Court Opinion

ID: 2824190
Source: CourtListenerOpinion
Date Created: 2015-08-11 04:30:25.945943+00
Date Added: 2024-06-11T13:39:22.465981
License: Public Domain

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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.
                                                                    3

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).
                                                                    4

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).
                                                                       5

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.,
                                                                     6

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.
                                                                    7

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
                                                                      8

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.
                                                                    9

     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.
                                                                   10

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
                                                                    11

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).
                                                                   12

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
                                                                        13

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
                                                                  14

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
                                                                 15

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.