Rhodes v. AIG Domestic Claims, Inc.
461 Mass. 486
Mass.2012Background
- Marcia Rhodes sustained catastrophic injuries from a rear-end collision in Jan. 2002; she, her husband Harold, and Rebecca Rhodes sued the GAF-insured defendants for damages.
- The tort defendants carried Zurich (primary) and National Union (excess) policies; AIGDC was National Union's claims administrator managing the excess claim.
- A jury in Sept. 2004 awarded about $11.3 million after the trial; settlement discussions occurred before and after trial with no timely pretrial settlement.
- Before trial, Zurich tendered its $2 million policy limits to AIGDC in Jan. 2004; AIGDC delayed and conditioned further discovery, delaying mediation until Aug. 2004.
- Mediation produced an agreed settlement with Professional Tree Service; AIGDC's pretrial offers remained insufficient and did not reflect the later trial outcome; postjudgment, the parties settled for $8.965 million with continued litigation on 93A claims.
- The Superior Court held Zurich did not violate 176D or 93A, but found AIGDC wilfully violated 176D and 93A; damages for postjudgment conduct were based on lost use of funds from judgment to settlement.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether AIGDC’s postjudgment c.93A/176D violations justified damages based on the underlying tort judgment. | Rhodes argued postjudgment conduct caused injury; damages should multiply the underlying judgment. | AIGDC contends damages should reflect loss of use from postjudgment funds and not necessarily the underlying judgment. | Damages for postjudgment violations must be based on the underlying judgment amount. |
| Whether postjudgment damages may be multiplied under c.93A, §9 when the underlying judgment arises from the same transaction. | Plaintiffs contend double damages should apply to the underlying tort judgment. | AIGDC argues improper to multiply beyond the loss of use. | Under the 1989 amendment, damages are double the underlying judgment amount. |
| Whether the pretrial conduct by AIGDC caused injury sufficient for c.93A recovery. | Delay in offers caused injury by depriving timely settlement opportunities. | No need to show acceptance of an offer; injury can result from delayed offers. | Causation established; still multiple damages apply for postjudgment conduct; causation moot for postjudgment measure. |
| Whether Zurich violated its duty to effectuate a prompt, fair settlement before trial. | Zurich delayed investigation; liability and damages could have been clear earlier. | Zurich tendered policy limits when it became clear the case wouldn’t settle within primary limits. | Zurich did not violate the duty; tender of limits was timely after liability/damages were clear. |
| Whether the punitive damages review under Campbell/Gore applies to c.93A multiples here. | Damages should be punitive, reflecting wilful misconduct across years. | Due process concerns limit the amount; should not exceed constitutional thresholds. | Punitive damages upheld as non grossly excessive; award based on underlying judgment mirrors statutory intent. |
Key Cases Cited
- Hershenow v. Enterprise Rent-A-Car Co. of Boston, 445 Mass. 790 (Mass. 2006) (causation required for 93A claims; harm must be shown)
- Hopkins v. Liberty Mut. Ins. Co., 434 Mass. 556 (Mass. 2001) (insurer need not prove claimant would have accepted a timely offer)
- Bobick v. United States Fid. & Guar. Co., 439 Mass. 652 (Mass. 2003) (causation required; recovery for 93A does not depend on acceptance of offer)
- Granger & Sons v. J & S Insulation, Inc., 435 Mass. 66 (Mass. 2001) (multiplier damages tied to underlying judgment; no need for acceptance of offer)
- Clegg v. Butler, 424 Mass. 413 (Mass. 1997) (settlement not a judgment; cannot multiply to compute 93A damages unless judgment exists)