Caira v. Zurich American Insurance Co.
AC 16-P-927
| Mass. App. Ct. | Apr 21, 2017Background
- On Sept. 14, 2013 Michael Caira was severely injured as a passenger in a rental vehicle driven by Daniel Madigan‑Fried; Groom Construction Co. rented the vehicle and Zurich insured Groom with a $1,000,000 primary auto liability policy. Groom had two excess policies of $5,000,000 each.
- Caira sued Madigan‑Fried and Groom for negligence; Zurich defended them under the primary policy. By settlement with rear‑seat plaintiffs Zurich paid $230,000, leaving $770,000 of its policy.
- Between Dec. 2014 and July 2015, Caira demanded Zurich tender its $1,000,000 limit (and later $3.9M including excess carriers) without releasing the insureds; Zurich repeatedly offered its available policy limit only if Caira executed a general release of Madigan‑Fried and Groom.
- Caira alleged violations of G. L. c. 176D, § 3(9)(f) (unfair claim settlement practices) and G. L. c. 93A, § 2, arguing that conditioning payment on a release was unreasonable, especially given available excess coverage.
- Zurich relied on Lazaris (428 Mass. 502) to justify conditioning payment on a release and maintained that excess insurance availability did not alter that legal principle; negotiations continued and Starr (an excess insurer) ultimately settled for $900,000 funded by Zurich’s $770,000 and $130,000 from Starr, with releases executed (excluding Caira’s claim against Zurich).
- Zurich moved for summary judgment on Caira’s statutory claims; the Superior Court granted it and denied Caira’s request for a continuance to conduct further discovery. Caira appealed; the Appeals Court affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Zurich violated G. L. c. 176D § 3(9)(f) / G. L. c. 93A by conditioning payment of its policy limit on a release of its insureds | Caira: conditioning payment on a release was an unfair settlement practice and unreasonable, particularly because excess insurance existed | Zurich: under Lazaris it may insist on a release of its insureds before paying policy limits; availability of excess insurance does not change that rule | Court: Zurich did not violate the statutes; conditioning payment on a release was lawful under Lazaris and not rendered unreasonable by the existence of excess insurance |
| Whether Lazaris applies when excess insurance exists | Caira: Lazaris should not permit an insurer to insist on a release where excess coverage exists that would compensate claimant for amounts above the primary limit | Zurich: Lazaris governs regardless of excess coverage; insurers insure distinct layers and may protect insureds by obtaining releases | Court: Lazaris applies; availability of excess insurance is not a material distinction that negates an insurer’s right to insist on a release |
| Whether Zurich acted in bad faith or used extortionate tactics | Caira: Zurich’s conduct showed unfair tactics and lack of good faith warranting § 3(9)(f) and c.93A liability | Zurich: its position was a plausible legal reading of Lazaris and timely, not extortionate | Court: No evidence of bad faith or extortion; a reasoned legal position is outside c.93A/c.176D punitive scope |
| Whether the judge abused discretion by denying a continuance for additional discovery under Mass.R.Civ.P. 56(f) | Caira: depositions and further discovery of Zurich employees were necessary to show unfair practices/bad faith | Zurich: additional discovery would not change the legal question governed by Lazaris; facts were sufficient | Court: Denial not an abuse of discretion; further discovery irrelevant to the legal issue of whether conditioning payment on a release violates § 3(9)(f) |
Key Cases Cited
- Lazaris v. Metropolitan Prop. & Cas. Ins. Co., 428 Mass. 502 (insurer may condition payment of policy limits on a release when liability and damages exceed the policy)
- Allmerica Fin. Corp. v. Certain Underwriters at Lloyd's, London, 449 Mass. 621 (primary and excess policies insure distinct layers of risk)
- Clegg v. Butler, 424 Mass. 413 (purpose of G. L. c. 176D and c. 93A is to encourage settlement and discourage forcing claimants into litigation)
- MacInnis v. Aetna Life & Cas. Co., 403 Mass. 220 (settlement typically involves release or termination of further claims against the tortfeasor)