Lemos v. Electrolux North America, Inc.
78 Mass. App. Ct. 376
Mass. App. Ct.2010Background
- Lemos sued Electrolux North America, Inc. and Equinox Insurance Co. after a 2001 lawnmower accident caused severe injuries.
- In 2005, a federal jury awarded Lemos $550,000 against Electrolux.
- Lemos asserted that Electrolux and Equinox engaged in unfair claim settlement practices under G.L. c. 176D, § 3, and G.L. c. 93A.
- A Superior Court judge granted summary judgment, ruling neither Electrolux nor Equinox was in the insurance business.
- The court reversed with respect to Equinox and affirmed as to Electrolux; case remanded for further proceedings.
- Equinox, a Vermont captive insurer owned by Electrolux, issued a policy insuring Electrolux and affiliates; its structure and control over settlements are central to the dispute.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Equinox is engaged in the business of insurance under c.176D | Lemos treats Equinox as insurer; captive status not dispositive | Equinox is not in the insurance business; it is a self-insurer | Equinox is engaged in the business of insurance and subject to c.176D |
| Whether Equinox can be held liable for unfair settlement practices despite no direct involvement in claim handling | Equinox controlled settlements and thus engaged in unfair practices | Equinox lacked employees and did not participate in the claim | Remand for further factual development; potential liability preserved |
| Whether Electrolux bears liability under c.176D as the insured party | Electrolux, as principal, is liable for unfair practices | Morrison holding excludes Electrolux from c.176D as an insurerentity | Electrolux judgment affirmed; not subject to c.176D as insurer |
| Impact of corporate separateness on liability for captive insurer claims | Captive insurer should be treated as insurer despite corporate form | Separate entities cannot be used to evade c.176D | Equinox liable; corporate separateness does not shield from c.176D |
Key Cases Cited
- Morrison v. Toys "R" Us, Inc., 441 Mass. 451 (2004) (holding captive/self-insurer distinction; unfair practices apply to insurers, not self-insurers)
- Miller v. Risk Mgt. Foundation of the Harvard Med. Insts., Inc., 36 Mass. App. Ct. 411 (1994) (claims negotiator/settler treated under c.176D standards)
- Poznik v. Massachusetts Med. Professional Ins. Assn., 417 Mass. 48 (1994) (limits applicability of c.176D to certain entities)