Chiulli v. Liberty Mutual Insurance, Inc.

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14-P-430 Appeals Court

ROBERT CHIULLI vs. LIBERTY MUTUAL INSURANCE, INC., & another.1

No. 14-P-430.

Suffolk. October 1, 2014. - April 2, 2015.

Present: Rapoza, C.J., Katzmann, & Wolohojian, JJ.

"Anti-SLAPP" Statute. Constitutional Law, Right to petition
government. Practice, Civil, Motion to dismiss,
Interlocutory appeal. Consumer Protection Act, Unfair or
deceptive act, Insurance. Insurance, Unfair act or
practice. Statute, Construction.

Civil action commenced in the Superior Court Department on
March 18, 2013.

A special motion to dismiss was heard by Frances A.
McIntyre, J.

Myles W. McDonough for the defendant.
Andrew M. Abraham (Thomas C. Thorpe with him) for the
plaintiff.

KATZMANN, J. The defendant, Liberty Mutual Insurance, Inc.

(Liberty), appeals from the denial by a Superior Court judge of

1
Everett Re Group, Ltd. Everett is not a party to this
appeal.
2

a special motion to dismiss pursuant to G. L. c. 231, § 59H, the

anti-SLAPP (Strategic Lawsuit Against Public Participation)

statute, enacted to protect the constitutional rights of

ordinary citizens to petition the government to redress their

grievances.2 The plaintiff, Robert Chiulli, having secured a

large jury verdict against Liberty's insured, filed the instant

lawsuit alleging that the defendant had violated G. L. c. 93A

and G. L. c. 176D by engaging in unfair and deceptive settlement

practices, chiefly by refusing to provide Chiulli with a

reasonable settlement offer once the insured's liability became

reasonably clear. Liberty argues that its pursuit of a jury

trial on behalf of its insured is protected petitioning activity

such that Chiulli's complaint should be dismissed as "a

retaliatory and punitive attack upon Liberty's petitioning

conduct." Liberty urges that its actions are protected by

petitioning immunity where "genuine issues of material fact

2
"'[A] party's exercise of its right of petition' shall
mean any written or oral statement made before or submitted to a
legislative, executive, or judicial body, or any other
governmental proceeding; any written or oral statement made in
connection with an issue under consideration or review by a
legislative, executive, or judicial body, or any other
governmental proceeding; any statement reasonably likely to
encourage consideration or review of an issue by a legislative,
executive, or judicial body or any other governmental
proceeding; any statement reasonably likely to enlist public
participation in an effort to effect such consideration; or any
other statement falling within constitutional protection of the
right to petition government." G. L. c. 231, § 59H, inserted by
St. 1994, c. 283, § 1.
3

existed in the underlying action against the insured." Finally,

it argues that application of c. 93A and c. 176D against it is

an unconstitutional infringement of its State and Federal rights

to a jury trial. It contends that c. 176D's requirement that an

insurer make a reasonable offer of settlement when liability is

reasonably clear is the equivalent of a requirement that it

forgo a jury trial and settle a tort action when there are

disputes about its insured's liability. We conclude that

Liberty is not entitled here to the protections of the anti-

SLAPP statute and that Liberty's deployment of that statute

would eviscerate the consumer protections embodied in c. 176D.

We thus affirm the denial of its special motion to dismiss.

Background. For background, we look first to Chiulli's

underlying complaint that triggered the lawsuit Liberty claims

should be dismissed under the anti-SLAPP statute, while also

noting other certain events relevant to Liberty's special motion

to dismiss. In the underlying complaint, Chiulli alleged that

on June 20, 2008, he was severely injured following an

altercation at Sonsie Restaurant (Sonsie) on Newbury Street in

Boston.3 As a result of the altercation, Chiulli fractured his

skull and was in a coma for approximately three months. He

3
Sonsie's corporate entity is Newbury Fine Dining, Inc.,
and The Lyons Group, Ltd., provided managerial services to
Sonsie. We will refer to them collectively as Sonsie or the
insured. Liberty was the primary insurer of both corporations
for the periods of time relevant to the lawsuit.
4

suffered a traumatic brain injury. The altercation had

developed between two groups of men at the bar in Sonsie. The

bartenders witnessed heated exchanges between the two groups but

did not remove the parties from the bar. The employees of

Sonsie contended that Chiulli started the fight, and provided

depositions in which they stated that they were not trained on

the safety rules related to liquor licenses, and that they

suspected a fight would occur between the two parties but took

no action to prevent it. Surveillance footage also suggested

that Sonsie ignored safety procedures aimed at preventing

fights.

Chiulli filed suit in Superior Court against Sonsie and

three individuals involved in the altercation, and the case was

removed to the United States District Court for the District of

Massachusetts. On June 21, 2010, Chiulli sent a formal demand

letter to Liberty, complete with pertinent medical bills and

reports. He alleged that damages became reasonably clear upon

receipt of the medical bills. Liberty did not make any

settlement offer before the trial in October of 2012. In

addition to Chiulli's medical expenses, his traumatic brain

injury has resulted in permanent disability, thereby causing

significant reduction to his future earning capacity. The

undisputed medical expenses were $661,928, and both parties had

experts determine lost future earnings, arriving at the
5

differing amounts of $413,532 and $1,589,949. In short, it was

undisputed that Chiulli suffered at least $1,075,460 in medical

expenses and lost earning capacity. During trial, Liberty

offered to settle for $150,000. On November 19, 2012, the

Federal jury found Sonsie to be ninety percent liable; Chiulli

(and another individual involved in the fight) were each found

five percent liable.4 The Federal jury awarded Chiulli damages

of $4,494,665.83. After completion of trial, Liberty moved for

judgment as a matter of law and for a new trial. The Federal

case settled while posttrial motions were pending.

Shortly thereafter, Chuilli sent formal demand letters to

Liberty pursuant to G. L. c. 93A and G. L. c. 176D. Liberty

denied the allegations in the letter, and Chiulli filed a

complaint in Superior Court, alleging that Liberty failed to

offer a reasonable settlement when its liability became

reasonably clear, which was long before trial. Liberty filed a

motion to dismiss the action pursuant to Mass.R.Civ.P. 12(b)(6),

365 Mass. 754 (1974), and G. L. c. 231, § 59H. The judge denied

the motion by written order. As to the anti-SLAPP aspect of the

4
The jury apportioned fault as follows: Newbury Fine
Dining, Inc. -- forty-five percent; The Lyons Group Ltd. --
forty-five percent; Chiulli -- five percent; and Garrett Rease
(another individual involved in the fight) -- five percent.
6

motion,5 she ruled that Liberty's reliance on the statute was

misplaced, as Chiulli's claims were premised on Liberty's

failure to make a reasonable offer of settlement, not on its

decision to exercise its right to a jury trial on behalf of its

insured. She concluded in this regard:

"Liberty provides no authority for its argument that an
insurer is entitled to relief under the anti-SLAPP statute
where it has brought a case to trial, thereby exercising
its right to petition the government for relief. Because
Chiulli's claims are not premised upon [Liberty's]
'petitioning activities,' but instead [Liberty's] alleged
unfair settlement practices, [Liberty's] special motion to
dismiss under G. L. c. 231, § 59H must be denied."

Liberty filed a notice of interlocutory appeal pursuant to "the

doctrine of present execution in light of the suit immunity

afforded to Liberty by reason of its exercise of the right of

petition under the United States and Massachusetts

Constitutions, the exercise of its sacred right to jury trial

under the Massachusetts Constitution and cognate rights under

the United States Constitution, and under the provisions of

G. L. c. 231, § 59H."

Discussion. 1. As a preliminary matter, we must determine

the issues properly before us in this interlocutory appeal.

There can be no dispute that insofar as Liberty is appealing the

denial of its motion to dismiss pursuant to the anti-SLAPP

statute, we have jurisdiction under the doctrine of present

5
The judge also denied the motion premised on rule
12(b)(6). That aspect of the motion is not before us.
7

execution to consider the arguments based on c. 231, § 59H. See

Fabre v. Walton, 436 Mass. 517, 521-522 (2002) (Fabre); Benoit

v. Frederickson, 454 Mass. 148, 151-152 (2009) (Benoit) ("the

doctrine of present execution applies to the denial of a special

motion to dismiss pursuant to the anti-SLAPP statute, because

. . . the denial of a special motion to dismiss interferes with

rights in a way that cannot be remedied on appeal from the final

judgment"). "The protections afforded by the anti-SLAPP statute

against the harassment and burdens of litigation are in large

measure lost if the petitioner is forced to litigate a case to

its conclusion before obtaining a definitive judgment through

the appellate process." Benoit, supra at 152, quoting from

Fabre, supra at 521.

Liberty, however, has presented us with no persuasive

authority for the contention that it is appropriate for us to

also now consider as an interlocutory matter its broader

constitutional argument that c. 176D violates the right to jury

trial. See Benoit, supra at 151, quoting from Elles v. Zoning

Bd. of Appeals of Quincy, 450 Mass. 671, 673-674 (2008) ("As a

general rule, an aggrieved litigant cannot as a matter or right

pursue an immediate appeal from an interlocutory order unless a

statute or rule authorizes it." See also Brum v. Dartmouth, 428

Mass. 684, 688 (1999) (noting distinction between immunity from

liability defense and immunity from suit defense, and that only
8

orders denying immunity from suit enjoy benefit of present

execution rule). In sum, all that is before us is so much of

the Superior Court judge's order as denies Liberty's motion to

dismiss on anti-SLAPP grounds.

2. We next consider whether Liberty has met its burden of

showing that it is entitled to the protection of c. 231, § 59H.

Under the "well-established" two-part "burden-shifting test,"

Hanover v. New England Regional Council of Carpenters, 467 Mass.

587, 595 (2014) (Hanover), the special movant who "asserts"

protection for its petitioning activities under G. L. c. 231,

§ 59H, "would have to make a threshold showing through the

pleadings and affidavits that the claims against it are 'based

on' the petitioning activities alone and have no substantial

basis other than or in addition to the petitioning activities."

Duracraft Corp. v. Holmes Prods. Corp., 427 Mass. 156, 167-168

(1998) (Duracraft). See Maxwell v. AIG Domestic Claims, Inc.,

72 Mass. App. Ct. 685, 695 (2008) (Maxwell) (addressing

"petitioning activity" as implicated by special motion to

dismiss by insurer facing claims; in determining that insurer

had not met its burden under first prong, court held that "fact

that some petitioning activity is implicated is not enough

where, as here, the root of the claims [the investigation] is

nonpetitioning"). If the moving party fails to meet this

burden, the judge must deny the special motion. See Duracraft,
9

427 Mass. at 165. However, should the moving party meet its

burden, the burden then shifts to the nonmoving party to

demonstrate by a preponderance of the evidence that the moving

party's petitioning activities were "devoid of any reasonable

factual support or any arguable basis in law" and, further, that

the petitioning activities caused actual injury. Ibid., quoting

from G. L. c. 231, § 59H. See Benoit, 454 Mass. at 152-153.

We agree with the judge that Liberty did not met its threshold

burden of showing that Chiulli based his claims solely on

Liberty's petitioning activities. As is clear from this

complaint, as in Maxwell, supra at 694, Chiulli's claims are

based fundamentally on Liberty's failure to effectuate prompt,

fair, and equitable settlement of his claim. That basis

suffices to defeat Liberty's special motion to dismiss. See id.

at 695. See also Wenger v. Aceto, 451 Mass. 1, 5 (2008).

3. Even if the matters surrounding the underlying lawsuit

amounted to petitioning activity, we note that there is merit to

Chiulli's claim that Liberty has not met its burden to support

standing to bring a special motion to dismiss under the anti-

SLAPP statute.6

6
In so concluding, however, we are not persuaded by
Chiulli's contention that Liberty cannot seek the protections of
the anti-SLAPP statute simply because it was not a named party
to the underlying tort action and, in contrast to Sonsie, had
not petitioned the court in the Federal jury trial. This
argument has been rejected by the Supreme Judicial Court, which
10

The record here contains no proof of direct action by

Liberty with regard to the underlying trial. Indeed, even if

there were proof in the record (which there was not) that

Liberty chose counsel for the insured or paid for such counsel,

such evidence would merely illustrate Liberty's contractual

relationship with its insured. Something more than a "mere

contractual connection" to petitioning activity is required to

establish standing. Kobrin v. Gastfriend, 443 Mass. 327, 338

(2005). Contrast Hanover, supra at 592-593 (though carpenters'

held that "[c]onstitutional petitioning activity for the
purposes of the anti-SLAPP statute is not limited to being a
named party in litigation, but rather includes activities such
as 'writing to government officials, attending public hearings,
testifying before government bodies, circulating petitions for
signature, lobbying for legislation, . . . filing agency
protests or appeals, being parties in law-reform lawsuits, and
engaging in peaceful boycotts and demonstration.'" Hanover, 467
Mass. at 590-591, quoting from Duracraft, 427 Mass. at 161-162.
Petitioning activity involves statements made to the government,
the most relevant here being "any statement reasonably likely to
encourage consideration or review of an issue by a . . .
judicial body." G. L. c. 231, § 59H. "[A] party cannot
exercise its right of petition without making a 'statement'
designed 'to influence, inform, or at the very least, reach
governmental bodies -- either directly or indirectly.'"
Marabello v. Boston Bark Corp., 463 Mass. 394, 399 (2012),
quoting from North Am. Expositions Co. Ltd. Partnership v.
Corcoran, 452 Mass. 852, 862 (2009). Support of statements
seeking to redress a grievance or to petition the government for
relief can give standing to bring an anti-SLAPP special motion
to dismiss to those who are not named parties to an underlying
lawsuit. Hanover, 467 Mass. at 593-594. "[T]here is no
statutory requirement that petitioning parties directly commence
or initiate proceedings[, but] the statute requires that the
protected party have more than a mere contractual connection to
. . . the petitioning activity." Kobrin v. Gastfriend, 443
Mass. 327, 338 (2005).
11

professional association was not a named party to taxpayer

litigation seeking judicial review of purported fraud by town,

its heavy involvement in "commencement and maintenance of the

action" "brought to seek redress against the government,"

"providing legal counsel and advice to the taxpayers," and

"enlisting the taxpayers . . . to encourage consideration by the

courts and enlist the participation of the public," falls within

anti-SLAPP statute's scope of protected petitioning activities).

Consequently, even if Liberty had demonstrated its contractual

connection to the underlying suit, it cannot be said that it

established standing.

4. Finally, our analysis in this case of the interplay

between c. 176D and c. 231, § 59H, is informed by principles of

statutory interpretation and the basic tenet that statutes

should be read harmoniously. General Laws c. 176D, entitled

"Unfair Methods of Competition and Unfair and Deceptive

Practices in the Business of Insurance," was enacted in 1972 to

protect consumers. The statute proscribes certain acts or

omissions that, if committed by an insurer, constitute violation

of the statute. The relevant prohibited acts here include

"[f]ailing 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.

General Laws c. 176D, § 3(9), serves the interests of both the
12

claimant and the insured. See Gore v. Arbella Mut. Ins. Co., 77

Mass. App. Ct. 518, 525 (2010) (Gore). It was "enacted to

encourage the settlement of insurance claims . . . and

discourage insurers from forcing claimants into unnecessary

litigation to obtain relief." Clegg v. Butler, 424 Mass. 413,

419 (1997) (Clegg). The purpose of G. L. c. 176D, § 3, is to

"remedy a host of possible violations in the insurance industry

and to subject insurers committing violations to the remedies

available to an injured party under G. L. c. 93A." Hopkins v.

Liberty Mut. Ins. Co., 434 Mass. 556, 562 (2001). See Gore,

supra at 523, quoting from Bolden v. O'Connor Café of Worcester,

Inc., 50 Mass. App. Ct. 56, 59 n.8 (2000) ("Those claiming

injury by virtue of an insurance practice prohibited by G. L.

c. 176D, § 3[9][f], may sue under G. L. c. 93A"). The statute

is used to "penalize insurers who unreasonably and unfairly

force claimants into litigation by wrongfully withholding

insurance proceeds." Clegg, supra at 425. An insurer is only

required to make a settlement offer when liability is reasonably

clear. The inquiry may turn on what the insurer knew on the

relevant date to warrant the complainant's conclusion of

reasonably clear liability. See Van Dyke v. St. Paul Fire &

Marine Ins. Co., 388 Mass. 671, 677 (1983). If it is shown that

liability was not reasonably clear, the refusal to settle would

not violate G. L. c. 176D, § 3. Ibid.
13

General Laws c. 231, § 59H, "was enacted by the Legislature

[in 1994] to provide a quick remedy for those citizens targeted

by frivolous lawsuits based on their government petitioning

activities." Kobrin, 443 Mass. at 331. "SLAPP suits have been

characterized as 'generally meritless suits brought by large

private interests to deter common citizens from exercising their

political or legal rights or to punish them from doing so.'"

Plante v. Wylie, 63 Mass. App. Ct. 151, 155-156 (2005) (Plante),

quoting from Duracraft, 427 Mass. at 161. "The statute is

designed to deter lawsuits filed to intimidate citizens from

legitimately petitioning the government for redress of

grievances and to provide a mechanism for the prompt dismissal

of such lawsuits before the petitioning party has been forced to

incur significant costs of defense." Plante, supra at 156-157.

To permit an insurance company to use an anti-SLAPP defense

to defeat c. 176D actions whenever an insurer has opted to try

the underlying tort action would effectively gut c. 176D. As

the Superior Court judge observed:

"If this court were to hold that an insurer may always
pursue a jury trial when claims are made against its
clients, and subsequently be protected from liability under
Chapter 176D and 93A by the anti-SLAPP statute, then there
would be no recourse for a plaintiff that was unjustly
required to litigate a meritorious claim. This would
directly contradict the Legislature's intent in enacting
G. L. c. 176D, § 3."

We agree.
14

We cannot conclude that the Legislature, by enacting

c. 231, § 59H, in 1994, intended to revoke the consumer

protections afforded by the 1972 enactment of c. 176D. See

Worcester v. College Hill Properties, LLC, 465 Mass. 134, 139

(2013) ("Legislature must be assumed to know the preexisting

law"). See also Alliance to Protect Nantucket Sound, Inc. v.

Energy Facilities Siting Bd., 457 Mass. 663, 673 (2010) (when

two statutes control, they should be "read together, giving

meaning and purpose to both"). "When construing two or more

statutes together, we are loath to find that a prior statute has

been superseded in whole or in part in the absence of express

words to that effect or of clear implication." Id. at 673

(quotation omitted). Here, we interpret the statutes such that

G. L.

c. 231, § 59H, does not supersede G. L. c. 176D, § 3, because

there are no express words that demonstrate such legislative

intent. Furthermore, as the Supreme Judicial Court has observed

regarding the scope of c. 231, § 59H, even though a matter may

be within the letter of the statute, it may not come within its

spirit if to include the matter within the statute's purview

"would require a radical change in established public policy or

in the existing law and the act does not manifest any intent

that such a change should be effected." Duracraft, supra at

167, quoting from Commissioner of Corps. & Taxn. v. Dalton, 304
15

Mass. 147, 150 (1939). Allowing an insurer to always pursue a

jury trial whenever its insureds are sued, even when its

liability is reasonably clear, would effectively eviscerate

G. L. c. 176D, requiring an unintended "radical change." We

thus reject Liberty's argument that the anti-SLAPP statute can

be invoked here to dismiss the c. 176D and c. 93A complaint.

Order denying special motion
to dismiss affirmed.