AMY NEWCOMB v. ERIC O’BRIEN and others [Note 1]

COVEN, J. After a jury-waived trial on the claim of unfair insurance settlement practice, judgment entered in favor of defendant Plymouth Rock Assurance Corporation. [Note 2] The plaintiff has appealed, asserting that the trial judge committed error in basing the decision on acts occurring after the defendant’s receipt of the plaintiff’s G.L. c. 93A demand letter, and erred in determining that liability was not reasonably clear. The plaintiff also requests that this Division hold, as a matter of law, that upon receipt of a demand letter based on unfair claim practices, an insurer must tender its best and highest offer based on the information then known. We affirm. [Note 3]

We summarize the written findings of the trial judge. The plaintiff was involved in a motor vehicle accident with another vehicle on September 26, 2010. The defendant provided insurance coverage to the operator of the other vehicle. An insurance adjuster for the defendant was assigned to the case by September 29, 2010, and within one week, it was determined that the defendant’s insured was at fault. The adjuster made no conclusion, however, on the nature and extent of the plaintiff’s injuries. Information was obtained by the adjuster concerning the plaintiff’s damages for purposes of evaluation and settlement.

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The plaintiff sustained strains to her neck and back and bruises to her arms and abdomen where she came into contact with her seat belt, steering wheel, and dashboard. As a result of the accident, the trial judge found that the plaintiff was totally disabled for two weeks and partially disabled for sixteen weeks, during which the plaintiff made improvements with treatment. There was no permanent injury, and the plaintiff reached an end result by the end of January, 2011.

A demand package was sent to the adjuster by March 10, 2011. The demand did not contain a statement of what the plaintiff would accept as a settlement figure. The adjuster responded with an offer of $1,600.00, although the adjuster had determined that the plaintiff’s claim was valued between $1,600.00 and $4,200.00. The plaintiff had received personal injury protection benefits in the amount of $6,608.08 from Safety Insurance.

The offer was rejected on May 5, 2011, in a telephone conversation, and a demand was then made for $8,850.00 for a release of all claims. During the conversation, the plaintiff’s counsel informed the adjuster about contusions and temporary disfigurements sustained by the plaintiff to her abdomen, chest, and arms as a result of contact with her seat belt and steering wheel. Photographs of the injuries were provided on May 9, 2011, and on July 18, 2011, the adjuster increased the settlement offer to $2,000.00. The offer was rejected on October 4, 2011, during a telephone conversation in which a claim was raised that the plaintiff was unable to attend her classes at a cosmetology school because of her injuries.

A G.L. c. 93A letter was sent on December 2, 2011, asserting that the defendant’s offers were so inadequate as to constitute an unfair insurance practice claim when liability was reasonably clear. In the G.L. c. 93A letter, included as part of the appendix, a demand of $20,000.00 was made. The defendant’s insurance adjuster responded on December 23, 2011. The response did not offer any amount of money, although the $2,000.00 offer was not withdrawn. Instead, the adjuster asked for additional information concerning the plaintiff’s lost earning capacity due to the plaintiff’s withdrawal from school. This action was filed on February 28, 2012.

The trial judge made additional findings concerning postfiling actions. On August 27 and October 23, 2012, the adjuster requested additional support for lost earning claims. There was no response. After attending a deposition of the plaintiff, the adjuster increased the defendant’s settlement offer to $4,000.00 to satisfy all claims against the defendant and its insureds. This offer, made over the telephone, was rejected, and the plaintiff’s counsel advocated for a larger payment. The trial judge found that the plaintiff’s counsel did not communicate a willingness to accept anything less than the policy limit of $20,000.00.

The defendant offered to arbitrate the plaintiff’s claim as long as the plaintiff agreed that $20,000.00 would be the maximum recovery. The proposal was rejected, but later the plaintiff essentially agreed to the terms, but the defendant rejected the arrangement. On August 20, 2013, the parties met with a mediator. The plaintiff walked out of the mediation, however, when the defendant refused to meet the plaintiff’s settlement demand of $17,000.00 and offered only $4,500.00. The mediator, who was experienced, suggested to the parties that a jury would unlikely return a verdict greater than $10,000.00.

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On September 5, 2013, the adjuster offered to settle the underlying tort for $8,000.00. The offer was rejected. On October 11, 2013, the plaintiff accepted the defendant’s offer to settle the underlying claim for $11,000.00.

In concluding that the defendant did not commit an unfair settlement practice, the trial judge found that the defendant

“consistently made offers that were within its internal range of value for the plaintiff’s claims, that reflected a good faith evaluation of the then substantiated claims by the plaintiff. When plaintiff’s counsel submitted information that substantiated claims for disfigurement and loss of earning capacity, [the adjuster] updated her internal range of value and increased the defendant[’s] . . . offers to settle. Under the circumstances where the plaintiff’s demands for settlement consistently exceeded the high end of the defendant[’s] . . . internal valuation of the claims, it was not surprising that the defendant[’s] . . . offers would be at the low end of its internal range. This constituted fair negotiation of a claim whose value was in dispute.” [Note 4]

The trial judge also noted in his calculus that there had not been any unfair settlement practice by the defendant; the defendant agreed to mediation, but the plaintiff walked out; the plaintiff made demand for the policy limits; and when the parties settled, the defendant did not demand a release of the plaintiff’s claim against it. Additionally, the trial judge found that the plaintiff’s lost earning capacity claim was complicated by the plaintiff’s choice not to work in the cosmetology field. Ultimately, the trial judge concluded that at each stage of the claim, the defendant made fair offers as information and support for claims became available.

General Laws c. 176D, § 3(9)(f), gives rise to an unfair insurance practice claim where an insurer fails “to effectuate prompt, fair and equitable settlements of claims in which liability has become reasonably clear.”“Liability, as the word is used in this context, ‘encompasses both fault and damages.’”O’Leary-Alison v. Metropolitan Prop. & Cas. Ins. Co., 52 Mass. App. Ct. 214, 217 (2001), quoting Clegg v. Butler, 424 Mass. 413, 421 (1997). In evaluating whether an unfair settlement practice was committed, the starting point is on what was known to the insurer at the time the claim of an unfair practice was asserted through a G.L. c. 93A letter and response. Van Dyke v. St. Paul Fire & Marine Ins. Co., 388 Mass. 671, 677 (1983). Contrary to the plaintiff’s position, in evaluating whether an insurer violated G.L. c. 176D, § 3(9), and G.L. c. 93A, if liability is not then reasonably clear, the duty of the insurer is to make a reasonable offer when liability, expressed in fault and damages, thereafter becomes clear. Hopkins v. Liberty Mut. Ins. Co., 434 Mass. 556, 566 (2001). In other words, postdemand actions of an insurer based upon postdemand information may be evaluated in the calculus of whether an unfair settlement practice occurred based upon a claim of an insurer’s failure to offer a settlement when liability becomes reasonably clear postdemand. J.F. Comerford & M.S. Coven, Insurance Law § 12.8, at 522 (2013).

Factually, the trial judge found that the defendant’s response to the plaintiff’s demand letter was not unfair because the defendant sought additional information

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concerning the plaintiff’s earning capacity. This determination is a question of fact, and we cannot conclude, as a matter of law, that the defendant committed an unfair settlement practice in not extending an increased offer when it was without knowledge as to the extent of the plaintiff’s lost earning capacity.

For the same reasons, we find no merit to the claim that the trial judge erred in not finding that liability was clear. We acknowledge that the defendant’s initial offer of $2,000.00 amounted to just over $111.00 per week for the eighteen weeks of impairment suffered by the plaintiff. But the plaintiff inserted into the claim of damages lost earnings. [Note 5]

It is well settled that this Division may not disturb a judge’s findings of fact in a G.L. c. 93A claim unless those findings are clearly erroneous or there exists an error of law. Kendall v. Selvaggio, 413 Mass. 619, 620 (1992); Marlow v. City of New Bedford, 369 Mass. 501, 508 (1976).

Judgment affirmed.