RUFUS W. DAVIS vs. ALLSTATE INSURANCE COMPANY & another [Note 1]

GREANEY, J. We examine in this case (decided in the Superior Court on a motion for summary judgment and brought here by our granting the plaintiff's application for direct appellate

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review) the obligation of Allstate Insurance Company (Allstate), to pay post-judgment interest on the recovery obtained by the plaintiff, Rufus W. Davis, in his personal injury action against the defendant Robert Allard. The judgment for Davis embodied the actual damages that had been awarded by the jury together with prejudgment interest on those damages, and it exceeded the limits of coverage available to Allstate's insured. We conclude that Allstate was liable for post-judgment interest.until it unconditionally offered to pay the plaintiff the limits of its policy. We also conclude that there must be further proceedings in the Superior Court to decide whether Allstate committed any violations of G. L. c. 93A.

The undisputed material facts and procedural background may be summarized as follows. On March 11, 1982, the plaintiff sustained injuries when a van driven by Allard struck him as he crossed Route IA in Revere, outside Wonderland Greyhound Park. The van that Allard was operating at the time was owned by Edward Poulin and was insured by Allstate pursuant to the standard Massachusetts automobile insurance policy issued in that year. The policy provided indemnity in the amount of $25,000 for injuries to one person as a result of one accident. The policy contained provisions setting forth Allstate's duty to defend and right to settle, and its obligation to pay supplemental costs (in addition to the policy limits). We shall set forth those provisions in full later in this opinion.

In 1984, the plaintiff commenced an action in the Superior Court against Allard and others [Note 2] to recover for his injuries, and Allstate defended Allard and its insured in the lawsuit. At some time during, or prior to, a pretrial conference on March 8, 1990, Allstate communicated to the plaintiff's attorney, an oral offer of the $25,000 policy limits in exchange for the plaintiffs agreement to release Allard from all liability relating to the accident. [Note 3] The plaintiff rejected the offer, and the case went to trial.

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On October 4, 1990, a jury returned a verdict in favor of the plaintiff against Allard and one codefendant, Westwood Group (doing business as Wonderland Greyhound Park) (Westwood), in the amount of $224,952. [Note 4] Judgment entered on October 18, 1990, in an amount slightly in excess of $400,000 (the jury's award of damages plus prejudgment interest). On October 20, 1994, the Appeals Court affirmed the judgment against Allard, Davis v. Allard, 37 Mass. App. Ct. 508 (1994), and Allstate did not seek further appellate review. [Note 5]

On July 31, 1995 (shortly after this court had decided the appeal of Westwood), the plaintiff made a written demand on Allstate for payment of the $25,000 policy limits plus $228,236.29 in post-judgment interest that had accumulated from the date of entry of judgment. Allstate informed the plaintiff that the matter had been forwarded to its New Hampshire office. On February 26, 1996, the plaintiff sent Allstate a written demand, pursuant to G. L. c. 93A, s. 9, for payment of the "amount of the underlying judgment of $224,952 [sic], plus accrued interest since October 18, 1990." In response, Allstate informed the plaintiff that it was not obligated to pay interest that accrued after the initial offer to settle made by Allstate and rejected by the plaintiff, but that it would pay the plaintiff, as "our final offer," $25,000, plus $18,000 in interest that, according to Allstate's calculations, had accrued up until the pretrial offer of March, 1990. Despite this offer, on April 26, 1996, Allstate sent the plaintiff a check for $25,000 (with no interest included), marked "final settlement of any and all claims arising from bodily

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injury caused by [the accident]." The plaintiff did not indorse or negotiate this check. It was not until July 1, 1996, approximately two weeks after the plaintiff filed this action against Allstate, that Allstate issued an unconditional draft in the amount of $25,000 to the plaintiff.

The plaintiff's multi-count complaint sought, insofar as relevant here, a declaratory judgment under G. L. c. 231A that Allstate was liable for the post-judgment interest under the terms of its policy and by reason of G. L. c. 175, s. 113A, [Note 6] and a determination that Allstate violated G. L. c. 93A by its insistence on conditioning payment of the policy limits on a release of the plaintiff's claims. The judge entered summary judgment for Allstate. The judge concluded that (1) under the express terms of the policy, Allstate had no duty to pay post-judgment interest that accrued after its conditional pretrial settlement offer of the policy limits; (2) G. L. c. 175, s. 113A, requires written notice only when an insurer eliminates or reduces coverage provided by a policy, and does not apply to settlement offers; and, (3) under Lazaris v. Metropolitan Prop. & Cas. Ins. Co., 428 Mass. 502, 504 (1998), an insurer does not violate G. L. c. 93A when it conditions payment of policy limits on a release by the claimant, even when, as in this case, liability is undisputed and damages clearly exceed the available insurance.

1. The plaintiffs argument, in substance, is that Allstate is liable for post-judgment interest on the judgment, computed from the time of entry of judgment in October, 1990, until the time that Allstate tendered the unconditional payment of the policy limits of $25,000, in July, 1996. He asserts that an offer to pay must be both in writing and must be made after a judgment is entered, to toll the accrual of the post-judgment interest that Allstate was obligated to pay. Allstate argues (and the judge agreed) that Allstate offered, and paid, the plaintiff all that was due him

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because, under the terms of its policy, Allstate was not required to pay post-judgment interest after its initial prejudgment offer of the policy limits, notwithstanding the fact that Allstate's offer was expressly made conditional on a release by the plaintiff of his claims. [Note 7]

Neither the plaintiff nor Allstate has furnished the correct analysis. The judge correctly determined, and the plaintiff does not now persuasively argue otherwise, that there is nothing in G. L. c. 175, s. 113A, that required Allstate's settlement offer to be in writing. Section 113A does require that reductions or eliminations in coverage to a motor vehicle liability policy be memorialized in a printed notice attached to each policy. There is a clear difference, however, between a reduction of the coverage provided by a policy and an offer to settle a claim that is covered by the policy. As the judge correctly noted, "The former alters the insurance contract; the latter operates within it." In addition, nothing in the terms of the policy require that an offer to settle be in writing. The plaintiff points to the policy provision entitled "Our Agreement," which specifies that "[o]ral promises or statements made by you or our agent are not part of this policy." This provision, however, is comparable in substance and intent to G. L. c. 175, s. 113A, and cannot fairly be interpreted to require that every offer to settle be made in writing. [Note 8]

Allstate's reasoning, on the other hand, is also inaccurate.

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Allstate asserts that our decision in Lazaris v. Metropolitan Prop. & Cas. Ins. Co., supra, controls this case. In Lazaris, we held that, in settlement discussions, an insurer may condition payment of the policy limits on the plaintiff's execution of a release, even when liability is reasonably clear and damages exceed the limits of the policy. [Note 9] Id. at 505-506. Allstate reasons that its pretrial offer to pay the plaintiff the policy limits, conditioned on the plaintiff's release of all claims against its insured and Allard, constituted a valid offer under Lazaris, which, when rejected by the plaintiff, extinguished Allstate's liability for post-judgment interest. The Lazaris decision, however, dealt solely with a pretrial settlement offer, specifically, whether an insurance company violates G. L. c. 176D, s. 3 (9) (f), and G. L. c. 93A, by insisting that a claimant release all claims against its insured before it pays a claim. See id. at 502-503. Lazaris is not dispositive of the issue whether a pretrial offer to settle terminates an insurer's contractual obligation to pay post-judgment interest.

The correct analysis is based in the terms of Allstate's policy with its insured. We interpret these terms according to the "fair meaning of the language used, as applied to the subject matter." Bilodeau v. Lumbermens Mut. Cas. Co., 392 Mass. 537, 541 (1984), quoting Sav-Mor Supermarkets, Inc. v. Skelly Detective Serv., Inc., 359 Mass. 221, 226 (1971). The relevant policy terms are provisions 2 and 3 of the general provisions, set forth at note 7, supra. Fairly interpreted, these provisions together authorized and obligated Allstate, in this case, to:

(1) defend any lawsuit brought against its insured within the policy's coverage "even if [the lawsuit] is without merit";

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(2) settle any claim or lawsuit as it saw fit;

(3) terminate its duty to settle or defend by paying the claimant the maximum limits of coverage; and

(4) pay post-judgment interest until it offers to pay the limits of coverage.

The policy allowed Allstate, before trial, to attempt to settle the plaintiff's claim for the policy limits in exchange for a release by him of its insured and Allard. See Lazaris v. Metropolitan Prop. & Cas. Ins. Co., supra at 506. The plaintiff's refusal of Allstate's settlement offer required Allstate to defend its insured and Allard at trial. See Aetna Cas. & Sur Co. v. Sullivan, 33 Mass. App. Ct. 154, 158 (1992).

When the plaintiff prevailed and judgment entered, Allstate's obligations changed. It no longer was required to "defend" the action, namely, pursue an appeal, "even if [the action] [was] without merit." The action now had merit based on the jury's verdict establishing substantial fault on Allard's part and liquidating a large amount of damages that were incorporated, together with prejudgment interest, in a judgment. The plaintiff then became a judgment creditor, and he was entitled to have the "insurance money [in Allstate's policy] applied to the satisfaction of the judgment." G. L. c. 175, s. 113.

Allstate's decision whether to appeal the judgment was governed by the established rule that an insurer's duty to defend generally encompasses an obligation to appeal from an adverse judgment against its insured, but only if reasonable grounds exist to believe that the insured's interest might be served by the appeal. See Aetna Cas. & Sur Co. v. Sullivan, supra at 157 n.3; Chrestman v. United States Fid. & Guar Co., 511 F.2d 129, 130 (5th Cir. 1975); Truck Ins. Exch. of Farmers Ins. Group v. Century Indem Co., 76 Wash. App. 527, 533 (1995); Aetna Ins. Co. v. Borrell-Bigby Elec. Co., 541 So. 2d 139, 141 (Fla. Dist. Ct. App. 1989); 7C J.A. Appleman, Insurance Law and Practice s. 4688, at 200-201 (rev. 1979) (insurer "owes a duty to appeal in all instances where it appears the substantial interests of the insured may be served"); 14 G. Couch, Insurance s. 200.48, at 220-118 (3d ed. 1999) ("insurer's covenant to defend embraces

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the duty to prosecute an appeal from a judgment against an insured where there are reasonable grounds for appeal").

At this point, Allstate, under the express provisions of the policy, could either terminate all its responsibility to its insured and Allard by paying the plaintiff the policy limits, or it could pursue an appeal, knowing that it would be required to pay post-judgment interest until such time as it had, under the supplemental payments provision of the policy, "offered to pay [the plaintiff] up to the limits of coverage." If Allstate chose to appeal, as it did, it could still, in order to fulfil its continuing duty to its insured, have attempted to settle, conditioning payment of the $25,000 on the plaintiff's release of Allard or on the execution of some other suitable document acknowledging that Allard could no longer be pursued on any execution issued on the judgment.

Allstate did not make an unconditional offer to pay, and, consequently, by not doing so, and by continuing to control the litigation by pursuing an appeal, Allstate was responsible for the payment of post-judgment interest until such time as the terms of its policy were satisfied. The clear majority of courts, interpreting a standard interest clause in a motor vehicle liability insurance policy, have held insurers liable for post-judgment interest on the entire amount of the judgment, notwithstanding the fact that the policy limits may cover only a portion of the judgment. The United States Court of Appeals for the First Circuit, in Fratus v. Republic W Ins. Co., 147 F.3d 25, 29 (1st Cir. 1998), stated the majority view as follows:

"It may, at first, seem shocking to impose this immense obligation on [the insurer] for a failure to deliver a relatively small sum to the plaintiffs. Yet, the clear majority of modem courts that have interpreted a standard interest clause under similar circumstances have concluded that the policies mean what they say. . . .

"[Other] opinions not only apply the straightforward terms of the contracts, but produce sound policy. Compelling the insurer to pay all of the interest which accrues pending appeal protects the insureds, who may wish to pay the portion of the judgment in excess of policy limits

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and stop the tolling of interest, but whose lack of control over the litigation prevents them from doing so. . . . The rule also serves to protect plaintiffs from unreasonable delay on the part of insurers, or, as in this case, compensate them for such delays. The rule does not impose an unfair burden on insurers because they remain in control of both the tolling of interest and the litigation, and can fairly be expected to understand how the majority of jurisdictions interpret standard interest clauses." (Citations omitted.)

See Safeway Ins. Co. v. Amerisure Ins. Co., 707 So. 2d 218, 222-223 (Ala. 1997), and cases cited; Security Ins. Co. v. Houser, 191 Colo. 189, 192 (1976), quoting McPhee v. American Motorists Ins. Co., 57 Wis. 2d 669, 680 (1973) ("it is reasonable to impose the entire expense of accrued interest upon the insurer in view of the company's right to control the conduct of the suit and its power to escape liability for interest through the payment or tendering of its part of the judgment into the court"); River Valley Cartage Co. v. Hawkeye-Security Ins. Co., 17 111. 2d 242, 245-246 (1959); Powell v. TA. & C. Taxi, 104 N.H. 428, 431-432 (1963). Authoritative commentators on insurance law are also in accord. See 8A J.A. Appleman & J. Appleman, Insurance Law and Practice s. 4894.25, at 78-79 (rev. 1981) (that insurer should bear burden of all post-judgment interest is "the only fair result, inasmuch as the insurer has control of the litigation, and can make its election to appeal irrespective of the insured's desires in the matter"); 12 G. Couch, Insurance s. 170-43, at 170-59-170-60 (3d ed. 1998) ("courts . . . reason that where the insurer is in control of all litigation determining the liability of the insured and may stop the running of any interest against it by tendering, upon an adverse judgment, merely the amount for which it is liable under the policy, the insurer has in effect agreed, if it fails to make a timely tender, to pay all interest on the entire judgment in return for the surrender by the insured of his or her rights to effect a settlement"). [Note 10]

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The obligation described continued until such a time as Allstate, according to the policy's express language, "offered to pay" the policy limits to the plaintiff. Allstate's original conditional pretrial settlement offer did not constitute such an "offer to pay." In that proposal, Allstate did not offer to pay the plaintiff its policy limits, but instead offered him something substantially less, namely, payment of the policy limits in exchange for the plaintiff's release of claims that appeared to have merit both in terms of liability and damages.

Because the relevant policy language refers to an "offer to pay" rather than an "offer to settle," and makes no provision for the imposition of conditions on the offer to pay, Allstate was required to make an unconditional offer to pay the policy limits in order to terminate its express obligation to pay post-judgment interest. See Safeway Ins. Co. v. Amerisure Ins. Co., supra at 222-223 (prejudgment and post-judgment conditional offers did not terminate insurer's liability for post-judgment interest); Southern Gen. Ins. Co. v. Ross, 227 Ga. App. 191, 193 (1997) (conditional "tender" letter ineffective to stop accrual of post-judgment interest under policy because insurer not allowed to condition partial payment upon forgiveness of entire debt); Sours v. Russell, 25 Kan. App. 2d 620, 630 (1998); Cochran v. Auto Club Ins. Ass'n, 169 Mich. App. 199, 203 (1988) (insurer's offer to pay policy limits, conditioned on full release of defendants, insufficient to toll running of post-judgment interest); Balder v. Haley, 441 N.W.2d 539, 542 (Minn. Ct. App. 1989); Bossert v. Douglas, 557 P.2d 1164, 1167 (Okla. Ct. App. 1976); 8A J.A. Appleman & J. Appleman, Insurance Law and Practice, supra at s. 4894.25, at 98; 12 G. Couch, Insurance, supra at s. 170-S3, at 170-67-170-69. Cf. Insurance Co. of Pa. v. Giles, 196 Ga. App. 271, 273-274 (1990) (plaintiffs waived post-judgment interest obligation when insurer unconditionally offered to pay policy limits and delay in payment was due solely to plaintiffs' desire to ascertain amounts of respective judgments against multiple defendants). [Note 11] In this case, compliance occurred

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on July 1, 1996, when Allstate finally tendered unconditional payment of the $25,000 to the plaintiff.

Comment on the dissent is now in order. The dissent confuses the term "offer to settle" with the term "offer to pay." These are fundamentally different concepts in insurance law; the former contemplates payment in exchange for a release, the latter encompasses actual payment without a release. The majority rule, stated in both cases and commentary such as Appleman and Couch, set forth above, supports this view, as does the decision in Lazaris v. Metropolitan Prop. & Cas. Ins. Co., 428 Mass. 502, 505 (1998) ("There is a difference between making payment on a claim and settling that claim").

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It is true that the interpretation of an insurance contract is dependent on the particular language used in the policy. We are bound, however, to interpret policy language in accordance with the common meaning of the words used, from the viewpoint of a reasonable insured, in order to "best effectuate[] the main manifested design of the [insurer and insured]." Worcester Mut. Ins. Co. v. Marnell, 398 Mass. 240, 245 (1986); James J. Mawn Enters., Inc. v. Liquor Liab. Joint Underwriting Ass'n, 42 Mass. App. Ct. 417, 420 (1997). The dissent fails to follow this general principle. Although a valid "tender," when used in the legal sense, may imply more than a mere offer to pay, see Mondello V. Hanover Trust Co., 252 Mass. 563, 567 (1925) (offer to pay is "statement that the party has the money and is ready and willing to pay it"; tender requires "actual production of money"), for our purposes the terms are virtually synonymous. See Ryder & Brown Co. v. E. Lissberger Co., 300 Mass. 438, 445 (1938); Skillings v. Collins, 224 Mass. 275, 277 (1916); Cumnock v. Institution for Sav., 142 Mass. 342, 347 (1886) ("The distinction between an unconditional offer to pay a debt, accompanied with a present ability and intention to pay, and a formal tender, is certainly technical, and the tendency of the law undoubtedly is to ignore technicalities which serve no useful purpose"); New England Power Co. v. Riley Stoker Corp., 20 Mass. App. Ct. 25, 28 (1985), quoting comment 1 to s. 2-503 of the Uniform Commercial Code, I U.L.A. (Mastered. 1976) (tender is offer coupled with present ability to fulfil conditions resting on tendering party, followed by actual performance if other party shows himself ready to proceed). Both share the essential characteristic that they be without stipulations or conditions.

More to the point, the dissent's reasoning that an "offer to pay" means only an "offer to settle" does an injustice to the ordinary meaning of those terms. While in insurance parlance, an "offer to pay" may imply an "offer to settle," there is no question that the terms are commonly understood to have distinct meanings. Thus, where Allstate's policy sets forth its obligations to make payments to the insured (e.g., "[w]e will pay three kinds of benefits"; "we will pay reasonable expenses"; or "[a]dditional costs we will pay"), the term "pay"

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describes an unconditional tender of money owed. On the other hand, where Allstate's policy refers to a settlement of a claim (e.g., "right to settle" and "duty to settle") the term "settle" implies an offer of payment to the claimant that is expressly conditioned on some type of release for the insured. See Lazaris v. Metropolitan Prop. & Cas. Ins. Co., supra. Indeed, the use in Allstate's policy of both terms in tandem, as in "[o]ur duty to settle or defend ends when we have paid the maximum limits of coverage under this policy," illustrates that settlement and payment contemplate separate actions taken by the insurer, each triggering distinct consequences under the policy to the insured.

In keeping with this distinction, a reasonable insured would understand Allstate's promise to pay post-judgment interest (for the benefit of the insured, who is otherwise obligated to pay post-judgment interest) to terminate only after Allstate had offered to pay, with no conditions attached, the limits of the policy. Allstate's liability to the insured for the payment of post-judgment interest, according to the dissent, would end the first time Allstate offered to settle the case for the policy limits. This interpretation, however, renders Allstate's promise to the insured an empty promise, because, in every case where liability is both reasonably clear and in excess of the policy limits, an insurer like Allstate merely would extend an offer to the claimant to settle a case for the policy limits, thereby automatically shifting the burden of payment of post-judgment interest to the insured. This result would run directly counter to the purpose of the supplemental payments provision, "to protect the insured when the insurer decides to contest liability and a judgment in excess of the policy limits is returned against the insured." 12 G. Couch, Insurance, supra at s. 170:43, at 170-58. The insured, who, by clear language elsewhere in the policy, has relinquished control over the litigation to the insurer, and who may not wish to appeal, would be obligated to pay the interest that accrues on the judgment while the insurer pursues an appeal. [Note 12]

There is no evidence that the plaintiff acted unfairly or

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unreasonably to prolong litigation (and increase post-judgment interest due him by Allstate); if anything, the record reflects that Allstate pursued an appeal in the hope (a longshot at best) that Westwood might ultimately bear the responsibility to pay. Allstate could have avoided its contractual liability for the interest had Allstate paid the plaintiff the money it owed. The over-all effect of the dissent's interpretation of the supplemental payments provision adds language that is not in the supplemental payments provision of the policy to deny the benefits of Allstate's promise to its insured (which became a promise to the plaintiff by virtue of Allard's assignment of rights to the plaintiff). [Note 13]

2. We conclude that there must be further proceedings on the plaintiff's G. L. c. 93A claim.

In his February 26, 1996, G. L. c. 93A demand letter, the plaintiff asserted that Allstate's delay in responding to his July 31, 1995, demand for the policy limits plus interest, a demand made nine months after the judgment against Allstate's insured had become final, constituted a violation of various provisions of G. L. c. 176D, s. 3 (9), and, therefore, a violation of G. L. c. 93A. While there may be some adequate explanation for Allstate's delay, a fact finder must decide whether that delay constituted, in all the circumstances, an unfair or deceptive act or practice.

The other item identified by the plaintiff in his opposition to

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Allstate's summary judgment was that, after Allstate's offer of a proposed compromise, Allstate issued him a check for $25,000, on April 26, 1996, with a restrictive legend indicating that it was a "final settlement of any and all claims arising from" the underlying accident. This event occurred two months after the original letter, and, consequently, cannot be considered a separate item for purposes of G. L. c. 93A liability. See Clegg v. Butler, 424 Mass. 413, 423 & n.12 (1997); Bressel v. Jolicoeur, 34 Mass. App. Ct. 205, 211 (1993). See also Spring v. Geriatric Auth. of Holyoke, 394 Mass. 274, 287-289 (1985). Based on what has been said, there is to be a trial on the plaintiffs claim that Allstate violated G. L. c. 93A by unreasonably delaying payment of its policy limits with interest after the judgment became final.

3. Summary judgment is vacated. The case is remanded to the Superior Court for such proceedings on the complaint as may remain in dispute, including determination of the final amount of post-judgment interest owed by Allstate and determination of the G. L. c. 93A claim. When all remaining claims are decided, an appropriate new final judgment is to be entered.

So ordered.

SOSMAN, J. (concurring in part and dissenting in part). The court imposes on Allstate Insurance Company (Allstate) an obligation to pay post-judgment interest that is contrary to the express provisions of Allstate's standard automobile insurance policy. In my view, the judge below correctly granted Allstate's motion for summary judgment on the issue of its liability for post-judgment interest. The court's opinion also allows the plaintiff to pursue a G. L. c. 93A claim against Allstate based on its refusal to pay that disputed post-judgment interest. While I agree that the plaintiff should be allowed to proceed on a claim that Allstate's delay in paying the $25,000 policy limit violated G. L. c. 93A, Allstate did not violate G. L. c. 93A merely by litigating the issue of its liability for post-judgment interest.

1. Interpretation of insurance policy's interest provisions. Under the terms of its policy, Allstate agreed to pay post-judg-

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ment interest in any suit it defended, but that contractual obligation to pay interest would terminate once Allstate "offered to pay up to the limits" of the policy. At issue in this appeal is the meaning of the term "offered" as used in this policy, specifically, whether Allstate's offer to pay the policy limit in exchange for a release of its insured was sufficient to cut off its liability for post-judgment interest.

Courts interpreting policies with language identical to the Allstate policy have concluded that a conditional offer of the policy limit, such as that extended by Allstate, satisfies the policy requirement of an "offer to pay" the policy limit and terminates the insurer's liability for interest. See Overbeek v. Heimbecker, 101 F.3d 1225, 1227-1228 (7th Cir. 1996) (where interest obligation "ends once the insurance company offers to pay the policy limits," repeated offers to settle for policy limits precluded award of post-judgment interest); Farmers Alliance Mut. Ins. Co. v. Bethel, 812 F.2d 412 (8th Cir. 1987) (pretrial offers to pay $30,000 in exchange for release of insured satisfied policy requirement of "offer to pay"); Campbell v. Turner, 744 So. 2d 1261 (Fla. Dist. Ct. App. 1999) (offer of $10,000 policy limit in exchange for release was "offer to pay" that avoided liability for interest).

A contrary result has been reached in two cases. See Safeway Ins. Co. v. Amerisure Ins. Co., 707 So. 2d 218 (Ala. 1997); Sours v. Russell, 25 Kan. App. 2d 620, 629-630 (1998). [Note Dissent-1] Both relied on case law interpreting policy language requiring that the policy limit be "paid or tendered or deposited in court" in order to avoid interest. Safeway Ins. Co. v. Amerisure Ins. Co., supra at 220. Sours v, Russell, supra at 629-630. When the policy language requires the policy limit to be "paid or tendered

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or deposited into court" in order to terminate the insurer's liability for interest, a mere settlement offer of the policy limits does not qualify as "tender" or "payment." See Calder Race Course Inc. v. Illinois Union Ins. Co., 714 F Supp. 1183, 11881189 (S.D. Fla. 1989); Southern Gen. Ins. Co. v. Ross, 227 Ga. App. 191, 193 (1997); Cochran v. Auto Club Ins. Ass'n, 169 Mich. App. 199, 202-203 (1988); Balder v. Haley, 441 N.W.2d 539, 542 (Minn. Ct. App. 1989); Baughn v. Busick, 541 P.2d 873 (Okla. Ct. App. 1975); 12 G. Couch, Insurance s. 170.53, at 170-67 - 170-68 (3d ed. 1998); 8A J.A. Appleman & J. Appleman, Insurance Law and Practice s. 4894.25, at 98-100 (rev. 1981). But see Weimer v. Country Mut. Ins. Co., 216 Wis. 2d 705, 722-725 (1998) (using common meaning of term "tender," as opposed to legal definition, offer of policy limit in full settlement of claim qualified as "tender" that terminated insurer's obligation to pay interest).

However, no such language appears in the present Allstate policy. Here, the obligation to pay interest ended once Allstate "offered to pay up to the limits" of the policy. Allstate did not have to "tender .. .. pay," or "deposit" the policy limit in order to stop interest from accruing. The contract term "offer to pay" should not be interpreted as the equivalent of "tender," or "payment," or "deposit into court." The term "tender" and the term "pay" have always meant something more than a mere "offer." See Metropolitan Credit Union v. Matthes, 46 Mass. App. Ct. 326, 333 (1999), quoting Mondello v. Hanover Trust Co., 252 Mass. 563, 567 (1925). Cases holding that an offer to pay the policy limit conditioned upon release of the insured qualifies as an "offer" have appropriately distinguished those policies that require an actual tender, payment, or deposit. See Campbell v. Turner, supra at 1262-1263, citing Calder Race Course, Inc. v. Illinois Union Ins. Co., supra (adhering "to the distinction between 'offer' and 'tender' ").

When interpreting contract language, we should construe terms in their "usual and ordinary sense." Citation Ins. Co. v. Gomez, 426 Mass. 379, 381 (1998), quoting Hakim v. Massachusetts Insurers' Insolvency Fund, 424 Mass. 142, 146 (1982). Here, the term "offer to pay" the policy limit should be interpreted with reference to what was typically meant by an

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"offer" in the context of dealings with insurance companies in personal injury litigation. By standard custom and usage, an "offer" from an insurer defending its insured under a liability policy was an offer to pay in exchange for a release of its insured - i.e., an offer to pay in full settlement of the underlying claim. [Note Dissent-2] Indeed, our decision in Lazaris v. Metropolitan Prop. & Cas. Ins. Co., 428 Mass. 502 (1998), was premised in part on the fact that an insurer could not make an unconditional offer of the policy limit without risking a claim that it had violated its duty to its own insured. Id. at 506. It would be anomalous in the extreme to interpret the term "offer to pay" in a fashion that would, if made, expose an insurer to a claim that it had violated its duty to its insured. [Note Dissent-3]

The court's conclusion that "offer" means "unconditional offer" would transform the term "offer" into a requirement of actual payment. See ante at 183. An "offer" that has no conditions whatsoever will always be accepted, as there is no reason to reject an offer that demands no concessions in return. In the context of personal injury litigation, an "unconditional offer" will inevitably result in payment, as no plaintiff would ever turn down an offer of money that still left the plaintiff free to pursue all claims against all defendants. Ironically, it is those cases

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interpreting policies that terminate interest only when the policy limit has been "paid or tendered or deposited into court" that hold that an unconditional offer is required, reasoning (correctly) that only an unconditional offer is the equivalent of payment, tender, or deposit. See Calder Race Course v. Illinois Union Ins. Co., supra; Southern Gen. Ins. Co. v. Ross, supra; Cochran v. Auto Club Ins. Ass'n, supra; Balder v. Haley, supra; Baughn v. Busick, supra. Here, the court's insistence that Allstate make an "unconditional offer" incorrectly elevates the policy requirement of a mere "offer to pay" into the equivalent of actual payment. The term "offer to pay" the policy limit, as used in this policy, should be given the ordinary, sensible construction that the term had in the insurance field at the time in question, namely, an offer to pay conditioned on settlement of the claim against the insured. The policy requires only an "offer," and nothing in the policy language or in the industry's ordinary practices suggests that this court should insert the word "unconditional" to modify that contract term. [Note Dissent-4]

The court reasons that, because the policy terminated interest only on an offer to "pay," as opposed to an offer to "settle," we must conclude that only an unconditional offer will suffice. This analysis overlooks the fact that, under an insurance policy, the only thing that an insurer does for a claimant is to "pay" money, be it in satisfaction of a judgment, partial satisfaction of a judgment, or in settlement of the claim. An "offer to pay" can, and routinely does, occur in the context of settlement, as a settlement with an insurance company can only result in "payment." Nothing about the use of the term "pay" suggests that the "payment" anticipated by the offer can not be a payment in settlement. While quibbling over the ostensible distinction between "offer to pay" and "offer to settle," the majority ignores the fact that what is required is only an "offer," not ail actual payment.

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Beyond its erroneous interpretation of these contract terms, the court's analysis has some disturbing ramifications. The court acknowledges that, where an insured has a potentially meritorious appeal, the insurer's duty to defend obligates the insurer to pursue that appeal. And, pending the outcome of such an appeal, an insurer cannot abandon its insured simply by paying the policy limits without obtaining a release of the insured. See Lazaris v. Metropolitan Prop. & Cas. Ins. Co., supra at 506. Under the court's interpretation, the insurer is penalized (by the obligation to pay interest on the entire judgment) for having honored its duty to defend. [Note Dissent-5] Put another way, the court's interpretation provides a strong incentive for an insurer not to pursue an appeal, even if the appeal has a reasonable chance of success and should be undertaken pursuant to the duty to defend the insured. Where, as is often the case, the jury's verdict is vastly in excess of the policy limit, the interest that mounts on the judgment during an appeal will soon eclipse the policy limit. [Note Dissent-6] Even with excellent prospects on appeal, it would be better for the insurance company to pay its paltry policy limit, leaving the insured to contend with the remaining massive liability for both interest and principal, rather than take an appeal and risk having to pay all post-judgment interest (as well as the policy limit). [Note Dissent-7] Allowing an insurer to terminate its liability for interest upon an offer to settle (which would, if accepted,

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eliminate the insured's liability for both interest and principal) does no injustice to insureds. By definition, if the insurer is willing to pay its policy limit and forgo any appeal as long as its own insured is released, an appeal that is taken following the plaintiff's rejection of such an offer is an appeal taken in order to protect the insured, not to protect the insurer. There is nothing unjust or unreasonable about requiring an insured to pay the interest that mounts during a good faith appeal that has been taken solely to protect the insured's interests.

In terminating an insurer's liability for interest on an "offer to pay," the Massachusetts standard automobile insurance policy deviated from the interest provision most commonly used, which terminates liability for interest only when the policy limit is "paid or tendered or deposited in court." [Note Dissent-8] Today, the majority

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assumes that Massachusetts adopted such different language for no reason, holding that the two distinct versions mean exactly the same thing. Normally, we would attach significance to the parties' choice of words that so pointedly differed from an extant standard model. The wording is markedly different - an "offer" obviously means something other than actual payment and there is a discernible reason for choosing one version over the other. I believe that we should ascribe meaning to the different language chosen for this insurance policy, and that we should interpret that language in a way that does not encourage insurers, who are willing to part with the policy limit, to abandon their insureds after the jury return a verdict substantially in excess of that policy limit. Today's opinion will certainly reduce defense appeals in personal injury cases, but that reduction comes at the expense of insureds who may have had legitimate, good faith, and meritorious appeals. I therefore dissent.

2. G. L. c. 93A. I concur that further proceedings on the plaintiff's claim under G. L. c. 93A are required, as Allstate's delay in responding to the July 31, 1995, demand for the policy limit is potentially a violation of G. L. c. 93A. Once the $224,952 judgment against Allstate's insured became final, Allstate's obligation to pay its policy limit of $25,000 became absolute under G. L. c. 175, s. 113. While Allstate's attention may have been focused on the much larger sum of interest then being demanded by the plaintiff, at least $25,000 was undisputably owed by that time. Delay in paying the undisputed portion of its obligation can give rise to liability under G. L. c. 93A, and that aspect of the plaintiff's G. L. c. 93A claim needs to be tried.

However, as I disagree with the court's determination that Allstate is liable for post-judgment interest, I obviously disagree with the proposition that Allstate's failure to pay post-judgment interest could be a violation of G. L. c. 176D, s. 3 (9), and thereby a violation of G. L. c. 93A. Beyond the simple disagreement on the merits of the post-judgment interest issue, I do not see how Allstate's decision to litigate an unsettled question of law, a question on which other courts have reached differing results, could violate G. L. c. 93A. A respected trial judge agreed with Allstate's interpretation of its insurance policy, as do I, and as have several other courts. See Overbeek v. Heimbecker, 101

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F.3d 1225 (7th Cir. 1996); Farmers Alliance Mut. Ins. Co. V. Bethel, 812 F.2d 412 (8th Cir. 1987); Campbell v. Turner, 744 So. 2d 1261 (Fla. Dist. Ct. App. 1999). See also Weimer v. Country Mut. Ins. Co., 216 Wis. 2d 705 (1998). [Note Dissent-9] Faced with a demand of $228,236 in post-judgment interest, and armed with significant precedent from other jurisdictions supporting its assertion that it owed no interest at all, Allstate did not violate G. L. c. 176D, s. 3 (9), or G. L. c. 93A, in litigating what was until today an unsettled question of law in Massachusetts. I see no need for any trial on that aspect of the plaintiffs G. L. c. 93A claim.