Following a reference proceeding, the Massachusetts Superior Court finds insurer violated ch. 93A but awards no damages

The Business Litigation Session of the Massachusetts Superior Court has issued a ruling holding that insurer Privilege Underwriters Reciprocal Exchange (PURE) breached ch. 93A in handling a first party property damage claim, but that no 93A damages should be awarded.  

The fire and PURE's adjustment of the loss

The plaintiffs owned a large house with features such as wood construction made from American Chestnut, and fireplaces set in hand-crafted lake stone chimneys.

PURE insured the property.  The policy had a $5,679,540 dwelling limit, but the limit would not apply (meaning there would be no limit) if reconstruction was begun within two years of a loss.  

In December, 2020, the house suffered significant damage from a major fire.  PURE's internal communications showed that it knew that the cost to rebuild would far exceed the coverage limit.  It nevertheless provided the plaintiffs with a reconstruction estimate below that limit.  

In Deutschv. Privilege Underwriters Reciprocal Exchange  Judge Salinger of the Massachusetts Superior Court's Business Litigation Session found that the PURE estimate did not reflect the kind and quality of material and workmanship used to construct the house.  For example, the estimate proposed replacing maple floors with oak flooring, and replacing a hand-built stone foundation with a poured concrete foundation.  It also left out the replacement of windows and doors and underestimated the size of the dwelling by 30 percent.  When the insureds pointed out that the estimate was lacking, the PURE adjuster told them that the estimate was only a "starting point."  

PURE later offered to pay $8.2 million as a lump sum settlement of the claim.  The insureds  counteroffered that they would accept $10.4 million, and PURE responded with an offer of $8.645 million.  

At that point the insureds hired their own construction experts to prepare an estimate.  When PURE's adjusters learned of this, they became angry, even though they knew that their original estimate had been too low.  In an internal communication, one of the adjusters wrote that the plaintiffs "are pissing me off" and that he was no longer going to follow the "love our members approach."

The plaintiffs requested a total settlement package of $17.66 million, which they supported with a detailed report showing their reconstruction costs.  PURE responded with an estimate showing reconstruction costs of $7.268 million.  The plaintiffs' next demand exceeded $19 million.  

The reference proceedings

PURE moved to compel a reference proceeding, which was allowed.  The reference panel ordered PURE to pay the plaintiffs $11.5 million in reconstruction costs.

PURE subsequently moved to compel further reference proceedings, which resulted in an award of $700,000 for unpaid contents and additional living expenses.  

In total, PURE paid $11,783 million in dwelling coverage. $2.272 million in contents coverage, and $1,945 million in additional living expenses.  

The ch. 93A lawsuit: 93A violation found, but no 93A damages

After a subsequent trial on the plaintiffs' claim that PURE breached Mass. Gen. Laws ch. 93A, the court held that PURE was liable because it engaged in unfair settlement practices by making lowball offers and by compelling the plaintiffs to instigate litigation and then to participate in reference proceedings to recover amounts due under the policy.  The court noted that PURE's final offer was only 63 percent of the amount awarded at the reference proceeding.  

The court held that amounts awarded at a reference proceeding are not single damages subject to multiplication for breach of ch. 93A, because reference proceedings are a form of arbitration and the reference proceeding award was paid without being confirmed by the court.  The court then found that the plaintiffs had not met their burden of proving any damages under ch. 93A.

The court cited two cases, Bonofiglio v. Commercial Union Ins. Co. 411 Mass. 31, 37 (1991) and Murphy v. Nat'l Union Fire Ins. Co., 438 Mass. 529 (2003).  Those cases hold that unlike a court judgment, arbitration awards are not the basis for single damages under ch. 93A.  

But both those cases hold that 93A damages may be awarded after an arbitration even if the arbitration amount is not reduced to a court judgment.  While the court is correct that an unconfirmed arbitration award is not the basis for single 93A damages subject to doubling or trebling under the statute, both cases held that post-arbitration 93A damages is lost interest accrued between when the insurer should have paid the underlying damages and when it did pay those damages. 

The Superior Court held that the plaintiffs had not proved any ch. 93A damages, such as increased construction costs.  Perhaps this was a failure of advocacy, but it seems to me that the only proof required for lost interest is the date that the insurer had sufficient information to understand what the damages were and the date that the insurer actually paid those damages.  

I would like to see a legislative solution

As to an arbitration award never being the basis for single damages under ch. 93A subject to doubling or trebling, I would support a legislative solution that when arbitration is mandatory under state law – which includes reference proceedings for first party property losses as well as underinsured and uninsured motorist claims – the arbitration award should be considered single damages under ch. 93A subject to doubling or trebling.  In voluntary arbitrations, the parties can set the parameters, including choosing to allow the arbitrator to award ch. 93A damages based on the underlying award.  But an insured with a first party property damage claim is required by statute to use a reference proceeding to resolve a dispute with their insurer over the amount of their loss, and that is all that reference proceedings determine. It is arbitrary and unfair that if someone’s house burns down and they seek payment from their own insurer who engages in bad faith settlement practices, their 93A damages are limited to lost interest.  But if they seek damages from their next door neighbor who negligently started the fire and the neighbor’s insurer engages in bad faith settlement practices, they can be awarded double or treble their amount of loss.

Massachusetts Lawyers Weekly quoted me in an article about this case, here.

Invitation to my Tuesday June 2, 2026 webinar, Untangling Coverage: A Practical Guide to Your First Insurance Dispute UPDATED: FREE OR DISCOUNTED REGISTRATION FEE AVAILABLE

On June 2, 2026, from 4 to 6 PM, I will be presenting a webinar sponsored by the Social Law Library in partnership with The Insurance Library, “Untangling Coverage: A Practical Guide to Your First Insurance Dispute.” Insurance coverage disputes can feel like a maze even for seasoned practitioners, and for attorneys stepping into their first coverage matter the learning curve can be steep.

This focused, highly practical webinar is geared towards attorneys and summer associates, but is appropriate for anyone who wants to develop a deeper understanding of insurance coverage law.   I will offer a clear, usable roadmap for navigating your first coverage dispute, from making sure you are working with the correct insurance policy to understanding the obligations and pressure points of the insurer, the policyholder, and the claimant, to moving the matter toward resolution.

What You’ll Learn:

• How to identify and verify the applicable insurance policy;
• Notice requirements: occurrence vs. claims-made policies;
• Analyzing coverage: triggers, exclusions, and exceptions;
• Duties of the insurer and the policyholder;
• Claims under Mass. Gen. Laws chs. 93A and 176D;
• Reservation of rights letters; and
• Declaratory judgment actions

The program runs from 4:00 p.m. to 6:00 p.m. and is priced at $25,

Featuring Panelist Nina Kallen

The session is led by Nina Kallen, a respected Massachusetts attorney known for her deep experience in insurance coverage and bad‑faith litigation. Nina’s practice has long focused on helping insurers, policyholders, and other lawyers navigate the complexities of policy language, statutory obligations, and the strategic decisions that shape coverage outcomes. 

You can sign up here: https://www.socialaw.com/about/library-calendar/2026/june-2026/untangling-coverage-a-practical-guide-to-your-first-insurance-dispute/

I can provide a limited number of free and discounted registration fees.  Please reach out to me if these would be helpful to you.  

I'm presenting at a webinar on Reservations of Rights: Ethical Rules, Conflicts, Right to Independent Counsel on Wednesday, April 22, 2026 at 1 PM; discount codes available

Ethics of Insurance Defense Under a Reservation of Rights: Ethical Rules, Conflicts, Right to Independent Counsel

This CLE webinar will discuss how policyholders, insurers, and panel counsel determine whether a reservation of rights (ROR) creates a disqualifying conflict of interest for panel counsel at various stages of the case, and the possible consequences if a conflict exists. We will offer guidance and best practices for insurers, policyholders, panel counsel, and independent counsel. The program will discuss roles in the tripartite relationship, defense counsel's ethical obligation if a conflict arises, and examples of disqualifying conflicts in various jurisdictions.

Description

When an insurer agrees to defend its policyholder under a reservation of its right to later litigate or deny coverage, a particularly delicate and dynamic tripartite relationship is created. Everyone involved in this relationship needs to be aware of conflicts and potential conflicts of interest, and sometimes determine how to use them to their advantage.

What constitutes a conflict within the context of the tripartite relationship is often hotly contested. The case law continues to develop and no less than 50 American jurisdictions have issued rulings on these important issues.

An insurer's reservation of rights will necessitate panel counsel to evaluate many ethical duties: undivided loyalty (Rule 1.7), disclosure (Rule 1.4), confidentiality (Rule 1.6), and limitations on compensation from insurers (Rule 1.8). At the same time, policyholders need to make a determination of whether the convenience and known competence of panel counsel is outweighed by the advantages of independent counsel.

Listen as this esteemed panel examines the scope of the appointed defense counsel's ethical obligations, discusses the insured's right to independent counsel, reviews emerging issues in independent counsel litigation, and offers best practices for policyholders and insurers. 

You can sign up here.  https://www.barbri.com/course/professional-development/CLE/ethics-of-insurance-defense-under-ror-model-rule-17-conflict_2026-04-22

Feel free to use and share this code for 50 percent off tuition:

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If this program remains cost-prohibitive for you even at 50 percent off, please reach out to me.  I have a limited number of free tuition spots, first-come, first-served.  

Massachusetts Superior Court issues giant 93A judgment against insurer for ignoring the facts of the underlying case

Every few years, a decision comes down against an insurance company for breach of Mass. Gen. Laws ch. 93A that makes the plaintiffs' personal injury bar chortle with glee and insurance defense attorneys wipe their brow and say, thank goodness that wasn't my case.  The recent Massachusetts Superior Court decision in Peerless Insurance Co. v. Rooney is one of those, with a judgment against the insurance company of $90,771,612.00 plus attorney's fees.  But although this case seems like a crazy 93A verdict, the yikes factor here is really the underlyling judgment of $45.49 million including prejudgment interest.  Finding that she had no choice under ch. 93A, the judge ordered that the insurer pay double that judgment for its bad faith.  If the underlying judgment had been $100,000, would anyone take note of the $200,000 ch. 93A judgment?  The analysis would be exactly the same.  

The accident, and factual development during the underlying lawsuit

A consortium of contractors called JV entered into a contract to repair the Longfellow Bridge.  John Rooney worked as a mason for United Stone, JV's masonry subcontractor.  He was injured on the job on May 9, 2014, resulting in nine surgeries including cervical discectomies and cervical fusions.  He sued JV in 2015, alleging various negligence counts.  

Peerless Insurance Company issued a primary policy to JV. Liberty Mutual Fire Insurance Company and Ohio Casualty Insurance Company issued umbrella policies.  The court refers to the insurers together as "Liberty." 

Very early in the case Liberty understood that Rooney's injuries were causally related to the accident.  As to liability, Liberty's independent investigator wrote that Rooney had fallen off a plank that he himself had placed ("the single plank theory").  Liberty first concluded based on this information that there was only a 25 percent chance that Rooney would prevail at trial.  

Facts developed during discovery that showed that this initial assessment was incorrect.  There was no support for the single plank theory.  Rooney had fallen through a wide gap in scaffolding.  JV was responsible for safety at the job site.  It was supposed to inspect the scaffolding daily but failed to do so.  Rooney had complained prior to the accident of the unsafe conditions.

These facts were never conveyed from the lower level adjuster at Liberty to senior management.  As a result, Liberty continued to overestimate JV's chances of success at trial and to undervalue the claim.  

The jury awarded Rooney $26.6 million.  Judgment with interest entered in the amount of $45.49 million.  

Post-trial settlement offer and 93A demand letters

A month later, on September 15, 2021, Liberty offered in settlement the aggregate policy limits of $19.5 million.

On April 8, 2022 and June 27, 2024, Rooney sent 93A demand letters to Liberty.  Liberty did not make an offer of settlement.  

The 93A lawsuit

Liberty filed a lawsuit seeking a declaration that it had not violated Mass. Gen. Laws ch. 93A.  Rooney counterclaimed. 

Failure to make a reasonable investigation 

Rather than jumping straight to whether Liberty failed to effectual prompt, fair, and equitable settlement of a claim in which liability had become reasonably clear, the court first looked at a different section of Mass. Gen. Laws ch. 176D, requiring an insurer to conduct a prompt and reasonable investigation.  The court noted that this requires an insurer to "take basic steps toward obtaining an independent or neutral assessment of potential fault."  An insurer is not permitted to "cherry-pick facts favorable to it or disregard unfavorable evidence, and, instead, has to assess the evidence objectively."  Liability arises when, if an adequate investigation had been conducted, liability would have been reasonably clear.  

The court held that Liberty failed to make a reasonable investigation.  

Failure to make an offer of settlement when liability was reasonably clear

The court held that when liability is reasonably clear, an insurer must make an offer of settlement even if there are disputes as to comparative fault or the extent of damages.  Liability can be reasonably clear well before a verdict or judgment resolves every contested issue.  An insurer cannot turn a "blind eye" and fail to credit or give appropriate weight to readily available information related to liability while relying on defense counsel's trial strategy and assessment of trial risk.  The insurer is obligated to conduct a neutral assessment of liability separate from defense counsel's litigation strategy.  

Liability can be reasonably clear even if there are other potential tortfeasors or the possibility of comparative negligence.  

When liability is reasonably clear, an insurer must extend a reasonable settlement offer, even if the plaintiff would not accept that offer.  

The court held that the standard for whether liability is reasonably clear is not whether "no reasonable insurer would have failed to settle," as articulated in Hartford Casualty Ins. Co. v. New Hampshire Ins. Co., 417 Mass. 115 (1994).  Rather, the standard is set forth in Demeo v. State Farm Mut. Auto. Ins. Co., 38 Mass. App. Ct. 855 (1995) as "whether a reasonable person, with knowledge of the relevant facts and law, would probably have concluded, for good reason, that the insured was liable to the plaintiff."  The court held, however, that the two standards are essentially the same.  Under the Hartford test, once liability is reasonably clear, "no reasonable insurer, acting in good faith, would fail to make a prompt, fair, and equitable offer of settlement.  No reasonable insurer would knowingly violate chapter 176D (and face the risk of significant punitive damages) by perpetrating litigation where there is no legitimate dispute  to the insured's fault or the scope of the claimant's injury."  

Based on that standard, Liberty failed to make an offer of settlement after liability was reasonably clear.  JV's liability became obvious during discovery.  Although there was a comparative negligence defense, defense counsel never advised Liberty that a jury would likely find Rooney more than 51 percent liable for the accident.  

Failure to adopt and implement reasonable standards for the investigation of claims

The judge rejected Rooney's claim that Liberty had failed to adopt and implement reasonable standards for the investigation of claims.  She held that Liberty trained its claims professionals and had written protocols and procedures.  The failure in this case was the adjusters', but it did not stem from a lack of protocols and procedures.  

Liberty's violation of ch. 93A was willful and knowing

The court held that it "cannot conclude otherwise" than that Liberty’s conduct was willful or knowing.  "Liberty deliberately closed its eyes to known and available information, in order to hold fast to its premature, yet somehow cast in concrete, theory of the case."

The court held that the question was not "whether, on the roll of the dice, a defense verdict was possible.  . . .  The question does not depend on trial counsel's assessment of the potential jury verdict.  If the possibility of a defense verdict -- whether forty percent or twenty-five percent-- was alone sufficient to avoid making a reasonable offer of settlement when liability was reasonable clear, no insurer would settle. Ever.  Jury trials are, by definition, unpredictable."

93A damages

I wrote here a few weeks ago about Gretzky v. AmGuard, 2025 WL 3140762 (D. Mass. 2025) (unpublished), in which the United States District Court for the District of Massachusetts held that single damages under ch. 93A is lost interest, not the amount of the underlying verdict.  I wrote that in that case the measure of damages seemed to be based on the timing of the 93A demand letter, which was sent after the insurer had paid its policy limits after the verdict.

The court in Rooney seems to disagree.  The court held that single damages under ch. 93A is always lost interest, but that where damages are multiplied because the violation was willful or knowing, the damages to be multiplied is the underlying judgment.  Although the court does not provide a complete analysis, its method could actually result in a larger award.  Liberty should be liable for the trial verdict up to the policy limit as actual damages, lost interest as 93A single damages, and double the entire trial verdict as 93A damages.   

The judge ruled that, given the size of the underlying judgment, an award of double damages resulted in a "grossly excessive punitive damages award . . . far in excess of the goals the statute is designed to achieve."  However, the statute and controlling precedent offer no discretion.  She issued an award of $90,971,612 plus attorney's fees.  

What happens next 

Entry of judgment has been stayed pending a determination of attorney's fees, which means that the clock for Peerless to file an appeal has not yet begun to run.  

Takeaways

There are number of important points in this 68 page decision, but from the point of view of an insurance litigator I'll focus on the relationship between the insurer and insurance defense counsel.

The decision carefully outlines what happened in each step of the underlying litigation, including communications between insurance defense counsel and the insurer.  At one point, insurance defense counsel asked his supervisor if the insurer was reviewing his reports, because it continued to rely on old analyses.  The decision also states at various points that the insurer should not rely only on communications from defense counsel, who may be biased in favor of the client, and that the insurer should instruct defense counsel to provide more information.  

From a practical standpoint, that's an instruction that goes both ways.  Insurance defense counsel has an obligation to make sure that an insurer is receiving the message they are sending.  The rules of tripartite relationship (sorry for jargon -- this term means that insurance defense panel counsel fully represents both the insurer and the insured) means that insurance defense counsel does not dictate settlement strategy and needs to be careful not to back the insurer into a corner.  But if you're insurance defense counsel and you've sent a written report to an adjuster that you're concerned is not being read, it's time to pick up the phone.  

Update: webinar is being rescheduled. I'm moderating a webinar on insurance policy interpretation on Tuesday, January 22, 2026 at 1 PM; discount codes available

Update:  One of the other panelists had an emergency, so this webinar is being rescheduled.  

This is a full description of the webinar: 

Insurance Policy Interpretation: Recurring Issues, Ambiguities, Exclusions, Plain Meaning, Burdens of Proof, and More

This CLE webinar will discuss the interpretation of some of the most fiercely and frequently litigated words and phrases in insurance policies in the context of coverage disputes. The program will review the rules for construing insurance policies with respect to ambiguities, exclusions, plain meaning, burdens of proof, and more, and then consider whether these rules are evolving to produce unexpected coverage decisions that are changing insurance law. The speakers will offer both insurer and policyholder perspectives. 

Description 

Resolving coverage disputes and interpreting policies requires applying both traditional principles of contract interpretation and unique insurance-related rules of construction about ambiguities, exclusions, reasonable expectations, unconscionable advantage, illusory coverage, duty of utmost good faith, and much more. Notwithstanding that many policies have standard language and phraseology, policyholders, courts, and insurers often have difficulty ascertaining a policy's plain meaning in a given factual or procedural context, leading to seemingly inconsistent outcomes and unpredictability. 

Insurance policies are long, complex, and labyrinthine documents that may not have been precisely drafted for a variety of reasons. Coverage can turn on the meaning of a single word or phrase, perhaps located paragraphs or pages away from the main provision. Some words and phrases get debated and interpreted over and over: arising out of, because of, connected or related to, accident, any, an, of, and for are just a few examples. As courts tweak or modify interpreting policies, the law can evolve about what is or is not covered under particular language. 

Listen as this accomplished panel of insurance coverage attorneys reviews the rules for policy interpretation, discusses frequently litigated issues in the policy language, and offers insights into whether the law is evolving with respect to these often-disputed provisions.

You can sign up here.   https://www.barbri.com/course/professional-development/cle/insurance-policy-interpretation-recurring-issues-ambiguities_2026-01-13   

Feel free to use and share this code for 50 percent off tuition:

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If this program remains cost-prohibitive for you even at 50 percent off, please reach out to me.  I have a limited number of free tuition spots, first-come, first-served.