Hong v. Northland Insurance Company

Filing 20

Judge Douglas P. Woodlock: MEMORANDUM AND ORDER entered granting 6 Motion to Dismiss; finding as moot 18 Motion to Strike (Woodlock, Douglas)

UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS

MINGDE HONG,

)
)
Plaintiff,
)
)
)
v.
)
)
NORTHLAND INSURANCE COMPANY, )
)
Defendant.
)

CIVIL ACTION NO.
18-10440-DPW

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MEMORANDUM AND ORDER
May 30, 2018
This is a case alleging unfair settlement practices brought against an
insurer under Mass. Gen. Laws ch. 93A, § 9 asserting unfair and deceptive
practices in the business of insurance under Mass. Gen. Laws ch. 176D, § 3(9).
The Complaint alleges that shortly before a trial in which it received an adverse
verdict, the insurer withdrew its (unduly modest) outstanding settlement offer
altogether. The instant case was filed in Massachusetts Superior Court on
November 26, 2017 before being removed to this court. The alleged settlement
misconduct was completed on September 24, 2013 when the final offer was
rescinded. No further settlement activity is alleged. The verdict adverse to the
insurer was rendered November 26, 2013. The applicable statute of limitations
for filing a lawsuit based on unfair settlement practices by an insurer, Mass.
Gen. Laws ch. 260, § 5A, is four years. If the limitations period begins no later
than the date of the last alleged settlement misconduct, the statute of

limitations bars the plaintiff's claim. I conclude that it did and will grant the
defendant insurer's motion to dismiss this case.
Accrual of a claim under Chapter 93A of Massachusetts General Laws
“typically occurs at the time injury results from the assertedly unfair or
deceptive acts.” Cambridge Plating Co. v. Napco, Inc., 991 F.2d 21, 25 (1st Cir.
1993). The Massachusetts Appeals Court has held that a claim accrues “when
the plaintiff knew or should have known of appreciable harm” caused by the
alleged conduct. Int'l Mobiles Corp. v. Corroon & Black/Fairfield & Ellis, Inc.,
560 N.E.2d 122, 125-26 (Mass. App. Ct. 1990). The rule in International
Mobiles has not been modified in the last quarter century since it was
enunciated. This is a settled matter of state law reflected in more recent brevis
decisions applying it. See, e.g., D.A.C. v. Eastguard Ins. Co., 888 N.E.2d 386
(Mass. App. Ct. 2008) (unpublished); Santiago v. The Premier Ins. Co., 2017
Mass. App. Div. 134 (2017).
In an effort to create a silk purse from otherwise unpromising material in
which to carry his argument, the plaintiff in a belated post-hearing submission,
contends that International Mobiles actually supports his position. This
argument is misplaced. To be sure, the court’s reasoning of International
Mobiles focused on when International Mobiles could allege damages it suffered
as a result of the defendant insurance broker’s negligence. 560 N.E.2d at 125.
The court noted that in 1981, International Mobiles “could not have maintained
a cause of action against [the defendant insurance broker] because it could
allege no damage.” Id. Rather, the court continued, “[a]lthough Mobiles had
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reason to think that [the defendant insurance broker] had bungled when [the
excess coverage fleet policy provider] responded in 1981 that its policy did not
cover vehicles in Rhode Island, Mobiles incurred no expense nor . . . suffered
any discernible detriment as a result of [the defendant insurance broker’s]
negligence.” Id. Moreover, “[t]he expense of Mobiles’ defense . . . was borne
entirely by [its primary liability insurer].” Id. In these circumstances, “[t]he
date of accrual for Mobiles’ c. 93A action . . . [was] the date of settlement in
June, 1986,” id. at 126, because that was the date that the plaintiff suffered
harm. Id. at 123. Wrenching International Mobiles out of context, the plaintiff
suggests the date the settlement that started the running of the statute of
limitations in International Mobiles is for conceptual purposes the same as the
date of entry of judgment in the underlying tort action here. However, the
plaintiff fails to recognize that the injury or harm alleged here was appreciable
no later than when the defendant insurer rescinded its settlement offer
altogether.
The injury alleged here is the failure to offer a reasonable settlement
under the circumstances. This was fully known as of September 24, 2013
when the defendant insurer rescinded its $4,000 offer. This was an offer, it
bears noting, that itself was some $10,000 less than the plaintiff's claimed
medical bills as of that date. The plaintiff prevailed at trial two months later
and obtained a verdict resulting in a judgment of $59,713.60. It is not alleged
that the resulting judgment was unpaid, but rather that the improvident

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settlement conduct by the insurer before the verdict upon which that judgment
was based was the injury or harm.
The plaintiff’s earlier effort in his prehearing submissions to rely upon
Kerlinsky v. Fidelity & Deposit Co. of Maryland, 690 F. Supp. 1112 (D. Mass.
1987), as support for his belated filing of this lawsuit, illustrates the difference
between crystallization of money damages1 and accrual of a ch. 93A, § 9/ch.
176D, § 3(9) claim as a result of appreciable harm or injury from settlement
conduct. Kerlinsky offers plaintiff no support. Rather, it explains why the
plaintiff here cannot avoid the statute of limitations bar to his case. In
Kerlinsky, an unfair settlement practices lawsuit was dismissed when filed
more than four years after the verdict was rendered, giving rise to an
unexecuted judgment. In the course of explaining why dismissal was
appropriate, my current colleague Judge Ponsor — then sitting as a Magistrate
Judge providing a report and recommendation adopted by Judge Freedman —
observed that any “duty reasonably to 'settle' the underlying . . . claim [could
only have been triggered] prior to a verdict being returned for plaintiff.” Id. at
1117-18. So too here. Any actionable injury or harm for unfair settlement
practices here was appreciable some two months before the verdict was
rendered for the plaintiff. This was the point at which the statute of limitations

It bears noting that following the July 1979 amendment of Chapter 93A,
consumers proceeding under ch. 176D, § 3(9) were not obligated to
demonstrate that they suffered a loss of money or property. Rather, it is
sufficient for such a claimant to show a violation of § 3(9).
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accrued and that accrual was more than four years prior to the filing of this
case. Accordingly, this case must be dismissed.
I hereby GRANT defendant's [Dkt. No 6] motion to dismiss and direct the
Clerk to terminate this case.

/s/ Douglas P. Woodlock______
DOUGLAS P. WOODLOCK
UNITED STATES DISTRICT JUDGE

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