Silva v. Steadfast Insurance Co. ( 2015 )

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14-P-987 Appeals Court
GARY P. SILVA vs. STEADFAST INSURANCE COMPANY.
No. 14-P-987.
Hampden. March 5, 2015. - August 7, 2015.
Present: Cypher, Kafker, & Green, JJ.
Practice, Civil, Summary judgment. Insurance, Unfair act or
practice, Settlement of claim. Consumer Protection Act,
Insurance, Offer of settlement, Unfair act or practice,
Consumer, Businessman's claim.
Civil action commenced in the Superior Court Department on
November 14, 2012.
The case was heard by Constance M. Sweeney, J., on motions
for summary judgment.
Mark J. Albano for the plaintiff.
Timothy O. Egan for the defendant.
KAFKER, J. Gary P. Silva appeals from the entry of summary
judgment in favor of Steadfast Insurance Company (Steadfast).
In his complaint, Silva claimed that Steadfast violated G. L.
c. 176D, § 3(9), and G. L. c. 93A, §§ 2 and 11, by failing to
effectuate a prompt, fair, and equitable settlement of earlier
litigation arising out of damage to Silva's business caused by a
2
botched demolition project by Associated Building Wreckers, Inc.
(Associated), a company insured by Steadfast. Silva maintains
that Steadfast should have made a settlement offer after
judgment entered in the earlier litigation even though (1) Silva
was appealing multiple aspects of that judgment and seeking to
expand the scope of both liability and damages, and (2)
postjudgment motions by both Silva and Steadfast to recalculate
the amount of damages were ultimately allowed. We affirm.
Background. The city of Holyoke hired Associated to
demolish an abandoned building that was adjacent to Silva's
property, on which Silva operated his auto body and repair
business, S&L Automotive. During demolition, which took place
on January 19, 2006, the building collapsed onto Silva's
property and severely damaged his business. Steadfast was
Associated's liability insurer at the time. On December 29,
2006, Silva brought suit in Superior Court against Associated
seeking, among other things, damages for his business and
property and for personal injuries.1 At the close of Silva's
1
Silva's complaint set forth seven counts: Count I, a
negligence and breach of contract claim for property damage and
business loss; Count II, a negligence and breach of contract
claim for his personal injuries; Count III, a negligence claim
by Silva's wife for loss of consortium (which was dismissed by
stipulation before trial); Count IV, a trespass claim for his
injuries and damages; Count V, a nuisance claim for his injuries
and damages; Count VI, an ultra-hazardous activity/strict
liability claim for his injuries and damages; and Count VII, a
claim under G. L. c. 93A, §§ 2 and 11, for injuries and damages.
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evidence in that trial, the judge directed a verdict for
Associated on Silva's nuisance, strict liability, and G. L.
c. 93A claims. At the conclusion of the trial on June 21, 2010,
the judge awarded Silva $366,607.36 on his first breach of
contract claim,2 including damages for building repair, removal,
and demolition costs, along with $10,000 for personal property
damage. The judge ruled in favor of Associated on Silva's
claims for negligence, personal injury, and trespass.
Associated did not appeal. Silva appealed the directed
verdicts, his trespass claim, and the amount of damages awarded.
See Silva v. Associated Bldg. Wreckers, Inc., 82 Mass. App. Ct.
1106 (2012). The appeal was ultimately unsuccessful and the
judgment was affirmed, resulting in an execution on the judgment
issuing to Silva on November 9, 2012, in the amount of
$671,216.74. Between the entry of the judgment on June 21,
2010, and the execution issued in November, 2012, Silva made no
demands on Associated or Steadfast to pay the judgment or any
2
In Silva's appeal from that judgment, this court explained
in an unpublished decision issued pursuant to our rule 1:28 that
"[t]he contract between [Associated] and the city provided that
[Associated] would restore any structures and items damaged as a
result of the demolition. At the beginning of the trial, the
parties stipulated that [Silva] was a third-party beneficiary of
this contract. [Associated] conceded that it was responsible
for the damage to the plaintiff's building." Silva v.
Associated Bldg. Wreckers, Inc., 82 Mass. App. Ct. 1106 (2012).
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portion thereof, nor were any offers made by Steadfast to settle
the claims.
On November 14, 2012, Silva filed the instant action,
alleging that Steadfast violated G. L. c. 176D, § 3(9), and
G. L. c. 93A, §§ 2 and 11, by failing to effectuate a prompt,
fair, and equitable settlement after the original judgment in
Silva's favor entered on June 21, 2010.
On December 17, 2012, Associated filed a motion for relief
from judgment in the underlying action pursuant to Mass.R.Civ.P.
60(a), 365 Mass. 828 (1974), because, it contended, the judgment
failed to apply the setoff to the judgment amount provided for
by the judge in his written findings. Associated's motion was
allowed over Silva's objection.3 The judge found that Silva had
already "received insurance payments [from Steadfast] in the
amount of $186,464, and [Associated] may offset the award by the
amount received [from] the insurance company." Silva v.
Associated Bldg. Wreckers, Inc., 87 Mass. App. Ct. 1104 (2015).
Later, Silva moved to amend the judgment to add additional
costs, and that motion was allowed in part. On March 5, 2013,
an amended judgment of $342,201.53 entered for Silva, which was
comprised of the principal amount of $180,143.36, with
3
Silva appealed the application of the setoff, and the
motion judge's decision was ultimately affirmed by this court.
Silva v. Associated Bldg. Wreckers, Inc., 87 Mass. App. Ct. 1104
(2015).
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prejudgment interest of $75,660.21, postjudgment interest of
$84,415.18, and costs of $1,982.79. On March 28, 2013,
Steadfast paid Silva the full amount of the March 5, 2013,
judgment.
In October, 2013, a judge of the Superior Court held a
hearing on the parties' cross motions for summary judgment in
the instant case. In January, 2014, the judge granted summary
judgment to Steadfast. The judge ruled that Steadfast had not
violated G. L. c. 176D because "Silva rendered uncertain the
total liability of Steadfast's insured by appealing the June 21,
2010, judgment." Judgment entered in March, 2014, dismissing
Silva's complaint, and Silva filed a timely appeal.
Discussion. 1. Standard of review. "Summary judgment is
appropriate when there are no genuine issues of material fact
and the moving party is entitled to judgment as matter of law."
Kanamaru v. Holyoke Mut. Ins. Co., 72 Mass. App. Ct. 396, 398
(2008), citing Mass.R.Civ.P. 56(c), as amended, 436 Mass. 1404
(2002). We view the facts in the light most favorable to Silva,
against whom judgment was entered, see ibid., to determine
whether he "has 'no reasonable expectation of proving an
essential element' of his case." Bobick v. United States Fid. &
Guar. Co., 439 Mass. 652, 659 (2003), quoting from Kourouvacilis
v. General Motors Corp., 410 Mass. 706, 716 (1991). "Our review
is de novo," Auto Flat Car Crushers, Inc. v. Hanover Ins. Co.,
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469 Mass. 813, 820 (2014), and "we may consider any ground
apparent on the record that supports the result reached in the
lower court." Demeo v. State Farm Mut. Auto. Ins. Co., 38 Mass.
App. Ct. 955, 956 (1995), quoting from Gabbidon v. King, 414
Mass. 685, 686 (1993).
2. Relationship between G. L. c. 93A and G. L. c. 176D.
General Laws c. 93A, the Massachusetts Consumer Protection Act,
protects consumers and businesses alike from unfair business
practices that are "immoral, unethical, oppressive, or
unscrupulous; or within the bounds of some statutory, common-law
or other established concept of unfairness." Ellis v. Safety
Ins. Co., 41 Mass. App. Ct. 630, 640 (1996). Similarly,
"[G. L.] c. 176D, § 3, prohibits 'unfair or deceptive acts or
practices in the business of insurance,' and § 3(9) enumerates
acts and omissions that constitute unfair claim settlement
practices." Hopkins v. Liberty Mut. Ins. Co., 434 Mass. 556,
564 (2001). However, c. 176D, § 3, does not itself provide a
private right of action. See Dodd v. Commercial Union Ins. Co.,
373 Mass. 72, 75 (1977), superseded in part by statute as stated
in Wheatley v. Massachusetts Insurers Insolvency Fund, 465 Mass.
297, 301 n.7 (2013); Morrison v. Toys "R" Us, Inc., Mass. 59
Mass. App. Ct. 613, 617 n.7 (2003), S.C., 441 Mass. 451 (2004);
Adams v. Liberty Mut. Ins. Co., 60 Mass. App. Ct. 55, 63 n.14
(2003). To proceed against an insurer who has violated G. L.
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c. 176D, § 3(9), a plaintiff must bring a claim under G. L.
c. 93A, § 9 or § 11. In the present case, Silva has brought his
claim pursuant to c. 93A, § 11, which governs claims by persons
acting in a business context. See Frullo v. Landenberger, 61
Mass. App. Ct. 814, 821 (2004).
It is important to recognize at the outset of our analysis
that G. L. c. 93A, § 11, does not expressly incorporate
violations of G. L. c. 176D, § 3(9), in contrast to c. 93A, § 9,
which has been amended to allow consumers to bring c. 93A claims
alleging violations of c. 176D without regard to whether those
violations constitute an unfair business practice under c. 93A,
§ 2. See Polaroid Corp. v. Travelers Indem. Co., 414 Mass. 747,
754 (1993); DiVenuti v. Reardon, 37 Mass. App. Ct. 73, 79
(1994). That being said, if a business establishes a relevant
"business context" between it and the insurer as a prerequisite
for liability under c. 93A, §§ 2 and 11, "a judge may
nonetheless rely on a c. 176D violation as evidence of an unfair
business practice [for the purpose of] § 11." Northern Security
Ins. Co. v. R.H. Realty Trust, 78 Mass. App. Ct. 691, 696 n.12
(2011). However, "[t]here is no one-to-one relationship between
[c.] 176D and [c.] 93A" in the c. 93A, § 11, context, as
"violations of chapter 176D run the gamut from those that are
somewhat technical to those that are gravely offensive. Given
this range, conduct that abridges the unfair claim practice
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statute may or may not abridge the unfair trade practice
statute." Continental Ins. Co. v. Bahnan, 216 F.3d 150, 157
(1st Cir. 2000). This distinction can be important when
determining whether an alleged claim settlement practice
provides grounds sufficient to overcome a motion for summary
judgment in a c. 93A, § 11, action.
3. Classification of Silva's G. L. c. 93A claim. Before
reaching the substance of Silva's appeal as it relates to G. L.
c. 176D, we first address Steadfast's argument that Silva's
G. L. c. 93A claim should be read as a claim under c. 93A, § 9
-- the branch of c. 93A that provides a right of action to
individual consumers -- not c. 93A, § 11. If Silva's claim is
determined to fall under the province of c. 93A, § 9, Steadfast
argues, the claim should have been dismissed on the ground that
Silva failed to send Steadfast a demand letter in compliance
with the statute. See Spilios v. Cohen, 38 Mass. App. Ct. 338,
342 (1995) ("demand letter is a condition precedent to
commencing an action under G. L. c. 93A, § 9"). Steadfast
asserts that Silva's claim falls under c. 93A, § 9, because
Silva pursued both personal and business damages. Steadfast
also contends that it is unprecedented for third-party claimants
in an insurance context to file a claim under c. 93A, § 11,
given the lack of privity between third-party claimants and
insurers. We are unpersuaded by Steadfast's argument.
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The first prong of Steadfast's argument is readily disposed
of given that current case law does not prevent Silva, as a
matter of law, from bringing suit under G. L. c. 93A, § 11,
simply because he pursued damages relating to both his personal
and business injuries. See Begelfer v. Najarian, 381 Mass. 177,
190-191 (1980) (inquiry whether § 11 "business context" has been
established is fact-specific, requiring consideration of "the
circumstances of each case").4 Moreover, Silva, Associated, and
Steadfast were all engaged in trade or commerce during the
claims, incidents, and transactions at issue. Silva's
automotive repair business was damaged by Associated's
demolition business, which was insured by Steadfast's insurance
business.
Steadfast's third-party claimant argument is equally
unpersuasive. In Clegg v. Butler, 424 Mass. 413, 418 (1997)
(Clegg), the Supreme Judicial Court affirmed the right of third-
party claimants to file suit against insurers under G. L.
c. 93A, though this interpretation was based on the statutory
language of c. 93A, § 9, not of §§ 2 and 11. "While the
majority of c. 93A actions [relating to c. 176D] involve an
4
This analysis includes "the nature of the transaction, the
character of the parties involved, and the activities engaged in
by the parties. . . . Other relevant factors are whether
similar transactions have been undertaken in the past, whether
the transaction is motivated by business or personal reasons
. . . , and whether the participant played an active part in the
transaction." Begelfer v. Najarian, 381 Mass. at 191.
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insured's attempt to enforce its rights against its own insurer,
'the specific duty contained in subsection [3(9)](f) [of c.
176D] is not limited to those situations where the plaintiff
enjoys contractual privity with the insurer.'" Pacific Indem.
Co. v. Lampro, 86 Mass. App. Ct. 60, 64 (2014), quoting from
Clegg, supra at 419.
Although in Clegg the court interpreted G. L. c. 93A, § 9,
there are also cases that demonstrate the ability of third-party
claimants to bring suit under c. 93A, § 11. See R.W. Granger &
Sons, Inc. v. J & S Insulation, Inc., 435 Mass. 66, 68-72 (2001)
(R.W. Granger & Sons) (breach of contract claim between
subcontractor and general contractor; after judgment entered in
favor of subcontractor, surety for general contractor was liable
to subcontractor pursuant to G. L. c. 149, § 29, and violated
G. L. c. 93A, §§ 2 and 11); Adams v. Liberty Mut. Ins. Co., 60
Mass. App. Ct. at 63 n.14 (plaintiff chiropractor's third-party
claim against workers' compensation insurer "adequately
constitute[d] a claim for relief under G. L. c. 93A, § 11").
Moreover, the goal behind G. L. c. 176D -- to facilitate
settlement of insurance claims -- "is equally desirable whether
the plaintiff is an insured or a third-party claimant," Clegg,
supra at 419, and whether the plaintiff is an individual
consumer or a business. We discern no basis for a bright-line
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rule that would prohibit third-party claimants in the c. 176D
context from filing claims pursuant to c. 93A, § 11.
4. Alleged violation of G. L. c. 176D, § 3(9). "The duty
of fair dealing in insurance settlement negotiations is
established by statute under G. L. c. 176D, § 3(9)." Clegg,
supra at 419. The over-all purpose of this statute is to
"encourage the settlement of insurance claims . . . and
discourage insurers from forcing claimants into unnecessary
litigation to obtain relief." Ibid. Of the fourteen insurance
settlement practices described by c. 176D, § 3(9), at issue here
is subsection (f), which requires insurance companies "to
effectuate prompt, fair and equitable settlements of claims in
which liability has become reasonably clear." G. L. c. 176D,
§ 3(9)(f), inserted by St. 1972, c. 543, § 1.
In evaluating the settlement practices here, we stress that
Silva objects only to Steadfast's postverdict settlement
practices.5 Indeed neither party has addressed the $186,464
insurance payment made before trial in the underlying case,
which was the subject of a prior decision of this court. Silva
v. Associated Bldg. Wreckers, 87 Mass. App. Ct. 1104. We
5
Though less common than their pretrial counterparts, G. L.
c. 176D violations arising out of postjudgment settlement
practices have been recognized. See Van Dyke v. St. Paul Fire &
Marine Ins. Co., 388 Mass. 671, 674 n.3 (1983) (discussing
possibility of posttrial violation); R.W. Granger & Sons, 435
Mass. at 78-79 (no error in ruling that defendant's postverdict
conduct constituted a violation).
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therefore only consider whether Steadfast's postverdict
settlement practices are actionable. See R.W. Granger & Sons,
435 Mass. at 69 ("The judge limited the G. L. c. 93A claim . . .
to events 'occurring subsequent to' the jury's . . . verdict").
Silva argues that he demonstrated as a matter of law that
Steadfast violated G. L. c. 176D, § 3(9)(f), when it failed to
effectuate a settlement between June 21, 2010, when judgment
originally entered for Silva, and March 28, 2013, when Steadfast
finally paid the judgment. Steadfast responds that its
liability only became "reasonably clear" on March 5, 2013, after
the resolution of Silva's appeals and the parties' respective
motions to amend the judgment.
"Although whether a particular set of acts, in their
factual setting, is unfair or deceptive is a question of fact,
the boundaries of what may qualify for consideration as a
[G. L.] c. 93A violation is a question of law." Chervin v.
Travelers Ins. Co., 448 Mass. 95, 112 (2006) (citation omitted).
See R.W. Granger & Sons, 435 Mass. at 73. We conclude that
Steadfast's postjudgment actions fell outside those boundaries
and therefore Steadfast was entitled to summary judgment as a
matter of law.
As directed by G. L. c. 176D, § 3(9)(f), insurers must
attempt to settle claims once liability has become reasonably
clear. For this purpose, "liability encompasses both fault and
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damages." Clegg, 424 Mass. at 421. See R.W. Granger & Sons,
435 Mass. at 75. Whether fault and damages were reasonably
clear here postjudgment is not a simple inquiry. When judgment
entered in Silva's favor on June 21, 2010, Silva did not seek to
enforce the judgment or make a settlement request or demand for
full or partial payment but, rather, appealed the judgment on
multiple grounds, thereby opening up both the scope of liability
and the amount of damages. Associated, however, did not file an
appeal, so some amount of liability and damages had, at that
point, been established. Further complicating matters,
Steadfast had previously paid Silva $186,464, the basis of the
offset that was the subject of Silva's second round of appellate
litigation. Between entry of the original judgment on June 21,
2010, and the execution issued in November, 2012, Steadfast made
no additional settlement offers. Thus, the question is whether
Steadfast's failure to make a postjudgment settlement offer
constituted a violation of G. L. c. 93A, §§ 2 and 11. We
conclude that Steadfast did not as a matter of law engage in
unfair and deceptive practices pursuant to c. 93A, §§ 2 and 11,
in these circumstances.
We so conclude because the amount of damages was not
reasonably clear once Silva chose to appeal multiple claims
previously found to be without merit by the trial judge. See
Clegg, supra at 421. The subsequent appellate and postjudgment
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litigation confirmed the reasonableness of Steadfast's actions,
as Silva's claims were once again determined to be without merit
and the amount of damages required multiple adjustments in the
trial court. Cf. Jet Line Servs., Inc. v. American Employers
Ins. Co., 404 Mass. 706, 717 (1989) ("As a general rule, an
insurance company does not act unfairly or deceptively within
the meaning of G. L. c. 93A, § 2, with respect to a claim made
under a policy of insurance simply by making a legally correct
disclaimer of coverage"); Ben Elfman & Sons, Inc. v. Home Indem.
Co., 411 Mass. 13, 21 (1991) ("Because we have decided that the
defendant rightfully refused to pay interest under the policy,
its actions in that regard do not constitute unfair and
deceptive acts").
Our holding is consistent with established Massachusetts
case law. In R.W. Granger & Sons, 435 Mass. at 75-76, the
Supreme Judicial Court held there was a postverdict violation of
G. L. c. 176D, § 3(9)(f), within the G. L. c. 93A, §§ 2 and 11,
context where the defendant insurer argued that liability was
not reasonably clear given that the amount of attorney's fees
was still disputed. The court found the defendant's argument
unpersuasive when comparing the potential amount of "reasonable
attorney's fees" to the certainty of the jury verdict and
interest. In addition, the plaintiff had made a demand for
payment within a month of the verdict, and the defendant
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insurer's tardy settlement offer "was neither 'fair' nor
'equitable.'" Id. at 76.
The court reached a similar conclusion in Rhodes v. AIG
Domestic Claims, Inc., 461 Mass. 486 (2012), a G. L. c. 93A,
§ 9, case involving catastrophic injuries, including permanent
paraplegia. Liability was certain and the postjudgment
settlement offer in response to the demand letter was "not only
unreasonable, but insulting." Id. at 494. The actions of Silva
and Steadfast in the case at bar are in stark contrast to both
R.W. Granger & Sons and Rhodes, as the amount of damages here
was uncertain once Silva appealed the judgment in the underlying
litigation. The fact that both Silva and Steadfast later filed
successful motions to amend the judgment amount gives further
credence to the judge's conclusion here that the amount of
damages was not "reasonably clear" until March of 2013.
These differences also lead us to distinguish this case
from those that hold "[a]n insurer's statutory duty to make a
prompt and fair settlement offer does not depend on the
willingness of a claimant to accept such an offer," Hopkins v.
Liberty Mut. Ins. Co., 434 Mass. at 567, and "[e]ven excessive
demands on the part of a claimant . . . do not relieve an
insurer of its statutory duty to extend a prompt and equitable
offer of settlement once liability and damages are reasonably
clear." Bobick v. United States Fid. & Guar. Co., 439 Mass. at
16
662. While that maxim is true when both liability and damages
are reasonably clear, in the instant case at least the amount of
damages remained uncertain until the appeals and postjudgment
motions were resolved. As such, the grant of summary judgment
in favor of Steadfast was appropriate.
Judgment dated March 12,
2014, affirmed.