Barrett v. Massachusetts Insurers Insolvency Fund

• Decision Date: 05 June 1992
• Parties: Amanda BARRETT, administratrix, 1 v. MASSACHUSETTS INSURERS INSOLVENCY FUND.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

Page 1317

592 N.E.2d 1317

412 Mass. 774

Amanda BARRETT, administratrix, ¹ v. MASSACHUSETTS INSURERS INSOLVENCY FUND.

Supreme Judicial Court of Massachusetts Suffolk.

Argued May 7, 1992.

Decided June 5, 1992.

Frances L. Robinson, Boston (Willie J. Davis, with her), for plaintiff.

Joseph C. Tanski, Boston (Jo Anne Rosenblum, with him), for defendant.

Before LIACOS, C.J., and WILKINS, ABRAMS, LYNCH and GREANEY, JJ.

LYNCH, Justice.

The plaintiff appeals from a judgment of the Superior Court allowing the defendant's motion to dismiss the plaintiff's complaint for failure to state a claim on which relief can be granted. Mass.R.Civ.P. 12(b)(6), 365 Mass. 754 (1974). We transferred the appeal here on our own motion and now affirm.

"In evaluating allowance of the motion to dismiss, we accept as true the factual allegations of the complaint." Manning v. Zuckerman, 388 Mass. 8, 9, 444 N.E.2d 1262 (1983). Nader v. Citron, 372 Mass. 96, 97-98, 360 N.E.2d 870 (1977). We summarize these allegations: The plaintiff is the administratrix of the estate of her husband, who died of bullet wounds sustained while on the premises of the Celtic Tavern in the Charlestown section of Boston. She brought an action against Sever Street, Inc. (Sever), the owner and operator of the Celtic Tavern, and ultimately obtained a verdict against Sever, in her favor, in the amount of $200,000. Sever's insurance carrier, Integrity Insurance Company (Integrity), became insolvent and the defendant assumed the handling of Integrity's affairs pursuant to the provisions of G.L. c. 175D (1990 ed.). Despite repeated requests, the defendant refused, neglected, and failed to effectuate a prompt, fair, and equitable settlement after liability had become reasonably clear, in violation of G.L. c. 93A (1990 ed.).

The Superior Court judge ruled that the plaintiff could not maintain a G.L. c. 93A claim because the defendant does not engage in a "trade" or "commerce" and its activities are not performed within a "business context." We agree.

General Laws c. 93A, § 2(a ), states, "[u]nfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce are hereby declared unlawful." We have stated that "the proscription in [G.L. c. 93A,] § 2 of 'unfair or deceptive acts or practices in the conduct of any trade or commerce' must be read to apply to those acts or practices which are perpetrated in a business context." Lantner v. Carson, 374 Mass. 606, 611, 373 N.E.2d 973 (1978). "[W]e need to look at the particular circumstances to determine whether the acts complained of were committed within a 'business context.' " Planned Parenthood Fed'n of Am., Inc. v. Problem Pregnancy of Worcester, Inc., 398 Mass. 480, 493, 498 N.E.2d 1044 (1986). See also Begelfer v. Najarian, 381 Mass. 177, 190, 409 N.E.2d 167 (1980). Certain standards apply for determining whether a party is engaged in "trade or commerce." Factors to be considered include the character of the party, the nature of the transaction, the activities engaged in by the party, and whether the transaction was motivated by business or personal reasons. Id. at 191, 409 N.E.2d 167.

The plaintiff argues that the character of the defendant is the same as that of an insurer ² and as such it is engaged in trade or commerce as defined under c. 93A. ³ The plaintiff misunderstands the character of the defendant. The defendant is a "statutorily mandated, nonprofit, unincorporated association of all insurers writing certain kinds of direct insurance in the Commonwealth ... available to settle certain unpaid claims which arise out of and are within the coverage of an insurance policy issued by an insolvent insurer." Commissioner of Ins. v. Massachusetts Insurers Insolvency Fund, 373 Mass. 798, 799, 370 N.E.2d 1353 (1977). The defendant is, in essence, simply a conduit to which certain noninsolvent insurers, authorized to do business in the Commonwealth, pay a pro rata amount to enable the defendant to pay "covered claims" ⁴ to insureds whose insurance companies become insolvent subsequent to the issuance of their policies and claims. G.L. c. 175D. The nature of the transaction and the activity engaged in is the payment of the "covered claims," and transactions are motivated by legislative mandate, not business or personal reasons.

"The Legislature originally enacted c. 93A to improve the commercial relationship between consumers and businessmen. By requiring proper disclosure of relevant information and proscribing unfair or deceptive acts or practices, the Legislature strove to encourage more equitable behavior in the marketplace." Manning v. Zuckerman, 388 Mass. 8, 12, 444 N.E.2d 1262 (1983). We have stated that "[t]he use of the words 'distribution of any services' in conjunction with words such as 'sale' and 'lease' indicates an intent that the services be distributed in exchange for some consideration or that there...