NOTICE: All slip opinions and orders are subject to formal 

revision and are superseded by the advance sheets and bound 

volumes of the Official Reports. If you find a typographical 

error or other formal error, please notify the Reporter of 

Decisions, Supreme Judicial Court, John Adams Courthouse, 1 

Pemberton Square, Suite 2500, Boston, MA, 02108-1750; (617) 557-

1030; SJCReporter@sjc.state.ma.us

SJC-11791

JOSEPH P. BOYLE & another1 vs. ZURICH AMERICAN INSURANCE 

COMPANY.

Middlesex. April 6, 2015. - September 14, 2015.

Present: Gants, C.J., Spina, Cordy, Botsford, Duffly, Lenk, & 

Hines, JJ.

Insurance, Insurer's obligation to defend, Notice, Settlement of 

claim. Notice, Insurance claim. Consumer Protection Act, 

Insurance, Unfair or deceptive act. Practice, Civil, 

Damages.

Civil action commenced in the Superior Court Department on 

June 27, 2011.

The case was heard by Kenneth W. Salinger, J.

The Supreme Judicial Court granted an application for 

direct appellate review.

John T. Harding (Rachel M. Davison with him) for the 

defendant.

Michael K. Gillis (David R. Bikofsky & Joseph I. Rogers

with him) for the plaintiff.

The following submitted briefs for amici curiae:

Laura Foggan, of the District of Columbia, & Rosanna 

Sattler for Complex Insurance Claims Litigation Association.

 

1 Janice M. Boyle.
2

Anthony R. Zelle & Robert J. Maselek, Jr., for 

Massachusetts Defense Lawyers Association.

Charlotte E. Glinka, Thomas R. Murphy, & J. Michael Conley

for Massachusetts Academy of Trial Attorneys.

LENK, J. Joseph P. Boyle was injured by an exploding tire 

in an automobile repair shop operated by C&N Corporation (C&N). 

Joseph2 and his wife, Janice M. Boyle, filed a complaint against 

C&N, asserting claims for bodily injury and loss of consortium. 

C&N held an insurance policy issued by Zurich American Insurance 

Company (Zurich). The policy required that C&N provide notice 

to Zurich of any suit brought against it. C&N informed Zurich 

about Joseph's injury. It did not notify Zurich about the 

lawsuit, but the Boyles' counsel eventually did. Zurich did not

defend against the suit. C&N defaulted, and judgment by default 

was entered for the Boyles.

Subsequently, the Boyles brought suit against Zurich, 

asserting both their individual claims and the claims of C&N, 

which, in the interim, C&N had assigned to the Boyles. In 

return for a negotiated sum of money, the Boyles released the 

claims that they had asserted on their own behalf; these 

individual claims arose from Zurich's asserted failure to settle 

the Boyles' personal injury action when liability had become 

reasonably clear. After a jury-waived trial on C&N's claims 

 

2 Because they share a last name, we refer to Joseph P. 

Boyle and Janice M. Boyle by their first names.
3

against Zurich, a Superior Court judge determined that Zurich 

had committed a breach of its contractual duty to defend C&N. 

The judge declined to award the Boyles (as C&N's assignees) 

multiple damages, costs, and attorney's fees pursuant to G. L. 

c. 93A. The judge also subtracted from the Boyles' damages (as 

assignees) the amount that Zurich had agreed to pay to settle 

the Boyles' individual claims. The parties filed cross appeals, 

and we granted Zurich's petition for direct appellate review.

We conclude that the judge did not err in his determination

that Zurich committed a breach of its duty to defend C&N. In 

essence, as we have held in the line of cases proceeding from 

Johnson Controls, Inc. v. Bowes, 381 Mass. 278 (1980) (Johnson 

Controls), an insured's failure to comply with a notice 

obligation in an insurance policy does not relieve the insurer 

of its duties under that policy unless the insurer demonstrates 

that it suffered prejudice as a result of the breach. Zurich 

has not shown such prejudice.

We do not disturb the judge's conclusion that Zurich did 

not violate G. L. c. 93A. We do, however, conclude that the sum 

agreed upon to settle the Boyles' individual claims should not 
4

have been subtracted from the damages awarded to the Boyles as 

C&N's assignees.3

1. Background. We recite the essential facts found by the 

judge, which we accept "unless they are clearly erroneous,"

Weiler v. PortfolioScope, Inc., 469 Mass. 75, 81 (2014), quoting 

Makrigiannis v. Nintendo of Am., Inc., 442 Mass. 675, 677 

(2004), and which the parties do not challenge, supplemented by 

other undisputed information from the record.

a. Underlying facts. C&N operated an automobile repair 

shop. In March, 2006, Nicholas Rago, one of C&N's co-owners,

raised a customer's truck on a lift at C&N's shop. At Rago's 

request, Joseph stepped into the garage to listen to the truck's 

transmission. As Rago revved the engine, one of the truck's 

tires exploded, severely lacerating and fracturing Joseph's left 

forearm and hand.

Joseph underwent several surgical procedures, incurring 

approximately $106,000 in medical expenses. He suffered 

permanent scarring and partial loss of function in his left arm 

and hand. For approximately one year, Joseph was unable to 

work. Subsequently, he was compelled to seek less-skilled, 

lower-paying employment than he previously had held.

 

3 We acknowledge the amicus briefs submitted by the Complex 

Insurance Claims Litigation Association, the Massachusetts 

Defense Lawyers Association, and the Massachusetts Academy of 

Trial Attorneys.
5

C&N carried a "business auto" insurance policy issued by 

Zurich, which included liability coverage. The coverage limit 

of that policy was $50,000. Rago reported Joseph's accident to 

his insurance agent, Tarpey Insurance Group (Tarpey), twelve 

days after the accident. Tarpey relayed written notice to 

Zurich, which opened a claim file and began an investigation.

In June, 2006, an investigator for Zurich interviewed Rago, 

who described the accident and reported that Joseph was 

undergoing surgeries. That same month, an attorney retained by 

the Boyles informed C&N by letter that the Boyles intended to 

assert a claim for bodily injury. This letter was forwarded by 

C&N to Tarpey, and by Tarpey to Zurich. In October, 2006, the 

Boyles' attorney wrote to Zurich directly, informing it of the 

Boyles' intention to pursue a bodily injury claim and asking for 

information about the coverage limits of C&N's policy. Another, 

similar letter, marked "2nd request," was delivered to Zurich in 

December, 2006. Although Zurich was required to provide the 

information sought by the Boyles, see G. L. c. 175, § 112C, it 

did not respond.

By October, 2007, Zurich had determined that C&N would be 

held liable for Joseph's injuries. By early 2008, it had 

concluded that Joseph's injuries were covered by C&N's policy. 

Zurich did not relay these determinations to C&N. It also did 

not attempt to estimate the liability that C&N might face, or to 
6

settle the Boyles' claims. Instead, in February, 2008, Zurich 

closed its file for the Boyles' claim.

b. Suit against C&N. In August, 2008, the Boyles brought 

an action in the Superior Court against C&N,

4 seeking damages for 

Joseph's injuries and for Janice's loss of consortium. By that 

time, C&N no longer was operating as a business; it had been 

administratively dissolved for approximately fourteen months. 

C&N did not inform Tarpey or Zurich that the suit had been 

filed, and did not forward to Zurich the complaint or other 

documents filed in the proceedings. C&N did not answer the 

complaint, and in January, 2009, C&N's default was entered.

The Boyles then moved for a judgment by default. In 

September, 2009, the Boyles' attorney sent Zurich a letter 

stating that a hearing had been scheduled in the Superior Court 

to determine the amount of the Boyles' damages. The letter 

specified the docket number assigned to the Boyles' complaint. 

Another letter, sent by the attorney later the same month, 

informed Zurich that the damages hearing had been postponed 

until October, 2009. That letter also stated the amount of

Joseph's medical expenses, and enclosed copies of his medical 

bills. Upon receipt of these letters, a Zurich clerk scanned 

them and added them to the closed file for the Boyles' 

 

4 Nicholas Rago also was named as a defendant in that suit.
7

complaint. The clerk did not realize that any other action was 

necessary. Zurich therefore did not move to have C&N's default 

set aside; did not contact C&N to discuss the suit; and did not 

attempt to settle the suit with the Boyles, or otherwise to 

contact them or their attorney.

The October, 2009, hearing on the Boyles' damages was not 

attended by C&N or by Zurich. After the hearing, the judge 

awarded damages of $1.5 million to Joseph and $750,000 to 

Janice. The Boyles also were awarded pre- and postjudgment 

interest. Final judgment was entered against C&N in January, 

2010.5

c. Suit against Zurich. In June, 2011, the Boyles 

commenced their current suit, also in the Superior Court, naming 

Zurich as the defendant. Among other things, the Boyles 

asserted that they were third-party beneficiaries of C&N's 

policy, and that Zurich had violated G. L. c. 93A by failing to 

settle the Boyles' suit against C&N. In September, 2013, C&N 

was revived by the Secretary of the Commonwealth for a period 

not to exceed one year. Upon being revived, C&N assigned to the 

Boyles all of its rights and claims against Zurich, including a 

claim that Zurich had committed a breach of its contractual duty 

 

5 The judgment was entered jointly and severally against C&N 

and Rago, who also had defaulted.
8

to defend C&N.

6 C&N's claims against Zurich, assigned to the 

Boyles, subsequently were consolidated with the Boyles' claims

on their own behalf.

Several days before the case was scheduled to be tried, the 

Boyles and Zurich reached an agreement to settle the Boyles' 

individual claims. The Boyles signed a release relinquishing 

any claims they had "in their individual capacities." In 

return, they were to receive $1,324,357, a sum equal to the 

amount that had accrued in postjudgment interest on the default 

judgment that the Boyles had obtained against C&N. A release

executed by the Boyles as part of the settlement stated that it 

"specifically excludes . . . the rights of the Boyles as 

assignees of [C&N] to pursue the full amount of the judgment 

entered in [the Boyles' suit against C&N], with interest."

A jury-waived trial was conducted on the remaining claims, 

namely, those that C&N had assigned to the Boyles. In detailed 

written findings, the Superior Court judge concluded that Zurich 

had committed a breach of its contractual duty to defend C&N. 

The judge determined that Zurich's duty to defend was triggered 

by the notice it had received of Joseph's injury (from C&N), 

 

6 It is permissible and not uncommon for an insured to 

assign his or her rights against an insurer to the injured 

party. See Ratner v. Canadian Universal Ins. Co., 359 Mass. 

375, 379 (1971); Gore v. Arbella Mut. Ins. Co., 77 Mass. App. 

Ct. 518, 526 (2010).
9

coupled with its notice of the impending damages hearing 

(received from the Boyles' attorney). Based primarily on the 

testimony of a Zurich employee, the judge found that any

reasonable insurer would have attempted, by the time of the 

damages hearing, to settle the Boyles' claim for the policy 

limit of $50,000. The judge credited the testimony of the

Boyles and their attorney that if, at that time, Zurich had 

offered to settle for the policy limit, such an offer would have 

been accepted, and no default judgment against C&N would have 

been pursued.

Accordingly, the judge concluded that Zurich's failure to 

defend C&N caused C&N damages in the full amount of the judgment 

rendered against it, namely, $2,250,000, plus interest. The 

judge did not, however, award the Boyles (as assignees) multiple 

damages, finding no violation of G. L. c. 93A. At the end of 

his order, the judge wrote that "the $1,324,357 in post-judgment 

interest that [Zurich] has already agreed to pay to the Boyles 

in order to settle their direct claims" would be subtracted from 

the award of damages. Both parties appealed.

2. Discussion. Before us, Zurich contends that its duty 

to defend C&N was not triggered at any time, given that C&N 

itself never informed Zurich of the Boyles' lawsuit, never 

forwarded the complaint and related documents to Zurich, and 

never requested that Zurich provide a defense. The Boyles, for 
10

their part, challenge the judge's determinations that Zurich 

committed no violation of G. L. c. 93A, and that the Boyles' 

damages should be reduced by the amount that Zurich had agreed 

to pay in order to settle the Boyles' individual claims. 

Examining these arguments "without deference [to] the legal 

standard which the judge applied," Makrigiannis v. Nintendo of 

Am., Inc., 442 Mass. 675, 678 (2004), quoting Kendall v. 

Selvaggio, 413 Mass. 619, 621 (1992), we conclude that only the 

Boyles' challenge to the subtraction of the settlement payment 

from their damages award is meritorious.

a. Duty to defend. "It is well settled in this 

jurisdiction that a liability insurer owes a broad duty to 

defend its insured against any claims that create a potential 

for indemnity." Doe v. Liberty Mut. Ins. Co., 423 Mass. 366, 

368 (1996), citing Liberty Mut. Ins. Co. v. SCA Servs., Inc., 

412 Mass. 330, 332 (1992). A breach of the duty to defend can 

support claims in contract, in tort, and under G. L. c. 93A. 

See Hartford Cas. Ins. Co. v. New Hampshire Ins. Co., 417 Mass. 

115, 118, 120 (1994). Closely tied to the duty to defend is an 

insurer's obligation "to effectuate prompt, fair and equitable 

settlements of claims in which liability has become reasonably 

clear." Id. at 120, quoting G. L. c. 176D, § 3 (9) (f).

The duty to defend also was incorporated explicitly into 

the policy that Zurich issued to C&N, by way of a mandatory 
11

indorsement approved by the Commonwealth's Division of 

Insurance. Zurich argues, however, that it was not subject to 

any duty to defend C&N because of other terms in C&N's policy. 

That policy, which (according to the parties) is in widespread 

use in Massachusetts, stated that Zurich would "ha[ve] no duty 

to provide coverage . . . unless there has been full compliance" 

with specified obligations, including the obligation to 

"[i]mmediately send [Zurich] copies of any request, demand, 

order, notice, summons[,] or legal paper received concerning [a] 

claim or 'suit.'" In Zurich's view, C&N's failure to forward 

the Boyles' complaint and related documents to Zurich relieved

Zurich of its duty to defend.

The approach advocated by Zurich long has been rejected in 

Massachusetts, both by way of legislation and in our

jurisprudence. The Legislature, in 1977, amended G. L. c. 175, 

§ 112, to provide that "[a]n insurance company shall not deny 

insurance coverage to an insured because of failure of an 

insured to seasonably notify an insurance company of an 

occurrence, incident, claim or of a suit . . . unless the 

insurance company has been prejudiced thereby." See St. 1977, 

c. 437.7 This provision applies to motor vehicle insurance 

 

7 Zurich argues that it never "den[ied] insurance coverage" 

to C&N Corporation (C&N). We reject the suggestion, implicit in 

this argument, that an insurer may avoid the consequences of an 
12

policies, like the one issued to C&N, and to other policies 

insuring against liability due to bodily injury, death, or 

property damage.

Our decision in Johnson Controls, supra, extended the same 

treatment to other liability insurance policies.8 The insured in 

that case, an attorney, failed to provide his malpractice

insurance carrier with written notification of a claim against 

him, and failed also "to forward suit papers" to the insurer,

all "in violation of the provisions of his insurance contract." 

381 Mass. at 279.9 We held that, in subsequent cases, an 

insurance company seeking to be "relieved of its obligations 

under a liability insurance policy . . . on the ground of 

untimely notice . . . will be required to prove both that the 

 

otherwise wrongful denial of coverage by ignoring a claim 

altogether.

8 The approach to notice obligations prescribed by Johnson 

Controls, Inc. v. Bowes, 381 Mass. 278, 279 n.2 (1980) (Johnson 

Controls), and its progeny concerns "occurrence"-based liability 

insurance policies like the one at issue in this case. 

Different considerations apply to "claims-made" policies. See 

Chas. T. Main, Inc. v. Fireman's Fund Ins. Co., 406 Mass. 862, 

863-864 (1990).

9 Because the insured in Johnson Controls never provided 

notice of the claim against him, Zurich is incorrect in 

suggesting that the analysis adopted in that case is restricted 

to instances in which the insured did eventually, if belatedly, 

provide notice of the suit against it. See Darcy v. Hartford 

Ins. Co., 407 Mass. 481, 482-483 (1990). See also Couch on 

Insurance § 200:33, at 200-48 (3d ed. 2005) (prejudice 

requirement applies to "failure of the insured to give notice").
13

notice provision was in fact breached and that the breach 

resulted in prejudice to its position." Id. at 282.

Our reasoning in Johnson Controls, as we later paraphrased 

it, was that "[a] violation of a policy provision should bar 

coverage only where the breach frustrates the purpose underlying 

that provision." Augat, Inc. v. Liberty Mut. Ins. Co., 410 

Mass. 117, 123 (1991). Notice requirements are intended to 

permit the insurer to undertake a "seasonable investigation of 

the facts relating to liability," see Johnson Controls, 381 

Mass. at 281, quoting Bayer & Mingolla Constr. Co. v. Deschenes, 

348 Mass. 594, 600 (1965), so that it may preserve "an 

opportunity to defend effectively." See Johnson Controls, 

supra, quoting Brakeman v. Potomac Ins. Co., 472 Pa. 66, 75 

(1977). These purposes are undermined by an insured's breach 

only if the insurer is prejudiced thereby. See Johnson 

Controls, supra at 281. The contrary approach, which treats a 

notice provision as a condition precedent to the insurer's 

obligations, results in "a forfeiture, for the carrier 

seeks . . . to deny the insured the very thing paid for." Id.

at 281, quoting Cooper v. Government Employees Ins. Co., 51 N.J. 

86, 93-94 (1968). We noted also in Johnson Controls, supra at 

281, quoting Brakeman, supra at 72, that the traditional notion

that courts should not "redraft" policy provisions "fails to 

recognize the true nature of the relationship between insurance 
14

companies and their insureds," insofar as "[a]n insurance 

contract is not a negotiated agreement; rather its conditions 

are by and large dictated by the insurance company to the 

insured."

10

We reaffirmed and fortified the rule of Johnson Controls in 

Darcy v. Hartford Ins. Co., 407 Mass. 481 (1990) (Darcy). 

There, too, the insured, a corporation, did not notify the 

insurer about the lawsuit brought against it. The insurer 

learned of the suit when it was impleaded as a third party into 

another action arising from the same underlying accident. See

id. at 482-483. The insurer refused to defend its insured

because, among other things, the insured had not provided it 

with notice of the suit. Id. at 484. The injured parties later 

obtained a judgment against the insurer. Id. On appeal, we 

declined to adopt "a rebuttable presumption of prejudice in 

cases where the delay in notifying an insurer of a claim or 

possible claim is 'extreme.'" Id. at 485. We explained that an 

insurer should not be permitted "to avoid liability on the basis 

of the possibility, rather than on proof of actual prejudice." 

 

10 This is thus a context in which both we and the 

Legislature have declined to embrace the customary canon -- on 

which Zurich leans heavily in its brief -- that "[a] policy of 

insurance whose provisions are plainly and definitely 

expressed . . . must be enforced in accordance with its terms." 

Cody v. Connecticut Gen. Life Ins. Co., 387 Mass. 142, 146 

(1982), quoting Hyfer v. Metropolitan Life Ins. Co., 318 Mass. 

175, 179 (1945).
15

Id. at 486. Rather, the insurer must bear "the burden of 

identifying the precise manner in which its interests have 

suffered," id. at 487, for instance by showing that the 

insured's breach of a notice requirement resulted in "the loss 

of critical evidence[] or testimony from material witnesses[,] 

despite diligent good faith efforts on the part of the insurer 

to locate them." Id. at 486.

Both Johnson Controls, 381 Mass. at 278, and Darcy, 407 

Mass. at 483, arose from complaints brought by injured parties

on their own behalf, seeking to reach and apply the proceeds of 

the insureds' policies. In Sarnafil, Inc. v. Peerless Ins. Co., 

418 Mass. 295 (1994) (Sarnafil), we applied the same approach to 

an insured's complaint for breach of the duty to defend. The 

insured in Sarnafil, like C&N, informed the insurer about the 

potential for a claim, but -- in violation of the terms of the 

policy -- provided no notice about the initiation of legal 

proceedings. See id. at 298-301. This court concluded that the 

insured's violation of the notice provision would bar coverage 

only if the breach frustrated the provision's purpose. See id.

at 302, 305-306, citing Augat, Inc. v. Liberty Mut. Ins. Co., 

410 Mass. at 122-123, and Darcy, 407 Mass. at 491. The court 

rejected the view, advocated by a dissent, that the purpose of 

the notice requirement was frustrated "as a matter of law" by 

the insured's failure to "tender[] its defense to [the 
16

insurer]," id. at 313 (O'Connor, J., dissenting in part), and 

that "[b]ecause there was no notice, there was no duty [to 

defend]." Id. at 315 (O'Connor, J., dissenting in part). 

Instead, the court held that the insurer would not be excused of 

its obligations without a showing of prejudice. See Sarnafil, 

supra at 305-306.11

We have not seen cause to revise our holdings in Johnson 

Control and its progeny. See, e.g., Mello v. Hingham Mut. Fire 

Ins. Co., 421 Mass. 333, 336-337 (1995); Goodman v. American

Cas. Co., 419 Mass. 138, 141 (1994). See also Pilgrim Ins. Co. 

v. Molard, 73 Mass. App. Ct. 326, 336-337 (2008). The reasoning 

of those decisions, described earlier, remains compelling 

today.12 Indeed, similar rules have been adopted by a large 

majority of other States. See, e.g., Prince George's County v. 

Local Gov't Ins. Trust, 388 Md. 162, 182-188 (2005), and cases 

 

11 Under this analytical framework, the court concluded that 

a genuine dispute remained as to whether the insurer had 

suffered prejudice, precluding summary judgment. See Sarnafil, 

Inc. v. Peerless Ins. Co., 418 Mass. 295, 302, 305-306 (1994).

12 Two of the amici suggest that a rule permitting an 

insured to obtain coverage after failing to comply with a notice 

provision opens the door to manipulations by insureds, who may 

seek to "undermine the defense" and to "thwart the insurer's 

ability to mount an effective, timely defense." But 

circumstances in which the defense would be injured in these 

ways are precisely those in which the prejudice requirement of 

Johnson Controls, 381 Mass. at 282, would be satisfied.
17

cited; Couch on Insurance § 199:135, at 199-187 to 199-189 (3d 

ed. 2005).

13

Accordingly, C&N's failure to notify Zurich of the 

complaint brought by the Boyles did not, standing alone, excuse 

Zurich of its duty to defend C&N. Instead, upon learning from 

the Boyles' attorney that a lawsuit was pending against C&N for 

an occurrence covered by the policy, Zurich was required to 

defend against that suit unless C&N's breach of its notice 

obligation prejudiced Zurich, by depriving it of an opportunity 

to mount an effective defense.

The judge determined that Zurich did not establish that it

had been prejudiced in this way. Although Zurich made no 

argument to the contrary in the Superior Court, it challenges 

this determination in a footnote to its appellate brief. Even 

 

13 Zurich American Insurance Company (Zurich) cites 

decisions from several other jurisdictions for the proposition 

that the duty to defend is not triggered unless the insured 

affirmatively requests that a defense be provided. See, e.g., 

Purvis v. Hartford Acc. & Indem. Co., 179 Ariz. 254, 258 (Ct. 

App. 1994); First Bank of Turley v. Fidelity & Deposit Ins. Co. 

of Maryland, 928 P.2d 298, 304 (Okla. 1996). Other courts do 

not impose this condition. See, e.g., Cincinnati Cos. v. West 

Am. Ins. Co., 183 Ill. 2d 317, 326 (1998); Garcia v. 

Underwriters at Lloyd's, London, 143 N.M. 732, 738 (2008). See 

generally Couch on Insurance § 200:32, at 200-47 to 200-48. As 

we have indicated in Johnson Controls, supra at 282, and Darcy

v. Hartford Ins. Co., 407 Mass. 481, 482-483 (1990), we 

subscribe to the latter school of thought. See note 9, supra.
18

if the issue had been properly preserved and presented,14

Zurich's position would be belied by the judge's unchallenged

findings of fact. When Zurich learned of the Boyles' lawsuit, 

the hearing to assess the Boyles' damages had not yet taken 

place. At that juncture, Zurich could have contacted C&N and 

arranged to enter an appearance on its behalf. Zurich could 

have requested a postponement of the damages hearing. It could 

have moved to have C&N's default set aside, pursuant to Mass. R. 

Civ. P. 55 (c), 365 Mass. 822 (1974). Even after a judgment had 

entered, Zurich could have moved to set the judgment aside, 

pursuant to rule 55 (c) and Mass. R. Civ. P. 60 (b), 365 Mass. 

828 (1974). Most importantly, Zurich still could have resolved 

the Boyles' claim by offering to pay the policy limit of 

$50,000, an offer that, the judge found, the Boyles would have 

accepted. On these facts, the judge's conclusion that Zurich 

failed to present "proof of actual prejudice," Darcy, 407 Mass. 

at 486, was well-founded.

b. Consequences of the duty to defend. Zurich presents no 

other challenge to the judge's analysis. In conjunction with 

its duty to defend, Zurich was obliged to make reasonable, 

 

14 See Canton v. Commissioner of Mass. Highway Dep't, 455 

Mass. 783, 795 n.18 (2010) (argument waived where it was not 

made in trial court); Mole v. University of Mass., 442 Mass. 

582, 603 n.18 (2004) (sentence in footnote did not amount to 

argument).
19

prudent efforts to settle the Boyles' suit. See Medical 

Malpractice Joint Underwriting Ass'n of Mass. v. Goldberg, 425 

Mass. 46, 60 n.33 (1997); Hartford Cas. Ins. Co. v. New 

Hampshire Ins. Co., 417 Mass. 115, 119-120 (1994). Zurich 

committed a breach of that duty by failing to settle the suit 

for the policy limit, an endeavor that, the judge found, any 

reasonable insurer would have undertaken.

The judge calculated the Boyles' total amount of damages by 

using the method we endorsed in DiMarzo v. American Mut. Ins. 

Co., 389 Mass. 85 (1983) (DiMarzo). In that case, too, an 

insurer failed to settle an injured plaintiff's tort claim 

against an insured for the policy limit, there $20,000.15 See 

 

15 Whereas Zurich failed to make any effort to settle the 

Boyles' suit, the insurer in DiMarzo v. American Mut. Ins. Co., 

389 Mass. 85, 89 (1983), offered the injured plaintiff less than 

the policy limit. This distinction does not affect the manner 

in which an insured's damages are calculated. See note 7, 

supra. Nor is the judge's method of calculating damages 

rendered incorrect by the fact that DiMarzo v. American Mut. 

Ins. Co., supra at 87, concerned a claim under G. L. c. 93A, 

whereas the judge found Zurich liable on a breach of contract 

theory. Breach of the contractual duty to defend entitles the 

insured "to contract damages caused by the breach." 

Metropolitan Prop. & Cas. Ins. Co. v. Morrison, 460 Mass. 352, 

359 (2011), citing Polaroid Corp. v. Travelers Indem. Co., 414 

Mass. 747, 763 (1993). "Contract damages are 'those that cannot 

be reasonably prevented and arise naturally from the breach, or 

which are reasonably contemplated by the parties.'" Polaroid 

Corp. v. Travelers Indem. Co., supra at 762, quoting Delano 

Growers' Coop. Winery v. Supreme Wine Co., 393 Mass. 666, 680 

(1985). Where breach of the duty to defend results in a 

judgment against the insured that otherwise would not have 

occurred, the amount of that judgment may be deemed damages 
20

id. at 89, 100-101. The plaintiff's tort case went to trial, 

and resulted in a judgment against the insured for approximately 

$149,068. See id. at 89. There, as here, the plaintiff 

obtained an assignment of the insured's rights against the 

insurer. See id. at 93-94. We upheld a subsequent award of 

damages against the insurer for the full amount of the tort 

judgment, explaining that "[i]f [the insurer] had offered 

$20,000, [the insured] would have been released from the 

judgment against him." Id. at 101. See also Metropolitan Prop. 

& Cas. Ins. Co. v. Morrison, 460 Mass. 352, 360 (2011) (insurer 

committing breach of duty to defend may incur "obligation to pay 

the default judgment"); Polaroid Corp. v. Travelers Indem. Co., 

414 Mass. 747, 764 (1993) (Polaroid) ("an insured's losses in 

the underlying claim could well be the result of a breach of the 

duty to defend"). The amount of damages was not affected, we 

explained, by the question whether the insured was (like C&N) 

insolvent; as we had reasoned in an earlier case, "if solvency 

is required in order to sue for damages, an insurer is likely to 

be less responsive to its duty to act in good faith toward an 

insured who cannot pay the judgment." Jenkins v. General Acc. 

Fire & Life Assur. Corp., 349 Mass. 699, 702 (1965). See 

 

arising naturally from the breach. See Metropolitan Prop. & 

Cas. Ins. Co. v. Morrison, supra at 359-360; Polaroid Corp. v. 

Travelers Indem. Co., supra at 762, 764.
21

DiMarzo, supra at 95 n.9. See also D.J. Wall, Litigation and 

Prevention of Insurer Bad Faith § 5:19, at 231 (2d ed. 1994)

("rule . . . almost unanimously followed . . . holds that the 

contents of the insured's wallet are irrelevant to accrual of 

the insured's cause of action").

We are not asked to revisit our DiMarzo decision, and we do 

not now see cause to do so. Applied here, the analysis of that 

decision yields the result reached by the judge, namely, that 

Zurich is liable to C&N for the amount of the judgment by 

default entered in the suit that Zurich failed to defend.

c. General Laws c. 93A. In their cross appeal, the Boyles

challenge the judge's decision that Zurich did not violate G. L. 

c. 93A and that the Boyles are not entitled to multiple damages. 

We discern no reversible error.

The judge determined that Zurich committed a breach of both 

its contractual duty to defend C&N and the statutory obligation 

"to effectuate prompt, fair and equitable settlements of claims 

in which liability has become reasonably clear." G. L. c. 176D, 

§ 3 (9) (f). A violation of G. L. c. 176D, § 3 (9), itself 

establishes a violation of G. L. c. 93A unless the injured party 

is "engage[d] in the conduct of any trade or commerce." See 

G. L. c. 93A, §§ 9 (1), 11. The judge found, in accordance with

the parties' agreed statement of facts, that C&N was indeed 

engaged in trade or commerce. Consequently, the Boyles (as 
22

C&N's assignees) are entitled to relief under G. L. c. 93A only 

upon a showing that Zurich engaged in "[u]nfair or deceptive 

acts or practices." See G. L. c. 93A, § 2. An award of "up to 

three, but not less than two, times" C&N's actual damages is 

warranted if such unfair or deceptive acts or practices were

"willful or knowing." G. L. c. 93A, § 11. See Auto Flat Car 

Crushers, Inc. v. Hanover Ins. Co., 469 Mass. 813, 830 (2014); 

Polaroid, supra at 754.

The Boyles contend that Zurich engaged in unfair or 

deceptive acts by failing to defend C&N against the Boyles' 

suit; and, much later, by failing to settle the suit brought by 

the Boyles as C&N's assignees. The judge found that neither 

episode amounted to an unfair or deceptive act. "[W]hether a 

particular set of acts, in their factual setting, is unfair or 

deceptive is a question of fact," which we review for clear 

error. See Klairmont v. Gainsboro Restaurant, Inc., 465 Mass. 

165, 171 (2013), quoting Casavant v. Norwegian Cruise Line Ltd., 

460 Mass. 500, 503 (2011).

Zurich's failure to defend C&N against the Boyles' suit 

was, the judge found, "inadvertent" and "negligent." It stemmed 

largely from the unfortunate decision of a Zurich clerk to take 

no action upon receiving the letters informing Zurich of the 

Boyles' damages hearing. Mere negligence ordinarily does not 
23

represent an unfair or deceptive act. See Darviris v. Petros, 

442 Mass. 274, 278, 279 n.2 (2004), and cases cited.

Zurich made an error of a different nature in failing, more 

recently, to settle the Boyles' lawsuit as C&N's assignees. By 

the eve of the trial against it, Zurich apparently was not 

averse to settlement, having agreed to resolve the Boyles' 

individual claims for a sum of $1,324,357. The final offer made 

by Zurich to settle the Boyles' claims as C&N's assignees was 

the policy limit of $50,000, plus interest. The judge found 

that "Zurich did not make this offer in bad faith or based on 

any ulterior motive," but rather, "did so based on its reading 

of its insurance policy." The judge stated also, quoting Boston 

Symphony Orchestra, Inc. v. Commercial Union Ins. Co., 406 Mass. 

7, 15 (1989), that the position taken by Zurich was "a 

plausible, although ultimately incorrect, interpretation of 

[the] policy."

In view of our long-standing jurisprudence, described 

supra, we do not share the view that Zurich's position was 

"plausible." Even so, the judge's finding that Zurich's conduct 

was neither "unfair" nor "deceptive" was not clearly erroneous. 

"While G. L. c. 93A is a statute of 'broad impact,' the limits 

of which are not precisely defined, a violation of G. L. c. 93A 

requires, at the very least, more than a finding of mere 

negligence." Darviris v. Petros, 442 Mass. at 278, quoting 
24

Greenfield Country Estates Tenants Ass'n v. Deep, 423 Mass. 81, 

88 (1996), and citing Mechanics Nat'l Bank v. Killeen, 377 Mass. 

100, 109 (1979). The judge found, in essence, that although 

Zurich blundered badly in its reading of the legal landscape, 

its unsuccessful efforts to settle the Boyles' claims as C&N's 

assignees represented a negligent miscalculation, rather than 

"conduct involving dishonesty, fraud, deceit or 

misrepresentation." Darviris v. Petros, supra, quoting Poly v. 

Moylan, 423 Mass. 141, 151 (1996), cert. denied, 519 U.S. 1114 

(1997). Similarly, the judge's finding that Zurich's settlement 

efforts, while misguided, were made in good faith, entails the 

conclusion that Zurich's conduct was not "willful or knowing" in 

the sense necessary to warrant an award of multiple damages. 

See Cruz Mgt. Co. v. Thomas, 417 Mass. 782, 791 (1994); VMark 

Software, Inc. v. EMC Corp., 37 Mass. App. Ct. 610, 623 (1994). 

Nothing in the record compels conclusions to the contrary.

d. Deduction of settlement payment. As noted, the judge

reduced the damages awarded to the Boyles as C&N's assignees by 

$1,324,357, the amount for which the Boyles had settled their 

individual claims against Zurich. We agree with the Boyles that 

this was error.

The judge's concern was evidently that the Boyles not 

recover twice for the same injury. See Selmark Assocs., Inc. v. 

Ehrlich, 467 Mass. 525, 544 (2014), citing Blake v. Commissioner 
25

of Correction, 403 Mass. 764, 767 (1989) ("double recovery for 

same injury or loss is impermissible"). This concern appeared 

to the judge warranted since, at Zurich's urging, the judge 

characterized the payment of $1,324,357 as "post-judgment 

interest that [Zurich] has already agreed to pay."16 But the 

parties' own agreement concerning their settlement, in the form 

of the written release signed by the Boyles (the validity of 

which is not contested), dispels the notion that the payment 

agreed upon overlaps with any subsequent award granted to the 

Boyles as C&N's assignees.

According to that release, the settlement payment was 

granted to the Boyles specifically in conjunction with the 

"claims, demands, causes of action . . . which the Boyles have 

or could have brought directly and in their individual 

capacities." The crux of the Boyles' individual claims was that 

Zurich had wronged them as third-party beneficiaries of C&N's 

policy, by failing to settle the Boyles' suit when liability had 

become reasonably clear. This wrong, which had the potential to 

result in multiple damages, attorney's fees, and costs (even if 

C&N's claim under G. L. c. 93A proved unsuccessful), is 

 

16 The suggestion that the payment should be so 

characterized was based on the fact that, according to the 

parties' joint statement of facts, the amount of postjudgment 

interest that had accrued as of May, 2014, on the judgment by 

default against C&N also was $1,324,357.
26

analytically independent of the wrong that supported C&N's claim

against Zurich (assigned to the Boyles) -- i.e., that Zurich did 

not provide C&N with a defense. The release made in connection 

with the settlement of the Boyles' individual claims against 

Zurich acknowledged as much, stating that it "specifically 

excludes . . . the rights of the Boyles as assignees of [C&N] to 

pursue the full amount of the judgment entered in [the Boyles' 

suit against C&N], with interest" (second emphasis added).

In short, the parties made clear that the payment settling

the Boyles' individual claims against Zurich would not come at 

the expense of any portion of Zurich's liability toward C&N, 

including (as stated explicitly) interest. The judgment should 

not have been reduced, therefore, by the amount of the 

settlement payment.

3. Conclusion. The result of our analysis is that 

Zurich's failure to defend on a $50,000 policy will culminate in 

an award of damages that is, "in the circumstances, 

extraordinarily large." See DiMarzo, 389 Mass. at 108 

(Hennessey, C.J., concurring). This result flows from findings 

of fact "warranted on the evidence," with "[t]he law, step by 

step, . . . correctly applied." Id. "The crucial principles 

are . . . established . . . by construction of . . . statute[s], 

or by common law, in prior cases." Id. Those "crucial 

principles" are intended, in part, to ensure that an insurer 
27

remains "responsive to its duty to act in good faith toward an 

insured." Jenkins v. General Acc. Fire & Life Assur. Corp., 349 

Mass. 699, 702 (1965). We are presented with no reason to

abandon those principles.

The judgment is vacated and set aside, and the matter is 

remanded to the Superior Court for entry of a modified judgment 

consistent with this opinion.

So ordered.