Massachusetts Auto Accident Chapter 93A Damages News

The Massachusetts Supreme Judicial Court is currently considering an important case under Massachusetts General Laws, Chapter 93A, Consumer Protection statute. The issue before the SJC is how to calculate 93A damages following a finding, by the trial judge, that a motor vehicle accident insurance company violated the law by failing to make a fair settlement offer. We reported on this case last December, in an article called Massachusetts Personal Injury Victims Win Unfair Claims Settlement Against Insurance Companies.

The case currently on appeal stems from a 2002 motor vehicle and truck collision. When Marcia Rhodes stopped her vehicle on Route 109 in Medway, Massachusetts for a police officer, a tractor trailer rear ended her vehicle. Ms. Rhodes was severely injured, resulting in paralysis. The driver of the truck was an employee of Driver Logistic Services, working for GAF Building. GAF had motor vehicle insurance with Zurich American, for $2 million and there was a $50 million policy with National Union, with adjusting company AIGDC. When the truck driver plead out his criminal case in November 2002, the civil case should have been ready to settle.
The Rhodes family, through their Massachusetts personal injury lawyer, made a settlement demand of $15 million, in November, 2002. Unfortunately, notwithstanding the fact that the Zurich Insurance adjuster made an internal assessment of clear liability and gave a value of $5 million to $10 million, no offer was made by the company at that time. The defense attorney, paid for by the insurance companies, recommended that they make a settlement offer or they would be in violation of Massachusetts General Laws, Chapter 93A and Chapter 176D. The insurance companies did not follow the advice of counsel. Four months later, Zurich offered their $2 million policy. As that was the extent of the offers, the Rhodes family rejected the offer. A few weeks before trial, the insurance companies made an offer of $3.5 million. The trial resulted in a $9.5 million jury verdict, which, with interest at 1% per month per Massachusetts Court Rules, there would be a judgment of $11.3 million.
Again, rather than pay, or negotiate, the insurance companies appealed, calling the jury’s verdict excessive. The Rhodes family sent a 93A Demand Letter on November 19, 2004, to both insurance companies. Zurich responded by paying the $2 million policy; the adjusting company for National Union finally made an acceptable offer in June 2005, in the amount of $9 million.
Next, the Rhodes family filed a second lawsuit, against the insurance companies, for violations of Massachusetts General Laws, Chapter 93A and Chapter 176D. The Superior Court judge found that AIGDC violated 93A in failing to make a reasonable settlement offer, however, the Court found that the $3.5 million offer at mediation was “reasonable” and at that point stopped all 93A damages. The Court did find, however, that following the trial AIGDC failed to pay promptly, thus ordering “loss of use” damages and doubled those damages for violation of 93A.
The Court of Appeals reversed the trial Court on the issue of pre-trial conduct but agreed with the trial Court’s on the violation of 93A for post trial conduct. The Court of Appeals ruling is now under appeal before the Massachusetts Supreme Judicial Court. At issue is how 93A damages should be calculated. Rather than provide all of the possible ways the SJC could rule, we will await their decision and report back at that time.
In essence, the SJC will decide whether the measure of damages is the “loss of use” of funds or based on multiplying the judgment amount. The Rhodes family and their Massachusetts personal injury lawyers argue that a finding of unfair settlement practices should be double or treble damages, per the statute. The insurance companies argue that the judgment for the 93A case is not the same “traction or occurrence” as the underlying case and should be a different measure of damages.
Stay tuned. The outcome could determine how the insurance companies treat Massachusetts motor vehicle drivers.