Opinion ID: 488518
Heading Depth: 2
Heading Rank: 2

Heading: Unfair Claims Settlement Claims

Text: 19
20 Mass.Gen.L. ch. 176D, Sec. 3 prohibits certain unfair acts or practices in the business of insurance. Mass.Gen.L. ch. 93A provides a civil cause of action to persons injured as a result of an unfair act or practice, including those prohibited under ch. 176D, Sec. 3. Mr. Bergeron asserted a claim under ch. 93A contending that Connecticut Mutual had violated several subsections of ch. 176D, Sec. 3(9) in the handling of his insurance claim. The district court concluded that in connection with Mr. Bergeron's insurance claim, Connecticut Mutual had violated ch. 176D, Sec. 3(9)(g), which prohibits [c]ompelling insureds to institute litigation to recover amounts due under an insurance policy by offering substantially less than the amounts ultimately recovered in actions brought by such insureds. 20 Connecticut Mutual now argues that the district court erred in its interpretation of Sec. 3(9)(g). According to Connecticut Mutual, an insurer does not violate Sec. 3(9)(g) if it compels an insured to institute litigation when, as here, liability was not reasonably clear. 21 21 But even assuming that Sec. 3(9)(g) is not violated if the insurance company refuses to pay in the good faith belief that it has no liability, 22 Connecticut Mutual's conduct does not measure up to this standard. Once it became apparent that Connecticut Mutual might invoke the suicide exclusion clause, Mr. Bergeron broached the topic of a possible settlement. But Mr. Bergeron was informed by Connecticut Mutual that its policy was not to settle claims until after suit except for a small amount. Indeed, Connecticut Mutual did not make any settlement offer until trial, 23 and then it offered only a fraction of what Mr. Bergeron recovered. The district court specifically found uncontroverted evidence that Connecticut Mutual's failure to make a reasonable settlement offer was not a unique response to the particular circumstance of Mr. Whyte's death, but was rather consistent with Connecticut Mutual's standard claim settlement practice. In essence, the district court found that Connecticut Mutual's failure to make a reasonable offer was not predicated on a good faith determination that liability was not reasonably clear, and there is no indication that this finding of fact is clearly erroneous. 24 Even assuming therefore that an insurance company does not violate Sec. 3(9)(g) if its reason for offering substantially less than the amount ultimately recovered is a good faith belief that liability is not reasonably clear, 25 Connecticut Mutual's conduct was still in violation of Sec. 3(9)(g). 22 Connecticut Mutual next argues that even if it did violate Sec. 3(9)(g) with respect to the handling of Mr. Bergeron's claim, it was improper for the district court to award Mr. Bergeron damages of $25.00 and attorney's fees, because Mr. Bergeron did not prove that he was injured or adversely affected by the violation. We conclude, however, that the district court's award was proper. Chapter 93A, Sec. 9(3) specifically provides for recovery in the amount of actual damages or twenty-five dollars, whichever is greater, and ch. 93A, Sec. 9(4) provides for the recovery of attorney's fees in addition to other relief provided for by this section and irrespective of the amount in controversy. Therefore, it is clear that a plaintiff bringing an action under chs. 93A and 176D can recover $25.00 even if he can prove no damages, 26 and that an award of attorney's fees to a prevailing plaintiff is also proper in these circumstances. Even if Mr. Bergeron must show that he was adversely affected before he can recover any damages or attorney's fees, 27 there is no question that Mr. Bergeron was affected by Connecticut Mutual's violation of Sec. 3(9)(g). As a result of Connecticut Mutual's violation, he was required to undertake time consuming and costly litigation, the very burden that Sec. 3(9)(g) was enacted to eliminate. 23
24 On appeal, Mrs. Whyte contends that the district court erred in concluding that Connecticut Mutual had not committed an unfair claim settlement practice in its handling of her claim. Mrs. Whyte asserted that Connecticut Mutual had violated Mass.Gen.L. ch. 176D Sec. 3(9)(d)-(f). 28 The district court found, however, that given the circumstances of Mr. Whyte's death, Connecticut Mutual had conducted a reasonable investigation and had denied coverage within a reasonable time. The district court also concluded that until the jury returned the verdict in favor of Mrs. Whyte and Mr. Bergeron on the contract claims, liability was not reasonably clear. Therefore, the court ruled that Connecticut Mutual had not violated Sec. 3(9)(d), (e), or (f). 25 Mrs. Whyte contends that the district court's ruling was based on an erroneous interpretation of law for two reasons: first, the district court did not take into account the extraordinarily high burden of proof an insurer faces when it seeks to invoke a suicide exclusion clause in Massachusetts; second, the court failed to recognize that Connecticut Mutual owed a higher duty to Mrs. Whyte because of the extensive estate planning rendered in connection with the sale of the policy. We conclude, however, that the district court committed no error in its disposition of Mrs. Whyte's ch. 176D claims. 26 Although it is true that an insurer faces a high burden of proof when it seeks to invoke a suicide exclusion clause, 29 there is no reason to think that the district court did not consider this burden when it evaluated Mrs. Whyte's ch. 176D claims. Indeed, it is undisputed that the district court specifically included a discussion of this high burden in its instructions to the jury that considered the contract claims. Immediately after instructing the jury, the court considered Mrs. Whyte's ch. 176D claims. It is therefore reasonable to assume that the district court considered her ch. 176D claims in the light of the heavy burden an insurer seeking to invoke a suicide exclusion clause faces. 27 Mrs. Whyte also argues that Connecticut Mutual owed a higher duty to Mrs. Whyte while assessing her claim because of the extensive estate planning and financial consulting services it rendered along with the sale of the insurance policy. According to Mrs. Whyte, these additional services rendered Connecticut Mutual a fiduciary. 28 We must conclude, however, that in assessing her claim, Connecticut Mutual owed no fiduciary duty to Mrs. Whyte. She has not offered, and we have not found, any case in which an insurer was held to a higher duty with respect to its assessment of a claim as a result of estate planning services. 30 Connecticut Mutual owed a duty to Mrs. Whyte to handle her claim candidly, fairly, promptly, and in good faith. 31 The district court properly considered this duty when assessing Mrs. Whyte's ch. 176D claims. 29 Additionally, although not clearly articulated, Mrs. Whyte apparently contends that the district court erred as a matter of fact in concluding that Connecticut Mutual conducted a reasonable investigation, that Connecticut Mutual promptly denied coverage, and that liability did not become reasonably clear until the jury returned its verdict. She is asking this Court to review these issues de novo. We decline that invitation. The evidence supports the district court's findings; the findings are not erroneous. 30 Finally, Mrs. Whyte argues that if Connecticut Mutual violated Sec. 3(9)(g) in its handling of Mr. Bergeron's claim, that it also violated Sec. 3(9)(g) in its handling of her claim. Although this argument is superficially appealing, it is without merit for two reasons, both of which are related to the fact that Mrs. Whyte chose to follow a different tack from Mr. Bergeron in her dealings with Connecticut Mutual. 32 First, unlike Mr. Bergeron, Mrs. Whyte failed to meet the demand letter requirement of ch. 93A. Chapter 93A, Sec. 9(3) requires that [a]t least thirty days prior to the filing of any such action, a written demand for relief, identifying the claimant and reasonably describing the unfair or deceptive act or practice relied upon and the injury suffered, shall be mailed or delivered to any prospective respondent. Such a demand letter should specifically list the deceptive practices claimed. 33 Mrs. Whyte's demand letter failed even to come close to meeting these requirements. Although her letter listed several violations and included copies of the relevant parts of the statutes with respect to those violations, the letter did not mention Sec. 3(9)(g). The letter therefore not only failed to list Sec. 3(9)(g), but by negative implication informed Connecticut Mutual that no such violation was being claimed. 31 The second reason Mrs. Whyte cannot recover under Sec. 3(9)(g) is found in the plain language of Sec. 3(9)(g), which prohibits [c]ompelling insureds to institute litigation to recover amounts due under an insurance policy by offering substantially less than the amounts ultimately recovered in actions brought by such insureds. 34 It is clear, however, that Mrs. Whyte was not compelled to institute litigation as a result of any offer by Connecticut Mutual. Mr. Whyte died in March 1981. Mrs. Whyte submitted her proof of loss to Connecticut Mutual in April 1981. In May 1981, Connecticut Mutual advised her that it would be conducting an investigation--which eventually concluded in November 1981. Mrs. Whyte instituted litigation in September 1981, which was not only before Connecticut Mutual had informed her of its decision, but also before it had even made its decision. 35 Given these circumstances, Mrs. Whyte can hardly claim that Connecticut Mutual compelled her to institute litigation by offering her a low settlement. 32 In contrast, Mr. Bergeron submitted his proof of loss in June 1981, but did not bring suit until October 1983--after having been informed both that Connecticut Mutual was invoking the suicide exclusion clause and that Connecticut Mutual's policy was not to settle claims until after suit except for a small amount. He sent Connecticut Mutual a proper demand letter identifying Sec. 3(9)(g) as a claimed unfair act. 33 We have considered all of the remaining contentions raised by Mrs. Whyte and Connecticut Mutual. We find them to be without merit.