Bearbones, Inc. et al v. PEERLESS INDEMNITY INSURANCE COMPANY

Filing 124

Magistrate Judge Katherine A. Robertson: ORDER entered. MEMORANDUM AND ORDER Regarding Defendant's 85 MOTION for Summary Judgment and Plaintiffs' 88 MOTION for Partial Summary Judgment. For the reasons stated, Count I of the verified complaint is DISMISSED and the court finds that judgment as a matter of law is warranted in favor of Peerless on Counts II and III. Therefore, Defendant's motion for summary judgment is GRANTED and Plaintiff's cross-motion for partial summary judgment is DENIED. The Clerk's Office is directed to enter judgment for the defendant. The case may be closed. (See attached Memo & Order for complete details.) (Calderon, Melissa)

UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS
BEARBONES, INC.,
d/b/a MORNINGSIDE BAKERY,
and AMARAL ENTERPRISES LLC,
Plaintiffs,
v.
PEERLESS INDEMNITY
INSURANCE COMPANY,
Defendant.

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Civil Action No. 3:15-30017-KAR

MEMORANDUM AND ORDER REGARDING
DEFENDANT, PEERLESS INDEMNITY INSURANCE COMPANY’S MOTION FOR
SUMMARY JUDGMENT AND BEARBONES, INC. d/b/a MORNINGSIDE BAKERY AND
AMARAL ENTERPRISES LLC MOTION FOR PARTIAL SUMMARY JUDGMENT
AGAINST PEERLESS INDEMINITY INSURANCE COMPANY UNDER FED. R. CIV. P. 56
(Dkt. Nos. 85 & 88)
ROBERTSON, U.S.M.J.
I.

Introduction

This case arises out of a February 19, 2013 incident in which a frozen pipe burst causing
water damage to a Pittsfield, Massachusetts commercial bakery (the “Bakery”) operated by
plaintiff Bearbones, Inc., d/b/a Morningside Bakery (“Bearbones”) in a commercial
condominium unit located at 283 Tyler Street, Pittsfield, MA, (“the condominium unit”) owned
and operated by plaintiff Amaral Enterprises, LLC (“Amaral”) (collectively, “Plaintiffs”). In
their verified complaint, Plaintiffs allege that their insurer, Peerless Indemnity Insurance
Company (“Peerless” or “Defendant”), failed to pay for their covered losses resulting from the
incident and engaged in unfair claims settlement practices. Plaintiffs assert claims for breach of
contract (Count II) and for unfair and deceptive acts or practices in violation of Mass. Gen. Laws

ch. 93A and ch. 176D (hereinafter, “Chapter 93A” and “Chapter 176D”) (Count III).1 The
parties have filed cross motions for summary judgment. Defendant seeks summary judgment in
its favor as to both the breach of contract and Chapters 93A and 176D claims, while Plaintiffs
seek partial summary judgment in their favor only on their Chapters 93A and 176D claim.
The parties have consented to this court’s jurisdiction (Dkt. No. 36). See 28 U.S.C. §
636(c); Fed. R. Civ. P. 73. For the following reasons, the court DENIES Plaintiffs’ motion and
ALLOWS Defendant’s motion.
II.

Standard of Review

Summary judgment is appropriate where, “the pleadings, depositions, answers to
interrogatories and admissions on file, together with affidavits, if any, show that there is no
genuine issue as to any material fact and that the moving party is entitled to judgment as a matter
of law.” Carroll v. Xerox Corp., 294 F.3d 231, 236 (1st Cir. 2002) (citing Fed. R. Civ. P. 56(c)).
“A factual dispute is ‘genuine’ if ‘it may reasonably be resolved in favor of either party’ and,
therefore, requires the finder of fact to make ‘a choice between the parties’ differing versions of
the truth at trial.’” DePoutot v. Raffaelly, 424 F.3d 112, 117 (1st Cir. 2005) (quoting Garside v.
Osco Drug, Inc., 895 F.2d 46, 48 (1st Cir. 1990) (citations and internal quotation marks
omitted)). “[A] fact is ‘material’ ‘if its existence or nonexistence has the potential to change the
outcome of the suit.’” Jarvis v. Village Gun Shop, Inc., 805 F.3d 1, 7 (1st Cir. 2015) (citing
Borges ex rel. S.M.B.W. v. Serrano-Isern, 605 F.3d 1, 4 (1st Cir. 2010)).

1

Plaintiffs also brought a declaratory judgment claim (Count I), but Plaintiffs did not address the
claim in their opposition to Peerless’s motion for summary judgment, and Plaintiffs’ counsel
advised the court at oral argument on the cross motions for summary judgment that Plaintiffs are
not pursuing it. Accordingly, the claim is dismissed.
2 

In ruling on summary judgment, the court “view[s] ‘the entire record in the light most
hospitable to the party opposing summary judgment, indulging all reasonable inferences in that
party’s favor.’” Padilla-García v. Guillermo Rodríguez, 212 F.3d 69, 73 (1st Cir. 2000) (quoting
Euromotion, Inc. v. BMW of N. Am., Inc., 136 F.3d 866, 869 (1st Cir. 1998)). A party seeking
summary judgment is responsible for identifying those portions of the record, “which it believes
demonstrate the absence of a genuine issue of material fact.” Celotex Corp. v. Catrett, 477 U.S.
317, 323 (1986). The movant can meet this burden either by “offering evidence to disprove an
element of the plaintiff’s case or by demonstrating an ‘absence of evidence to support the nonmoving party’s case.’” Rakes v. United States, 352 F. Supp. 2d 47, 52 (D. Mass. 2005) (quoting
Celotex, 477 U.S. at 325). If the moving party meets its burden, “‘the nonmoving party must
come forward with facts that show a genuine issue for trial.’” Sensing v. Outback Steakhouse of
Fla., LLC, 575 F.3d 145, 152 (1st Cir. 2009) (quoting Carroll, 294 F.3d at 236). “‘[T]he
nonmoving party may not rest upon mere allegations or denials of [the movant’s] pleading, but
must set forth specific facts showing that there is a genuine issue of material fact as to each issue
upon which he would bear the ultimate burden of proof at trial.’” Id. (second alteration in
original) (quoting DeNovellis v. Shalala, 124 F.3d 298, 306 (1st Cir. 1997)). “‘The test is
whether, as to each essential element, there is sufficient evidence favoring the nonmoving party
for a jury to return a verdict for that party.’” Id. at 152-53 (quoting DeNovellis, 124 F.3d at 306).
“Cross-motions for summary judgment require the district court to ‘consider each motion
separately, drawing all inferences in favor of each non-moving party in turn.’” Green Mountain
Realty Corp. v. Leonard, 750 F.3d 30, 38 (1st Cir. 2014) (quoting D & H Therapy Assocs., LLC
v. Boston Mut. Life Ins. Co., 640 F.3d 27, 34 (1st Cir. 2011)).

3 

III.

Findings of Fact2

Plaintiffs held a commercial business insurance policy with Peerless (“the Policy”)
effective from October 1, 2012 through October 1, 2013. On February 19, 2013, a frozen pipe
burst in the Bakery causing water damage to the Bakery’s equipment, as well as to the realty.
Plaintiffs timely notified Peerless of the loss.
Two days later, on February 21, 2013, Matthew Mitchell, an adjustor for Peerless who
was assigned to the loss, and Martin Scovill, an estimator from Interstate Restoration, inspected
the loss. The following day, Mr. Scovill prepared a loss estimate of $5,912.32 relative to some
of the water damage to the building; Mr. Scovill noted in his estimate that “[m]itigation, drying,
and cleaning work [was] being completed by others,” and the “[p]roperty owner has plumber
repairing the frozen lines.” Accordingly, Mr. Scovill noted that the repair scope was limited and
might have to be revisited upon completion of the mitigation work.
On February 25, 2013, Plaintiffs forwarded Mr. Mitchell an estimate from Paul J.
Murphy Plumbing & Heating regarding the cost to repair the plumbing and heating at the
Bakery. The estimate was $5,631.47 for the plumbing and $4,297.38 for the heating.
On February 27, 2013, Plaintiffs forwarded Mr. Mitchell an invoice from Catamount
Response for emergency water mitigating and drying services rendered following the loss and an
estimate from Catamount to finish remediation and cleanup of the claimed water damage. The
invoice was for $1,821.20, and the estimate was for $2,273.79.
In a document dated March 29, 2013, James Munoz, a commercial HVAC claims
consultant with CIS who Peerless retained to review Mr. Murphy’s estimates, indicated that he
had determined that the estimates prepared by Mr. Murphy for the repairs to the plumbing and

2

The facts are drawn from the parties’ submissions and the exhibits referenced therein.
4 

heating systems were in line with national standards and represented a fair and reasonable
estimate to repair the damage to the HVAC systems.
On April 15, 2013, Plaintiffs’ counsel, who is also counsel in the instant litigation, mailed
a letter to Defendant notifying Defendant that he was representing Plaintiffs.
On April 16, 2013, Defendant issued a claim payment in the amount of $11,672.94,
representing $15,841.17 in building damage less $3,168.23 in recoverable depreciation and a
$1,000.00 deductible. The $15,841.17 figure is the sum of Mr. Scovill’s $5,912.32 estimate and
Mr. Murphy’s $5,631.47 and $4,297.38 estimates.
On April 19, 2013, Mr. Mitchell directed email correspondence to Plaintiffs inquiring
whether Plaintiffs planned to replace or repair the oven damaged in the loss and requesting
documentation of Plaintiffs’ efforts to find a replacement oven or repair the existing one. In the
same correspondence, Mr. Mitchell indicated that, for Peerless to consider a claim for business
income, Bearbones would have to submit financial documentation in order for Peerless to
calculate a business income loss. Specifically, Mr. Mitchell requested a 2012 year tax return (or
2011 if 2012 was not yet available), monthly profit and loss or income statements, monthly or
weekly sales records for the prior year through the period of restoration of business operations,
and documentation of payroll if Bearbones was claiming payroll continued through the period of
restoration.
On April 22, 2013, Defendant issued payment to Catamount Response in the amount of
$4,094.99, representing the sum of the $1,821.20 invoice and the $2,273.79 estimate.
On April 26, 2013, Arthur Knight, an employee of Peerless, directed a letter to Plaintiffs’
counsel advising that he was in receipt of Plaintiffs’ counsel’s April 15, 2013 letter of

5 

representation. Mr. Knight indicated that Plaintiffs’ claim remained open while Peerless awaited
documentation to support the business income and business personal property claims.
On May 10, 2013, Peerless issued a second check to Bearbones and Lee Bank, the
mortgage holder on the condominium unit, for $11,672.94. The “remarks” accompanying the
check state that it is the “re-issue of prior payment: replacement cost $15,841.17, less
recoverable depreciation of $3,168.23, less $1,000 deductible. This represents payment for
building repairs.” The Policy provides that Defendant “will pay for covered loss or damage to
real estate to each mortgageholder shown in the Declarations, or in an attached schedule, in the
order of precedence, as may appear.” While it is undisputed that Lee Bank was the mortgage
holder, the commercial property coverage part declarations page of the Policy lists the mortgage
holder as “none,” and there is no attached schedule listing Lee Bank as a mortgage holder.
On May 16, 2013, Mr. Mitchell directed correspondence to Plaintiffs’ counsel requesting
documents supporting Plaintiffs’ business personal property claim concerning damage to the
oven and Plaintiff’s business income claim, specifically including days and hours of operation,
daily sales for the period 1/1/13 to the present, payroll by pay period for the period 1/1/13 to the
present, monthly sales tax returns for the period 1/1/12 to the present, monthly profit and loss
statements for the period 1/1/11 to the present, and 2011 and 2012 income tax returns. The letter
also advised that Peerless had retained the services of LWG Forensics to inspect the oven in
question and provide an evaluation and indicated that Paul Mullen would be reaching out to
arrange for the inspection.
On May 16, 2013, Plaintiffs’ counsel emailed Mr. Mitchell the 2011 income tax return.
The following day, May 17, 2013, Mr. Mitchell emailed Plaintiffs’ counsel, referencing
and attaching the May 16, 2013 letter and indicating that Peerless “cannot properly calculate the

6 

Business Income loss without the required documentation.” Mr. Mitchell also requested that
Plaintiff’s counsel cooperate with Mr. Mullen to set up an appointment to allow inspection of the
oven.
Mr. Mullen inspected the oven on July 2, 2013, and issued a report on July 18, 2013,
indicating that damage to the oven and two proofing boxes was consistent with exposure to water
due to a frozen pipe bursting. The estimated cost to replace the oven and proofing boxes was
$33,456.30.
On July 25, 2013, Defendant issued payment in the amount of $16,728.15 to Bearbones.
The “remarks” accompanying the check state “reimbursement for actual cash value of business
personal property claim damages, reflecting recoverable depreciation of $16,728.15.”
On August 6, 2013, Plaintiffs’ counsel emailed Peerless a monthly summary of Plaintiffs’
business from 2012. Debra Allen Bok, an employee of Peerless, responded the following day,
indicating that additional information was required to calculate a loss measure for the business
income claim.
On August 30, 2013 and October 2, 2013, Mr. Mitchell sent letters to Plaintiffs’ counsel
indicating that Defendant had not received the requested documentation to compute Plaintiffs’
loss of business income and again requesting the same list of materials requested in his May 16,
2013 correspondence. In the October 2, 2013 letter, Mr. Mitchell also indicated that, if
Defendant did not receive the requested documentation by October 30, 2013, the claim would be
closed.
Two days later, on October 4, 2013, Plaintiffs filed a lawsuit against Defendant in the
Suffolk Superior Court arising out of the loss.

7 

On December 20, 2013, Defendant served Plaintiffs’ counsel with a motion to dismiss the
state court action based on Plaintiffs’ failure to engage in a reference proceeding as contemplated
by statute and under the mandatory terms of the Policy. Specifically, the Policy contained the
following language required by Mass. Gen. Laws ch. 175, § 99:
In case of loss under this policy and a failure of the parties to agree
as to the amount of loss, it is mutually agreed that the amount of
such loss shall be referred to three disinterested men, the company
and the insured each choosing one out of three persons to be
named by the other, and the third being selected by the two so
chosen; and the award in writing by a majority of the referees shall
be conclusive and final upon the parties as to the amount of loss or
damage, and such reference, unless waived by the parties, shall be
a condition precedent to any right of action in law or equity to
recover for such loss ….
Three days later, on December 23, 2013, Plaintiffs’ counsel sent a written demand to
Defendant’s counsel to refer the matter to a reference proceeding.
Pursuant to Mass. Gen. Laws ch. 175, § 100, Peerless responded to the demand by letter
dated January 2, 2014, providing Plaintiffs’ counsel with a list of three nominees to serve as a
potential referee on the three-member reference panel.3

3

 Section 100 of Mass. Gen. Laws ch. 175 sets out the procedure for selecting the three referees.
It provides that:

If a claim is presented under any policy of fire insurance issued on
property or interests in the commonwealth in the standard form set
forth in the preceding section, and the parties fail to agree as to the
amount of loss, the company shall, within ten days after receiving
a written demand from the insured for the reference of the amount
of loss to three referees as provided in such policy, submit in
writing the names and addresses of three persons to the insured,
who shall, within ten days after receiving such names, notify the
company in writing of his choice of one of the said persons to act
as one of said referees. The insured shall submit in writing the
names and addresses of three persons to the company, which shall,
within ten days after receiving such names, notify the insured in
8 

On January 30, 2014, Plaintiffs filed a notice with the Suffolk Superior Court voluntarily
dismissing all of their claims against Peerless in the state court action without prejudice.
Despite the requirements of Mass. Gen. Laws ch. 175, § 100, Plaintiffs’ counsel did not
send written notice to Peerless selecting one of the individuals off of Peerless’s list to serve as a
referee until January 14, 2015, over one year after Peerless sent its list. The following day,
Plaintiffs’ counsel sent Defendant’s counsel its list of three names of individuals who could act
as potential referees.
Peerless responded in writing to Plaintiffs’ counsel on January 23, 2015, selecting an
individual from Plaintiffs’ list to act as the second referee, and the first two referees selected the
third referee, as contemplated by Mass. Gen. Laws ch. 175, § 100. The parties and referees
agreed to begin the reference proceeding on April 6, 2015.
Before the reference proceeding commenced, Plaintiffs filed the instant action on
February 6, 2015.
On February 27, 2015, Plaintiffs’ counsel provided Defendant’s counsel with a document
entitled “Financial Expert Report” drafted by Steven Egna, purportedly detailing a claim for
economic loss on behalf of Plaintiffs from $1,170,000.00 to $1,290,000.00.
The parties completed the reference proceeding, including an inspection of the subject
property and seven days of hearings. The referees published their unanimous award on July 7,
2015. The referees’ award was all inclusive and was made without consideration of prior

writing of its choice of one of said persons to act as one of said
referees.
Mass. Gen. Laws ch. 175, § 100. The final referee is then chosen by the two selected referees
within ten days, or, absent that, by the commissioner of insurance upon application of the
referees or the parties. Id.

9 

payments by Peerless. The referees’ award consisted of building loss and damage at actual cash
value after application of the policy deductible of $26,116.77, business personal property loss
and damage at actual cash value of $26,842.22, business income loss of $35,929.00, and extra
expense loss of $324.25, for a total award of $89,212.24.
Following the referees’ award, Peerless made payment to Plaintiffs in the amount of
$42,227.28, representing the total of the referees’ award ($89,212.24), less Peerless’s previous
payments ($32,496.08), less one-half of the third referee’s bill for services ($14,488.88).
IV.

Discussion
A. Plaintiffs’ Breach of Contract Claim

Count II of the complaint alleges that Defendant breached the contract of insurance “by
failing to pay for [Bearbones’] loss covered by th[e] Policy” (Dkt. No. 1 at ¶ 31). Viewing the
undisputed facts in the light most favorable to Plaintiffs and drawing all reasonable inferences in
their favor, Plaintiffs fail to create a triable issue on their breach of contract claim. The
undisputed facts show that the parties had a dispute as to the amount of loss and that the dispute
was submitted to reference, as contemplated by Mass. Gen. Laws ch. 175, § 99 and the
mandatory terms of the Policy. Thereafter, the referees issued an award, which Defendant has
paid in full. Thus, the undisputed evidence establishes that Defendant fulfilled its contractual
obligation to pay Plaintiffs for their covered losses.
Plaintiffs attempt to press their claim by continuing to dispute the amount owed under the
Policy, arguing that their covered losses actually exceed $1 million. As observed by another
session of this court in Shealey v. Federal Insurance Co., 946 F. Supp. 2d 193 (D. Mass. 2012),
“[a]s to reference proceedings pursuant to Mass. Gen. Laws ch. 175, § 99, courts have generally
held that that panel’s calculation of the amount of loss has a binding preclusive effect, but issues

10 

of construction of policy terms ‘remain open for reexamination in an action on the policy.’” Id.
at 199 (quoting Augenstein v. Ins. Co. of N. Am., 360 N.E.2d 320, 323 (Mass. 1977)). Stated
another way, “the insured can only challenge the panel’s award on the basis that it misconstrued
a term in the policy; he cannot simply allege that the award was unfair or challenge the factual
findings of the panel.” Id. See also Augenstein, 360 N.E.2d at 323 (“Where there was no
question about the ‘construction’ … of the policy, it would follow that the referees’ finding
would be conclusive of the loss as well as the amount ….”). Here, Plaintiffs are not challenging
the panel’s construction of a term in the Policy or whether coverage exists; they are challenging
the panel’s determination of the amount of loss. This they are foreclosed from doing by Mass.
Gen. Laws ch. 175, § 99 and the case law interpreting it. “It would be improper for the Court to
send these claims to the jury for reevaluation. The purpose of the statutorily mandated reference
procedure is to provide a ‘summary method of establishing the amount of loss,’ and allowing the
relitigation of that issue before a jury would wholly eviscerate that purpose.” Shealey, 946 F.
Supp. 2d at 200 (quoting Hanley v. Aetna Ins. Co., 102 N.E. 641, 643 (Mass. 1913)). See also
Augenstein, 360 N.E.2d at 324 (holding that where there was no question of illegality or mistake
of law, “the insurer was not entitled to a fresh determination by a jury of the question of loss”).
As such, Plaintiffs’ breach of contract claim fails as a matter of law.4

4

Plaintiffs’ reliance on Anthony v. Amica Mutual Insurance Co., No. 98-02168, 1999 WL
513958 (Mass. Super. Ct. May 13, 1999), is misplaced. In that case, the insurer did not
incorporate the statutorily mandated language in its policy, and the language that it included
could be read to leave the insured the choice between reference and litigation. In Form
Endorsement CP 01 09 10 00, the policy Defendant issued to Plaintiffs tracked word-for-word
the language of Mass. Gen. Laws ch. 175, § 99 (Dkt. No. 87-34 at 47).
11 

B. Mass. Gen. Laws Chapters 93A and 176D
Count III of the complaint alleges that Peerless engaged in unfair and deceptive acts and
practices in violation of Chapter 93A and unfair claims settlement practices in violation of
Chapter 176D. Both sides have cross-moved for summary judgment as to this count.
To proceed against an insurer who has violated Mass. Gen. Laws ch. 176D, § 3(9), an
insured must bring a claim under either Mass. Gen. Laws ch. 93A, § 9 or § 11. Silva v. Steadfast
Ins. Co., 35 N.E.3d 401, 405 (Mass. App. Ct. 2015). In this case, Plaintiffs bring their claim
pursuant to ch. 93A, § 11, which “governs commercial transactions between two parties ‘acting
in a “business context.”’” Kraft Power Corp. v. Merrill, 981 N.E.2d 671, 682-83 (Mass. 2013)
(quoting Milliken & Co. v. Duro Textiles, LLC, 887 N.E.2d 244, 259 (Mass. 2008)). “[U]nlike
consumer claims under Chapter 93A, § 9, a violation of Chapter 176D constitutes only probative
evidence, not per se proof, of egregious business misconduct for a Chapter 93A, § 11 businessto-business claim.” Peabody Essex Museum, Inc. v. U.S. Fire Ins. Co., 802 F.3d 39, 54 (1st Cir.
2015) (citing Polaroid Corp. v. Travelers Indem. Co., 610 N.E.2d 912, 917 (Mass. 1993);
Transamerica Ins. Grp. v. Turner Constr. Co., 601 N.E.2d 473, 477 (Mass. App. Ct. 1992)).
Thus, “section 11 plaintiffs must ‘satisfy the elements of a claim based on an alleged unfair or
deceptive practice under Section 2 of Chapter 93A.’” M. DeMatteo Const. Co. v. Century
Indem. Co., 182 F. Supp. 2d 146, 160 (D. Mass. 2001) (quoting RLI Ins. Co. v. Gen. Star Indem.
Co., 997 F. Supp. 140, 151 (D. Mass. 1998)).
“To assert a claim under M.G.L. c. 93A, § 11, a plaintiff must show that the defendant 1)
committed an unfair or deceptive trade practice, and 2) that it suffered a loss of money or
property as a result of that unfair trade practice.” Alan Corp. v. Int’l Surplus Lines Ins. Co., 823
F. Supp. 33, 43 (D.Mass.1993) (footnote omitted). “To be actionable, the challenged conduct

12 

must rise to the level of an ‘extreme or egregious’ business wrong, ‘commercial extortion,’ or
similar level of ‘rascality’ that raises ‘an eyebrow of someone inured to the rough and tumble of
the world of commerce.’” Peabody Essex Museum, 802 F.3d at 54 (citing Baker v. Goldman,
Sachs & Co., 771 F.3d 37, 49-51 (1st Cir. 2014); Zabin v. Picciotto, 896 N.E.2d 937, 963 (Mass.
App. Ct. 2008)). In making a Chapter 93A fairness determination, the “‘focus [is] on the nature
of the challenged conduct and on the purpose and effect of that conduct.’” Commercial Union
Ins. Co. v. Seven Provinces Ins. Co., Ltd., 217 F.3d 33, 40 (1st Cir. 2000) (quoting Mass.
Empl’rs Ins. Exch. v. Propac-Mass, Inc., 648 N.E.2d 435, 438 (Mass. 1995)).
In the insurance context, business misconduct that is actionable
under Chapter 93A may include unfair settlement practices that are
defined under Chapter 176D, § 3. Hallmarks of such misconduct
generally involve the “absence of good faith and the presence of
extortionate tactics.” Guity v. Commerce Ins. Co., 631 N.E.2d 75,
77-78 (Mass. App. Ct. 1994). Such circumstances include
withholding payment from the insured and “stringing out the
process” by using shifting, specious defenses with the intent to
force the insured into an unfavorable settlement. Commercial
Union Ins. Co., 217 F.3d at 40 (providing examples under
Massachusetts law)
Peabody Essex Museum, 802 F.3d at 54. “In contrast, ‘[a] plausible, reasoned legal position that
may ultimately turn out to be mistaken [or unsuccessful] is outside the scope of the punitive
aspects of the combined application of c. 93A and c. 176D.’” Caira v. Zurich Am. Ins. Co., 76
N.E.3d 1002, 1009 (Mass. App. Ct. 2017) (alterations in original) (quoting Guity, 631 N.E.2d at
75, 76).
In their verified complaint, Plaintiffs do not identify the specific acts or omissions
allegedly committed by Defendant that they claim violate the unfair claims settlement and unfair
business practices statutes, but rather, simply restate eleven of the fourteen sub-paragraphs of ch.

13 

176D, § 3(9).5 By contrast, in their motion for partial summary judgment, Plaintiffs identify
three ways in which they claim that Peerless violated Chapter 93A, without identifying any of
the subparagraphs of ch. 176D, § 3(9) that Peerless purportedly contravened in doing so. In
other words, they state “pure” Chapter 93A violations. Foisy v. Royal Maccabees Life Ins. Co.,
241 F. Supp. 2d 65, 69 (D. Mass. 2002). Specifically, Plaintiffs claim that Defendant’s Chapter
93A violations consist of Defendant’s payment before the reference proceeding of an amount
less than the written referees’ award, Defendant’s delay of some 60 days after the loss in issue to

5

Specifically, Plaintiffs allege that Defendant violated Mass. Gen. Laws ch. 176D, § 3(9) by:
(a) Misrepresenting pertinent facts or insurance policy provisions relating to coverages at
issue;
(b) Failing to acknowledge and act reasonably promptly upon communications with respect
to claims arising under insurance policies;
(c) Failing to adopt and implement reasonable standards for the prompt investigation of
claims arising under insurance policies;
(d) Refusing to pay claims without conducting a reasonable investigation based upon all
available information;
(e) Failing to affirm or deny coverage of claims within a reasonable time after proof of loss
statements have been completed;
(f) Failing to effectuate prompt, fair and equitable settlements of claims in which liability
has become reasonably clear;
(g) Compelling insureds to institute litigation to recover amounts due under an insurance
policy by offering substantially less than the amounts ultimately recovered in actions
brought by such insureds;
(h) Attempting to settle a claim for less than the amount to which a reasonable man would
have believed he was entitled by reference to written or printed advertising material
accompanying or made part of an application;
(i) …
(j) Making claims payments to insured or beneficiaries not accompanied by a statement
setting forth the coverage under which payments are being made;
(k) …
(l) …
(m) Failing to settle claims promptly, where liability has become reasonably clear, under one
portion of the insurance policy coverage in order to influence settlements under other
portions of the insurance policy coverage; or
(n) Failing to provide promptly a reasonable explanation of the basis in the insurance policy
in relation to the facts or applicable law for denial of a claim or for the offer of a
compromise settlement.
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make any payment to Plaintiffs, and Defendant’s inclusion of Plaintiffs’ commercial lender, Lee
Bank, as an additional payee on certain of the checks issued in connection with the adjustment of
the loss. As to each contested act, Plaintiffs argue that the undisputed evidence establishes that
Plaintiffs suffered a loss of money or property, but they develop no argument as to how each
contested act was unfair or deceptive within the meaning of Chapter 93A. In its motion for
summary judgment and opposition to Plaintiff’s motion for summary judgment, Peerless argues
that Plaintiffs fail to create a triable issue as to either element of a Chapter 93A claim.6
“‘[W]hether a particular set of acts, in their factual setting, is unfair or deceptive is a
question of fact,’” Baker, 771 F.3d at 49 (alteration in original) (quoting Arthur D. Little, Inc. v.
Dooyang Corp., 147 F.3d 47, 54 (1st Cir.1998)) “‘but whether that conduct rises to the level of a
chapter 93A violation is a question of law.’” Id. (quoting Fed. Ins. Co. v. HPSC, Inc., 480 F.3d
26, 34 (1st Cir. 2007)). See also Commercial Union Ins. Co., 217 F.3d at 40 (“Although whether
a particular set of acts, in their factual setting, is unfair or deceptive is a question of fact, the
boundaries of what may qualify for consideration as a c. 93A violation is a question of law.”
(quoting Schwanbeck v. Federal-Mogul Corp., 578 N.E.2d 789, 803-04 (Mass. App. Ct. 1991)).
The court examines each contested action in turn from the perspective of each side to evaluate
whether Chapter 93A has been violated, or not, as a matter of law. Scott v. Vt. Mut. Ins. Co., No.
07-12081-DPW, 2011 WL 4436984, at *6 (Sept. 22, 2011).

6

In Plaintiffs’ opposition to Defendant’s summary judgment motion, they argue that Defendant
has taken the position that Chapter 93A claims must be decided in the reference proceeding
required by the Policy (Dkt. No. 97 at 2-3). Defendant makes no such argument. Rather, it
seeks judgment on Plaintiffs’ Chapter 93A claims on the basis that it has not engaged in unfair
claims settlement practices.
15 

1. Payment Prior to Reference of an Amount Less than the Referees’ Award
Plaintiffs first complain that Defendant violated Chapter 93A by paying an amount prior
to reference that was less than the reference award. Plaintiffs cite no case law for the proposition
that the mere fact that an insurer pays an insured an amount less than is ultimately awarded in
reference automatically makes the insurer liable under Chapter 93A. Nor is it a tenable position.
It cannot be that every time there is a dispute over the amount of loss that proceeds to a
statutorily contemplated reference proceeding and results in a balance to the insured that the
insurer has, ipso facto, engaged in an unfair trade practice.
Further, viewing the facts presented in the light most favorable to Plaintiffs or Defendant
in turn, the court concludes, as a matter of law, that Peerless did not violate Chapter 93A’s
prohibition against unfair trade practices by their payment prior to reference of an amount less
than the referees’ ultimate award. Two circumstances lead to this conclusion. First and
foremost, the disagreement as to the amount of loss in this case was vast by any measure.
Plaintiffs sought an award at reference of between $1,170,000.00 and $1,290,000.00, while
Peerless had paid only $32,496.08. The referees’ award was only $89,212.24, less than ten
percent of what Plaintiffs were seeking. Given this large discrepancy, there is no basis for a
trier-of-fact to conclude that Peerless was acting in bad faith or engaging in extortionate behavior
by disputing, and submitting to reference, the amount of loss Plaintiffs were claiming.
Second, the uncontested facts reveal that, prior to reference, Plaintiffs failed to produce
information that would have enabled Peerless to calculate the amount of business income loss, a
component of loss that was unpaid at the time of reference and that was the largest part of the
referees’ award. It is undisputed that Peerless diligently sought documentation that would allow
it to calculate the amount of business income loss, making seven written requests to Plaintiffs for

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specific records on April 19, April 26, May 16, May 17, August 7, August 30, and October 2,
2013. Despite Peerless’s requests, Plaintiffs provided nothing until May 16, 2013, at which time
they provided only a 2011 tax return. Three months later, on August 16, 2013, Plaintiffs
provided a monthly summary of business for 2012. In both instances, Peerless responded
promptly, advising Plaintiffs that it needed additional information to calculate the loss. That
information was not forthcoming.
Plaintiffs argue that Peerless has conceded it did not need the exact documentation it
requested to calculate a loss, but this does not mean that Peerless could calculate the loss without
any data. Peerless’s efforts to quantify the loss prior to making payment cannot be characterized
as unfair or deceptive within the meaning of Chapter 93A. Indeed, Peerless was within its
contractual rights in requesting the information, as Plaintiffs had a duty under the Policy (CP 00
30 04 02) to, as often as reasonably required, permit Peerless to examine the business’s books
and records and to cooperate with Peerless in the investigation and settlement of the claim (Dkt.
No. 87-34 at 34). Thus, Plaintiffs claim that Peerless violated Chapter 93A by paying before
reference an amount that was less than was ultimately awarded at reference fails as a matter of
law.
2. Alleged 60 Day Delay in Making Any Payment under the Policy
Plaintiffs’ second argument is that Peerless violated Chapter 93A by not paying anything
until 60 days after the loss. It is undisputed that Peerless did not make any payments under the
Policy until its $11,672.94 payment for building damage on April 16, 2013, which was actually
56 days after the February 19, 2013 incident that caused Plaintiffs’ loss. However, Plaintiffs
direct the court to no authority to support their position that a lapse of 60 days – or, more
precisely, 56 days – from the date of the loss to the date of first payment runs afoul of Chapter

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93A, nor has the court found any. To the contrary, 56 days appears to be within the realm of
reasonableness and, therefore, such a delay, by itself, does not amount to an extreme or
egregious business wrong. Compare Forcucci v. U.S. Fidelity and Guar. Co., 817 F. Supp. 195,
197-98 (D. Mass. 1993) (granting summary judgment to the defendant insurer on the plaintiff
insured’s ch. 93A claims based on a finding that the lapse of two months between the time that
liability was reasonably clear under the policy to when the insurer made a settlement offer was
not unreasonably slow), with R.W. Granger & Sons, Inc., v. J & S Insulation, Inc., 754 N.E.2d
668, 677-78 (Mass. 2001) (affirming entry of judgment against surety on Chapter 93A claim
where the surety delayed almost one year in effectuating payment). Nor have Plaintiffs pointed
to any statutory provision mandating payment within a certain period of time, or included any
expert evidence in the summary judgment record supporting their contention that the lapse of 56
days was unreasonable under the circumstances. See, e.g. Villanueva v. Commerce Ins. Co., 50
N.E.3d 219, *4 (May 18, 2016) (unpublished disposition) (holding that the trial court did not err
in finding that expert testimony was required to establish that the insurer breached its statutory
duty in settling claims where the claimed violation was not so egregious that an expert would be
unnecessary).
Plaintiffs cite to the case of Santos v. Preferred Mutual Ins. Co., 21 F. Supp. 3d 111 (D.
Mass. 2014), for other reasons, but Santos is instructive on this issue of delay in payment. In
Santos, an oil tank in the plaintiffs’ basement exploded, filling it with oil. Id. at 113-14. The
defendant insurer did not make any payments under the policy of insurance for lodging, food, or
other relevant expenses incurred as a result of the accident until ten months later, by which time
the plaintiffs had served the defendant with a Mass. Gen. Laws ch. 93A, § 9(3) demand letter, to
which the defendant failed to respond, and had filed suit. Id. at 115. Because the defendant

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failed to make any payments, the plaintiffs ran out of money to stay at a hotel and had to move
back into their home, which was later determined to pose an imminent threat to their health. Id.
Under the circumstances of the case, the court denied the defendant’s motion for summary
judgment in their favor on the plaintiff’s Chapter 93A claim, noting that the plaintiffs could
proceed on the theory that the defendant “essentially … left two of its policyholders, people of
very modest means, twisting in the wind while it dithered about the amount of loss.” Id. at 118.
By contrast, here, the initial payment was made only 56 days after the incident, as
opposed to ten months later, and well before the initiation of litigation. Moreover, there is no
evidence in the summary judgment record showing that the 56-day delay was extreme or
egregious under the circumstances, such as was before the court in Santos. Finally, the court
here is presented with a § 11 business-to-business claim, which demands a higher standard of
unfairness than a claim brought by a consumer under § 9, as in Santos. Ora Catering, Inc., v.
Northland Ins. Co., 57 F. Supp. 3d 102, 110 (D. Mass. 2014) (citing Madan v. Royal Indem. Co.,
532 N.E.2d 1214, 1217 n.7 (Mass. App. Ct. 1989)). There is no evidence in the record that the
56-day delay was motivated by any sort of extortionate behavior on Peerless’s part as would be
required to bring the action within the ambit of Ch. 93A, § 11. See, e.g., Peabody Essex
Museum, 802 F.3d at 55 (reversing the district court’s entry of summary judgment in favor of the
insured under Chapter 93A where “[t]here [wa]s simply no evidence that the delay in paying
unreimbursed defense costs was attributable to nefarious leveraging conduct or motives on [the
insurer’s] part”).
As such, viewing the facts presented in the light most favorable to Plaintiffs or Defendant
in turn, the court concludes as a matter of law that Defendant did not run afoul of the boundaries
of Chapter 93A by issuing its first payment under the Policy 56 days after the loss.

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3. Inclusion of Lee Bank as a Loss Payee
Plaintiffs’ final argument is that Peerless violated Chapter 93A by including Lee Bank as
a loss payee on certain of the checks issued in connection with the loss, a fact that is undisputed.
Plaintiffs sole support for this argument is a decision by the First Circuit in In re Montreal,
Maine & Atlantic Railway, Ltd., 799 F.3d 1 (1st Cir. 2015). According to Plaintiffs, In re
Montreal stands for the proposition that “a lender has no right to insurance proceeds or payment
unless it is named a loss payee” (Dkt. No. 89 at 3). Plaintiffs’ interpretation of the holding of In
re Montreal is incorrect. In In re Montreal, the insured, a railway, suffered a catastrophic loss
when one of its freight trains that included 72 tanker cars filled with oil derailed in LacMégantic, Québec, sparking massive explosions and killing 47 people. Id. at 4. In the wake of
the disaster, the insured filed a claim under a commercial property insurance policy for lost
business income, and the insurer denied the claim. Id. Thereafter, the insured filed for
bankruptcy and sued the insurer concerning the denial of the underlying claim. Id. The insured
and the insurer settled the lawsuit, but, when the trustee moved the bankruptcy court for approval
of the settlement, a creditor of the insured objected, arguing that its security agreement with the
insured granted it a first-priority security interest in the proposed settlement. Id. The First
Circuit disagreed, finding first that Article 9 of the Uniform Commercial Code did not apply to
the claim, and second, that the creditor had failed to perfect its security interest under Maine
common law. Id. at 5-11. In ruling, the court left open the question of what exactly Maine law
requires for the perfection of such an interest, instead reaching the more limited holding that
what the creditor had done, i.e. filing a UCC-1 financing statement with the Delaware
Department of State, was insufficient. Thus, not only does In re Montreal not say what Plaintiffs

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say it says, but also, it is distinguishable on its facts and has no applicability to the Massachusetts
unfair trade practice claim that Plaintiffs are advancing.
Moreover, the court finds that Peerless’s conduct here fell outside the boundaries of what
may qualify for consideration as a violation of Chapter 93A. Silva, 35 N.E.3d at 408. The
Policy provides that Peerless “will pay for covered loss or damage to real estate to each
mortgageholder shown in the Declarations, or in an attached schedule, in the order of
precedence, as may appear.” While it is undisputed that the commercial property coverage part
declarations page of the Policy lists the mortgage holder as “none,” and there is no attached
schedule listing Lee Bank as a mortgage holder, it is also undisputed that Lee Bank was, in fact,
the mortgage holder and that Peerless was aware of that fact (Dkt. No. 99 at 4). Peerless might
well have faced liability to Lee Bank had it failed to include Lee Bank as a payee on a payment
for loss or damage to real estate. Under these circumstances, Peerless’s actions bear none of the
hallmarks of misconduct that would run afoul of Chapter 93A, including the “absence of good
faith and the presence of extortionate tactics.” Guity, 631 N.E.2d at 77-78. “[T]his record does
not invoke the potent weaponry of Chapter 93A.” Peabody Essex Museum, 802 F.3d at 56
(footnote omitted). Accordingly, Peerless is entitled to summary judgment as a matter of law.
V.

Conclusion

For the reasons stated herein, Count I of the verified complaint is DISMISSED and the
court finds that judgment as a matter of law is warranted in favor of Peerless on Counts II and
III. Therefore, Defendant’s motion for summary judgment is GRANTED and Plaintiff’s crossmotion for partial summary judgment is DENIED. The Clerk’s Office is directed to enter
judgment for the defendant. The case may be closed.
It is so ordered.

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Oct. 17, 2017

/s/ Katherine A. Robertson____
KATHERINE A. ROBERTSON
United States Magistrate Judge

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