United States District Court, D. Massachusetts
BEARBONES, INC., d/b/a MORNINGSIDE BAKERY, and AMARAL ENTERPRISES LLC, Plaintiffs,
PEERLESS INDEMNITY INSURANCE COMPANY, Defendant.
MEMORANDUM AND ORDER REGARDING PLAINTIFFS' MOTION
TO SUPPLEMENT (DKT. NO. 40)
KATHERINE A. ROBERTSON U.S. MAGISTRATE JUDGE.
the court is the motion of the plaintiffs, Bearbones, Inc.,
d/b/a Morningside Bakery (“Morningside”), and
Amaral Enterprises LLC (“Amaral”), to file a
supplemental complaint pursuant to Fed.R.Civ.P. 15(d) (Dkt.
No. 40). The defendant, Peerless Indemnity Insurance Co.
(“Peerless” or “Defendant”), opposes
the motion (Dkt. No. 43). The parties have consented to this
court's jurisdiction (Dkt. No. 36). See 28
U.S.C. § 636(c); Fed.R.Civ.P. 73. For the reasons set
forth below, Plaintiffs' motion is DENIED.
Factual Background and Procedural History
a Massachusetts corporation, operated a commercial bakery
located inside a commercial condominium unit owned by Amaral,
a related Massachusetts limited liability
company (Dkt. No. 40-1 at ¶¶ 1-2).
Morningside and Amaral (collectively,
“Plaintiffs”) purchased commercial casualty
insurance from Peerless. The Peerless policy provided four
categories of coverage, consisting of “Building,
” “Business Personal Property, ”
“Business Income, ” and “Extra
Expense” (id. at ¶¶ 6-7, 22).
about February 19, 2013, “massive amounts of water
emanating from a frozen pipe destroyed [Plaintiffs']
business premises, its equipment, its business operation and
its overall viability rendering both [Morningside and Amaral]
a total loss” (id. at ¶ 8). Plaintiffs
notified Peerless on or about the day of the incident
(id. at ¶¶ 6, 13). Plaintiffs did not
receive any written response from Peerless until April 19,
2013, nearly 60 days later (id. at ¶ 13). On
April 15, 2013, Plaintiffs communicated a demand to Peerless,
but Peerless ignored it (id. at ¶ 16).
According to Plaintiffs, while their losses exceed $1.5
million, Peerless has paid Plaintiffs only $28, 401.99
(id. at ¶¶ 9-10, 15). Plaintiffs accuse
Peerless of “substantial and unwarranted delay”
in adjusting their claim and of having a deficient claims
handling process (id. at ¶ 19). They also claim
that Peerless forces its insureds to initiate lawsuits to
achieve compensation (id. at ¶¶ 19, 23).
Plaintiffs' Original Federal Complaint
February 6, 2015, Plaintiffs filed a three-count diversity
complaint against Peerless in this court. In it, Plaintiffs
seek: (I) a declaratory judgment that Peerless is obligated
to provide coverage for all of Plaintiffs' losses,
compensatory and consequential, as a result of the incident;
(II) damages for breach of contract; and (III) damages for
unfair business and claims settlement practices in violation
of Mass. Gen. Laws chs. 93A and 176D (Dkt. No. 1 at
requires insurance companies issuing certain policies
covering property or interests in the Commonwealth to use
standard forms as set forth in Mass. Gen. Laws ch. 75, §
99. One provision in the Massachusetts standard policy
provides as follows:
In case of loss under this policy and a failure of the
parties to agree as to the amount of loss, it is mutually
agreed that the amount of such loss shall be referred to
three disinterested men, the company and the insured each
choosing one out of three persons to be named by the other,
and the third being selected by the two so chosen; and the
award in writing by a majority of the referees shall be
conclusive and final upon the parties as to the amount of
loss or damage, and such reference, unless waived by the
parties, shall be a condition precedent to any right of
action in law or equity to recover for such loss ….
Mass. Gen. Laws ch. 175, § 99, cl. twelfth. The parties
had commenced the above-described reference process when
Plaintiffs filed their original complaint on February 6, 2015
(Dkt. No. 1 at ¶ 24; Dkt. No. 40-1 at ¶ 24), but
the proceeding did not conclude until five months later, on
July 6, 2015 (Dkt. No. 14; Dkt. No. 43-12). The Referees'
unanimous award was as follows: Building Loss at replacement
cost - $31, 111.26, and at actual cash value and after
application of the deductible - $26, 116.77; Business
Personal Property Loss at replacement cost - $26, 842.22;
Business Income Loss - $35, 929.00; and Extra Expense Loss -
Plaintiffs' Supplemental Complaint
now seek to file a supplemental complaint adding five counts
against Defendant, all of which relate to the reference
proceeding. Three of Plaintiffs' proposed counts are for
additional alleged violations of Mass. Gen. Laws chs. 93A and
176D. Specifically, in Counts IV and V, Plaintiffs claim that
they were subjected to unfair business and claims settlement
practices during the reference proceeding because Peerless
called two witnesses it claimed were experts, but who were
neither independent nor objective (Dkt. No. 40-1 at
¶¶ 37-48). Count IV relates to Peerless witness
Mary A. Mull, a Certified Public Accountant
(“CPA”), who testified that “an oath she
signs ensures she is both objective and independent”
(id. at ¶41). According to Plaintiffs, however,
she is neither because “she has worked for Liberty
Mutual or Peerless or an affiliate for 29 years, her entire
professional career, ” (id. at ¶ 40), and
she “had no reasonable response to cross-examination
questions which challenged her objectivity and independence
when her livelihood, paycheck and pension are dependent upon
testifying in the way Liberty Mutual tells her to”
(id. at ¶ 41). Count V relates to Peerless
witness Bruno Graizzaro, also a CPA, and, for 16 years, an
“active co-partner in a real estate business in
Plymouth County Massachusetts” with William O. Monahan,
“the principal Peerless attorney in this lawsuit, in [a
related proceeding in Massachusetts state court, ] and at
Reference” (id. at ¶¶ 44-45).
Plaintiffs claim that Graizzaro's relationship with
Monahan prevents him from being objective and independent and
that Defendant hid the relationship from the Plaintiffs and
referees (id. at ¶¶46-47). Nevertheless,
on cross-examination of Graizzaro, Plaintiffs “unmasked
[Peerless] as facilitating, encouraging, [sic] funding
testimony of so-called experts who are neither objective nor
independent but are controlled by Peerless”
(id. at ¶ 48; see also Dkt. No. 41 at
p. 2 and 41-1). In proposed Count VI, Plaintiffs claim that
Defendant engaged in unfair claims settlement practices by
refusing to resolve Plaintiffs' claim “despite
being advised that its counsel was impermissibly in business
with its so-called expert giving the appearance Liberty
Mutual purchases favorable testimony it desires” (Dkt.
No. 40-1 at ¶ 51), and by “engaging in various
acts of trickery and deceit against its insured, ”
including “harassing the insured with requests for
false stipulations to be entered into [the Electronic Case
Filing System] which could result in the insured waiving its
claims, ” and claiming that it has never received
written discovery from Plaintiffs when it is in possession of
all of Plaintiffs' written discovery (id. at
Count VII, Plaintiffs seek a declaration that Mass. Gen. Laws
ch. 175, § 99, cl. twelfth is unconstitutional.
Specifically, Plaintiffs claim that the reference proceeding
violates the access to justice principles protected by art.
11 of the Declaration of Rights of the Massachusetts
Constitution, which guarantees each person the right
“to obtain right and justice freely, and without being
obliged to purchase it, completely, and without any denial,
promptly, and without delay; conformably to the laws”
(id. at ¶ 55).
in Count VIII, Plaintiffs purport to state a class action
with the following proposed subclasses:
A. Those insureds, anywhere in the world, who submitted their
claim to Reference, or a similar such proceeding, in any
jurisdiction throughout the world, and were awarded higher
payments by Referees, or a similar judge like body, than
Peerless, or another unit of Liberty Mutual, paid such
insureds voluntarily prior to the commencement of any
Reference, or a similar such proceeding;
B. Those insureds anywhere in the world who were forced to go
to Reference, or a similar such proceeding, to the extent
Reference (or a similar statute) is found or held to be
unconstitutional as currently applied;
C. Those insureds anywhere in the world whose claims or
losses were valued by CPA Graizzaro and where he failed to
disclose his business partnership with Atty. Monahan.
(id. at ¶ 59).
The Applicable Standard
15(d) affords litigants a pathway for pleading ‘any
transaction, occurrence, or event that happened after the
date of the pleading to be supplemented.'” U.S.
ex rel. Gadbois v. PharMerica Corp., 809 F.3d 1, 4 (1st
Cir. 2015). “Under Rule 15(d), the filing of a
supplemental pleading is not available to the pleader as a
matter of right but, rather, is subject to the court's
discretion.” Id. at 6 (citing ConnectU LLC
v. Zuckerberg, 522 F.3d 82, 90 (1st Cir. 2008)).
“As written, Rule 15(d) contains no standards at all to
guide the district court's analysis; it merely authorizes
the district court to permit service of a supplemental
pleading ‘on just terms.'” Id. at 7.
The First Circuit condones treating requests to supplement
under Rule 15(d) liberally, “reminiscent of the way in
which courts have treated requests to amend under Rule
15(a)'s ‘freely give[n]' standard.”
Id. (alteration in original) (citations omitted).
“[A] district court faced with a Rule 15(d) motion must
weigh the totality of the circumstances, just as it would
under Rule 15(a).” Id. (citing Palmer ...