Graf v. Hospitality Mutual Insurance Co.

Decision Date26 June 2015
Docket NumberHDCV2010-00429
PartiesKatie Graf v. Hospitality Mutual Insurance Company Opinion No. 131022
CourtSuperior Court of Massachusetts

Filed June 29, 2015


Edward J. McDonough, Jr., Justice of the Superior Court.

Plaintiff Katie Graf (" Graf") alleges defendant Hospitality Mutual Insurance Company (" Hospitality") committed unfair insurance claims settlement practices, in violation of G.L.c. 93A, § § 2 and 9 and G.L.c. 176D, § 3(9). Graf alleged that she sustained serious and permanent damage and disability as the result of a fractured ankle she sustained on September 7, 2007, at The Fat Cat Bar and Grill (" Fat Cat") in Springfield, Massachusetts.


Graf claims Hospitality violated c. 176D, § 3(9)(f) when it failed to effectuate a prompt, fair and equitable settlement of her tort claim despite the fact that liability had become reasonably clear to Hospitality before and after a February 1, 2010 jury verdict in her favor in the amount of $500, 000 the amount of Hospitality's policy limits.

On the incident date, the Fat Cat was insured by Hospitality's predecessor insurer, the Liquor Liability Joint Underwriting Insurance Association of Massachusetts (" LLJUA") under a policy of liability insurance effective from February 3, 2007 to February 3, 2008, with liability limits of $500 000. Hospitality became successor in interest and obligation to LLJUA in June 2008.

Up to the February 1, 2010 verdict, Graf submits Hospitality never made any offer of settlement to Graf, nor did Hospitality make an offer post-verdict until July 16, 2010--more than five months post-verdict--when Hospitality offered to pay Graf the sum " of $500, 000 plus postjudgment interest through an agreed upon date . . . in exchange for a release of the defendants [in the Litigation] to the satisfaction of counsel for the defendants."

Hospitality denies it violated c. 176D claiming it conducted a reasonable investigation of Graf's claim beginning shortly after it received notice of her claim. Hospitality submits its investigation, as well as its experienced and skilled trial counsel's pretrial discovery, disclosed the case was entirely a credibility contest as to how the incident occurred between Graf and her friend eyewitness, and the competing version told by Hospitality's insured bar manager and bouncer.

Hospitality's position is that before and after the February 1, 2010 verdict, Hospitality reasonably believed in the truth of its insured's employees' statements--including their deposition and trial testimony--and that grave doubts existed about Graf's implausible account based on common sense and Graf's self-contradictions. Hospitality submits that notwithstanding the verdict for Graf, liability still was not reasonably clear because Hospitality had good faith non-frivolous grounds for appeal, and was so advised by its trial counsel, Attorney Kathleen Sheehan and its post-trial counsel, Attorney John P. Ryan. In particular Hospitality believed in good faith, and had been so advised by legal counsel, that the trial judge committed reversible error on a critical evidentiary ruling going to the hotly disputed question of why the Fat Cat staff never called an ambulance for the injured Graf, thereby enhancing Graf's credibility, harming the Fat Cat employees' credibility, and depriving Hospitality's insureds of a fair trial in what was quintessentially a credibility contest.

Hospitality submits it promptly effectuated settlement by settling the case about seven months after the verdict, after extensive settlement discussions including Graf's unequivocal rejection of three settlement initiatives in March of 2010 and a written offer of the policy limits on July 16, 2010. Ultimately, on November 4, 2010 Graf agreed to accept and Hospitality agreed to pay its policy limits plus postjudgment interest in the sum of $552, 007.55 in settlement of the underlying litigation, while reserving Graf's right to litigate separately a coverage dispute--litigation in which Hospitality ultimately prevailed. See Graf v. Hospitality Mut. Ins. Co., 956 F.Supp.2d 337 (D.Mass. 2013) (Nieman, M.J.), affirmed, Graf v. Hospitality Mut. Ins. Co., 754 F.3d 74, 77 (1st Cir. 2014).

Hospitality viewed the jury verdict as unexpected both on liability and damages, and believed it was likely the result of jury anger resulting from erroneous evidentiary rulings by the trial judge on state of mind issues, which gave Hospitality good grounds for appeal it pursued while simultaneously attempting to settle Graf's tort claim. Any post-verdict delay in achieving settlement, Hospitality's submits, was attributable to Graf's refusal to accept Hospitality policy limits in settlement of Graf's claims against its insureds, which refusal was based on Graf's erroneous interpretation of the amount of Hospitality policy limits.

1. Graf's Asserted Basis for Her Tort Claim

The parties to the underlying tort litigation were plaintiff Katie Graf of Westfield, Massachusetts, Torcia & Sons, Inc., a Massachusetts corporation which conducted its business as The Fat Cat Bar and Grill (" Fat Cat"), on Worthington Street in Springfield, Massachusetts, and Ronald Lindsey (" Lindsey") of Springfield, a bouncer at the Fat Cat, which sold food and alcoholic beverages to patrons of the general public.[1]

In the early morning hours of September 7, 2007, Graf was a patron at the Fat Cat who sustained serious and permanent injuries when, as she claims, she was carelessly and negligently thrown or pushed to the floor by Lindsey. Lindsey was then acting as a doorman and bouncer engaged in quelling a disturbance that did not involve Graf. Graf contended she was picked up and thrown by Lindsey four to six feet and testified at the trial that she went " flying through the air." In her answers to interrogatories she stated she was thrown approximately eight feet. In her deposition she testified she felt " airborne" and thrown, not pushed. Graf's close friend and companion that night, Jamie Mongeau, witnessed the incident and corroborated Graf's version testifying she saw Lindsey pick Graf up by the shoulder area and toss her. Graf admitted she consumed four or five Bud Lite beers at her friend Mongeau's home before entering the bar at about 11:30 p.m., where she consumed another beer inside the bar, and two more Bud Lites on the bar's patio.

2. Hospitality's Insureds Dispute Graf's Version of Events

Hospitality's insureds disputed Graf's version of how she was injured, principally because Lindsey maintained from the start, and so testified, that he never even touched Graf. Fat Cat's manager Shavone Gauthier stated in her interview that " one guy pushed [the] other and [Graf] got knocked over and twisted her ankle." In her deposition Gauthier testified she saw two boys in the bar pushing each other, and saw Graf on the ground before Lindsey arrived to break up the altercation. While Lindsey agreed he took action to break up the altercation, he claimed he had a clear path on the patio to reach the area where a fight was occurring and did not need to touch anyone to approach the area of the fight. Lindsey testified at his deposition and at trial that he had been at the bar's front door, but then approached an altercation out on the patio passing through the entranceway from the main bar. Lindsey further testified that Graf was on the far side of the altercation from him, nearer the band. He testified he did not reach Graf's side of the group and he touched neither Graf, nor anyone else, except when he squeezed in between people and said " excuse me" and that he " came into contact with people. When you are shoulder to shoulder, it's hard not to walk by somebody without maybe touching them." Lindsey maintained he was physically incapable of picking up and throwing Graf--who weighed approximately 110 pounds--or anyone else. Graf's testimony that she was not involved in the altercation was subject to contradiction by her statement recorded in her hospital record. Graf and her friend Mongeau were the only eye witnesses to the incident. Although Lindsey was responsible for Fat Cat security and safety, he never asked Graf how she injured her leg. Shavone Gauthier, the Fat Cat manager responsible for safety, previously worked at McDonalds and had taken courses in forensics, but never asked Graf how the incident happened nor did she take the names of any witnesses.

3. The Ambulance Dispute

A hotly contested issue in the claim and at trial was why the Fat Cat staff never called an ambulance for Graf despite well-knowing she had suffered a serious injury to her ankle. Graf testified she asked the bar manager to call an ambulance but he refused saying it would be much easier to pull a car up to the street behind the Fat Cat where he would then help Graf and her friends carry her out. Graf identified the bar manager by description only as a muscular male with a blonde goatee who did not identify himself when he came over to her while she was sitting on a bench. She testified she thought this man gave her ice.

The Fat Car denied it employed any muscular male with the blond goatee, much less as its manager, and further denied such a man even existed. Gauthier testified that she was the Fat Cat manager, and that she was the one who tended to Graf, offering her water and ice.

Gauthier testified that when she saw Graf attempt to stand, Gauthier told her: " No, you need to sit down. Obviously your ankle is swollen. I then asked her--I said do you want me to call an ambulance, and are you ok? She said I don't think I'm ok." Gauthier claimed Graf never asked her for an ambulance. To the...

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