Heard: February 2, 2017.
Vehicle, Insurance. Insurance, Unfair act or practice,
Settlement of claim. Consumer Protection Act, Unfair act or
practice, Insurance. Practice, Civil, Consumer protection
case, Summary judgment, Continuance, Discovery. Civil action
commenced in the Superior Court Department on April 9, 2015.
motion for a continuance was heard by Timothy Q. Feeley, J.,
and the case was heard by him on a motion for summary
T. Rumson (Paul F.X. Yasi also present) for the plaintiff.
A. Home (Allen N. David also present) for the defendant.
Present: Grainger, Sullivan, & Lemire, JJ.
case, we consider whether a judge in the Superior Court erred
in granting summary judgment to Zurich American Insurance Co.
(Zurich) on a complaint alleging that Zurich committed unfair
claim settlement practices in violation of G. L. c. 176D,
§ 3(9) (f_), and G. L. c. 93A, § 2. We conclude
that Zurich did not violate these statutory provisions when
it conditioned the payment of its primary insurance policy
limit on a release of all claims against its insureds,
notwithstanding the availability of excess insurance.
Accordingly, we affirm.
after midnight on September 14, 2013, Daniel Madigan-Fried
was driving a rental car in Swampscott when he was involved
in a one-vehicle accident. The plaintiff, Michael Caira, who
was a passenger in the front seat, suffered life-threatening
injuries, and the two passengers in the back seat sustained
serious injuries. A few weeks before the accident,
Madigan-Fried had rented the vehicle in his capacity as an
employee of Groom Construction Co., Inc. (Groom). Zurich had
issued to Groom the primary commercial automobile insurance
policy that was in place at the time of the accident. The
bodily injury coverage under the policy was $1 million. In
addition, Groom had two excess insurance policies issued by
Starr Indemnity & Liability Company (Starr Indemnity) and
Navigators Insurance Company (collectively, excess insurers)
that provided coverage of $5 million each.
October 29, 2013, Caira filed a complaint in the Superior
Court against Madigan-Fried and Groom, alleging
negligence. Caira claimed that excessive speed caused
Madigan-Fried to lose control of the vehicle and to crash
into a granite wall. Zurich undertook the defense of
Madigan-Fried and Groom.
December 23, 2014, and July 15, 2015, thirteen letters were
exchanged between Caira and Zurich regarding the settlement
of Caira's negligence claims against Madigan-Fried and
Groom. In his initial demand letter dated December 23, 2014,
written pursuant to G. L. c. 176D, § 3(9) (f_) and (n),
Caira asserted that it was reasonably clear that
Madigan-Fried was liable for both the accident and the
resulting damages (which purportedly exceeded $1 million),
that Zurich had an obligation to tender a settlement to
Caira. The letter stated that in exchange for the
$1 million insurance policy limit, Caira would release Zurich
from further claims of any kind. This proposed settlement,
however, did not include an offer to release either
Madigan-Fried or Groom because Caira intended to continue
litigating his claims for additional damages. Caira stated,
however, that if Zurich met his demand for the $1 million
policy limit, he would enter into an agreement with
Madigan-Fried and Groom to seek recovery of any future
judgments only from one or both of the excess insurers. Caira
demanded a response within sixty days.
responded by electronic mail message (e-mail) dated February
4, 2015, declining Caira's offer to release Zurich, but
not Madigan-Fried and Groom, from any additional claims in
exchange for the $1 million policy limit. Zurich stated that,
because discovery had just begun and because there had not
yet been any independent medical examinations, the matters of
liability and damages remained substantially unresolved. In
addition, Zurich stated that paying the policy limit without
receiving a release could expose Zurich to a claim of bad
faith by its insureds (Madigan-Fried and Groom), and could
jeopardize any excess insurance coverage to which
Madigan-Fried and Groom might be entitled in the event that
Zurich's policy was exhausted.
subsequent demand letter dated February 10, 2015, written
pursuant to G. L. c. 93A, § 9(3), Caira asserted that
Zurich's failure to conduct a reasonable investigation
and to make an equitable offer of settlement constituted
wilful and knowing violations of G. L. c. 176D, § 3(9)
(c0, (d), and (f_), and per se violations of G. L. c. 93A,
§ 2. The letter reiterated Caira's demand for
Zurich's $1 million policy limit in exchange for the
partial resolution of Caira's claims against
Madigan-Fried and Groom. Caira stated that an untimely
response or an unreasonable offer of settlement would result
in the amendment of his complaint to include a claim for
unfair claim settlement practices against Zurich.
letter dated February 13, 2015, Zurich responded that, in
reliance on Lazaris v. Metropolitan
Property & Cas. Ins. Co., 428 Mass. 502 (1998), it
properly could condition the payment of its policy limit on
the receipt of a release of its insureds. In Zurich's
view, nothing in Lazaris or its progeny turned on
the existence or nonexistence of excess insurance. Assuming
for purposes of its response that liability was reasonably
clear and that Caira's damages exceeded the $1 million
policy limit, Zurich stated that it would only entertain
settlement proposals that provided for a release of
Madigan-Fried and Groom.
March 19, 2015, Caira moved to amend his complaint to add a
claim against Zurich for unfair claim settlement practices in
violation of G. L. c. 176D, § 3(9) (f_), and G. L. c.
93A, § 2. A judge allowed the motion, and he stayed the