Wheatley v. Massachusetts Insurers Insolvency Fund, 988 N.E.2d 845

This case follows Wheatley I, which held the insolvency fund is subject to consumer actions under c. 93A, § 9(1).
The present decision concludes that when a plaintiff prevails in a consumer action against the insolvency fund under § 9(1), the fund is liable for reasonable attorney’s fees under § 9(4).
The insolvency fund is an unincorporated association created to settle unpaid claims against insolvent insurers; it defends towns sued under the Massachusetts Tort Claims Act.
Wheatley involved a statute-based claim against a town insured by Legion, which became insolvent; the fund defended the town and ultimately paid a judgment of $20,786.31.
Plaintiff’s November 1, 2004 demand under § 9(3) went unanswered; suit was filed August 31, 2006, alleging violations of c. 176D, § 3(9) and c. 93A; a Superior Court judge granted judgment on the pleadings that the fund was not subject to § 9(1).
After Wheatley I remanded, the parties settled the § 9 claim for damages; the remaining issue was attorney’s fees; the motion judge held the fund liable for fees, and the insolvency fund appealed.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the insolvency fund can be liable under § 9(1) for first-prong § 2 violations.	Wheatley I treated the fund as in the business of insurance, making § 2 applicable.	Wheatley I did not necessarily decide on first-prong liability; the fund argues only second-prong liability.	Yes; the fund is liable under the first prong because it operates in a business context and is subject to § 2.
Whether the fund may be liable under § 9(1) on the second prong for practices violating c.176D §3(9).	The second prong permits actions where rights are affected by a violation of §3(9).	The fund argued liability is limited to §2 violations.	Yes; liability can arise under the second prong when §3(9) practices are involved.
Whether the fund may be liable for attorney’s fees under § 9(4) when the plaintiff prevails.	Prevailing plaintiff entitled to fees under § 9(4) after successful §9(1) action.	Fees should be unavailable if §9(1) liability is not established or if only §9(3) damages were at issue.	Affirmed; plaintiff entitled to reasonable attorney’s fees under § 9(4).
Whether Wheatley I left open the possibility of first-prong liability for the fund.	Wheatley I contemplated liability under the first prong as well as the second.	Wheatley I primarily discussed the second prong and did not foreclose first-prong liability.	No open question; Wheatley I implied the fund is in the business of insurance, supporting first-prong liability.

Barrett v. Massachusetts Insurers Insolvency Fund, 412 Mass. 774 (Mass. 1992) (fund not liable under 93A as not in business context before amendment)
Poznik v. Massachusetts Med. Professional Ins. Ass’n, 417 Mass. 48 (Mass. 1994) (before 1996 amendment, fund not in business of insurance)
Hopkins v. Liberty Mut. Ins. Co., 434 Mass. 556 (Mass. 2001) (c.93A §2 incorporation of §3(9) into claims settlement practices; supports dual §9(1) liability)
Wheatley v. Massachusetts Insurers Insolvency Fund, 456 Mass. 594 (Mass. 2010) (held insolvency fund subject to consumer actions under §9(1); discussed amendment effect)
Dodd v. Commercial Union Ins. Co., 373 Mass. 72 (Mass. 1977) (broadens private causes of action for unfair insurance claim settlement practices)