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Chamberland v. Arbella Mutual Insurance Co.

Appeals Court of Massachusetts, Bristol

June 9, 2017

HEATHER CHAMBERLAND
v.
ARBELLA MUTUAL INSURANCE COMPANY.

          Heard: February 1, 2017.

         Civil action commenced in the Superior Court Department on March 4, 2015.

         The case was heard by Robert J. Kane, J., on motions for summary judgment.

          Peter E. Heppner (Andrew Hart Lynch also present) for the defendant.

          Ronald J. Resmini for the plaintiff.

          Present: Carhart, Massing, & Henry, JJ.[1]

          HENRY, J.

         This case highlights the intricacies of the framework for underinsured motorist claims in Massachusetts, which provides that the insured and the insurer must either agree on the resolution of the claim or arbitrate. The plaintiff, Heather Chamberland, pursued a lengthy civil action against the other driver involved in the underlying accident and obtained a large judgment and eventually a settlement in the amount of that driver's policy limits. Her underinsurance carrier, Arbella Mutual Insurance Company, was not a party to that action, though it consented to the settlement. Chamberland then sought underinsured motorist coverage from Arbella, which invoked arbitration. On cross motions for summary judgment, a Superior Court judge held that Arbella's invocation of arbitration was untimely, and thus Arbella had waived its right to arbitrate. The motion judge further held that, as a result of the damages award that Chamberland had secured against the other driver at trial, Arbella was collaterally estopped from contesting issues of liability and damages in connection with Chamberland's underinsurance claim. Arbella appealed. We reverse because, notwithstanding the significant amount of time that passed before Arbella's demand for arbitration, Arbella did not act inconsistently with its statutory and policy-based right to arbitrate. As such, there is no basis for a finding of waiver of that right.

         Background.

         The following undisputed facts are drawn from the summary judgment record. On July 16, 2007, Chamberland was injured in an accident while operating a motor vehicle insured under a policy issued by Arbella. The other vehicle involved in the accident was operated by Dylon Maiorano and insured under a policy issued by Liberty Mutual Insurance Company. Arbella was notified of the accident, and by October 3, 2007, confirmed in writing that Chamberland's underinsurance (part 12) coverage limits under the Arbella policy were $250, 000 per person and $500, 000 per accident.

         Chamberland sued Maiorano in a case that ultimately involved two jury trials and multiple appeals. Chamberland prevailed in the second trial; the jury concluded that the accident was caused solely by Maiorano's negligence and that Chamberland was entitled to $231, 565 in damages.[2] With statutory interest, Chamberland's judgment totaled $340, 557.02. Maiorano appealed. Arbella was not a party to this action.

         While the appeal was pending, Chamberland, with Arbella's consent, reached a settlement with Maiorano and Liberty Mutual, pursuant to which Liberty Mutual agreed to pay her the full $100, 000 in bodily injury coverage available under Maiorano's policy. In exchange, Chamberland released Maiorano and Liberty Mutual from all claims arising out of the accident. She further acknowledged that Maiorano, by entering into the settlement, did not admit liability for the accident, and, in fact, continued to deny the same. On May 2, 2014, Chamberland and Maiorano filed a stipulation of dismissal of the case with prejudice.

         During the course of Chamberland's action against Maiorano, Arbella requested that it be kept apprised of the matter so it could determine if an underinsurance claim was forthcoming. The parties did not correspond again until more than three years later when, on December 31, 2013, Chamberland's attorney notified Arbella of the $340, 557.02 judgment against Maiorano. Chamberland claimed that the issues of liability and damages had been resolved by that judgment and demanded payment of the balance of the judgment, $240, 557.02, pursuant to the underinsurance coverage provision in the Arbella policy. Arbella refused, stating that it was not bound by the judgment against Maiorano and asserting that it was entitled to resolve issues of liability and damages through arbitration.

         Chamberland subsequently initiated this action (1) seeking a declaration that she is entitled to the "remaining" underinsurance coverage limits of the Arbella policy, and (2) asserting that Arbella had engaged in unfair settlement practices in violation of G. L. c. 93A and G. L. c. 176D. Arbella denied Chamberland's claims and asserted a counterclaim for court appointment of an arbitrator. The parties immediately proceeded to summary judgment. The motion judge dismissed Arbella's counterclaim, granted a required offset of $100, 000 for the bodily injury coverage that Chamberland recovered under Maiorano's automobile insurance policy, and declared Arbella ...


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