Massachusetts General Laws Chapter 93A and 176D have long provided the plaintiffs’ personal injury bar with an exceptionally sharp check on insurance carriers’ settlement practices. While many claims under Chapter 93A/176D appear from the outset to be pro forma, a recent Massachusetts Appeals Court in Chiulli v. Liberty Mutual Insurance, Inc., 97 Mass. App. Ct. 248 (2020) illustrates the perils of Chapter 93A/176D violations in settlement practices and the substantial penalties that may be imposed in the event of a finding of willful and/or knowing violation of good faith and equitable settlement practices.
Chiulli arose from a physical altercation at a prominent Boston restaurant in 2008. Shortly before the altercation, restaurant staff separated two groups of individuals involved in a spirited argument over the occupancy of a certain barstool but allowed both groups to remain on the premises. Unfortunately, the argument soon turned violent. Chiulli was knocked unconscious and sustained a traumatic brain injury.
Chiulli, in turn, filed suit against the Restaurant, its parent company, and the opposing combatant seeking medical damages in excess of $600,000. He asserted a negligent security claim against the Restaurant and its operating group claiming they failed to reasonably address the initial altercation by not removing the respective parties from the premises and failing to ensure that the factions did not leave the premises together which was bolstered by expert testimony. The Restaurant did not offer its own expert and instead argued that it conducted itself in a reasonable manner in addressing the argument and altercation.
The case went to trial in 2012. The only settlement offer extended prior to or during trial was an offer for $150,000 made by the Restaurant’s primary insurance carrier. The three-week trial ended in a plaintiff’s verdict finding that both the Restaurant and its operating company were each 45% at fault for the altercation. The jury awarded Chiulli approximately $4.5 Million in damages.
Post-Verdict Claims Handling
After confirming that the primary carrier did not tender its policy limits of $1 Million to the Restaurant’s excess carrier, Chiulli served Chapter 93A demand letters on both carriers 16 days after the verdict. There, Chiulli alleged that both insurers failed to effectuate a fair and prompt settlement of the underlying tort action despite the fact liability was reasonably clear vis-à-vis the jury verdict. Chiulli sought $5.7 Million “to resolve the [underlying tort] case, and to avoid further litigation” wherein he would seek multiple damages under Chapter 93A.
Twenty-two days after the underlying verdict, the Restaurant’s primary carrier still had not tendered its policy limits, which resulted in the excess carrier serving its own demand upon the primary carrier. The primary carrier soon acquiesced and tendered its $1 Million policy limit to the excess carrier. During this timeframe, Chiulli served a second Chapter 93A demand on both carriers. This time, he sought $5.7 Million to resolve the tort case and an additional $10 Million demand to resolve putative bad faith settlement claims against both insurers.
The excess carrier, taking