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Quincy Mutual Fire Insurance Co. v. Atlantic Specialty Insurance Co.

United States District Court, D. Massachusetts

July 29, 2019

QUINCY MUTUAL FIRE INSURANCE COMPANY, Plaintiff,
v.
ATLANTIC SPECIALTY INSURANCE COMPANY, Defendant.

          MEMORANDUM AND ORDER DENYING DEFENDANT'S MOTION FOR SUMMARY JUDGMENT AND GRANTING IN PART PLAINTIFF'S MOTION TO COMPEL

          ALLISON D. BURROUGHS U.S. DISTRICT JUDGE.

         Plaintiff Quincy Mutual Fire Insurance Company (“Quincy”) brings this action pursuant to Massachusetts General Laws Chapter 93A (“Chapter 93A”), § 11 to recover its costs for defending a third-party complaint that Defendant Atlantic Specialty Insurance Company (“Atlantic”) directed its insured to file against Quincy. See [ECF No. 1-1 (“Complaint” or “Compl.”)]. Quincy asserts that the underlying third-party complaint, which was filed in the Massachusetts Superior Court for Barnstable County (the “Superior Court”), Richards v. MacDougalls' Cape Cod Marine Services, Inc., No. 1472CV00632 (Mass. Super. Ct.) (the “Richards Litigation”), brought claims in bad faith at a time when Atlantic knew those claims were without merit. Now pending before the Court are Quincy's motion to compel discovery and Atlantic's motion for summary judgment. [ECF Nos. 17, 19]. For the reasons discussed herein, Atlantic's motion for summary judgment [ECF No. 19] is DENIED, and Quincy's motion to compel [ECF No. 17] is GRANTED IN PART and DENIED IN PART.

         I. FACTS [1]

         On December 26, 2014, Joyce Richards initiated the Richards Litigation against MacDougalls' Cape Cod Marine Services, Inc. (“MacDougalls”) to recover for personal injuries that she allegedly suffered on June 3, 2014 while working as an employee of Boston Yacht Sales (“BYS”) at MacDougalls' boatyard. [ECF No. 20 (“Atlantic Facts”) ¶¶ 2-4]. BYS was in the business of selling boats from a sales office that it had leased at MacDougalls' boatyard. [ECF No. 20-12 at 2]. Richards fell from a ladder while inspecting a potential BYS client's boat in a building at the boatyard that was located approximately 90 yards from BYS's sales office. [Id. at 5]. At the time of Richards' injury, MacDougalls was insured by Atlantic, and BYS was insured by Quincy. Compl. ¶¶ 3, 24. Despite Atlantic's allegations to the contrary, MacDougalls was not an insured entity under the policy BYS obtained from Quincy, nor did the Quincy policy otherwise cover Richard's injuries. Id. ¶ 6.

         On March 12, 2015, at Atlantic's direction, MacDougalls requested that BYS and Quincy defend and indemnify MacDougalls against Richards' claims. Atlantic Facts ¶¶ 1, 10. Quincy refused to indemnify MacDougalls and explained that MacDougalls was not listed on BYS's insurance policy, an indemnity provision in BYS's lease was void and unenforceable, and in any event, Richards' injuries were not incurred on the property that BYS had leased from MacDougalls. Compl. ¶¶ 9, 14-16. Quincy claims that Atlantic never carried out a reasonable investigation and that an investigation would have revealed that Quincy owed no obligation whatsoever to MacDougalls. Id. ¶¶ 7-8. On April 17, 2015, at Atlantic's direction, MacDougalls filed a third-party complaint against BYS and Quincy. Compl. ¶ 20; Atlantic Facts ¶¶ 12-13. Quincy asserts that the claims were “false and baseless.” Compl. ¶ 23.

         Quincy responded by filing a counterclaim, alleging in part that MacDougalls violated Chapter 93A by asserting groundless indemnification and defense claims that relied on an indemnification provision in BYS's lease that was unenforceable and void. [ECF No. 20-12 at 21]. On June 7, 2016, the Superior Court entered summary judgment in favor of Quincy on MacDougalls' claims. Atlantic Facts ¶ 16; see generally [ECF No. 20-12]. The Superior Court denied MacDougalls' motion for summary judgment on Quincy's Chapter 93A counterclaim, concluding that there was “a dispute of material fact as to whether MacDougalls' demand for coverage in reliance on the void indemnification provision constituted an unfair and deceptive trade practice.” [ECF No. 20-12 at 21]. Although the Superior Court recognized that “alleged unfair practices conducted during the course of litigation do not support [Chapter 93A] liability, Quincy's claim [was] based on conduct that occurred prior to the parties' litigation.” [Id. at 22 (citation omitted)].

         On August 7, 2018, Quincy filed this case in the Superior Court of Norfolk County, and on August 30, 2018, Atlantic timely removed the case to this Court. [ECF No. 1]; Compl. at 4. Quincy seeks to recover litigation costs totaling more than $100, 000 that it incurred in the Richards Litigation. Atlantic Facts ¶ 19; [ECF No. 1-2].[2] Atlantic was not a party to the Richards Litigation, and Quincy therefore chose to initiate this case rather than proceeding within the Richards Litigation. See Mass. R. Civ. P. 14. On September 21, 2018 Atlantic filed an answer. [ECF No. 10]. The Court held a scheduling conference on October 23, 2018 and ordered discovery to be completed by June 29, 2019. [ECF No. 15]. Quincy served interrogatories and requests for production on Atlantic in February 2019, but rather than engaging in the discovery process, Atlantic responded that it intended to move for summary judgment. [ECF No. 18 at 1]. Quincy filed a motion to compel discovery on March 14, 2019, [ECF No. 17], and Atlantic filed its motion for summary judgment on March 26, 2019, [ECF No. 19]. Timely oppositions were filed as to both motions. [ECF Nos. 21, 22].

         II. SUMMARY JUDGMENT STANDARD OF REVIEW

         Summary judgment is appropriate where the movant can show that “there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). “A fact is material if its resolution might affect the outcome of the case under the controlling law. . . . A genuine issue exists as to such a fact if there is evidence from which a reasonable trier could decide the fact either way.” Cochran v. Quest Software, Inc., 328 F.3d 1, 6 (1st Cir. 2003) (citation omitted).

         “To succeed in showing that there is no genuine dispute of material fact, ” the moving party must point to “specific evidence in the record that would be admissible at trial.” Ocasio-Hernandez v. Fortuño-Burset, 777 F.3d 1, 4 (1st Cir. 2015). “That is, it must ‘affirmatively produce evidence that negates an essential element of the non-moving party's claim,' or, using ‘evidentiary materials already on file ... demonstrate that the non-moving party will be unable to carry its burden of persuasion at trial.'” Id. (quoting Carmona v. Toledo, 215 F.3d 124, 132 (1st Cir. 2000)). “One of the principal purposes of the summary judgment rule is to isolate and dispose of factually unsupported claims or defenses . . . .” Celotex Corp. v. Catrett, 477 U.S. 317, 323-24 (1986). Once the movant takes the position that the record fails to make out any trialworthy question of material fact, “it is the burden of the nonmoving party to proffer facts sufficient to rebut the movant's assertions.” Nansamba v. N. Shore Med. Ctr., Inc., 727 F.3d 33, 40 (1st Cir. 2013).

         In reviewing the record, the court “must take the evidence in the light most flattering to the party opposing summary judgment, indulging all reasonable inferences in that party's favor.” Cochran, 328 F.3d at 6 (citation omitted). The First Circuit has noted that this standard “is favorable to the nonmoving party, but it does not give him a free pass to trial.” Hannon v. Beard, 645 F.3d 45, 48 (1st Cir. 2011). “The factual conflicts upon which he relies must be both genuine and material, ” Gomez v. Stop & Shop Supermarket Co., 670 F.3d 395, 397 (1st Cir. 2012), and the court may discount “conclusory allegations, improbable inferences, and unsupported speculation, ” Cochran, 328 F.3d at 6 (quoting Medina-Munoz v. R.J. Reynolds Tobacco Co., 896 F.2d 5, 8 (1st Cir. 1990)). “If the evidence is merely colorable, or is not significantly probative, summary judgment may be granted.” Medina-Munoz, 896 F.2d at 8 (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249-50 (1986)).

         Although Federal Rule of Civil Procedure 56 allows a motion for summary judgment “at any time until 30 days after the close of all discovery, ” Fed.R.Civ.P. 56(b), the Court is mindful that Atlantic has not yet produced documents, responded to interrogatories, or otherwise engaged in the discovery process in a meaningful manner. Accordingly, for the purposes of the instant motion, the Court will assume the truth of the allegations in the Complaint concerning Atlantic's failure to undertake a reasonable investigation of Richards' claims. See [Mot. to Compel, ECF No. 17 (“At a conference held on March 14, 2019, Defendant's counsel advised Plaintiff's counsel that the Defendant would not be answering the interrogatories or producing the documents requested . . . .”)].[3]

         III. SUMMARY JUDGMENT DISCUSSION

         Quincy brings a single claim against Atlantic for violating Chapter 93A, § 11, which allows actions by businesses that suffer a loss “as a result of the use or employment by another person who engages in any trade or commerce of an unfair method of competition or an unfair or deceptive act or practice . . . .” Mass. Gen. Laws ch. 93A, § 11. Chapter 93A “was designed ‘to encourage more equitable behavior in the marketplace and impose liability on persons seeking to profit from unfair practices.'” Linkage Corp. v. Trs. of Bos. Univ., 679 N.E.2d 191, 208 (Mass. 1997) (quoting Poznik v. Massachusetts Med. Prof'l Ins., 628 N.E.2d 1, 4 (Mass. 1994)). “[A] chapter 93A claimant must show that the defendant's actions fell ‘within at least the penumbra of some common-law, statutory, or other established concept of unfairness,' or were ‘immoral, unethical, oppressive or unscrupulous,' and resulted in ‘substantial injury … to competitors or other business [persons].'” Boyle v. Int'l Truck & Engine Corp., 369 F.3d 9, 15 (1st Cir. 2004) (quoting Quaker State Oil Ref. Corp. v. Gamty Oil Co., 884 F.2d 1510, 1513 (1st Cir. 1989)). “In the context of disputes among businesses, where both parties are sophisticated commercial players, the ‘objectionable conduct must attain a level of rascality that would raise an eyebrow to the rough and tumble of the world of commerce.'” Ora Catering, Inc. v. Northland Ins., 57 F.Supp.3d 102, 110 (D. Mass. 2014) (quoting Levings v. Forbes & Wallace, Inc., 396 N.E.2d 149, 153 (Mass. App. Ct. ...


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