Boyle v. Zurich American Insurance Co.
472 Mass. 649
| Mass. | 2015Background
- C&N operated an auto repair shop with Zurich insurance; policy required notice of suits.
- Boyles sued C&N for Joseph Boyle's injuries; C&N did not forward the suit to Zurich.
- Zurich never defended; C&N defaulted; Boyles obtained a default judgment against C&N.
- C&N was revived and assigned its rights against Zurich to the Boyles; Boyles settled their individual claims with Zurich for $1,324,357.
- A damages hearing awarded Joseph $1.5M and Janice $750k; Zurich’s failure to defend was found breached, but damages were later adjusted by the trial judge.
- Superior Court found Zurich breached the duty to defend; judge deducted the settlement amount from Boyles’ damages as assignees, then both sides appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Did Zurich breach its duty to defend? | Boyles argue Zurich failed to defend despite notice | Zurich argued no duty due to lack of notice; no prejudice shown | Zurich breached the duty to defend |
| Did notice breach prejudice Zurich and excuse defense? | Prejudice shown by loss of defense opportunity | No prejudice proven; breach not excused | Prejudice not required to excuse defense; breach did not excuse duty here |
| Is there liability under G. L. c. 93A for insurer's conduct? | Zurich's conduct violated 93A through failure to settle/defend | No willful or knowing acts; negligent conduct not 93A violation | No 93A violation proven (prior finding sustained) |
| Should the settlement payment to Boyles be deducted from damages awarded to Boyles as assignees? | Settlement should reduce damages to avoid double recovery | Settlement payment separate; not to be deducted | Settlement should not be deducted from damages |
Key Cases Cited
- Johnson Controls, Inc. v. Bowes, 381 Mass. 278 (1980) (notice prejudice rule for liability insurance)
- Darcy v. Hartford Ins. Co., 407 Mass. 481 (1990) (burden on insurer to show prejudice for untimely notice)
- Sarnafil, Inc. v. Peerless Ins. Co., 418 Mass. 295 (1994) (breach of notice duty tolerated if not prejudicial)
- DiMarzo v. American Mut. Ins. Co., 389 Mass. 85 (1983) (method to award damages for failure to settle)
- Polaroid Corp. v. Travelers Indem. Co., 414 Mass. 747 (1993) (insurer liable for insured's damages when failure to defend)
- Morrison v. Metropolitan Prop. & Cas. Ins. Co., 460 Mass. 352 (2011) (insurer's breach may incur obligation to pay judgment)
- Jenkins v. General Acc. Fire & Life Assur. Corp., 349 Mass. 699 (1965) (insurer duties when insured cannot pay judgment)