Forcucci v. United States ( 1993 )

November 1, 1993
UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT
No. 93-1490
CARMEN FORCUCCI and THERESA FORCUCCI,
Plaintiffs, Appellants,
v.
UNITED STATES FIDELITY AND GUARANTY COMPANY,
Defendant, Appellee.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. A. David Mazzone, U.S. District Judge]
Before
Stahl, Circuit Judge,
Aldrich and Campbell, Senior Circuit Judges.
Mark D. Shuman for appellants.
Alice Olsen Mann with whom Ralph C. Sullivan and Morrison,
Mahoney & Miller were on brief for appellee.
ALDRICH, Senior Circuit Judge. The district
court's allowance of defendant's Fed. R. Civ. P. 56(c)
summary judgment motions, adopting a magistrate's
recommendation, raises questions of opinion, the law as well
as the basic facts being undisputed. Did defendant, an
insurer on a standard automobile policy providing coverage in
case of injury by a party who was uninsured or underinsured
("UIM coverage"), act fairly, reasonably, promptly, with
respect to a claim? Mass. G.L. c. 93A, 9 and c. 176D,
3(9). (Counts I and II). Was its conduct "extreme and
outrageous . . . utterly intolerable"? Agis v. Howard
Johnson, 371 Mass. 140, 145, 355 N.E.2d 315, 319 (1976)
(quoting Restatement). (Counts III and IV). Counts III and
IV's allegations are themselves extreme, and are so fully
answered by the magistrate judge as confirmed by the district
court and by what we say, incidentally, hereafter, that we
will give them no further specific attention. The other
claims are more difficult, as are often questions of judgment
when summary disposition is sought. Cf. Wallace v. Shade
Tobacco Growers Agric. Ass'n., Inc., 642 F.2d 17, 19-20 (1st
Cir. 1981). At the same time, although our review is de
novo, Rivera-Marcano v. Normeat Royal Dane Quality A/S, 998
F.2d 34, 37 (1st Cir. 1993), we may be slow to reverse a
magistrate's careful conclusions, thoughtfully reviewed. In
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this case we almost entirely agree with what has been said
below and we affirm.
First, some dates. On November 11, 1988 Cesare
Forcucci, son of plaintiffs Carmen and Theresa Forcucci, was
injured in a single vehicle accident, dying the next day.
There was at first a question whether he, or one Darin
Goodwin, was driving. On April 26, 1989, plaintiffs' counsel
notified defendant of the accident, and requested the full
medical coverage of $10,000, due regardless of who was
driving. Nothing was said about UIM. On June 1 counsel
wrote with respect to UIM that Goodwin's $100,000 coverage
with Travelers was insufficient. Defendant paid the medical.
In late September Travelers, evidently conceding that Goodwin
had been the driver, offered the full $100,000 under its
policy, and thereafter paid it. On November 9 plaintiffs'
counsel wrote defendant that Goodwin had been convicted on
October 5 of motor vehicle homicide, thus resolving the UIM
issue, and repeated his demand for defendant's full UIM
$100,000. Included was a handwritten Victim Impact Statement
that Theresa Forcucci had submitted to the criminal court
prior to Goodwin's sentencing, describing the effects upon
her of her son's loss.
On November 28, having received no response,
plaintiffs' counsel, by fax, asked defendant why it did not
respond. On December 4, having received no reply, counsel
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telephoned defendant and was told that it was awaiting
completion of its investigation into the possibility of
plaintiffs making a claim against the nightclub that had
supplied Goodwin with alcoholic beverages. Asked why this
was relevant, defendant's claim representative could give no
answer. On December 5 plaintiffs mailed a demand letter for
unfair settlement practices pursuant to G.L. c. 93A, 9(3).
This extensive letter referred, inter alia, to a recent
Massachusetts case, Bertassi v. Allstate Ins. Co., 402 Mass.
366, 522 N.E.2d 949 (1988), that held that an insurer's
investigation of possible dram shop liability was no excuse
for delay. The certified receipt shows that this letter was
received on December 11. Defendant replied by fax on January
11, 1990, offering $25,000 in full settlement. On January 18
counsel replied by certified mail that $25,000 was grossly
inadequate and stating that plaintiffs were instituting
arbitration proceedings forthwith pursuant to the policy
provisions.
Plaintiffs' first claim is that defendant's offer
was not "prompt," one of the four objections to the
magistrate's report, because it was made 31 days from the
date of its receipt of plaintiffs' December 5 letter, rather
than within 30. Thirty days is a statutory period relating
to a defendant's opportunity to receive Ch. 93A protection,
Mass. G.L. c. 93A, 9(3), not to the statutory requirement
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of a reasonably prompt response. Mass. G.L. c. 176D, 3(9).
Especially with the holiday season interference we accept the
magistrate's conclusion that 31 days was reasonably prompt as
matter of law.1
The more serious question is whether $25,000 was a
reasonable offer. The magistrate found it was on the low
side, but reasonable as matter of law. In agreeing with him
we stress two factors; one, perhaps more than he did, and one
that he did not stress at all. Negotiating a settlement,
particularly when the damages are unliquidated, is, to an
extent, a legitimate bargaining process. The statute does
not call for defendant's final offer, but only one within the
scope of reasonableness. Experienced negotiators do not make
their final offer first off, and experienced negotiators do
not expect it, or take seriously a representation that it is.
Indeed, plaintiffs say as much in now intimating that their
own $100,000 policy limits offer was not final in spite of
the fact that, in several talks, they refused to reduce it.
The reasonableness of a defendant's response is to
be considered in the light of the situation as a whole, one
aspect of which was the size of plaintiffs' demand.
1. We further ask, if plaintiffs consider 30 days
appropriate, may not a fax on the 31st day be equivalent to a
letter mailed on the 30th?
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Plaintiffs' demand was very high.2 Ordinary give and take
would suggest that both would and should move. Defendant was
not ever given that opportunity, even when it traded against
itself, as shown in the magistrate's report. As to
defendant's alleged bad faith, this is not a case like Whyte
v. Connecticut Mutual Life Ins. Co., 818 F.2d 1005 (1st Cir.
1987).
We have only one problem, the last minute
expression of defendant's legal department's fear that
$100,000 would be a likely outcome. How over-large that
opinion might be is indicated by the arbitrator's finding.
See n.2, ante. This brings us to Theresa Forcucci's
extensive victim impact statement, submitted in support of
her claim herein. With the greatest respect for a bereaved
mother who has suffered a great tragedy, a jury's response is
not necessarily predictable. Defendant's legal department's
belief that a jury might give it great weight did not destroy
the reasonableness of the claim department's opinion that it
might not. Two different views could both be reasonable.
Apprehensions did not make the lower offer unreasonable,
particularly where, in dollars, that offer was the nearer to
the arbitrator's finding.
2. In saying this we may look at the arbitrator's finding of
$55,000. Plaintiffs' complaint of the magistrate's giving
weight hereto overlooks that the statute expressly permits
it. Mass. G.L. c. 176D, 3(9)(8)G. Their contention that
he accepted it out of hand is incorrect.
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We accept the magistrate's recommendation in
substance, and affirm the district court.
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