United States District Court, D. Massachusetts
RIVER FARM REALTY TRUST, PAUL DERENSIS, and LINDA DERENSIS Plaintiffs,
FARM FAMILY CASUALTY INSURANCE CO. Defendant.
MEMORANDUM AND ORDER
DOUGLAS P. WOODLOCK UNITED STATES DISTRICT JUDGE
bring suit against their insurance company for breach of
contract and for violations of the Massachusetts Consumer
Protection Act, M.G.L. c. 93A, based on a dispute between
them concerning an insurance claim for losses caused by the
formation of ice dams and subsequent water leakage into their
residence. The insurer now seeks summary judgment.
The Parties and the Policies
Plaintiff River Farm Realty Trust (“River Farm”)
is a nominee realty trust established to hold title to real
property located at 262 South Main Street in Sherborn,
Massachusetts (“the insured premise”). Plaintiffs
Paul and Linda DeRensis reside at the insured premise.
Farm Family Casualty Insurance Company (“Farm
Insurance” or “the insurance company”) is
licensed to transact the business of insurance in the
Commonwealth of Massachusetts.
Insurance issued Special Farm Package “10” Policy
No. 2011G1237 (“the River Farm policy”),
effective for the period November 15, 2014 to November 15,
2015, to River Farm as the insured entity. The policy
provided coverage for the insured premise subject to a limit
of liability of $729, 987.00 and a $500.00 deductible. This
policy did not, however, provide coverage for household
The River Farm Policy
River Farm policy specified that, in the event of a loss or a
claim, “[p]roperty losses are settled on the basis of
actual cash value, ” and, for loss to property, the
company would only be liable for the least of the following:
(a) the applicable limit of liability; (b) an amount not
greater than [the insured's] interest in the property;
(c) the cost of repairing or replacing the property with
materials of equivalent kind and quality to the extent
practicable; (d) the amount computed after applying the
deductible or other limitation applicable to the loss; or (e)
the ACTUAL CASH VALUE of the property at the time of loss
(except as provided under the Replacement Cost Provision, if
term “actual cash value” is defined in the
contract to mean “the amount it would currently cost to
repair or replace the covered property with new material of
like kind and quality, less allowance for physical
deterioration and depreciation, including
obsolescence.” In addition, the policy also required
that, if the insured premise was a residence - as is the case
here - the insurance company would pay for additional living
expenses for at most 24 months “for the necessary and
reasonable increase in living costs [the insured party]
incur[s] to maintain the normal standard of living” if
“a loss covered by this policy makes the [insured
insured party and the insurance company disagree on the
amount of loss, “either one can demand that the amount
of the loss be set by appraisal.” In that event, both
the insured party and the insurer will select a
“competent, independent appraiser” to assess the
amount of loss. If the appraisers agree on the amount of
loss, “the amount agreed upon shall be the amount of
loss” for which the company is liable. If the
appraisers do not agree, the disagreement shall be submitted
to an impartial umpire selected by the appraisers, and the
umpire shall determine the amount of loss. Once the amount of
loss is determined, the insurance company is obligated to
make a payment for the loss within thirty days. If the
insurance company fails to timely pay the claim once the
amount of loss is determined, it is also liable for
“the payment of interest to the [insured party] at a
rate of one percent over the prime interest rate on the
policy also included a Massachusetts-specific amendment that
allowed the insured parties to seek a Reference under M.G.L.
c. 175 § 99, et seq., in the event of a
disagreement about the value of the claim. The Reference
process required the value of the claim to be decided by
three uninterested individuals, with the insurance company
and the insured party each choosing one Referee, and the two
jointly choosing the third. The Reference process was an
alternative to the procedure outlined in the policy and
carried the same conditions regarding payment once the
process was completed.
The Triggering Incident
result of a series of snowstorms, ice dams began forming at
the insured premise on February 5, 2015. Due to the freezing
and thawing of these ice dams through March 3, 2015, water
leaked into and throughout the insured premise. Plaintiffs
did not initially call a water mitigation service, though Mr.
and Mrs. DeRensis sought help from their employees to shovel
snow off their roof and used buckets and towels to contain
the flood of water into the premise.
The Reported Claim
in March 2015, Mr. DeRensis contacted Farm Insurance to
notify it about the ice dam and water damage. On April 27,
2015, Mark Chilton, an adjuster with Farm Insurance, sent Mr.
DeRensis correspondence, which stated:
Mr. DeRensis, I must apologize. Unfortunately when your claim
arrived at Farm Family they were set up as one singular claim
where in fact there are two separate and distinct claims
being asserted. Once I had recognized the issue of two claims
and separated them a record keeping issue came to light. . .
. [T]he independent claim numbers became interchanged. As you
can see one minor issue led to a number of problems. . . . I
will work to see you receive our coverage determination ASAP.
Again, I apologize for the confusion and delay.
Insurance assigned Scott Howard to handle Plaintiffs'
claim. On May 4, 2015, Mr. Howard sent Mr. DeRensis a letter
with the subject line, “Claim Report
Acknowledgment.” This letter did not indicate when the
claim was made. Farm Insurance then assigned Dineley Claims
Service, an independent insurance adjusting firm that Mr.
Howard had hired in the past, to perform the initial field
investigation and loss adjustment. In turn, Dineley Claims
Service assigned Mark Whidden to handle the claim.
20, 2015, Mr. Whidden visited the insured premise and met
with Mr. DeRensis. He inspected the areas of damage brought
to his attention, including the roof, and took photographs of
the insured premise. Following his visit, Mr. Whidden
prepared an estimate of the costs he believed were necessary
to repair the damage he observed, which he mailed to Mr. and
Mrs. DeRensis in June of 2015. Mr. DeRensis did not agree
with the estimate of damage prepared by Mr. Whidden, and
testified that his first reaction to the estimate was that
“it was a fraud” because the estimate was so low.
On November 13, 2015, Mrs. DeRensis sent a letter to Mr.
Whidden regarding the claim. In her letter, she enclosed
three estimates from local contractors for the work she
deemed necessary to fix the damage caused by the ice dams and
the water leakage. When Mr. Whidden did not immediately
respond to the November 15, 2015 letter, Mrs. DeRensis
contacted him by telephone.
November 24, 2015, Mr. Howard sent Mr. DeRensis an email
acknowledging receipt of the estimates that Plaintiffs
”were able to obtain within the last couple of
weeks.” In response, Mr. DeRensis stated: “Given
how badly this claim handling has been botched, I am
consulting an attorney this morning, notwithstanding
[sic] the requests from the adjuster to ‘start
over' and forget the past.”
Mrs. DeRensis sent an email to Richard Dineley, the President
of Dineley Claims Service, about her dissatisfaction with the
handling of Plaintiffs' claim, to which he responded:
“Dear Ms. DeRensis: I had your claim confused with
another we have [sic] with a ‘Linda' in
NJ. . . . My apologies for the confusion.” In this
email, Mr. Dineley reported Bryan Grandmont had been assigned
as the new adjuster. That same day, Mr. Grandmont followed up
with Mrs. DeRensis, acknowledging that Plaintiffs had
retained legal counsel, and again apologizing for any
confusion there may have been.
February 16, 2016, after several communications with Farm
Insurance, Plaintiffs' legal counsel sent Mr. Howard a
preliminary statement of loss and associated estimates,
totaling $236, 437.60. The scope and pricing reflected in the
new contractor's estimates exceeded the estimates
previously furnished to Farm Insurance.
second inspection of the insured premise occurred on March 2,
2016. On March 18, 2016, Farm Insurance received an updated
estimate for interior damage from Dineley Claims Service,
which it sent to Plaintiffs' legal counsel. On March 23,
2016, Farm Insurance issued payment for the interior damage
in the amount of $28, 005.21. Plaintiffs' were
dissatisfied with this second estimate; Mr. DeRensis thought
it was a “joke.”
March 28, 2016, Plaintiffs' legal counsel demanded a
Reference pursuant to M.G.L. c. 175 § 99 et
seq. From June to July of 2016, a two-day hearing was
conducted before a three-member panel of Referees to hear the
evidence and determine the extent of loss. On July 20, 2016,
the panel issued a unanimous award, which entitled the
Plaintiffs to at most $183, 848.00.Farm Insurance has paid
Plaintiffs a total of $137, 887.99 - the actual cash value of
the loss to the building set forth in the award and the
amount to which Plaintiffs were entitled under the terms of
the insurance policy.
have not alleged that they incurred any additional living
expenses; nor have they submitted any documentation to Farm
Insurance to show that repairs have been performed to the
dwelling in excess of ...