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16-P-861 Appeals Court

HEATHER CHAMBERLAND vs. ARBELLA MUTUAL INSURANCE COMPANY.

No. 16-P-861.

Bristol. February 1, 2017. - June 9, 2017.

Present: Carhart, Massing, & Henry, JJ.1

Insurance, Underinsured motorist, Arbitration. Contract, 

Insurance, Arbitration. Waiver. Collateral Estoppel.

Judgment, Preclusive effect. Arbitration. Practice, 

Civil, Summary judgment, Waiver.

Civil action commenced in the Superior Court Department on 

March 4, 2015.

The case was heard by Robert J. Kane, J., on motions for 

summary judgment.

Peter E. Heppner (Andrew Hart Lynch also present) for the 

defendant.

Ronald J. Resmini for the plaintiff.

HENRY, J. This case highlights the intricacies of the 

framework for underinsured motorist claims in Massachusetts, 

which provides that the insured and the insurer must either 

 

1 Justice Carhart participated in the deliberation on this 

case prior to his retirement.
2

agree on the resolution of the claim or arbitrate. The 

plaintiff, Heather Chamberland, pursued a lengthy civil action 

against the other driver involved in the underlying accident and 

obtained a large judgment and eventually a settlement in the 

amount of that driver's policy limits. Her underinsurance 

carrier, Arbella Mutual Insurance Company, was not a party to 

that action, though it consented to the settlement. Chamberland 

then sought underinsured motorist coverage from Arbella, which 

invoked arbitration. On cross motions for summary judgment, a 

Superior Court judge held that Arbella's invocation of 

arbitration was untimely, and thus Arbella had waived its right 

to arbitrate. The motion judge further held that, as a result 

of the damages award that Chamberland had secured against the 

other driver at trial, Arbella was collaterally estopped from 

contesting issues of liability and damages in connection with 

Chamberland's underinsurance claim. Arbella appealed. We 

reverse because, notwithstanding the significant amount of time 

that passed before Arbella's demand for arbitration, Arbella did 

not act inconsistently with its statutory and policy-based right 

to arbitrate. As such, there is no basis for a finding of 

waiver of that right.

Background. The following undisputed facts are drawn from 

the summary judgment record. On July 16, 2007, Chamberland was 

injured in an accident while operating a motor vehicle insured 
3

under a policy issued by Arbella. The other vehicle involved in 

the accident was operated by Dylon Maiorano and insured under a 

policy issued by Liberty Mutual Insurance Company. Arbella was

notified of the accident, and by October 3, 2007, confirmed in 

writing that Chamberland's underinsurance (part 12) coverage 

limits under the Arbella policy were $250,000 per person and 

$500,000 per accident. 

Chamberland sued Maiorano in a case that ultimately

involved two jury trials and multiple appeals. Chamberland 

prevailed in the second trial; the jury concluded that the 

accident was caused solely by Maiorano's negligence and that 

Chamberland was entitled to $231,565 in damages.2 With statutory 

interest, Chamberland's judgment totaled $340,557.02. Maiorano 

appealed. Arbella was not a party to this action. 

While the appeal was pending, Chamberland, with Arbella's 

consent, reached a settlement with Maiorano and Liberty Mutual, 

pursuant to which Liberty Mutual agreed to pay her the full 

$100,000 in bodily injury coverage available under Maiorano's 

policy. In exchange, Chamberland released Maiorano and Liberty 

Mutual from all claims arising out of the accident. She further

 

2 The first jury returned a verdict finding that 

Chamberland's damages amounted to $5,280. However, the jury 

also found that Chamberland was fifty percent negligent, and the 

award was reduced accordingly. After adjustment for the PIP 

setoff, the damage award was reduced to $0. Chamberland then 

successfully pursued a motion for a new trial, however, and the 

matter proceeded to trial for a second time.
4

acknowledged that Maiorano, by entering into the settlement, did 

not admit liability for the accident, and, in fact, continued to 

deny the same. On May 2, 2014, Chamberland and Maiorano filed a 

stipulation of dismissal of the case with prejudice. 

During the course of Chamberland's action against Maiorano, 

Arbella requested that it be kept apprised of the matter so it

could determine if an underinsurance claim was forthcoming. The 

parties did not correspond again until more than three years 

later when, on December 31, 2013, Chamberland's attorney 

notified Arbella of the $340,557.02 judgment against Maiorano.

Chamberland claimed that the issues of liability and damages had 

been resolved by that judgment and demanded payment of the 

balance of the judgment, $240,557.02, pursuant to the 

underinsurance coverage provision in the Arbella policy. 

Arbella refused, stating that it was not bound by the judgment

against Maiorano and asserting that it was entitled to resolve 

issues of liability and damages through arbitration. 

Chamberland subsequently initiated this action (1) seeking

a declaration that she is entitled to the "remaining" 

underinsurance coverage limits of the Arbella policy, and 

(2) asserting that Arbella had engaged in unfair settlement 

practices in violation of G. L. c. 93A and G. L. c. 176D. 

Arbella denied Chamberland's claims and asserted a counterclaim

for court appointment of an arbitrator. The parties immediately 
5

proceeded to summary judgment. The motion judge dismissed 

Arbella's counterclaim, granted a required offset of $100,000 

for the bodily injury coverage that Chamberland recovered under 

Maiorano's automobile insurance policy, and declared Arbella 

liable to Chamberland for $131,565 in underinsurance coverage, 

the balance (after the offset) of the jury's damages award in 

the second trial.

3 Arbella appealed.

Discussion. Massachusetts automobile insurance policies 

must comply with all applicable statutory provisions and be in a 

form approved by the Commissioner of Insurance (Commissioner). 

See G. L. c. 175, §§ 2B, 113A. Statutorily, resolution of a 

claim for uninsured motorist benefits -- both liability and 

damages -- "shall be made by agreement between the insured . . .

and the insurer or, if they fail to agree, by arbitration." 

G. L. c. 175, § 111D. The underinsurance section of the Arbella 

policy, part 12,4 closely tracks the statute.

5

 

3 The judge made no explicit ruling on Chamberland's unfair 

settlement practices claim under G. L. c. 93A and G. L. c. 176D. 

The docket shows that after the summary judgment entered, 

Chamberland filed a request for postjudgment interest "and in 

[c]onsideration with" G. L. c. 93A and G. L. c. 176D, which the 

judge indorsed as "No Action Taken. The Court defers until 

appeal is resolved." See G. L. c. 251, § 18(a)(1) (order 

denying motion to compel arbitration is immediately appealable).

4 The Arbella policy provides: 

"The determination as to whether an injured person is 

legally entitled to recover damages from the legally 

responsible owner or operator will be by agreement between 
6

To begin, we briefly review how an insured may make a claim 

for underinsurance coverage. The insured can pursue the alleged 

tortfeasor for a judgment or, with the consent of her insurance 

company, a settlement, and then seek payment from the insurer 

providing underinsured motorist coverage.6 Furukawa v. Arbella 

Mut. Ins. Co., 59 Mass. App. Ct. 142, 143-146 (2003). The 

insurer's consent to the settlement does not preclude it from 

contesting the liability of an alleged tortfeasor or the amount 

of damages. Ibid. By the same token, the insured can lose her 

claim against the alleged tortfeasor and still pursue 

underinsured motorist coverage from her own insurer because the 

policy language provides for agreement or arbitration rather 

 

us and the injured person. The amount of damages, if any, 

will be determined in the same way. Arbitration will be 

used if no agreement can be reached." 

5 The Arbella policy at issue here was in a form consistent

with the seventh edition of the Massachusetts automobile 

insurance policy approved by the Commissioner.

6 Part 12 of the Arbella policy includes the following 

provision: 

"If an injured person settles a claim as a result of an 

accident covered under this Part, we will pay that person 

only if the claim was settled with our consent." 

See MacInnis v. Aetna Life & Cas. Co., 403 Mass. 220, 222-223

(1988) (a consent-to-settlement clause in the underinsurance 

section of a policy is valid, although the insurer must prove 

that it suffered material prejudice to deny coverage on that 

basis).
7

than judicial determination of coverage. Allstate Ins. Co. v. 

MacNeil, 32 Mass. App. Ct. 227, 228 & n.2, 230 (1992). 

Alternatively, the insured can proceed on parallel tracks, 

pursuing the alleged tortfeasor while simultaneously demanding 

underinsurance coverage from her own carrier. See Aetna Cas. & 

Sur. Co. v. Faris, 27 Mass. App. Ct. 194, 196-197 (1989) ("There 

is nothing in the underinsurance statute or the policy terms 

expressly requiring exhaustion of claims against alleged 

tortfeasors prior to arbitration"; such a parallel option 

protects insureds "from the possibility of unreasonably delayed 

insurance settlements"); Gilbert v. Hanover Ins. Co., 35 Mass. 

App. Ct. 683, 687 (1993) (applying Faris to a subsequent edition 

automobile insurance policy approved by the Commissioner). With 

this background, we address Arbella's claims on appeal.

1. Waiver of arbitration. "An appellate court, reviewing 

a judge's finding that a party has waived arbitration, must 

determine whether . . . the judge abused his discretion." 

Martin v. Norwood, 395 Mass. 159, 162 (1985). This requires us 

to determine whether the motion judge's decision resulted from 

"a clear error of judgment in weighing the factors relevant to 

the decision . . . such that the decision falls outside the 

range of reasonable alternatives." L.L. v. Commonwealth, 470 

Mass. 169, 185 n.27 (2014).
8

Here, it is undisputed that Arbella did not explicitly 

waive its right to arbitrate Chamberland's underinsurance claim. 

Accordingly, "[t]he essential question is whether, under the 

totality of the circumstances, [Arbella] acted inconsistently 

with the arbitration right." Martin, 395 Mass. at 162

(quotation omitted). Upon review of the undisputed facts in the 

record, we conclude that the motion judge's determination that 

Arbella waived its arbitration right amounted to an abuse of 

discretion.

As the motion judge noted in his decision, Arbella and 

Chamberland each had the option of demanding arbitration at any 

time, assuming they were unable to reach agreement on liability 

and/or damages, and did not need to wait to do so until 

Chamberland had exhausted her rights against Maiorano. Faris, 

27 Mass. App. Ct. at 197. The motion judge took Faris one step 

further, however, concluding that, because "both [Arbella] and 

[Chamberland] agreeably waited until the passage of two jury 

trials, [they both] forfeited the arbitration remedy and must by 

their omissions be deemed to have consented to resolution by the 

judicial determinations arrived at in the second trial." There 

is nothing in Faris, however, to suggest that an insurer (or 

insured) acts untimely by waiting until the conclusion of an 

insured's action against the alleged tortfeasor to demand 

arbitration on such a claim. Quite the contrary. Absent other 
9

acts inconsistent with its arbitration right, therefore, Arbella 

did not waive that right merely by waiting to assert it until 

Chamberland's action against Maiorano came to a conclusion.

The motion judge here placed great reliance on the decision 

in Home Gas Corp. of Mass., Inc. v. Walter's of Hadley, Inc., 

403 Mass. 772 (1989), where the defendant was held to have 

waived a contractual arbitration right by not asserting it until 

after the defendant had engaged in litigation with the plaintiff 

for two and one-half years, including a hearing before a master, 

thus "wast[ing] scarce judicial time and effort and hamper[ing] 

judges' authority to control the course of proceedings before 

them." Id. at 778 (quotation omitted). The motion judge here 

was of the opinion that Arbella had similarly wasted judicial 

time and effort by taking a "wait and see" approach while 

Chamberland's action against Maiorano played out, only to demand 

arbitration when the second jury trial ended favorably for 

Chamberland on the issues of liability and damages. 

However, unlike the insurer in Home Gas Corp., Arbella was 

not a party to the litigation between Chamberland and Maiorano. 

As it was a stranger to that action, Arbella cannot fairly be 

charged with wasting judicial time and effort merely because it 

waited for Chamberland's action against Maiorano to conclude.

7

 

7 The motion judge noted that Arbella could have moved to 

intervene in the action against Maiorano, pursuant to 
10

As soon as Chamberland finalized her settlement with Maiorano 

and Liberty Mutual and made a demand for the underinsurance 

limits of the Arbella policy, Arbella demanded arbitration. 

When Chamberland responded by filing this action, Arbella 

immediately moved, by way of counterclaim, for the appointment 

of an arbitrator. In short, Arbella's actions were anything but 

inconsistent with its arbitration right. As the Faris decision 

makes clear, Arbella was within its contractual rights to follow

the course that it did. As such, Arbella did not act with undue 

delay and cannot be penalized for doing what it was entitled to 

do. Nor can Chamberland claim to have been prejudiced. Indeed, 

as noted above, she herself could have demanded arbitration at 

any time.

2. Collateral estoppel. The motion judge also held that 

Arbella was precluded by the judgment against Maiorano from 

contesting issues of liability and damages in connection with 

Chamberland's underinsurance claim. Where, as here, there is a 

specific provision in the policy requiring arbitration to 

resolve disputed issues of liability and damages for purposes of 

underinsurance, preclusion does not lie. See Allstate Ins. Co. 

v. MacNeil, 32 Mass. App. Ct. at 228 n.2. In MacNeil, it was 

 

Mass.R.Civ.P. 24(b), 365 Mass. 769 (1974). Even if that is 

true, which we need not decide, Arbella was not obligated to do 

so. As already noted, Arbella had a contractual right to 

arbitrate disputes of liability and damages with respect to 

Chamberland's underinsurance claim.
11

the insurer, Allstate, that sought to preclude its insured, 

MacNeil, from pursuing arbitration of his underinsurance claim 

after judgment entered against MacNeil finding that the alleged 

tortfeasor was not liable for the accident. Id. at 228. The 

court held that, "[w]ere it not for the specific provisions of 

the policy [requiring arbitration to resolve disputed issues of 

liability and damages for purposes of underinsurance], we would 

agree with the conclusion that the principles of (issue 

preclusion) apply and that MacNeil is bound, even though 

Allstate was not a party in the first action.[8] . . . 

[However,] [s]ince the [policy] called for agreement of the 

parties as to whether MacNeil was legally entitled to recover 

from [the alleged tortfeasor], and, failing agreement, 

arbitration, Allstate is required to arbitrate." Id. at 228, 

230. The analysis in MacNeil applies equally to the facts of 

this case. It was thus error to deny Arbella's cross motion for 

summary judgment on its counterclaim seeking appointment of an 

arbitrator.

Conclusion. The summary judgment entered in favor of 

Chamberland is reversed, and an order shall enter allowing

 

8 Notably, Allstate had rejected MacNeil's request that it 

assent to being bound by any decision reached in the action 

against the alleged tortfeasor. MacNeil, 32 Mass. App. Ct. at 

229. If Allstate had assented, issue preclusion would have 

applied because the policy, like the Arbella policy here, allows 

the insurer and insured to agree to resolve issues without 

resorting to arbitration. Id. at 230.
12

Arbella's cross motion for summary judgment on its counterclaim 

requesting appointment of an arbitrator. The matter is remanded 

to the trial court for appointment of an arbitrator and for 

further proceedings on Chamberland's claim that Arbella engaged 

in unfair settlement practices in violation of G. L. c. 176D and 

G. L. c. 93A, which we do not read as being based solely on the 

theories of waiver and estoppel.

So ordered.