WARREN BINGHAM, as Executor of the Estate of Marion Bingham, Plaintiff, Appellant,
SUPERVALU, INC., Defendant, Appellee
APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MASSACHUSETTS. Hon. Indira Talwani, U.S. District Judge.
Joshua N. Garick, with whom Law Offices of Joshua N. Garick, P.C., was on brief, for appellant.
Wesley S. Chused, with whom Preti Flaherty Beliveau & Pachios LLP, was on brief, for appellee.
Before Lynch, Stahl, and Kayatta, Circuit Judges.
STAHL, Circuit Judge.
Massachusetts law prohibits those " in the business of insurance" from employing " unfair methods of competition and unfair or deceptive acts or practices," which include " [f]ailing to effectuate prompt, fair and equitable settlements of claims in which liability has become reasonably clear." Mass. Gen. Laws ch. 176D, § 3(9)(f) (" Chapter 176D" ). This appeal requires us to consider what it means to be " in the business of insurance."
The Appellant, Warren Bingham, proceeding in his capacity as the executor of the estate of Marion Bingham (the " Estate" ), brought suit alleging that the Appellee, Supervalu, Inc., acted as an insurer of one of its subsidiaries, and violated Chapter 176D by failing to promptly, fairly, and equitably effectuate the settlement of prior litigation between the subsidiary and the Estate. The district court found that Supervalu was not in the business of insurance and, on this basis, entered summary judgment in Supervalu's favor. The Estate appeals. Finding no error, we AFFIRM.
I. Facts and Background
A. The Prior Litigation
In January 2006, Marion Bingham was shopping at a Shaw's Supermarket in East Boston, Massachusetts when she was struck by a motorized cart. Ms. Bingham suffered a laceration to her right heel in the area of her Achilles' tendon. At the time, Ms. Bingham was in her early-eighties, and the incident seems to have precipitated a rapid decline in her health. Ms. Bingham passed away approximately eight months later in September 2006.
Before she died, Ms. Bingham brought a negligence action against Shaw's in Massachusetts state court. Later, after her death, Ms. Bingham's nephew, Warren Bingham, was appointed as the executor of the Estate, and was substituted as the plaintiff in the suit against Shaw's.
At the time of the January 2006 incident, Shaw's was a subsidiary of Albertson's, Inc. On June 2, 2006, however, Albertson's was acquired by Supervalu. Thus, when Ms. Bingham filed her lawsuit against Shaw's at the end of June 2006, Shaw's was a subsidiary of Supervalu and, pursuant to the manner in which Supervalu structured its relationship with its direct and indirect corporate subsidiaries, Supervalu had the authority to negotiate and settle claims on behalf of Shaw's.
Including Shaw's, Supervalu owned some 228 distinct subsidiaries. Supervalu maintained a centralized risk management system whereby it negotiated and resolved claims made against its subsidiaries that were not otherwise covered by insurance. Supervalu employed claims adjusters to perform these functions, and once a self-insured claim was settled, Supervalu would issue payment from a central account on behalf of the subsidiary against which the claim was made. Supervalu did not issue
insurance policies to its subsidiaries. However, in order to minimize its total costs and exposure, Supervalu opted to centralize the ...