PIPER CAFE, INC. & others [Note 1] vs. COMMERCIAL UNION INSURANCE COMPANIES.

CUTTER, J. On May 10, 1983, a fire, possibly incendiary in origin, took place in a commercial building (the locus) in Springfield owned by Calabrese and Peluso (see note 1). Piper Cafe, Inc. (Piper), a Massachusetts corporation of which Calabrese and Peluso were the principal shareholders, had operated a restaurant known as Gabriel's, under a rental arrangement from themselves, on the first floor and part of the second floor of the locus. The locus and its contents were insured by Piper,

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Calabrese, and Peluso (collectively the plaintiffs) against fire and loss of earnings by Commercial Union Insurance Companies (CU).

There appears to be no dispute that the policy contained the provisions required by G. L. c. 175, Section 99, Twelfth, as amended through St. 1981, c. 718, Sections 1 & 2, to be set out "substantively" in the standard form of Massachusetts fire policy. Included was the following paragraph: "In case of loss under this policy and a failure of the parties to agree as to the amount of loss, it is mutually agreed that the amount of such loss shall be referred to three disinterested [persons] . . . and the award in writing by a majority of the referees shall be conclusive and final upon the parties as to the amount of loss or damage, and such reference, unless waived by the parties, shall be a condition precedent to any right of action in law or equity to recover for such loss . . ." (emphasis supplied).

The plaintiffs promptly notified CU of the loss and about October 3, 1983, submitted to CU written proof of loss. [Note 2] CU rejected this claim of loss about November 1, 1983.

After significant negotiations, the plaintiffs brought an original complaint in the Superior Court, the progress of which probably can best be described by the following chronology:

(a) December 22, 1983. Counsel for the plaintiffs sent what purported to be a demand letter under G. L. c. 93A in behalf of all the plaintiffs to recover damages caused by the fire.

(b) August 3, 1984. The original complaint was filed asserting claims of unfair practices under G. L. c. 93A, Section 2 and c. 176D, Section 3(9).

(c) August 27, 1984. CU filed a motion for a more definite statement, or in the alternative, for dismissal.

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(d) November 5, 1984. A hearing on the motion mentioned in subparagraph (c) supra, was held. As a consequence, discussions between counsel took place.

There seems to be no serious dispute that a purely oral agreement was reached in November, 1984, as to the amounts of the plaintiffs' claims (in which the amount of business income loss, see note 2, supra, was reduced to $18,000 from the claimed $25,000). There was, however, substantial difference of understanding by the plaintiffs' counsel and CU's counsel whether there was then an oral arrangement that a written agreement would be filed reciting the amounts upon which oral agreement had been reached. [Note 3] The chronology continues:

(e) December 6, 1984. CU's attorney sent to the plaintiffs' attorney for signature a document entitled "Agreement as to Loss," reflecting the amounts of loss stated in the oral agreement. This was followed on January 11, 1985, by a letter from CU's counsel to the plaintiffs' counsel enclosing a slightly revised "Agreement as to Loss."

(f) April 23, 1985. After further correspondence between counsel, CU's counsel filed a motion to dismiss or, in the alternative, for summary judgment. A hearing on this motion, based on the plaintiffs' alleged failure to comply with G. L. c. 175, Section 99, quoted above took place before Superior Court judge no. 1. On May 31, 1985, that judge ruled that (with the consent of the plaintiffs' counsel) Piper's claim could be dismissed without prejudice. That

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judge denied dismissal of the claim of Peluso and Calabrese. [Note 4]

(g) June 24, 1985. CU denied the plaintiffs' claim under the policy.

(h) October 11, 1985. CU's answer and counterclaim against Calabrese and Peluso was filed. [Note 5]

On February 13, 1987, the plaintiffs moved to amend their complaint (1) to add Piper once more as a plaintiff and (2) to substitute a whole new complaint. Counts 2 and 3 of this new complaint were for breach of contract. Count 1 was based on c. 93A. This motion to amend, in view of CU's somewhat slow-moving proceedings, properly was allowed by Superior Court judge no. 3 on March 5, 1987. CU then on March 16, 1987, filed a motion for partial summary judgment supported by the affidavit of its counsel. Superior Court judge no. 4, despite the opposition of the plaintiff's counsel, on April 6, 1987, issued a memorandum and order allowing CU's motion for partial summary judgment and ordering that counts 2 and 3 of the amended complaint be dismissed. On April 14, 1987, interlocutory summary judgment pursuant to Mass.R.Civ.P. 56, 365 Mass. 824 (1974), was entered, with the approval of Superior Court judge no. 4. [Note 6]

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1. The principal question in this case really comes down to whether an oral agreement about the amount of an insured loss (even if not embodied later in a written memorandum) will satisfy the pertinent language of G. L. c. 175, Section 99, Twelfth, in avoiding arbitration as a condition precedent to an insured's initiation of an action against an insurer. The language of Section 99 does not decide the question with desirable clarity. We examine (a) the language of Section 99, Twelfth, quoted in the second paragraph of this opinion beginning with the words (emphasis supplied), "In case of loss under this policy and a failure of the parties to agree as to the amount of loss," and (b) the language of the next paragraph of Section 99, Twelfth, set out in the margin. [Note 7] It is surprising that this issue has not been decided over the many years Section 99 has been in effect.

In many places in Section 99 (as periodically revised) successive Legislatures have shown that, when they wanted some document to be in writing, they knew how to express that intention. It thus is of some significance that no such requirement is stated directly with reference to the words "failure of the parties to agree." See Beeler v. Downey, 387 Mass. 609, 616 (1982);

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First Natl. Bank v. Judge Baker Guidance Center, 13 Mass. App. Ct. 144, 153 (1982), where it was said, "Where the Legislature has . . . employed specific language in one paragraph . . . [of a] statute . . . but not in others which treat the same topic . . . the language should not be implied where it is not present."

Arguments have been made in the briefs and orally that, on the facts of some of the relevant cases, agreement about the amount of losses had been in fact expressed in writing at some stage of the case. In Molea v. Aetna Ins. Co., 326 Mass. 542, 547 (1950), however, it was said, "While the parties have all argued the question of waiver as the issue, we believe that strictly speaking the issue is not one of waiver but rather whether . . . the parties agreed . . . upon the amount of loss" (emphasis supplied). In the same case (at 548), it was said, quoting from Union Inst. for Sav. v. Phoenix Ins. Co., 196 Mass. 230, 236 (1907), "A jury has often been permitted to infer a waiver of a special [insurance company] defence . . . from very slight evidence. But we are not aware of any case in which such an inference has been allowed . . . without proof of some conduct of the company bearing upon the particular defence."

We perceive no reason why "slight evidence" of a waiver (which could be oral or by company action not in writing) should be given more weight than strong indication of an oral agreement as to the amount of the loss. See the Union Inst. case at 236. See also Alba v. Fireman's Fund Ins. Co., 295 Mass. 80, 84 (1936). Such evidence of the existence of an oral agreement we observe in CU's attorney's withdrawal of his motion despite his accompanying letter to which reference already has been made. See note 3, supra.

In United States v. Raphelson, 802 F.2d 588, 592 (1st Cir. 1986), on facts somewhat similar to those here presented, it was said, "The law [under Section 99] is well settled that if the insurer and the insured agree to the amount of loss then the arbitration reference provision . . . does not apply." Representations by the insurer in that case "that it would pay its appraised figure

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did not require a formal acceptance by [the insured]" (emphasis supplied). [Note 8]

We think that this whole record shows in fact there was at least an oral agreement between the plaintiffs and CU as to the amount of loss. Such an oral agreement (unless subject to an integral explicit agreement that it would not become effective until reduced to writing) would be sufficient under Section 99 (see note 7, supra) to permit bringing this action. Whether the oral agreement contained any such express conditions would be at least a mixed question of law and fact sufficient to preclude summary judgment.

2. Superior Court judge no. 4, in view of our decision in the final paragraph of part 1 above must be regarded as having misapprehended the effect under the relevant parts of c. 175, Section 99, of an unconditional oral agreement as to the amount of loss. See the second paragraph of this opinion and note 7, supra. He may merely have assumed (not unreasonably in view of the state of the decisions at that time) that a written agreement as to the loss was required. This case is one where the judge's misapprehensions about the law and the parties' disagreements about the terms of their agreement seem to us sufficiently basic to have required Superior Court judge no. 4 to deny summary judgment. [Note 9]

3. Other questions raised in the briefs and at the arguments are discussed in the margin. [Note 10]

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4. We remand the case to the Superior Court for trial on the issues (preferably to be submitted to the jury on special questions suitable to develop answers on these issues) of (1) whether CU is liable on the policy (as the amount of loss already has been determined) and (2) whether the agreement as to the amount of loss had been made expressly subject to a stated, explicit condition that the oral agreement would not become effective unless and until reduced to writing, and also (3) for any further appropriate proceedings consistent with this opinion.

So ordered.