On December 16, 2022, USLI denied coverage, citing a policy provision excluding coverage for dishonest or criminal acts by the insured. The denial letter stated there was evidence of an incendiary fire in which the plaintiffs had “motive and opportunity.” Significantly, USLI also reported the matter to the Massachusetts Insurance Fraud Bureau, which opened a formal investigation.

Rather than pursuing a single comprehensive lawsuit, the LaBranches embarked on a litigation strategy that would ultimately prove problematic. They filed three separate lawsuits between 2021 and 2024. The first lawsuit targeted Liberty Mutual Insurance Company (their personal property insurer) seeking coverage. The second lawsuit named USLI and the condominium trust, asserting breach of contract, unjust enrichment, defamation, and negligence claims. The third lawsuit added the fire investigators—Kevin Michael Murphy (a Florida resident), Envista Forensics LLC (a New Jersey company), and Andrew Williams d/b/a GAI Engineering (also from New Jersey)—as defendants, alleging violations of Massachusetts Chapter 93A, interference with contractual relations between the LaBranches and their insurers, and negligence.

The Claim-Splitting Doctrine and USLI’s Motion

USLI moved for summary judgment based on the claim-splitting doctrine, arguing that the LaBranches’ third lawsuit constituted impermissible piecemeal litigation. The claim-splitting doctrine is a fundamental principle of state and federal civil procedure, designed to promote judicial efficiency and prevent parties from circumventing legal restrictions by filing multiple successive lawsuits arising from the same set of facts.

Under this doctrine, plaintiffs must include all related claims in their initial lawsuit rather than pursuing separate actions against different defendants or asserting different legal theories in subsequent cases. The rule prevents what courts call “claim shopping”—the practice of filing multiple lawsuits in the hope of finding a more favorable forum or outcome.

Judge Joun applied the First Circuit’s “transactional approach” to determine whether claim splitting had occurred. This test examines whether successive lawsuits arise from “a common nucleus of operative facts” and whether the facts are “related in time, space, origin, or motivation.” The court also considers whether the cases would “form a convenient trial unit” if combined.

The court’s analysis revealed a clear pattern of claim-splitting. All three lawsuits stemmed from the identical May 11, 2021, fire incident and the subsequent insurance coverage denial. The court noted that the LaBranches possessed all relevant information necessary for their third lawsuit when they filed the second lawsuit in May 2023, including a coverage denial letter, the Envista forensic report, and the GAI evidence log. Most importantly, the court found that the LaBranches had an opportunity to amend their second lawsuit to include the fire investigators as defendants but chose not to do so.

Judge Joun emphasized that the claim-splitting doctrine prevents parties from obtaining “a second chance at a different outcome by bringing related claims against closely related defendants at a later date.” The court concluded that allowing the third lawsuit to proceed would undermine judicial economy and reward the plaintiffs’ strategic choice to pursue piecemeal litigation.

Motion to Dismiss Rulings

The out-of-state fire investigators—Murphy (Florida), Envista (New Jersey), and Williams (New Jersey)—filed comprehensive motions to dismiss, arguing that there was a lack of personal jurisdiction, failure to state claims, and immunity under the litigation privilege. Unlike USLI, which was admitted to do business in Massachusetts, these forensic defendants challenged the court’s authority to exercise jurisdiction over them, arguing that their limited contacts with the Commonwealth did not constitute sufficient grounds for jurisdiction.

The court’s analysis of the individual claims provides instructive guidance for insurance practitioners. On the Massachusetts Chapter 93A consumer protection claim, the court found that plaintiffs failed to adequately allege that any deceptive act occurred “in the conduct of any trade or commerce” and was unable to identify any specific business, commercial, or transactional relationship with the defendants.

The interference with contractual relations claim against the fire investigators failed because plaintiffs could not establish the required element of “improper motive.” The LaBranches alleged that Murphy and Williams knew their investigative reports would be used to deny insurance coverage, but Massachusetts law requires “actual malice” rather than mere intentional interference. The court noted that the pursuit of legitimate business interests, without more, fails to qualify as improper means or motive. The theory was that the investigators’ findings interfered with the LaBranches’ contractual relationship with their insurers by providing grounds for coverage denial.

Perhaps most significantly, for property damage cases, the negligence claim was dismissed under the economic loss doctrine. Massachusetts law prohibits recovery of “purely economic losses in tort in the absence of personal injury or property damage,” and the plaintiffs failed to allege that the fire investigators caused any physical harm or damage to property.

Personal Jurisdiction and Litigation Privilege

The court rejected the out-of-state defendants’ challenge to personal jurisdiction, finding that their investigative activities in Massachusetts constituted sufficient contacts with the Commonwealth. The court ruled that by conducting fire scene examinations and evidence collection in Massachusetts to “create a presence” for their investigation, the defendants “willfully took advantage of the privilege of conducting activities” in the state.

However, the court also recognized that the fire investigators enjoyed protection under the litigation privilege for their investigative reports. Given that litigation was contemplated when the reports were prepared, and the Insurance Fraud Bureau had opened a formal investigation, the privilege provided absolute immunity for statements made in connection with judicial proceedings.

Some Lessons from the Decision

This decision offers several important lessons for insurance professionals. First, the claim-splitting analysis demonstrates the importance of careful case management when multiple related proceedings arise from the same incident. Insurers should coordinate with all potential defendants early to avoid the kind of piecemeal litigation that characterized this case.

Second, the court’s analysis of the economic loss doctrine reinforces that property damage investigations rarely give rise to negligence claims absent allegations of actual property damage or personal injury. Fire scene evidence collection, even when extensive, typically falls within the scope of permissible investigation activities.

Third, the litigation privilege provides important protection for forensic investigators, but only when their work is conducted in contemplation of litigation. The court emphasized that statements must be made “preliminary to a proposed or contemplated judicial proceeding” and bear “some relation to the proceeding.”

Conclusion

The LaBranche decision illustrates how property damage claims involving alleged arson can quickly become complex multi-party litigation. While the court’s dismissal of claims against the fire investigators was based on well-established legal doctrines rather than groundbreaking precedent, the ruling provides valuable guidance on managing the procedural and substantive challenges that arise when coverage is denied based on intentional acts.

For insurers facing similar situations, the decision underscores the importance of conducting thorough investigations, maintaining clear documentation, and coordinating defense strategies across multiple related proceedings. The claim-splitting doctrine remains a powerful tool for preventing the kind of piecemeal litigation that can significantly increase defense costs and create inconsistent outcomes.

Thirty days to appeal

The LaBranches have thirty days from May 30, 2025, to file an appeal from this decision. Agency Checklists will continue monitoring this case if an appeal is filed.