Court: Massachusetts Appeals Court; December 4, 1996; Massachusetts; State Appellate Court
Fred Cohen sustained injuries on February 24, 1989, while unloading merchandise from a van registered to Accessory Group, Ltd. (AGL), which he believed was insured by Liberty Mutual Insurance Company under policy number AMI 313 451899 018. After notifying AGL of his injury, he received no response; similarly, Liberty did not respond to multiple communications from Cohen’s attorney over the following months. Liberty conducted searches on the Registry of Motor Vehicles and initially found no match for the van’s registration number but later confirmed it matched a van owned by AGL and insured by Liberty.
Cohen filed a lawsuit against AGL in the Essex County Superior Court, which defaulted when AGL failed to respond. The court awarded Cohen $90,000 in damages and other costs, a judgment that neither AGL nor Liberty appealed. Following notification of the default judgment, Liberty questioned its coverage but did not provide further response. Cohen later sought enforcement of the judgment, and Liberty continued to delay its response regarding coverage despite receiving relevant documentation from Rizzo Insurance Agency, which confirmed the van's insurance status.
On October 26, 1990, Cohen's attorney sent a demand letter to Liberty alleging unfair and deceptive practices under Massachusetts General Laws, but Liberty did not reply. On January 17, 1991, Cohen initiated legal action against both AGL and Liberty for violations of G.L. c. 93A and c. 176D, with Liberty acknowledging its role as the insurer under the applicable policy for the van at the time of Cohen's injury.
In August 1991, Liberty acknowledged that the van in Cohen's accident was covered under AGL’s insurance policy, resolving the coverage issue in Cohen’s favor and offering him the $20,000 policy limit, which Cohen rejected. Following a jury-waived trial, a Superior Court judge found Liberty in violation of G. L. c. 93A, § 9(1) and G. L. c. 176D, § 3(9). The judge awarded actual damages of $20,000 plus interest from August 7, 1990, and, due to the knowing nature of Liberty's violation, tripled the damages under c. 93A, § 9(3). Additionally, Cohen was awarded $9,500 in attorney's fees and costs of the action. Liberty appealed while Cohen cross-appealed, and the court affirmed the decision.
During the trial, Liberty attempted to introduce evidence of policy exclusions to dispute its obligation to indemnify AGL, but the trial judge excluded this evidence as irrelevant and untimely. The judge determined that Liberty had not defended against Cohen's action in a previous case and had not sought to reopen that case. Liberty contended that the exclusion of evidence was an error, arguing that it was relevant to show unclear liability. While the evidence had some marginal relevance, the appellate court found that Liberty did not demonstrate that the exclusion prejudiced their case sufficiently to warrant reversal. The court emphasized that Liberty failed to show a plausible scenario in which the trial judge would have ruled differently had the evidence been presented. Thus, the appellate court upheld the lower court's findings and decisions.
The trial judge determined that the exclusion of evidence regarding Liberty’s policy defenses did not materially affect the trial's outcome, as the key arguments were adequately presented through various motions and findings submitted by Liberty. The judge found no plausible reason to believe that different evidence would have led to a different judgment, concluding that any error was harmless.
In awarding damages under Chapter 93A, the judge found Liberty in violation and granted Cohen actual damages of $20,000, plus interest from August 7, 1990, until judgment entry, which was then trebled due to Liberty's knowing violation of the statute. Liberty argued against the treble damages and contended that only the interest from August 7, 1990, to April 1992 should be multiplied.
Cohen cross-appealed for the trebling of a separate $90,000 judgment against AGL. The 1989 amendment to Chapter 93A, § 9(3) states that the actual damages to be multiplied encompass all claims from the same transaction or occurrence, raising ambiguity about whether it applies solely to Chapter 93A claims or all related claims. Legislative history offers limited insight, but commentators suggest the amendment aimed to address issues highlighted in Wallace v. American Mfrs. Mut. Ins. Co., where the court previously limited the multiplication of damages to accrued interest. The current interpretation maintains that claimants must still demonstrate a causal link between the wrongful conduct and their damages, suggesting that the amendment was intended to correct the restriction on multiplying only accrued interest, rather than eliminating the need for causation in damage claims.
The Supreme Judicial Court in Schwartz v. Rose established that a plaintiff must demonstrate a causal link between a defendant's wrongful actions and the resultant damages for claims under c. 93A. The 1989 amendment did not eliminate this requirement but clarified that only interest, not the underlying damages, could be multiplied. The trial judge found that Liberty's actual damages were limited to the $20,000 policy limit plus accrued interest from August 7, 1990, due to Liberty's lack of responsibility for a $90,000 judgment entered in April 1990, when it believed it had no obligation. Liberty knowingly violated c. 93A by not settling a claim despite having prior knowledge of its potential liability. Consequently, the plaintiff is entitled to treble damages based on the actual damages and interest. Liberty's argument regarding the specificity of the c. 93A demand letter was dismissed, as general allegations with sufficient detail suffice. A discrepancy in the vehicle identification number was deemed insignificant, and the judge noted that Liberty could have pursued reopening or vacating the default judgment, though this procedural issue was not explored. The interpretation of the 1989 amendment was contested, but no legislative intent materials were found to inform the court's understanding.
At least one "fact sheet" prepared by Representative William B. Vernon, the amendment's sponsor, exists but was not included with house bill H.B. 6014 or in the legislative packet in the State Archives. The lack of clarity regarding the Legislature's consideration of this unofficial document leads to its exclusion from analysis. The plaintiff's reliance on the 1989 amendment discussion in Brandley v. United States Fidelity & Guaranty Co. is misplaced since that opinion was vacated on August 10, 1993. Due to insufficient briefing on the 1989 amendment, the analysis is confined to the current case and its facts. Liberty's argument that its liability was not "reasonably clear" upon learning of the RMV-1 form on August 7, 1990, citing the obscure nature of G. L. c. 90, § 34B's estoppel provision and the plaintiff's duty to notify Liberty, is deemed meritless. Furthermore, the assertion that § 34B’s estoppel applies solely to compulsory coverage, which would be $10,000 in this instance, is rejected. The purpose of compulsory coverage is to ensure minimum protection for injured parties, and additional optional bodily injury coverage enhances recovery potential without altering the fundamental protection provided by compulsory coverage. Therefore, limiting § 34B’s estoppel provision in such instances would contradict the statute's intent. Cohen's request for appellate attorney's fees is denied.
