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."
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.
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