Silva v. Norfolk & Dedham Mutual Fire Insurance Co.

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16-P-150 Appeals Court

MARK SILVA vs. NORFOLK & DEDHAM MUTUAL FIRE INSURANCE COMPANY.

No. 16-P-150.

Barnstable. January 5, 2017. - April 26, 2017.

Present: Carhart, Massing, & Lemire, JJ.

Motor Vehicle, Insurance. Insurance, Unfair act or practice,
Settlement of claim. Consumer Protection Act, Unfair act
or practice, Insurance. Judgment, Interest. Practice,
Civil, Consumer protection case, Interest. Evidence,
Expert opinion. Witness, Expert.

Civil action commenced in the Superior Court Department on
January 13, 2011.

The case was heard by Robert C. Rufo, J.

Richard T. Corbett for the plaintiff.
Kevin M. Truland (Ralph C. Sullivan also present) for the
defendant.

MASSING, J. After a jury-waived trial in the Superior

Court on claims of unfair settlement practices under G. L.

c. 93A and G. L. c. 176D, the judge found that the defendant,

Norfolk & Dedham Mutual Fire Insurance Company (Norfolk &
2

Dedham), did not engage in unfair practices in its handling of

the plaintiff's, Mark Silva's, personal injury claim against

Norfolk & Dedham's insured. The judge also found, however, that

after Silva obtained a substantial jury verdict on his personal

injury claim and while the appeal from that judgment was pending

in this court,1 Norfolk & Dedham violated c. 93A when it offered

to settle the claim for the policy limit without also offering

postjudgment interest.

Silva appeals, arguing that the judge erred by (1) finding

that Norfolk & Dedham did not engage in unfair settlement

practices, (2) precluding Silva's expert from testifying that

Norfolk & Dedham engaged in unfair practices, and (3) finding

that Norfolk & Dedham's failure to include postjudgment interest

in its settlement offer, although a violation of c. 93A, was not

wilful and knowing. Norfolk & Dedham cross appeals, arguing

that its failure to offer postjudgment interest did not violate

c. 93A whatsoever. We reverse the award of damages, prejudgment

interest, costs, and attorney's fees with respect to its failure

to offer postjudgment interest, and affirm the amended judgment

in all other respects.

Background. We summarize the judge's comprehensive

findings concerning Norfolk & Dedham's investigation and

handling of Silva's personal injury claim, reserving other facts

1
See Silva v. McQuinn, 79 Mass. App. Ct. 1109 (2011).
3

for later discussion. On March 9, 2005, Silva, a tow truck

operator, was assisting a vehicle stuck in a snow drift on Route

6 in Provincetown. Silva had pulled his truck to the side of

the road and hooked up a tow line to the disabled car. The road

conditions were "snowy, slushy, and icy." Dorothy McQuinn was

driving on Route 6 with her windshield fogged up, obstructing

her view of the road, when she rear-ended Silva, who "was tossed

inside the truck." The next day, Norfolk & Dedham, McQuinn's

insurer, was informed of the collision and opened a claim.

McQuinn had bodily injury coverage of $250,000 per person,

$500,000 per accident.

Norfolk & Dedham's initial efforts to obtain information

regarding Silva and his injuries were mostly fruitless. Silva's

automobile insurance carrier and his worker's compensation

carrier were initially reluctant to disclose to Norfolk & Dedham

any information from their own investigations. (Norfolk &

Dedham did not obtain access to Silva's medical records until

more than three years after the accident, after Silva filed his

personal injury suit against McQuinn.) However, Norfolk &

Dedham slowly gathered information casting doubt on the

genuineness of Silva's claimed injuries. The judge found that

"[t]his series of events occurring between 2006 and 2008 gave

Norfolk & Dedham reason to doubt Silva's general veracity and be
4

suspicious of not only his wage claim but also his claims of

bodily injury."

Based on the communications and miscommunications2 between

Silva's attorney (White) and the attorney that Norfolk & Dedham

assigned to represent McQuinn (Feeney), prior to trial "Attorney

Feeney did not have an understanding of what Attorney White's

position was relative to settlement." On the first day of trial

of the personal injury suit, January 19, 2010, the presiding

judge held a lobby conference to discuss the possibility of

settlement. White said that no offer had been made, and Feeney

responded that he had never received a demand. Feeney made two

settlement offers during the personal injury trial -- $25,000

and $60,000 -- both of which were rejected. The jury returned a

verdict for Silva and awarded damages of $818,000.

Discussion. 1. Pretrial conduct. Silva argues that

Norfolk & Dedham's pretrial handling of his personal injury

claim violated subsections (d) and (f) of G. L. c. 176D, § 3(9).

"General Laws c. 93A, § 2(a), states that '[u]nfair methods of

competition and unfair or deceptive acts or practices in the

conduct of any trade or commerce are . . . unlawful.'" Bobick

2
Silva's attorney sent Norfolk & Dedham a demand letter
dated June 19, 2008. This letter was later included in Silva's
discovery responses in the personal injury suit. Nevertheless,
the judge found that "due to inadvertence and mistake by
[McQuinn's attorney] and Norfolk & Dedham," neither saw the
demand letter prior to the personal injury trial.
5

v. United States Fid. & Guar. Ins. Co., 439 Mass. 652, 658

(2003), quoting from G. L. c. 93A, § 2(a). General Laws

c. 176D, § 3(9), inserted by St. 1972, c. 543, § 1, bans "unfair

or deceptive acts or practices in the business of insurance,"

including "[u]nfair claim settlement practices." "[T]he former

statute incorporates the latter, and [accordingly] an insurer

that has violated G. L. c. 176D, § 3(9) . . . by definition, has

violated the prohibition in G. L. c. 93A, § 2, against the

commission of unfair or deceptive acts or practices." Hopkins

v. Liberty Mut. Ins. Co., 434 Mass. 556, 564 (2001).

As we are "reviewing a trial judge's conclusion that

particular conduct was or was not unfair or deceptive, we review

the judge's subsidiary findings of fact under the clearly

erroneous standard, while reviewing de novo his ultimate

conclusion of law." Zabin v. Picciotto, 73 Mass. App. Ct. 141,

170 (2008). See Demoulas v. Demoulas Super Mkts., Inc., 424

Mass. 501, 510 (1997), quoting from T.L. Edwards, Inc. v.

Fields, 371 Mass. 895, 896 (1976) (judge's findings of fact not

clearly erroneous "where such findings are supported 'on any

reasonable view of the evidence, including all rational

inferences of which it was susceptible'").

a. Norfolk & Dedham's investigation. "The question under

[G. L. c. 176D, § 3(9)](d)[,] is whether [Norfolk & Dedham]

refused to pay the claim without conducting a reasonable
6

investigation based on all available information." Van Dyke v.

St. Paul Fire & Marine Ins. Co., 388 Mass. 671, 676 (1983). We

agree with the judge that Norfolk & Dedham conducted a

reasonable investigation.

The judge's twenty-seven pages of findings under the

heading "Pre-Trial Claims Handling" reflect the voluminous

record in this case documenting Norfolk & Dedham's inquiry into

the circumstances of the accident and Silva's injuries. The

record includes sixty-six pages of log entries made by Norfolk &

Dedham claims adjusters over the history of Silva's claim. Six

days after learning of the accident, Norfolk & Dedham assigned

an independent adjuster to investigate the claim. Thereafter,

through its own claims adjusters and other sources, including

private investigators, Silva's worker's compensation carrier,

Silva's automobile insurance carrier, and Silva's discovery

responses and deposition testimony, Norfolk & Dedham gradually

acquired information that gave it "a reasonable basis for

regarding as suspicious" Silva's claim. Trempe v. Aetna Cas. &

Sur. Co., 20 Mass. App. Ct. 448, 455 (1985). Norfolk & Dedham

also sought the opinions of Dr. David Gushue, a biomechanical

engineer, and Dr. Mark Weiner, a neurologist, concerning the

cause and extent of Silva's injuries.

The judge found that "there was no testimony at trial

identifying specific steps that Norfolk & Dedham should have
7

taken but did not in investigating Silva's bodily injury claim."

The judge did not err in determining that Norfolk & Dedham was

not "inattentive" or "unreasonable" in its investigation of the

accident. McLaughlin v. American States Ins. Co., 90 Mass. App.

Ct. 22, 32 (2016).

b. Norfolk & Dedham's failure to offer a settlement.

Chapter 176D requires an insurer "to effectuate [a] prompt, fair

and equitable settlement[] of claims in which liability has

become reasonably clear." Bobick, 439 Mass. at 658-659, quoting

from G. L. c. 176D, § 3(9)(f). "Liability, as the word is used

in this context, 'encompasses both fault and damages.'"

O'Leary-Alison v. Metropolitan Property & Cas. Ins. Co., 52

Mass. App. Ct. 214, 217 (2001), quoting from Clegg v. Butler,

424 Mass. 413, 420 (1997). "To determine when an insured's

liability became 'reasonably clear' an objective test is used.

The fact finder determines 'whether a reasonable person, with

knowledge of the relevant facts and law, would probably have

concluded, for good reason, that the insure[d] was liable to the

plaintiff.'" O'Leary-Alison, supra, quoting from Demeo v. State

Farm Mut. Auto Ins. Co., 38 Mass. App. Ct. 955, 956-957 (1995).

Here, Norfolk & Dedham "had multiple reasons to be

skeptical of [Silva's] damage claims" from the inception of its

investigation just days after the accident. O'Leary-Alison,

supra at 217-218. A week after the accident, McQuinn told a
8

Norfolk & Dedham claims adjuster "that she could not imagine how

[Silva] could possibly have been injured." Eight days later

Norfolk & Dedham received information that after the accident,

Silva had not only towed McQuinn's car from the scene, but also

"returned to complete the original tow he had been working on

when the accident occurred." Within one month of the accident,

a private investigator informed Norfolk & Dedham that Silva "was

observed at [his automobile service station] and it appeared he

was working a very full and busy schedule."

Norfolk and Dedham's skepticism continued when "Silva

waited a year after the accident to claim disability from

performing work as a tow truck driver, continued to work a full

towing schedule while claiming he could only perform desk work,

[and] sought workers' compensation benefits while collecting

unemployment benefits." Norfolk & Dedham also learned that

Silva's worker's compensation insurer questioned the existence

of causation between the accident and Silva's claimed injuries.

In addition, "[a]lthough Attorney White initially claimed three

fractured vertebrae, Silva's injury was revealed to be three

herniated disks, two of which resolved themselves."

Gushue and Weiner reviewed evidence of the accident and

Silva's medical records. According to Gushue, the impact of the

accident would have generated "the same level of force [Silva]

experiences on a daily basis while going about his usual
9

routine." Norfolk & Dedham noted in its file that Gushue's

report "looked 'positively solid' for the defense." Weiner

opined that Silva's treatment after June, 2006, was "not

causally related to the injuries sustained as a result of the

motor vehicle accident."

Although fault for the accident may have been clear, the

"damages attributable to [McQuinn] . . . was still the subject

of good faith disagreement." Bobick, 439 Mass. at 660. "So

long as the insurer acts in good faith, the insurer is not held

to standards of omniscience or perfection." Bolden v. O'Connor

Café of Worcester, Inc., 50 Mass. App. Ct. 56, 67 (2000),

quoting from Peckham v. Continental Cas. Ins. Co., 895 F.2d 830,

835 (1st Cir. 1990). Here, Norfolk & Dedham "had a reasonable

basis for resisting liability." Trempe, 20 Mass. App. Ct. at

452.

Accordingly, we conclude that "there existed a legitimate

difference of opinion as to the extent of [McQuinn's]

liability," Bobick, 439 Mass. at 660, which was "outside the

scope of the punitive aspects of the combined application of

c. 93A and c. 176D." Guity v. Commerce Ins. Co., 36 Mass. App.

Ct. 339, 343 (1994).

Disputing this conclusion, Silva argues that some of the

evidence on which the judge relied was not known to Norfolk &

Dedham until after the judgment in the underlying personal
10

injury trial and, therefore, could not have been part of Norfolk

& Dedham's basis for doubting Silva's claim. Specifically,

Silva complains that the judge should not have considered

certain "bank and tax records" showing wages and benefits Silva

received in 2005, as well as "investigative reports and

summaries of surveillance" indicating that Silva continued to

work "full-tilt" after the accident. The judge did not err in

considering this after-acquired evidence, which merely confirmed

that Norfolk & Dedham had a reasonable basis to resist

settlement and was cumulative of the facts Norfolk & Dedham had

developed during its investigation.

To be sure, settlement offers must be made in good faith

given the insurer's "knowledge at the time of the relevant facts

and law concerning [Silva's] claim." Bolden, 50 Mass. App. Ct.

at 66. However, "[e]ven if [Norfolk & Dedham] violated G. L.

c. 176D, § 3(9)(d) and (f), [Silva] had to be adversely affected

by that violation in order to be entitled to recover under G. L.

c. 93A, § 9." Van Dyke, 388 Mass. at 678. See Casavant v.

Norwegian Cruise Line, Ltd., 460 Mass. 500, 503 (2011) (to

recover c. 93A damages, plaintiff must show "causal connection

between the deception and the loss and that the loss was

foreseeable as a result of the deception" [quotation omitted]).

Nothing in Bolden, supra, or Parker v. D'Avolio, 40 Mass. App.
11

Ct. 394, 395 (1996), with respect to c. 93A liability undermines

this holding of Van Dyke with respect to causation.

Just as Norfolk & Dedham relied on new evidence to show its

past conduct was reasonable, it was open to Silva to show that

further investigation by Norfolk & Dedham would have unearthed

evidence that made its refusal to settle unreasonable.3 If

Norfolk & Dedham had insufficient grounds for not settling with

Silva prior to trial, "it ran the risk that subsequent events

would not support its assertion that its insured[] had a

reasonable defense." Van Dyke, supra. Here, however, Norfolk &

Dedham's subsequent discoveries supported the reasonableness of

its pretrial investigation and settlement stance, and the judge

did not err in considering this evidence.

2. Silva's expert. Silva, who settled his claims against

McQuinn in exchange for the assignment of her rights against

Norfolk & Dedham, sought to introduce expert testimony to prove

that Norfolk & Dedham violated G. L. c. 176D, and therefore

3
In this vein, the judge considered the reasonableness of
Norfolk & Dedham’s settlement offers in light of the substantial
jury verdict for Silva. The judge concluded that "Norfolk &
Dedham could not have anticipated the $818,000 jury verdict and
that verdict is not an appropriate sum against which to gauge
the reasonableness of the mid-trial settlement offers." We
agree. See Guity, 36 Mass. App. Ct. at 343 ("A plausible,
reasoned legal position that may ultimately turn out to be
mistaken -- or simply, as here, unsuccessful -- is outside the
scope of the punitive aspects of the combined application of
c. 93A and c. 176D."); O'Leary-Alison, 52 Mass. App. Ct. at 218
("An insurer's good faith, but mistaken, valuation of damages
does not constitute a violation of c. 176D").
12

c. 93A, by exposing McQuinn to a judgment exceeding her policy

limits. See, e.g., Gore v. Arbella Mut. Ins. Co., 77 Mass. App.

Ct. 518, 526 (2010) ("If the insurer violated the law in failing

to settle for the policy limits, then the insurer will be liable

to the insured for the damages exceeding the policy limit").

Silva's expert, Attorney Paul Kelleher, offered an opinion that

Norfolk & Dedham's adjusters and investigators "engaged in

unfair and deceptive claims practices," based on a list of

activities that he deemed to be "unfair claims settlement

practices." The judge, however, did not allow Kelleher to

testify because he "did not present admissible expert testimony

that no reasonable insurer would have failed to settle his case

against McQuinn within the policy limits." In the absence of

such proof, the judge found that Norfolk & Dedham's failure to

offer the policy limit prior to trial did not amount to an

unfair settlement practice. Silva contends that the judge

erroneously excluded Kelleher's proposed testimony.

Kelleher's proffered testimony that Norfolk & Dedham's

conduct was unfair or deceptive was merely an opinion of law,

which is not a proper subject for expert testimony. See Birch

v. Strout, 303 Mass. 28, 32 (1939). "A ruling that conduct

violates G. L. c. 93A is a legal . . . determination." R.W.

Granger & Sons, Inc. v. J & S Insulation, Inc., 435 Mass. 66, 73

(2001). While "[a]n opinion within the domain of the expert's
13

professional knowledge may be admissible even if the expert's

testimony touches on the ultimate issues before the jury,"

Commonwealth v. Woods, 419 Mass. 366, 374–375 (1995), Kelleher's

proposed testimony "in effect would have been an opinion

involving at once a conclusion of law and a view on the ultimate

issue of the defendant's [liability]." Commonwealth v. Brady,

370 Mass. 630, 635 (1976) (prohibiting insurance agent from

interpreting "legal sufficiency of the defendant's [insurance]

coverage"). Such testimony was properly excluded. See

Mass. G. Evid. § 704 Note, at 241 (2016) (where "questions call

for opinions on matters of law or mixed questions of law and

fact . . . the [trier of fact] must be allowed to draw [its] own

conclusions from the evidence").

"The general rule in this Commonwealth is that an insurer

is held to a standard of reasonable conduct in its defense of

its insured." Hartford Cas. Ins. Co. v. New Hampshire Ins. Co.,

417 Mass. 115, 118 (1994) (Hartford Casualty). An insurer can

be liable for negligent handling of the defense of a covered

claim or for negligent handling of its settlement. Id. at 120.

The test for the latter "is not whether a reasonable insurer

might have settled the case within the policy limits, but rather

whether no reasonable insurer would have failed to settle the

case within the policy limits." Id. at 121. Because such proof

"is not a matter within the common knowledge of the ordinary lay
14

person," Herbert A. Sullivan, Inc. v. Utica Mut. Ins. Co., 439

Mass. 387, 402-403 (2003), expert testimony as to sound

insurance practices is necessary.4 See id. at 403. Silva's

proposed expert offered no such testimony.

Silva argues that Hartford Casualty applies only to common

law negligence claims, and that because his claim arises under

c. 93A, the proper standard is whether the insurer's conduct was

unfair or deceptive, as his expert would have testified.

Although whether Norfolk & Dedham's conduct was unfair or

deceptive is indeed the ultimate issue, we agree with the judge

that to prevail on this claim, Silva was required, at a minimum,

to satisfy the Hartford Casualty standard.

"[A] violation of G. L. c. 93A requires, at the very least,

more than a finding of mere negligence." Darviris v. Petros,

442 Mass. 274, 278 (2004). In determining the liability of an

insurer for failing to settle a claim, the court in Hartford

Casualty rejected the "traditional[] standard of whether the

insurer exercised good faith judgment on the subject." 417

Mass. at 118. Instead, the court adopted the less stringent

negligence standard -- the same standard that had previously

been applied to the duty to defend. Id. at 120-121. Silva was

4
This is not a case where, because of the "gross or
obvious" nature of the acts, expert testimony is unnecessary to
prove that a party was negligent. See Herbert A. Sullivan,
supra at 403.
15

required to satisfy at least this standard. See id. at 120

(noting that c. 93A "imposes standards of reasonable care"). If

Silva could not establish that Norfolk & Dedham acted

negligently in failing to offer the policy limit, he would not

be able to show that such conduct was unfair or deceptive. See

Swanson v. Bankers Life Co., 389 Mass. 345, 349 (1983) ("not

every negligent act is unfair or deceptive and thus unlawful

under G. L. c. 93A, § 2"); SMS Fin. V, LLC v. Conti, 68 Mass.

App. Ct. 738, 748 (2007) ("negligence without more does not

constitute an unfair or deceptive practice under G. L. c. 93A").

3. Posttrial conduct. On May 24, 2010, while the appeal

from the personal injury verdict was pending, Silva informed

Norfolk & Dedham that he was "willing to settle his claim for

the entire amount of the judgment plus interest, $1,011,873.37."

Norfolk & Dedham responded in a letter dated June 2, 2010,

offering to settle the case for $250,000, the policy limit, "in

exchange for a release of its insured." The judge determined

that "the failure to include post-judgment interest in the June

2, 2010 settlement offer violated Chapters 176D and 93A," but

also that the "violation of Chapter 93A was not knowing and

willful so as to warrant punitive damages."5 Norfolk & Dedham

5
The judge calculated Silva's damages as the loss of use of
the payment Norfolk & Dedham should have offered on June 2, 2010
(the $250,000 policy limit plus the postjudgment interest due
through that date), from June 2, 2010, through January 11, 2011,
16

argues that the judge erred as a matter of law in finding a

violation.6 Silva, for his part, argues that the judge erred by

finding that the violation was not knowing or wilful and

declining to order double or treble damages. We agree with

Norfolk & Dedham.

The judge relied on Davis v. Allstate Ins. Co., 434 Mass.

174, 181-183 (2001), for the proposition that postjudgment

interest must be included in a postjudgment settlement offer,

even if the judgment is greater than the policy limits. Our

reading of Davis, however, yields a different holding: after

judgment enters for the claimant, if the insurer does not

unconditionally offer its policy limit to satisfy the judgment,

the insurer is responsible for postjudgment interest on the

entire amount of the judgment until an unconditional offer is

made. Davis, therefore, concerns when an insurer's obligation

when Norfolk & Dedham paid Silva $371,060.39 to settle Silva's
claims against McQuinn. The damages thus amounted to
$10,465.47, plus prejudgment interest, costs, and attorney's
fees, for a total amended judgment of $21,372.66.
6
Norfolk & Dedham also argues that the c. 93A claim was
barred because Silva failed to make a specific demand for
postjudgment interest in his demand letter. See G. L. c. 93A,
§ 9(3). While Norfolk & Dedham asserted § 9(3) as an
affirmative defense in its answer, it did not raise this issue
in its opposition to Silva's motion for summary judgment "or
otherwise flag it prior to (or even after) trial." Diamond v.
Pappathanasi, 78 Mass. App. Ct. 77, 89 (2010). "Having
proceeded through a full trial to determine the truth of the
allegations set forth in the plaintiff's complaint, we believe
that it is too late for the defendant[] to argue the point."
Ibid.
17

to pay postjudgment interest is tolled, not whether it must be

included in any postjudgment offer to settle.

Here, Norfolk & Dedham made a conditional offer: the

policy limit of $250,000 in exchange for the release of its

insured. Such an offer was not improper. See, e.g., Lazaris v.

Metropolitan Property & Cas. Ins. Co., 428 Mass. 502, 505-506

(1998); Caira v. Zurich Am. Ins. Co., 91 Mass. App. Ct.

374, (2017). However, it did expose Norfolk & Dedham to the

risk that if Silva declined the offer (which he did), Norfolk &

Dedham's obligation to pay postjudgment interest on the entire

judgment would continue. See Davis, supra at 180-181. When

Silva and Norfolk & Dedham finally agreed to the terms of a

settlement of Silva's claims against McQuinn, Norfolk & Dedham

paid the postjudgment interest due to Silva. See note 5, supra.

Its actions were not unfair or deceptive.

Conclusion. We reverse the portions of the amended

judgment entered on November 23, 2015, awarding Silva damages,

prejudgment interest, costs, and attorney's fees for Norfolk &

Dedham's failure to include postjudgment interest in its

settlement offer. In all other respects, the amended judgment

is affirmed.

So ordered.