BERMUDEZ v. LIBERTY MUTUAL INSURANCE COMPANY (2019)

MEMORANDUM AND ORDER PURSUANT TO RULE 1:28

The plaintiff, Luz Bermudez, brought this action in Superior Court against the defendant, her automobile insurance company, Liberty Mutual Insurance Company (Liberty Mutual), when the parties were unable to reach an agreement as to the amount of Bermudez's loss following an automobile accident. Bermudez brought claims to compel arbitration, for breach of contract based on Liberty Mutual's refusal to arbitrate, and for violation of G. L. c. 93A based on Liberty Mutual's failure to effectuate a settlement. The parties ultimately resolved their dispute regarding Bermudez's insurance claim in arbitration. They then returned to Superior Court for a jury-waived trial on Bermudez's 93A claim, where a judgment was entered in her favor. Bermudez then sought, and received, an award of attorney's fees. On appeal, Liberty Mutual argues that Bermudez's 93A demand letter was deficient and that the trial judge erred in entering a judgment for $875 and in awarding attorney's fees.² We affirm.

1. Background. We summarize the facts found by the trial judge. Bermudez was rear ended by an uninsured motorist on October 2, 2013, and notified Liberty Mutual of her insurance claim shortly thereafter. Over the next several months, Bermudez provided various documents to Liberty Mutual, including medical records and bills and an authorization for Liberty Mutual to obtain any additional medical records that it needed. On April 17, 2014, Liberty Mutual offered to settle the pain and suffering component of Bermudez's insurance claim for $3,200, but made no offer as to the medical expenses component of the claim, which was still under review. In particular, Liberty Mutual was investigating whether any of Bermudez's medical expenses were attributable to her preexisting condition of scoliosis or to a subsequent automobile accident. Liberty Mutual also needed to ascertain whether any of Bermudez's medical bills had been paid through personal injury protection (PIP) benefits and were thus subject to a PIP offset.³ Bermudez rejected the settlement offer of $3,200, which was reasonable when made.

Progress on settling Bermudez's insurance claim then deteriorated. In late April through May, Bermudez repeatedly requested arbitration pursuant to the terms of her policy and also gave a personal statement in which she said that she was not injured in the second automobile accident. When Liberty Mutual did not agree to arbitration or provide a revised settlement offer, Bermudez sent a 93A demand letter on May 30, 2014, based in part on Liberty Mutual's failure to effectuate a prompt, fair, and equitable settlement once liability was reasonably clear. A little over three weeks later, on June 25, 2014, Liberty Mutual received the last of Bermudez's medical records. The trial judge found that Liberty Mutual should have revised its settlement offer no later than shortly thereafter. On July 1, 2014, Liberty Mutual responded to the demand letter but did not make a revised settlement offer.⁴ Finally, on October 23, 2014, Liberty Mutual increased its settlement offer to $9,000 after receiving photographs of the second automobile accident. Bermudez rejected this settlement offer.

Unable to reach an agreement with Liberty Mutual, Bermudez first sought to resolve her insurance claim through arbitration and next pursued her 93A claim in Superior Court. As to the arbitration, the arbitrator awarded Bermudez $15,000, minus $2,525 to account for the PIP offset, for a net award of $12,475. The arbitrator also awarded preaward interest in the amount of $875, which was later reduced to judgment in Superior Court. The 93A claim then proceeded to trial, with a judgment entering in Bermudez's favor “with no damages awarded beyond the Judgment for $875 previously entered.”

2. Discussion. a. The demand letter. Liberty Mutual contends that it was not found to have engaged in any unfair or deceptive acts or practices before June 25, the date on which it received the last of Bermudez's medical records. Liberty Mutual argues that Bermudez's demand letter was deficient because it was sent before June 25, and that Liberty Mutual was thus unfairly prejudiced because it was deprived of the opportunity to make a revised settlement offer based on the acts or practices that formed the basis for its liability. We disagree, both because Liberty Mutual's argument does not fairly construe the trial judge's findings and because Liberty Mutual was not unfairly prejudiced.

Taking Liberty Mutual's characterization of the trial judge's findings as accurate for the moment, we are not persuaded that Liberty Mutual was unfairly prejudiced. A demand letter must be sufficiently specific “to give the defendants ‘an opportunity to review the facts and the law involved to see if the requested relief should be granted or denied’ and to enable them to make ‘a reasonable tender of settlement’ in order to limit the recoverable damages.” York v. Sullivan, 369 Mass. 157, 162 (1975), quoting Slaney v. Westwood Auto, Inc., 366 Mass. 688, 704-705 (1975). Bermudez's demand letter put Liberty Mutual on notice of its failure to effectuate a prompt, fair, and equitable settlement once liability was reasonably clear. Liberty Mutual received the last of Bermudez's medical records, and thus all the information necessary to make a revised settlement offer, before responding to the demand letter.⁵ The purpose of the demand letter was thus fulfilled and there was no unfair prejudice to Liberty Mutual where its liability was based on the specific conduct stated in the demand letter.

Moreover, Liberty Mutual's argument does not fairly construe the trial judge's findings. As explicitly found by the trial judge, “Between April 17 and October 23, Liberty Mutual did not revise its settlement offer. Throughout this period, Liberty Mutual was receiving more information and documentation that would affect the amount of a fair settlement offer. By failing to revise its settlement offer, Liberty Mutual failed to follow customary industry practice.” Some of this conduct necessarily occurred before the demand letter was sent on May 30. While Liberty Mutual emphasizes another finding of the trial judge that Liberty Mutual should have revised its settlement offer “no later than shortly after June 25,”⁶ this finding does not alter, and is consistent with, the finding that Liberty Mutual received information in April and May that also affected the amount of a fair settlement offer.

Taken together, the trial judge's findings make clear that Liberty Mutual received information over a short period of time that had a cumulative effect on the amount of a fair settlement offer. The vast majority of that information was received before the demand letter, at which point in time Liberty Mutual was only awaiting the last of Bermudez's medical records to corroborate that she was not injured in the second automobile accident. Under the circumstances of this case, particularly where there was no unfair prejudice to Liberty Mutual, Bermudez did not need to send a supplemental demand letter describing Liberty Mutual's receipt of the corroborating medical records to preserve her claim that Liberty Mutual failed to effectuate a prompt, fair, and equitable settlement once liability became reasonably clear. See Clegg v. Butler, 424 Mass. 413, 423 (1997) (while “separate relief on actions not ․ mentioned [in demand letter was] foreclosed,” judge properly considered such actions in concluding that insurer violated obligation to effectuate prompt, fair, and equitable settlement, as alleged in demand letter). See also M.C. Gilleran, The Law of Chapter 93A, § 7.6, at 261 (2d ed. 2007) (no need to “send serial demand letters where the defendant has engaged in serial 93A conduct”).⁷

b. The judgment for $875. A judgment entered in Bermudez's favor on her 93A claim “with no damages awarded beyond the Judgment for $875 previously entered.” Liberty Mutual argues that the preaward interest of $875 should not have been reduced to judgment, as Liberty Mutual had already paid the arbitration award and Bermudez was thus fully compensated for her injuries. As an initial matter, Liberty Mutual did not object to the preaward interest being reduced to judgment below and has thus waived the argument.⁸ See Palmer v. Murphy, 42 Mass. App. Ct. 334, 338 (1997) (“Objections, issues, or claims - - however meritorious -- that have not been raised at the trial level are deemed generally to have been waived on appeal”). Moreover, even if the preaward interest had not been reduced to judgment and even though Liberty Mutual had already paid the arbitration award, Bermudez still would have been entitled to the entry of a judgment on her 93A claim reflecting the loss of use interest. See Auto Flat Car Crushers, Inc. v. Hanover Ins. Co., 469 Mass. 813 at 824,829 (2014) (if plaintiff previously received compensation for interest lost on money wrongfully withheld, which are actual damages for unreasonable delay in settling insurance claim, such compensation acts as offset, not bar to recovery).

c. Attorney's fees. We must also decide whether the award of attorney's fees was proper. Liberty Mutual relies on G. L. c. 93A, § 9 (4), to argue that Bermudez was not entitled to attorney's fees because the trial judge found that the first settlement offer of $3,200 was reasonable when made on April 17. Liberty Mutual's reliance on G. L. c. 93A, § 9 (4), however, is unpersuasive, as that statute provides that a “court shall deny recovery of attorney's fees and costs which are incurred after the rejection of a reasonable written offer of settlement made within thirty days of the mailing or delivery of the written demand for relief required by this section“ (emphasis added). The first settlement offer of $3,200 may have been reasonable when made on April 17, but it was no longer reasonable on the date of Liberty Mutual's response to Bermudez's demand letter. As found by the trial judge, Liberty Mutual's “settlement offer should have been revised no later than shortly after June 25.” Nearly a week later, when Liberty Mutual responded to the demand letter on July 1, Liberty Mutual did not provide a revised settlement offer. It is thus not entitled to the protection provided in G. L. c. 93A, § 9 (4).

Bermudez further seeks attorney's fees incurred defending this appeal. She is entitled to those fees pursuant to G. L. c. 93A, § 9 (4), and may submit a detailed and supported application for fees sought within fourteen days of the date of this decision. See Fabre v. Walton, 441 Mass. 9, 10 (2004). Liberty Mutual shall have fourteen days within which to respond.

Judgment affirmed.

Order awarding attorney's fees affirmed.

FOOTNOTES

2.   Although an amended judgment entered incorporating the original judgment and the award of attorney's fees, the defendant appeals from the original judgment and the order allowing attorney's fees.

3.   Any PIP benefits would have been paid by Liberty Mutual. As noted by the trial judge, however, this information was not immediately available to the Liberty Mutual adjuster who was handling Bermudez's insurance claim, due to privacy rules, until Bermudez returned the form authorizing Liberty Mutual to obtain her medical records. Liberty Mutual received that form on January 22, 2014, well before it determined what the PIP offset was.

4.   Liberty Mutual's response stated that “Bermudez's injuries [are] in dispute.” Liberty Mutual explained that it was still in the process of reviewing the last of Bermudez's medical records.

5.   Liberty Mutual additionally argues that liability was not reasonably clear on June 25 because it was still awaiting the photographs of the second automobile accident and that as soon as Liberty Mutual received those photographs, it increased its settlement offer. Where the photographs went solely to whether any of Bermudez's medical expenses were attributable to the second automobile accident, we see no error in the trial judge's conclusion that, in light of the medical records that Liberty Mutual received on June 25, liability was reasonably clear even without the photographs.Nor are we persuaded by Liberty Mutual's argument that it reasonably relied on counsel's diligent, good faith evaluation of the case. See Hartford Cas. Ins. Co. v. New Hampshire Ins. Co., 417 Mass. 115, 122 n.5 (1994). While negotiations certainly reached a standstill once Liberty Mutual's legal department became involved upon receipt of the demand letter, the trial judge's findings, which are supported by the record, do not attribute the breakdown in negotiations to counsel's conduct, which the judge found to be in good faith.

6.   Liberty Mutual also relies on a statement made by the trial judge when ruling on attorney's fees that “[a]t the time Plaintiff sent a 93A demand letter and then filed the lawsuit, no violation had yet occurred.” Where this statement is inconsistent with the trial judge's specific findings made after trial, we set it aside. Simon v. Weymouth Agric. & Indus. Soc., 389 Mass. 146, 148-149 (1983).

7.   The cases cited by Liberty Mutual, which stand for the proposition that there can be no relief under G. L. c. 93A if a demand letter fails to state the specific conduct at issue, are not to the contrary. See, e.g., Entrialgo v. Twin City Dodge, Inc., 368 Mass. 812, 813 (1975) (no relief for violations of credit disclosure statutes where demand letter stated that plaintiff was induced to purchase defective car through misrepresentations). As noted, supra, Bermudez's demand letter stated the specific conduct at issue.

8.   In objecting to the principal award being reduced to judgment, Liberty Mutual “request[ed] that [the Superior Court] ․ reduce only the interest portion of the arbitrator['s] ․ award to judgment.”