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Anderson v. National Union Fire Insurance Co. of Pittsburgh PA

Supreme Judicial Court of Massachusetts, Middlesex

February 2, 2017

ODIN ANDERSON & others[1]
v.
NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH PA & others.[2]

          Heard: October 6, 2016.

         Consumer Protection Act, Insurance, Unfair or deceptive act, Offer of settlement, Damages. Insurance, Settlement of claim. Damages, Consumer protection case, Interest, Punitive. Interest. Judgment, Interest. Practice, Civil, Judgment, Damages, Interest.

         Civil action commenced in the Superior Court Department on March 13, 2003.

         The case was heard by Brian A. Davis, J., and motions to alter or amend the judgment were also heard by him.

         After review by the Appeals Court, the Supreme Judicial Court granted leave to obtain further appellate review.

          Kathleen M. Sullivan for National Union Fire Insurance Company of Pittsburgh PA.

          Leonard H. Kesten (Richard E. Brody also present) for the plaintiffs.

          Present: Gants, C.J., Botsford, Lenk, Hines, Gaziano, & Lowy, Budd, JJ.

          GAZIANO, J.

         In this appeal, we consider the proper measure of punitive damages to be assessed against defendants who engage in unfair or deceptive insurance settlement practices in violation of G. L. c. 176D, § 3, and G. L. c. 93A, § 9 (3). The plaintiffs -- Odin Anderson, his wife, and his daughter -- filed a personal injury action in the Superior Court for serious injuries Odin[3] suffered after being struck by a bus owned by Partners Healthcare Systems, Inc. (Partners), that was being driven by one of its employees. The plaintiffs filed a separate action, under G. L. c. 176D, and G. L. c. 93A, against Partner's insurers and claims representatives; proceedings in that action were stayed pending resolution of the underlying tort claims. After a trial, a Superior Court jury awarded Anderson $2, 961, 000[4]in damages in the personal injury action, and awarded his wife and daughter $110, 000 each. At a subsequent, jury-waived trial, a different Superior Court judge found that the insurers and claims representatives violated G. L. c. 93A and G. L. c. 176D by their "egregious, " "deliberate or callously indifferent" actions, "designed to conceal the truth, improperly skew the legal system and deprive the Andersons of fair compensation for their injuries for almost a decade." Based on these findings, the judge concluded that the insurers' and claims representatives' "misconduct warrants the maximum available sanction . . ., both as punishment for what transpired and as a deterrent to similar conduct in the future." He awarded the plaintiffs treble damages, using as the "amount of the judgment" to be multiplied the combined amount of the underlying tort judgment and the accrued postjudgment interest on that judgment. See G. L. c. 93A, § 9 (3); G. L. c. 176D, § 3 (9) (f) (where violation of G. L. c. 176D is wilful, damages are to be multiplied pursuant to G. L. c. 93A, § 9 [3]). The Appeals Court affirmed the judgment of liability and the amount of the award of damages, in an unpublished memorandum and order issued pursuant to its rule 1:28. See Anderson v. National Fire Ins. Co. of Pittsburgh PA, 88 Mass.App.Ct. 1117 (2015).

         We granted the defendants' application for further appellate review, limited to the issue whether postjudgment interest was included properly in the "amount of the judgment" to be multiplied under G. L. c. 93A, § 9 (3). We conclude that in a case where the amount of actual damages to be multiplied due to a wilful or knowing violation of G. L. c. 93A or G L. c. 176D are based on the amount of an underlying judgment, that amount does not include postjudgment interest.

         1. Background.

         On September 2, 1998, while crossing Staniford Street in Boston, Odin was struck and injured by a bus owned by Partners and operated by Partners' employee Norman Rice. As a result of the collision, he sustained serious injuries, including a fractured skull and intracerebral hemorrhage, that ultimately required more than one year of medical treatment.

         At the time of the accident, Partners and Rice were insured under primary and excess policies issued by National Union Fire Insurance Company of Pittsburgh PA. American International Group Claims Services, Inc., the primary insurer, and American International Group Technical Services, Inc., the excess insurer, were responsible for adjusting claims on these policies.

         The plaintiffs, through counsel, sought to reach a settlement agreement with the defendants. The defendants rejected the plaintiffs' demand for settlement and declined to enter into settlement negotiations. As a result, in May, 2001, the plaintiffs filed a personal injury action against Partners and Rice, claiming negligent operation of a motor vehicle, negligent infliction of emotional distress, and loss of consortium. In March, 2003, the plaintiffs filed a separate action against all of the defendants under G. L. c. 176D, § 3, and G. L. c. 93A, § 9 (3), alleging wilful and egregious failure to conduct a reasonable investigation of the plaintiffs' claims, and failure to effectuate a prompt, fair, and equitable settlement, notwithstanding that liability had become "reasonably clear" by the time the plaintiffs filed their initial complaint. Proceedings in the second action were stayed, on the parties' joint motion, pending resolution of the underlying tort action.

         Trial in the tort case took place in June and July of 2003. The jury found that Odin had suffered $2, 961, 000 in damages but that he was comparatively negligent for forty-seven per cent of his injuries, thereby reducing the award of damages to $1, 569, 330.[5] Judgment entered for Odin on July 10, 2003, in the amount of $2, 244, 588.93; the total amount included costs and ...


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