I've been discussing in my last two posts Bearbones,
Inc. d/b/a Morningside Bakery v. Peerless Indem. Ins. Co.
, 2016 WL
5928799 (D. Mass.) (unpublished), a federal court case alleging bad faith practices by an insurer, Peerless, before and during a reference
The plaintiffs sought a declaration that the reference proceeding statute, Mass. Gen. Laws ch. 175 §99, ¶Twelvth
, violates Article 11 of the Declaration of Rights of the Massachusetts Constitution
, which guarantees the right "to obtain right and justice
freely, and without being obliged to purchase it, completely, and without any
denial, promptly, and without delay; conformably to the laws." Specifically they alleged that the reference proceeding statute violates Article 11 because it requires that insureds pay for referees and because referees, rather than judges determine the
amount of the loss.
The court noted that the free access to courts clause
of Article 11 "requires that all cases be decided by a judge, and that
litigants need not 'purchase' access to justice."
Using logic that strikes me as disingenuous, the court held that, unlike a
probate court matter in which the court appointed a parent coordinator with
binding authority to resolve conflicts between divorcing parents, the reference proceeding did not take
place over the objection of either party. Rather, the plaintiffs made a business decision to purchase casualty insurance. Pursuant to
the policy both parties agreed to submit disputes over the amount of loss to a
While it is true that parties can agree to alternative dispute resolution
clauses in a contract, that is not quite what happened here. Rather, the
reference proceeding statute requires
that disputes over the amount of
loss under certain insurance policies must be determined by a reference proceeding. That is why the requirement is in the property policies. The parties are not allowed to negotiate over it.
While it may be true that the plaintiffs did not have to purchase property
insurance -- and that is probably not the case, as mortgages require
property insurance -- it is not true that the parties included the reference
proceeding clause by their own free will.
The court also notes in a footnote that the plaintiffs failed to allege that they
incurred any costs in connection with the reference proceeding. In their motion to amend the complaint they argued that the reference proceeding statute requires an insured to expend significant sums of money to pay for
referees and that the plaintiffs paid over $30,000 in fees to the referees. The
court asserts that there were no supporting allegations in the supplemental
That seems overly harsh to me. The reference proceedings statute provides that of the three referees, the insureds will pay
the fee of the first, the insurer will pay the fee of the second, and they will split
the fee of the third.
The court then held that the "no purchase of justice" provision of
Article 11 is to guarantee that "all litigants similarly situated may
appeal to the courts both for relief and for defense under like conditions and
with like protection and without discrimination." A statute that
"does not pertain to a suspect class, . . . involves a right . . . that is
not fundamental, . . . and is rationally related to achieving its purpose . . .
passes constitutional muster."
The court noted that the plaintiffs have not alleged that they are being
treated differently than any other class of insureds under policies issued with the same mandatory language, or that they are part of a suspect class.
It also noted that free access to courts is not a fundamental right.
Therefore, the reference proceeding statute need only be rationally related to
achieving its purpose. The plaintiffs did not allege that the requirement
of a reference proceeding is not rationally related to achieving the purpose of
establishing a summary method of establishing the amount of loss.
I agree that the reference proceeding statute is rationally
related to the purpose of having a summary method of establishing the
amount of a property loss. I nevertheless am trouble by the decision -- or perhaps by the earlier decision quoted by the court holding that access to courts is not a fundamental right. If that's the case, then why is it part of the Massachusetts Declaration of Rights? I'm not a constitutional law scholar, but it seems to me that the legislature should not be able to take away a right protected by the constitution. Moreover, does this mean that the legislature can decide that parties to a tort case don't have a right to a judicial hearing? How about contract cases?