Schwartz v. Travelers Indemnity Co., P-2315

• Decision Date: 19 January 2000
• Docket Number: P-2315
• Citation: 740 N.E.2d 1039,50 Mass. App. Ct. 672
• Parties: (Mass.App.Ct. 2001) ROBERT B. SCHWARTZ vs. THE TRAVELERS INDEMNITY COMPANY & another. <A HREF="#fr1-1" name="fn1-1">1 97-
• Court: Appeals Court of Massachusetts

740 N.E.2d 1039 (Mass.App.Ct. 2001)

ROBERT B. SCHWARTZ vs. THE TRAVELERS INDEMNITY COMPANY & another.¹

97-P-2315

Massachusetts Court of Appeals

January 19, 2000

January 8, 2001

Insurance, Homeowner's insurance, Unfair act or practice, Broker. Consumer Protection Act, Insurance, Unfair act or practice. Limitations, Statute of. Contract, Insurance, Implied contract. Agency, Agent's duty of fidelity. Broker, Insurance. Fiduciary.

Civil action commenced in the Superior Court Department on May 28, 1996.

A motion for summary judgment was heard by Nancy S. Merrick, J., and entry of judgment was ordered by Peter F. Brady, J.

George E. Richardson for the plaintiff.

Richard E. Cavanaugh for the defendants.

Jacobs, Gillerman, & Gelinas, JJ.

GELINAS, J.

In reviewing the motion judge's allowance of the defendants' motion for summary judgment, we consider whether the two-year limitation of actions provided in G. L. c. 175, § 99, and contained in a homeowner's insurance policy, governs a claim for unfair claim settlement practices described in G. L. c. 176D, § 3(9), and brought pursuant to G. L. c. 93A, § 9. We also assess whether, on a motion for summary judgment, a policyholder has demonstrated those circumstances that created an actionable agency relationship with his insurance broker regarding settling claims against the insurer and, if there was such a relationship, whether he has shown any consequential damages. Finally, we determine whether the motion judge abused her discretion in denying a request pursuant to Mass.R.Civ.P. 56 (f), 365 Mass. 825 (1974), for a continuance or in failing to deny a motion for summary judgment, because the plaintiff Robert B. Schwartz did not have sufficient opportunity to obtain certain affidavits.

We conclude that Schwartz's claim under G. L. c. 176D, § 3(9), and G. L. c. 93A, is subject to the four-year statute of limitations contained in G. L. c. 260, § 5A. We determine, however, that the plaintiff's G. L. c. 93A claim against The Travelers Indemnity Company (Travelers) is time-barred even under the more generous four-year limitation statute. We further conclude that an insurance broker who sells a policy may, in some circumstances, become an agent of the purchaser of the policy for the settlement of postsale claims. In this case, however, although Schwartz provided sufficient material to survive a motion for summary judgment on the issue whether such an agency relationship had resulted in an implied contract that had been breached, he cannot recover against his broker, Mazonson, Inc. (Mazonson), as he cannot demonstrate damage as a result of any alleged breach. Finally, we find no abuse of discretion on the part of the motion judge in the matter of Schwartz's claim that he did not have full opportunity to obtain affidavits. We affirm the order granting summary judgment to the defendants for reasons different from those set forth by the Superior Court judge. See Foley v. Lowell Sun Publishing Co., 404 Mass. 9, 10-11 (1989).

Facts. We set forth generally the circumstances surrounding Schwartz's claims, all taken from the decision of the motion judge, supplemented by the undisputed summary judgment record, reserving certain facts for the discussion of the individual issues. On October 30, 1991, a powerful storm raged along the Northeastern Atlantic coast of the United States and Canada. Called at the time the "Halloween Gale," it was later dramatized as The Perfect Storm in Sebastian Junger's novel and director Wolfgang Petersen's subsequent movie of the same name. The storm resulted in a less than "perfect" experience for Schwartz and many others living on the New England coast. Schwartz's home was bordered on three sides by the Atlantic Ocean. The storm and its attendant wave wash caused extensive damage to the basement area of the house; Schwartz suffered further damage to his livingroom and areas adjacent thereto caused, as he alleged, by wind and rain, for which there may have been coverage under his policy with Travelers, and not by the flood of wave wash, which was excluded from coverage with Travelers. Other structures on his property were damaged as well. Schwartz had flood insurance, through a company not a party to these proceedings; his claim there was settled and presents no issue here. Travelers refused to pay claims under its homeowner's policy for any damage inside the home; the company did pay for a small amount of damage to structures outside the home. This litigation followed.

Schwartz alleged in the trial court that (1) Travelers breached its contract by failing to pay for damages covered by the insurance policy; (2) Travelers engaged in unfair claim settlement practices, as defined in G. L. c. 176D, § 3(9), and that Travelers thereby engaged in unfair and deceptive practices that are unlawful under G. L. c. 93A; and (3) Mazonson, Schwartz's broker, was in breach of a contract with him whereby Mazonson had agreed to act as Schwartz's agent in pursuing settlement of his claim against Travelers. As to the count alleging Travelers' breach of contract in failing to pay the claim, the motion judge determined that the claim was barred because the policy's two-year limitation period had long expired. Schwartz does not contest that aspect of the summary judgment order.

Claim pursuant to G. L. c. 176D and G. L. c. 93A. Travelers argues that Schwartz has simply relabeled his contract claim as a G. L. c. 93A claim as a pretext to avoid the policy's two-year limitation period. Travelers contends, under the authority of Worldwide Commodities, Inc. v. J. Amicone Co., 36 Mass. App. Ct. 304 (1994), that such a pretextual attempt is not permitted, even assuming there was a "'level of rascality' sufficient to find a violation of c. 93A," Worldwide Commodities Inc., supra at 307, because the contract violations were at the core of the c. 93A claims.

Travelers' argument is misdirected. Worldwide Commodities, Inc. v. J. Amicone Co., supra, is not controlling because, in that case there existed neither an independent statutory obligation nor a statutory remedy.² Here Schwartz's c. 93A claim is grounded in alleged violations of G. L. c. 176D.³ Conduct prohibited in c. 176D is not merely "duplicative" of ordinary breach of contract claims based on the policy, although there may be some parallels. Rather, in this case, engaging in the conduct prohibited by G. L. c. 176D, and made unfair and deceptive by G. L. c. 93A, § 9, creates an action independent from the contract. See Linkage Corp. v. Trustees of Boston Univ., 425 Mass. 1, 27-28, cert. denied, 522 U.S. 1015 (1997).

We first note that some of the conduct prohibited in G. L. c. 176D, § 3(9), standing alone, would probably not constitute a breach of the contractual obligations contained in the policy. For instance, G. L. c. 176D, § 3(9), as inserted by St. 1972, c. 543, § 1, makes actionable the failure "to adopt and implement reasonable standards for the prompt investigation of claims . . ."; "[m]aking claims payments to insured or beneficiaries not accompanied by a statement setting forth the coverage under which payments are being made"; and the refusal "to pay claims without conducting a reasonable investigation based upon all available information" (emphases added). Whether the insurer eventually pays the claim and honors the contract, its method of conducting the claims settlement process, and the payment strategy it adopts, can implicate liability under c. 176D, and thus under c. 93A.⁴ Schwartz's complaint, supported by his summary judgment materials, establishes a potential violation of the provisions of G. L. c. 176D, with respect to settlement practices, specifically, that Travelers, among other violations, failed to conduct a reasonable investigation by refusing to view the area of the claimed loss.

General Laws c. 260, § 5A, establishes a four-year limitation period for actions under G. L. c. 93A, as well as under G. L. c. 176D.⁵ The inclusion of claims grounded in G. L. c. 176D in the four-year limitation period established by G. L. c. 260, § 5A, makes little sense unless those claims are interpreted as independent from claims arising out of the policy itself. In apparent conflict with c. 260, § 5A, the language of G. L. c. 175, § 99, as appearing in St. 1951, c. 478, § 1, provides that insurance contracts may include, as did the policy in this case, a provision that "any claim by virtue of [this] policy" (emphasis added) is subject to a two-year limitation period.⁶ Travelers argues that, as this claim arises "by virtue of the policy," the two-year limitation period applies.

Principles of statutory construction assist in resolving this apparent conflict. "It 'is well established, that statutes alleged to be inconsistent with each other, in whole or in part, must be so construed as to give reasonable effect to both, unless there be some positive repugnancy between them.' Brooks v. Fitchburg & Leominster St. Ry., 200 Mass. 8, 17 [1908]. Everett v. Revere, 344 Mass. 585, 589 [1962]." Goldsmith v. Reliance Ins. Co., 353 Mass. 99, 102 (1967). See Rita v. Carella, 394 Mass. 822, 826 (1985). "We think the more reasonable approach, one consistent with long-standing practice in the courts of the Commonwealth as well as generally accepted canons of construction, is to view [an issue], governed by the specific provisions of [a rule], as constituting an exception to the general practice set forth [in another rule]. Cf. Boston Hous. Auth. v. Labor Relations Comm'n, 398 Mass. 715, 718-719 (1986)." F. W. Webb Co. v. Averett, 422 Mass. 625, 628-629 (1996). We conclude that the statute of limitations set forth in the standard form contract found in G. L. c. 175, § 99, must be read as inapplicable to claims brought under G. L. c. 93A that are grounded in G. L. c. 176D. The alternate reading would make meaningless the specific inclusion of c. 176D actions in c. 260, § 5A, since all claims against the insurer, even...