Heard: February 24, 2016.
action commenced in the Superior Court Department on June 7,
for summary judgment were heard by Janet L. Sanders, J., and
the case was heard by her.
Madan for the plaintiff.
Michael F. Aylward for the defendants.
Present: Katzmann, Maldonado, & Blake, JJ.
issue in the present case is whether the defendant insurance
companies, The Travelers Companies, Inc., and Travelers
Property Casualty Company of America (collectively
Travelers), breached their duties to defend, indemnify, and
settle in good faith, as to their insured, the plaintiff,
Rass Corporation (Rass). The underlying action, arising out
of Rass's decision to cut the underlying plaintiff out of
its food marketing and distribution business, alleged that
Rass's principal had committed trade libel, defamation,
and misappropriation of trade secrets. After a three-month
delay in notice, Travelers agreed to defend the case from
that point forward under a reservation of rights that
disclaimed coverage of the trade secrets claim, and subject
to Traveler's limit on defense counsel's hourly rate.
Rass ultimately settled the case on its own, refusing the
insurer's offer to contribute a nominal amount
conditioned on a waiver of Rass's right to seek
indemnification. Thereafter, Rass commenced the present
action against Travelers, seeking indemnity for the
settlement and the reasonable attorney's fees left unpaid
by Travelers, and alleging violations of G. L. c. 93A.
a bench trial in the Superior Court, the judge allocated
$140, 000 of the settlement to Travelers for indemnification
of the covered claims and found that Travelers owed an
additional $25, 000 in reasonable attorney's fees. The
judge also found that Travelers had committed violations of
G. L. c. 93A based on its commission of unfair claim
settlement practices. In a summary judgment ruling issued
prior to trial, the judge rejected Rass's claim for
attorney's fees incurred prior to its notice of the
underlying claim to Travelers. Before us now on the
parties' cross-appeals are challenges to the judge's
summary judgment ruling, the rulings as to coverage of the
underlying claims, the judge's allocation of the
settlement, and the finding of a c. 93A violation, along with
the judge's related findings as to damages and
attorney's fees. We affirm.
recite the essential facts found by the judge, which we
accept 'unless they are clearly erroneous, ' . . .
and which the parties do not challenge, supplemented by other
undisputed information from the record." Boyle
v. Zurich Am. Ins. Co., 472 Mass. 649, 651
(2015) (Boyle), quoting Weiler v.
PortfolioScope, Inc., 469 Mass. 75, 81 (2014).
The underlying lawsuit. Ranbir "Paul"
Jaggi has been engaged for several years in the sale of food
products through various corporate entities. In the early
1990s, Jaggi met Neera Tulshian, who is a food chemist based
in New Jersey, through his contact with Nugen, a New Jersey
food manufacturing plant. Tulshian, while she was at Nugen,
and then through her own company, IAM International, Inc.
(IAM), worked with Jaggi to convert Jaggi's Indian sauce
recipes into a "shelf stable" product capable of
being sold in jars at grocery stores without refrigeration.
Over several years, the two had an arrangement whereby IAM
would manufacture shelf-stable simmer sauces, and then
deliver the product for distribution by Jaggi, through one of
his own entities or a corporate parent. In 2004, Jaggi formed
Rass, which is based in Sudbury. Between January of 2004, and
January of 2008, Rass purchased $5, 445, 968.26 worth of
simmer sauces from IAM, which it then sold to the Trader
Joe's grocery store chain. Tulshian's personal tax
returns indicate that her annual income during that period
was about $400, 000.
2007, Tulshian learned that Jaggi, with his brother-in-law,
was in the process of setting up his own bottling line that
could make the sauces. Knowing that his actions would cut
Tulshian out of the business, Jaggi offered Tulshian a stake
in the new plant. When that offer failed, Jaggi offered her
$100, 000. She again refused. Anticipating a problem with his
Trader Joe's account, on November 8, 2007, Jaggi wrote an
electronic mail message (e-mail) to Cara Yokomizo, a buyer at
Trader Joe's. It states, in relevant part:
"[T]here is an outside chance that the person who is
handling this co-packing arrangement for us -- Ms. Neera
Tulshian -- may approach you directly for making these
sauces. Not only will that be unethical but illegal as well
as these are our recipes created by us for Trader Joe's
based on our frozen entree sauces. I do not foresee that
happening but I wanted to give you a heads up to avoid any
anticipated, Tulshian contacted Yokomizo and informed her
that she was the one who had developed the product. Yokomizo,
in turn, told Jaggi that he should contact Tulshian and
resolve the issue.
learned of the e-mail to Trader Joe's, Tulshian retained
an attorney, who sent Rass a demand letter dated December 7,
2007. After negotiation attempts between Jaggi and Tulshian
failed, on January 9, 2008, IAM filed a complaint in the
Superior Court of New Jersey alleging misappropriation of
trade secrets, tortious interference with present and
prospective economic advantage, and trade libel. Under the
count entitled trade libel, the complaint alleges that
Jaggi's statements in the e-mail "constitute trade
libel, trade disparagement, and defamation." Jaggi
responded by seeking the advice of his own local
Massachusetts attorney, and by hiring New Jersey attorney
Emery Mishky to defend the IAM lawsuit. Mishky agreed to
defend the case at a rate of $275 per hour.
relevant times, Rass was insured by a commercial general
liability policy issued by Travelers. The policy covered,
among other things, claims against the insured for
"[o]ral, written, or electronic publication of material
that slanders or libels a person or organization or
disparages a person's or organization's goods,
products, or services." The policy also required
Travelers "to defend the insured against any
'suit' seeking [covered] damages."
March 6, 2008, Rass notified Travelers of the New Jersey
lawsuit. A Travelers senior technical specialist, John Banks,
responded by letter dated March 19, 2008. It states that
"a potential for coverage" exists under the policy,
and that Travelers agrees to defend Rass subject to a
reservation of its rights "to deny indemnification for
any alleged acts which do not fall within the enumerated
personal injury offense ... or [fall within] any of the
exclusions [listed in the policy]." In the letter,
Travelers also disclaimed coverage for any claim related to
the trade secrets allegations, but acknowledged that the
claims based on the e-mail to Trader Joe's obligated
Travelers to defend the action. Finally, Travelers agreed to
have Mishky remain on the case, but unilaterally set a rate
of payment of $200 per hour.
the duration of the underlying case, Mishky regularly
reported to the Travelers personnel assigned to the case,
including Banks; Amy Baker, a claims adjustor in
Travelers's major case unit specializing in business
torts; and John Scott, an attorney from a New Jersey law firm
retained as independent monitoring counsel. Despite
Tulshian's claim of $675, 000 in lost profits and
Baker's acknowledgment that no policy exclusions applied,
Mishky's initial assessment of IAM's case was that
Travelers had minimal exposure. As for the claims arising out
of the e-mail, Mishky applied a common-law defamation
analysis. The pretrial reports and notes indicate that he
thought it was defensible on the grounds that the e-mail was
limited in its publication and expressed only Jaggi's
opinion, and because a qualified privilege could apply to the
statements made. On the trade secrets claim, Mishky pointed
to the fact that Tulshian had done nothing to protect any
trade secret she claimed as hers, and the fact that the
sauces were made from generic Punjabi recipes that Jaggi had
supplied to Tulshian. Nevertheless, as the case neared a July
21, 2009, trial date, in a report dated May 20, 2009, Mishky
predicted a possible verdict of $100, 000 to $500, 000,
recommended a settlement range of $100, 000 to $150, 000, and
indicated that the chance of a defense verdict was fifty to
July 21, 2009, trial date IAM dropped its demand from $675,
000 to $200, 000, and then to $175, 000. Extensive settlement
discussions occurred between IAM and Rass, with
communications to Travelers inquiring about contribution.
Travelers first offered $10, 000 on the condition that Rass
waive its right to dispute Mishky's reasonable hourly
rate. When that offer was rejected, Travelers made a second
offer of $20, 000 on the condition that Rass waive its right
to seek indemnification under the policy. Rass likewise
rejected that offer and, not wanting to lose the opportunity
to avoid trial, settled the case for $175, 000 without any
contribution from Travelers.
The present action.
settled the New Jersey case on its own, Rass filed a
complaint in the Superior Court on June 7, 2010, alleging
that Travelers had breached its contract and had committed
unfair or deceptive acts in violation of G. L. c. 93A, §
2. Following discovery, Rass moved for
partial summary judgment as to liability on the settlement
and attorney's fees, while Travelers sought a summary
judgment ruling limited to its obligation to pay the
attorney's fees Rass incurred prior to its March 6, 2008,
notice to Travelers of the underlying claim. The judge
allowed Travelers's motion and denied Rass's.
trial was held over multiple days in October and November,
2012, at which Jaggi, Baker, and Mishky testified. Rass also
hired New Jersey attorney Gregg Paradise, a specialist in
intellectual property law, who testified as an expert for
Rass on the reasonableness of the settlement and provided his
opinion of the viability of IAM's claims under New Jersey
law. The focus of Paradise's and Mishky's testimony
was that Rass's settlement was reasonable because IAM had
a viable trade disparagement claim based on the contents of
the e-mail. Counsel for Travelers and Baker, the major case
unit adjuster, who is also an attorney, disputed that a trade
disparagement claim would be covered under Jaggi's policy
because the e-mail did not "disparage a person's
or organization's goods, products, or services" as
provided in the policy language but, rather, disparaged
Tulshian herself, or her ownership of the sauces. Counsel for
Travelers also emphasized the absence of any written records
generated prior to the settlement discussing, or even
mentioning, trade disparagement.
at the facts known to the parties at the time of the
settlement, the judge concluded that "Rass has proved by
a preponderance of the evidence that the settlement in large
part (but not entirely) reflected Rass's exposure to
plaintiffs' claims for lost profits due to the Trader
Joe's e-mail and that these claims were covered."
The judge accordingly found that Travelers had breached its
contractual duties by failing to contribute $140, 000 to the
$175, 000 settlement. On the attorney's fees issue, the
judge found that there was little dispute that Mishky's
hourly rate of $275 was reasonable, and awarded Rass damages
for the difference that Travelers had failed to pay, which
amounted to $25, 000.
Travelers's conduct in relation to the requirements of G.
L. c. 176D, § 3(9), the judge found Travelers's
failure to contribute to the settlement, and its failure to
pay Mishky's reasonable attorney fees, to be unfair and
unreasonable in the face of the facts known to it and
reasonably available at the time and, therefore, to
constitute a violation of G. L. c. 93A. Rass subsequently
requested attorney's fees totaling $676, 302.77. The
judge awarded half that figure, criticizing counsel for his
obfuscating trial tactics and noting that he had repeatedly
filed frivolous and unnecessary motions. After incurring more
legal expenses for work related to bringing the case to final
judgment, Rass submitted an additional motion for an updated
fee award seeking another $29, 997.94. The judge summarily
denied the motion, citing the reasoning stated in
Travelers's opposition. These appeals followed.
Additional facts will be set forth as necessary.