DiVenuti v. Reardon, 92-P-1040

CourtAppeals Court of Massachusetts
Citation37 Mass.App.Ct. 73,637 N.E.2d 234
Decision Date26 July 1994
Docket NumberNo. 92-P-1040,92-P-1040
PartiesAlbert P. DiVENUTI, Jr. v. Ellen M. REARDON & others. 1

Richard F. Wholley, Winchester, for Ellen M. Reardon.

William H. Clancy, Boston, for Utica Mut. Ins. Co.

Alice Olsen Mann, Boston, for Manufacturers and Merchants Mut. Ins. Co.

Norman Jackman, Boston, for plaintiff.

Before KASS, KAPLAN and GREENBERG, JJ.

KASS, Justice.

Here litigation arose and muddled on by reason of a combination of recalcitrance and mutual finger pointing by insurance carriers in the face of certain liability and obdurate refusal by the plaintiff to accept settlement in full when, albeit belatedly, settlement making full compensation was offered. As the Superior Court judge, who patiently and ably worked through the morass, observed, chapter 93A of the General Laws "is not designed or intended to throw out all concepts of reasonableness and mitigation or to allow injured parties to turn their backs on reasonable, probable, and practical dispute resolution so they can conduct a prolonged quest for the mother lode." We affirm the judgment, whose particulars are best described after a summary of facts, taken from findings made by the trial judge on c. 93A components of the case. Certain issues were tried to a jury.

Albert P. DiVenuti, Jr., the plaintiff, inquired of Ellen M. Reardon, a defendant, in early November, 1985, if she, a licensed insurance broker, could obtain fire and other casualty insurance for nine residential properties which DiVenuti owned. Among those properties was a building at 135 Williams Avenue in Lynn (the locus). Reardon was an agent of the defendant Manufacturers and Merchants Mutual Insurance Company (Manufacturers), from which she obtained a quotation of premiums for the requested coverage. On December 23, 1985, Reardon notified DiVenuti that she had bound coverage, effective December 14, of his properties. The amount of insurance asked for and bound on the locus was $60,000. Five of DiVenuti's properties, including the locus, did not, when Manufacturers checked them out, meet its underwriting standards. Manufacturers, through a telephone call on January 9, 1986 (a call which Manufacturers confirmed by contemporaneous letter) informed Reardon that it did not wish to insure those five properties and that Reardon was to place coverage with other insurers. Neither Manufacturers nor Reardon communicated this information to DiVenuti.

Reardon acknowledges she was duty bound to find replacement insurance, but collateral business and personal circumstances bedevilled expeditious accomplishment of that task. Her office moved; a new computer system was being installed; she was off on a trip abroad. When fire broke out at the locus on March 9, 1986, Reardon had not placed substitute insurance. DiVenuti promptly reported the loss to Reardon who, in turn, notified Manufacturers, which denied coverage. That stance, as Manufacturers acknowledged later, was mistaken because the coverage had been lawfully bound by its authorized agent (Reardon); the agent had not cancelled the binder and, above all, had given no notice of cancellation to the customer. Nor had Manufacturers notified the customer that it desired to be rid of the coverage. Cf. G.L. c. 175, § 187C.

Conscious of her agency's exposure because she had not seen to replacement coverage, Reardon immediately notified her errors and omissions carrier, the defendant Utica Mutual Insurance Company (Utica), of potential liability to DiVenuti and to Manufacturers. Neither insurer recognized liability to DiVenuti. Utica took the position that Reardon, its insured, was blameless because Reardon had placed the wanted coverage with Manufacturers and the latter had never progressed beyond notifying her of its intent to cancel coverage on the locus. On May 7, 1986, DiVenuti wrote a demand letter, impliedly for $118,421, much in excess of the $60,000 of insurance coverage, to Manufacturers, Reardon, and Utica. The letter included c. 93A claims, hence a demand for counsel fees, and added a claim for lost rental income at the rate of $800 per month. In response, Manufacturers continued to deny liability and declined payment. Utica responded with an offer to pay DiVenuti $30,000 in exchange for a release that would leave DiVenuti free to chase Manufacturers. DiVenuti declined that ungiving proposal to pay fifty cents on the dollar and, on June 18, 1986, some three months after the fire loss, brought an action in Superior Court.

Within a month after Reardon's deposition had been taken in August, 1986, Manufacturers offered to pay the amount of the $60,000 policy, less the $1000 deductible, but plus the reasonable legal fees incurred by DiVenuti in chasing Manufacturers for the insurance proceeds. DiVenuti's lawyer countered with an inflated demand for $83,200. 2 Manufacturers asked DiVenuti's lawyer for an analysis of the approximately $11,000 in attorney's fees that he claimed, a request he ignored. In April, 1987, Manufacturers reiterated its settlement offer and request for documentation of the claimed legal fees. To that, DiVenuti's lawyer (who was not the same as appellate counsel) responded by upping the legal fees demanded to $21,500 and restating the demand for $118,421 in damages. 3

Ultimately, DiVenuti's claim against Manufacturers and Manufacturers's cross claim against Reardon for negligent failure to get it off the risk were tried to a jury which returned a verdict for DiVenuti of $60,000 (the face value of the coverage on the locus) and a verdict in the same amount for Manufacturers against Reardon. On the c. 93A questions, which the trial judge decided, Manufacturers had the benefit of an earlier partial summary judgment, allowed by another judge, which the trial judge decided not to revisit, not least because Manufacturers had made the most conspicuous effort to settle the case fairly. The trial judge found that Manufacturers had not acted unfairly in refusing to accede to DiVenuti's inflated demands. Reardon, the judge found, had violated c. 93A by her negligent disregard of her duty to place substitute insurance, but, the judge determined, that failure was not knowing and wilful. The c. 93A damages to which DiVenuti was entitled came to $2,950 for the loss of use of funds between May 1, 1986, when DiVenuti's claim for the insurance coverage should have been paid and October 1, 1986, when the judge found DiVenuti could and should have resolved the case, and $10,000 in counsel fees for the exertions of DiVenuti's lawyer through October 1, 1986. As to Utica, it knew from the outset that it was to indemnify Reardon and, by indirection, Manufacturers. Utica had, therefore, acted unfairly, and the c. 93A judgment against Reardon ran jointly and severally against it. Reardon and Utica have appealed.

1. Denial of Reardon's motion to amend her answer. On the first day of trial, which was more than four years after commencement of the action, Reardon moved to amend her answer by adding five affirmative defenses, including comparative negligence, estoppel, and waiver by Manufacturers. 4 Although she cast her motion as made under Mass.R.Civ.P. 15(b), 365 Mass. 761 (1974), to conform the pleadings to the evidence, such a motion lies only "[w]hen issues not raised by the pleadings are tried by express or implied consent of the parties," ibid, and Manufacturers actively resisted inclusion of the new matter. The judge properly treated the motion as made under paragraph (a) of rule 15. He denied the motion because made so late that it would have required a continuance of trial--for which all parties and witnesses had assembled--so that Manufacturers might prepare to meet the new issues which would have been interjected.

It is familiar ground that a trial judge should be generously disposed to motions to amend pleadings. "Leave shall be freely given," the rule says. Mass.R.Civ.P. 15(a), 365 Mass. 761 (1974). Castellucci v. United States Fid. & Guar. Co., 372 Mass. 288, 289, 361 N.E.2d 1264 (1977). Among the good reasons, however, for which a motion to amend may be denied are that no justification for the lateness of the motion is apparent (beyond counsel for the moving party having had a late dawning idea) and that one or more of the nonmoving parties would be caught off balance by the proffered amendment. Id. [37 Mass.App.Ct. 78] at 292, 361 N.E.2d 1264. Mathis v. Massachusetts Elec. Co., 409 Mass. 256, 264-265, 565 N.E.2d 1180 (1991). Walsh v. Chestnut Hill Bank & Trust Co., 414 Mass. 283, 287, 607 N.E.2d 737 (1993). The judge was well within his discretion in denying the motion. See Christopher v. Duffy, 28 Mass.App.Ct. 780, 786, 556 N.E.2d 121 (1990).

2. Whether the question of comparative negligence by Manufacturers should have been put to the jury. Reardon argues that, during the course of the trial, evidence bearing on the question of comparative negligence on the part of Manufacturers was, in fact, received. Consent to litigate an issue may, indeed, be implied if evidence is received...

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