Calandro v. Sedgwick Claims Management Services, 264 F. Supp. 3d 321

Background

Plaintiff sued Sedgwick under Mass. Gen. Laws ch. 176D and ch. 93A alleging Sedgwick failed to reasonably attempt to settle a wrongful-death claim concerning Plaintiff’s mother; a state-court jury later awarded $1,425,000 compensatory and $12,514,605 punitive damages.
After the verdict Plaintiff sent a Chapter 93A demand for $40 million; Sedgwick received it on Oct. 2, 2014 and on Oct. 30, 2014 tendered $1,990,197 (covering compensatory award, prejudgment and some post-judgment interest, and costs). Plaintiff rejected and filed this suit.
Sedgwick moved for summary judgment, invoking the § 9(3) “safe harbor” that limits recovery to a reasonable tender made within 30 days of a demand; the court originally denied that motion.
On reconsideration the court evaluated whether the safe-harbor “injury actually suffered” measurement required using the 1989 amendment’s “amount of actual damages” (the full judgment) or the loss-of-use (interest) standard from pre-amendment caselaw.
The court concluded the safe-harbor uses the loss-of-use (interest) standard, found Sedgwick’s $1,990,197 tender reasonable under that benchmark, allowed reconsideration, but held a trial on punitive/bad-faith issues and on whether any award must be offset by a prior $16 million Hartford settlement is still necessary.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Proper measure of “injury actually suffered” in § 9(3) safe harbor	The phrase should incorporate the 1989 amendment measure (the full judgment) so post-judgment tenders must be judged against the underlying judgment amount	Safe-harbor measure should be loss-of-use (interest) damages—the pre-amendment standard—so a post-judgment tender may be reasonable if it compensates loss-of-use	Held: Safe-harbor uses the loss-of-use (interest) standard; court reversed prior ruling and applied that benchmark
Was Sedgwick’s Oct. 30, 2014 tender reasonable under the safe harbor	Tender was inadequate compared to the full judgment and thus not reasonable	Tender of $1,990,197 reasonably compensated loss-of-use and related costs	Held: Tender was reasonable under loss-of-use standard; safe harbor applies
Whether trial on willfulness/bad faith (multiplication) is required after finding safe harbor applicable	Multiplication of full judgment necessary because defendant’s conduct caused greater injury	If safe harbor limits recovery, punitive/multiplication issues may be cabined, but court still must determine willfulness/bad faith	Held: Trial required to decide willfulness/bad faith and potential multiplication, but any award will be limited by the safe harbor result
Whether prior Hartford $16M settlement offsets recovery here	Hartford settlement resolves underlying loss and should bar or fully offset recovery against Sedgwick	Hartford settlement may partially offset but did not release Sedgwick, so double recovery is possible and must be assessed	Held: Offset analysis unresolved; trial necessary to determine whether award would double-pay plaintiff and how to apply offsets (offset after multiplication per precedent)

Key Cases Cited

Rhodes v. AIG Domestic Claims, Inc., 461 Mass. 486, 961 N.E.2d 1067 (Mass. 2012) (interpreting interplay of ch. 176D and ch. 93A remedies and discussing 1989 amendment)
Clegg v. Butler, 424 Mass. 413, 676 N.E.2d 1134 (Mass. 1997) (describing loss-of-use damages and legislative response increasing insurer exposure)
Anderson v. Nat’l Union Fire Ins. Co. of Pittsburgh PA, 476 Mass. 377, 67 N.E.3d 1232 (Mass. 2017) (statutory interpretation principles)
Auto Flat Car Crushers, Inc. v. Hanover Ins. Co., 469 Mass. 813, 17 N.E.3d 1066 (Mass. 2014) (offset of prior compensation against c. 93A recovery; offset after multiplication)
BMW of N. Am., Inc. v. Gore, 517 U.S. 559 (U.S. 1996) (Due Process limits on punitive damages)
St. Louis, I.M. & S. Ry. Co. v. Williams, 251 U.S. 63 (U.S. 1919) (early Due Process precedent regarding disproportionate punitive awards)