Cook v. Rettman , 25 Mass. L. Rptr. 59 ( 2008 )

Agnes, Peter W., J.

OnAugust3,2007, theplaintiff, Albert Cook (“Cook”), filed a municipal tort action, pursuant to G.L.c. 258, against the Town of Lexington and three of its police officers (collectively, the “defendants”) for injuries arising from a traffic stop in 2004. On August 22, 2008, the parties entered into a settlement agreement by which Cook would release the defendants from all claims in exchange for the sum of $7,500. Due to a dispute over the method of tender for the $7,500 settlement payment, a stipulation of dismissal has not yet been entered.

This matter is now before the court on the defendants’ motion to enforce the settlement agreement and to dismiss the case with prejudice. The defendants also ask the court to order Cook to pay the attorney fees and costs incurred in bringing this motion. For the reasons set forth below, the defendants’ motion to enforce the settlement and enter dismissal is DENIED.

BACKGROUND

On August 3, 2007, Cook brought a tort action against the defendants seeking recovery for injuries that Cook alleges he suffered during a traffic stop. While the suit was pending, Cook and the defendants entered into a settlement agreement under which the defendants would pay Cook $7,500 in return for a full release of all claims against them. Cook fully executed the release on August 22, 2008. The settlement agreement stipulates that Cook will satisfy any lien or claim from the proceeds of the settlement, and will indemnify the defendants and their insurer in the event that any such lien or claim is not satisfied.

In accordance with its statutory obligation under G.L.c. 175, §24F, the defendants’ insurer, Massamont Insurance Company (“Massamont”), made an inquiry with the Massachusetts Department of Revenue before issuing the settlement check to determine whether Cook had any outstanding tax liens. The lien inquiry revealed a “MassTax” lien against Cook. Cook had filed an appeal with the Department of Revenue to challenge the lien, but his appeal was dismissed for failure to prosecute, and his subsequent request to reopen the appeal was denied. The defendants advised Cook that the lien needed to be resolved before Massamont would issue payment under the settlement agreement. On September 5, 2008, the defendants offered to issue a settlement check jointly to Cook and the Department of Revenue in return for Cook’s agreement to execute a stipulation of dismissal. On September 9, 2008, Cook refused to accept a joint check and requested that the Town of Lexington pay him the $7,500 directly.

The defendants then brought this motion to enforce the settlement agreement and to dismiss the action with prejudice. Cook opposes the defendants’ motion and requests that the Town of Lexington issue a $7,500 check in his name alone.

DISCUSSION

General Laws c. 175, §24F, provides a mechanism for companies making one-time insurance payouts to exchange information with the Department of Revenue to ascertain whether the claimant owes taxes to the Commonwealth. The statute provides that, prior to making a lump-sum insurance payment equal to or in excess of $500, an insurer “shall either provide the department of revenue with information about the claimant or examine information made available by the department of revenue.” G.L.c. 175, §24F(a). In this case, Massamont did both, electing to conduct a lien inquiry before providing the Department of Revenue with Cook’s relevant information.

A tax lien is not a debt within the meaning of G.L.c. 175, §24F, if the statute of limitations for appealing the lien or for seeking abatement has not yet expired. G.L.c. 175, §24F(a). The court does not have sufficient information about the lien to determine whether the limitations period has expired, or whether the Department of Revenue’s dismissal of Cook’s request for abatement and denial of his re-application have forever exhausted Cook’s right to appeal. However, assuming that Cook is, in fact, a “person [owing] taxes to the commonwealth,” Massamont satisfied its statutory obligations when it notified the Department of Revenue of the pending settlement payment and provided Cook’s name, address, date of birth, and social security number. See id.

The statute further provides that an insurer “may remit to the department of revenue the full amount of taxes owed to the commonwealth at the time it so notified the department of revenue or at any time before making payment to the claimant.” G.L.c. 175, §24F(a) (emphasis supplied). Massamont is not required to pay the settlement proceeds directly to the Commonwealth in satisfaction of Cook’s tax lien, but, should it elect to do so, the language of the statute directs that the taxes be paid “before making payment” to the claimant. See Bankers Life and Cos. Co. v. Commissioner of Ins., 427 Mass. 136, 140 (1998) (it is “a basic tenet of statutory construction that a statute must be construed so that effect is given to all its provisions, so that no part will be inoperative or superfluous” (internal citations omitted)). Indeed, nothing in the statute requires, or even authorizes, an insurer to issue a settlement check jointly to a claimant and the Department of Revenue.

Further, the issuance of a joint check arguably puts Cook, who disputes the validity of the lien, in the position of having to confirm the validity of the lien asserted against him by having to endorse the check and then seek a refund from the Commonwealth. The court will not sanction a method of settlement payment that is neither required nor permitted by the relevant statute. For the settlement agreement to take effect, the defendants or their insurer may either pay the $7,500 to Cook individually, or remit the amount of the taxes owed directly to the commonwealth. The proposed tender of a joint check will not suffice.

While the court can appreciate Massamont’s desire to shield itself from any liability regarding the lien, Massamont satisfied its obligations simply by notifying the Department of Revenue of the pending payout. Additionally, the settlement agreement itself indemnifies the defendants and Massamont, and stipulates that Cook himself will satisfy any lien from the proceeds. The court, therefore, sees no reason why it should ratify the defendants’ novel proposal and enforce the settlement agreement in accordance with their unilateral adjustment to the payment terms.

ORDER

For the foregoing reasons, it is hereby ORDERED that the defendants’ motion to enforce settlement and for entiy of dismissal with prejudice is DENIED.

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