MA Court: Chapter 93A Liability Survives Defense Verdict

Liability for violation of Chapter 93A can be significant. At a minimum, under ' 9 a defendant will be responsible for actual damages or $25, whichever is greater, and the plaintiff's attorney's fees, but, if the court finds that the defendant's action was willful or knowing, the judge must grant double or treble damages. Id. at c. 93A, ' 9(3).

Application of Chapter 93A In the Context of Insurance Disputes

In Massachusetts, once tort liability becomes reasonably clear, for individuals, insurers have a duty to effectuate a prompt, fair and equitable settlement of the insured's or tort plaintiff's claim. M.G.L. c. 176D, ' 3(9)(f). Unlike an individual plaintiff who can rely on a violation of Mass. Gen. Law, c. 176D, ' 3(9) as a per se violation of Mass. Gen. Law, c. 93A, ' 9, a business plaintiff must prove a violation of Mass. Gen. Law, c. 93A, ' 2. Polaroid v. Travelers Indemn. Co., 414 Mass. 747, 754 (1994); see also Watts Water Techs., Inc. v. Fireman's Fund Ins. Co., SUCV2005-02604-BLS (Mass. Super. Mar. 20, 2009) (“[A] business plaintiff permitted to sue under ' 11 of Chapter 93A may not sue under ' 9 for alleged violations of Chapter 176D.”).

The Klairmont Decision

In Klairmont, the plaintiffs, two parents, sued a Boston bar and restaurant as well as affiliated individuals and entities, after their son was fatally injured when he fell down stairs at the defendants' establishment. Prior to filing suit, pursuant to Chapter 93A, the plaintiffs notified the defendants of their claim and requested a reasonable settlement offer. In their letters, the plaintiffs alleged that a staircase located in the defendants' establishment was maintained in violation of multiple provisions of the State Building Code. The plaintiffs further alleged that these violations constituted unfair and deceptive conduct under Chapter 93A, which caused their son's fatal injuries.

In response to the plaintiffs' demands, the defendants tendered a settlement offer of $25,000, which they subsequently raised to $75,000. Both amounts were well below the medical expenses incurred by the plaintiffs, and were rejected. Thereafter, the plaintiffs filed suit against the defendants, alleging claims for wrongful death, negligence, and violation of Chapter 93A, among other claims.

The case proceeded to trial, during which the judge allowed all claims to be decided by the jury, except for the Chapter 93A claim, which she reserved for herself. The jury held that the defendants' negligence was not a substantial factor leading to the plaintiffs' son's death, and returned a verdict for the defendants on the underlying tort claims.

Notwithstanding the jury's decision, the judge held that the defendants were liable for violation of Chapter 93A. The court found that the staircase constituted an unsafe, defective condition that violated the State Building Code and that this violation contributed to the plaintiffs' son's injury. The judge awarded $750,000 to each parent and to the son's estate. The judge further held that the defendants' violation was willful and knowing, warranting an award of treble damages and more than $2 million in attorneys' fees and costs. The total award was more than $9 million.

The Appeal

On appeal, the defendants argued that, since the jury returned a verdict in the defendants' favor on the wrongful death claim, the court erred in awarding damages under Chapter 93A. The court disagreed. It held that, “a claim under c. 93A vindicates rights personal to the decedent and does not aim to compensate a decedent' survivors. The c. 93A claim alleged by the plaintiffs on behalf of the estate is therefore a distinct cause of action separate and apart from the wrongful death cause of action alleging common-law claims.” Klairmont, 2013 Mass. LEXIS 338 at *25. Thus, the court affirmed the trial court's holding of liability for violation of Chapter 93A.

Critically, the court vacated and remanded the damages awarded by the trial court, finding that the parents were not entitled to Chapter 93A damages at all. Rather, the parents could “only recover to the extent that [the decedent] would have been able to recover on such a claim. ' Had [the decedent] survived, he would have been entitled to damages for the personal injuries caused by the defendants' unfair and deceptive conduct, including medical expenses and conscious pain and suffering.” Klairmont, 2013 Mass. LEXIS 338 at *29.

Significance of the Klairmont Decision

The Klairmont decision is another cautionary reminder to all entities doing business in Massachusetts that the Massachusetts Consumer Protection Act has significant teeth and that they should tread cautiously once notified of a putative Chapter 93A claim.

In light of the decision in Klairmont, defendants, and their insurers, must consider the possibility that, even if a defendant prevails at trial on underlying tort claims alleged by a plaintiff, the judge may find that the defendant's conduct violated Chapter 93A and impose a substantial award against them. In order to curtail liability for willful or knowing violations of Chapter 93A, ' 9 ' and the concomitant award of double or treble damages and attorneys' fees ' defendants, and insurers, may limit their exposure to liability by tendering a written settlement offer to the plaintiff that is reasonable in relation to the injury actually suffered. M.G.L. c. 93A, ' 9(3). If a court finds that this offer was in fact reasonable, then the defendant's liability for violation of Chapter 93A will be limited to the settlement offer.

On the other hand, the decision affirms that, where the jury has rendered a verdict in the plaintiff's favor, the trial court is not bound by that verdict and may find no Chapter 93A violation.

Kim V. Marrkand, a member of the litigation section in the Boston office of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., chairs the firm's insurance/reinsurance group and is a member of this newsletter's Board of Editors. Alec J. Zadek is also in the litigation section of Mintz Levin's Boston office and a member of the firm's insurance/reinsurance group. The views expressed in the article are those of the authors and not necessarily those of Mintz, Levin or its clients.

Even after a favorable jury verdict, defendants may face exposure to liability under the Massachusetts Consumer Protection Act, M.G.L. c. 93A (“Chapter 93A”). In Klairmont v. Gainsboro Restaurant, Inc., 2013 Mass. LEXIS 338 (Mass. May 16, 2013), the Massachusetts Supreme Judicial Court affirmed a trial court's holding that the defendants were liable for violations of Chapter 93A even though the jury found that they were not liable for the plaintiffs' underlying tort claims. The Klairmont decision highlights the fact that alleged Chapter 93A violations expose defendants to significant liability and that the exposure remains even after prevailing at trial on liability.

Massachusetts Consumer Protection Act

The Massachusetts Consumer Protection Act protects both individuals, (M.G.L. c. 93A, ' 9), and businesses, (M.G.L. c. 93A, ' 11), from unfair methods of competition and unfair or deceptive practices. Chapter 93A claims are equitable in nature; thus, a party has no right to a jury trial on an alleged violation of Chapter 93A. See Chamberlayne Sch. v. Banker , 30 Mass. App. Ct. 346, 353 (1991). As a result, a “judge may make independent and, therefore, different, findings on the c. 93A aspect of a case that arises out of the same facts which give rise to parallel common law claims.” Klairmont, 2013 Mass. LEXIS 338 at *43 (citation omitted).

Liability for violation of Chapter 93A can be significant. At a minimum, under ' 9 a defendant will be responsible for actual damages or $25, whichever is greater, and the plaintiff's attorney's fees, but, if the court finds that the defendant's action was willful or knowing, the judge must grant double or treble damages. Id. at c. 93A, ' 9(3).

Application of Chapter 93A In the Context of Insurance Disputes

In Massachusetts, once tort liability becomes reasonably clear, for individuals, insurers have a duty to effectuate a prompt, fair and equitable settlement of the insured's or tort plaintiff's claim. M.G.L. c. 176D, ' 3(9)(f). Unlike an individual plaintiff who can rely on a violation of Mass. Gen. Law, c. 176D, ' 3(9) as a per se violation of Mass. Gen. Law, c. 93A, ' 9, a business plaintiff must prove a violation of Mass. Gen. Law, c. 93A, ' 2. Polaroid v. Travelers Indemn. Co ., 414 Mass. 747, 754 (1994); see also Watts Water Techs., Inc. v. Fireman's Fund Ins. Co., SUCV2005-02604-BLS (Mass. Super. Mar. 20, 2009) (“[A] business plaintiff permitted to sue under ' 11 of Chapter 93A may not sue under ' 9 for alleged violations of Chapter 176D.”).

The Klairmont Decision

In Klairmont, the plaintiffs, two parents, sued a Boston bar and restaurant as well as affiliated individuals and entities, after their son was fatally injured when he fell down stairs at the defendants' establishment. Prior to filing suit, pursuant to Chapter 93A, the plaintiffs notified the defendants of their claim and requested a reasonable settlement offer. In their letters, the plaintiffs alleged that a staircase located in the defendants' establishment was maintained in violation of multiple provisions of the State Building Code. The plaintiffs further alleged that these violations constituted unfair and deceptive conduct under Chapter 93A, which caused their son's fatal injuries.

In response to the plaintiffs' demands, the defendants tendered a settlement offer of $25,000, which they subsequently raised to $75,000. Both amounts were well below the medical expenses incurred by the plaintiffs, and were rejected. Thereafter, the plaintiffs filed suit against the defendants, alleging claims for wrongful death, negligence, and violation of Chapter 93A, among other claims.

The case proceeded to trial, during which the judge allowed all claims to be decided by the jury, except for the Chapter 93A claim, which she reserved for herself. The jury held that the defendants' negligence was not a substantial factor leading to the plaintiffs' son's death, and returned a verdict for the defendants on the underlying tort claims.

Notwithstanding the jury's decision, the judge held that the defendants were liable for violation of Chapter 93A. The court found that the staircase constituted an unsafe, defective condition that violated the State Building Code and that this violation contributed to the plaintiffs' son's injury. The judge awarded $750,000 to each parent and to the son's estate. The judge further held that the defendants' violation was willful and knowing, warranting an award of treble damages and more than $2 million in attorneys' fees and costs. The total award was more than $9 million.

The Appeal

On appeal, the defendants argued that, since the jury returned a verdict in the defendants' favor on the wrongful death claim, the court erred in awarding damages under Chapter 93A. The court disagreed. It held that, “a claim under c. 93A vindicates rights personal to the decedent and does not aim to compensate a decedent' survivors. The c. 93A claim alleged by the plaintiffs on behalf of the estate is therefore a distinct cause of action separate and apart from the wrongful death cause of action alleging common-law claims.” Klairmont, 2013 Mass. LEXIS 338 at *25. Thus, the court affirmed the trial court's holding of liability for violation of Chapter 93A.

Critically, the court vacated and remanded the damages awarded by the trial court, finding that the parents were not entitled to Chapter 93A damages at all. Rather, the parents could “only recover to the extent that [the decedent] would have been able to recover on such a claim. ' Had [the decedent] survived, he would have been entitled to damages for the personal injuries caused by the defendants' unfair and deceptive conduct, including medical expenses and conscious pain and suffering.” Klairmont, 2013 Mass. LEXIS 338 at *29.

Significance of the Klairmont Decision

The Klairmont decision is another cautionary reminder to all entities doing business in Massachusetts that the Massachusetts Consumer Protection Act has significant teeth and that they should tread cautiously once notified of a putative Chapter 93A claim.

In light of the decision in Klairmont, defendants, and their insurers, must consider the possibility that, even if a defendant prevails at trial on underlying tort claims alleged by a plaintiff, the judge may find that the defendant's conduct violated Chapter 93A and impose a substantial award against them. In order to curtail liability for willful or knowing violations of Chapter 93A, ' 9 ' and the concomitant award of double or treble damages and attorneys' fees ' defendants, and insurers, may limit their exposure to liability by tendering a written settlement offer to the plaintiff that is reasonable in relation to the injury actually suffered. M.G.L. c. 93A, ' 9(3). If a court finds that this offer was in fact reasonable, then the defendant's liability for violation of Chapter 93A will be limited to the settlement offer.

On the other hand, the decision affirms that, where the jury has rendered a verdict in the plaintiff's favor, the trial court is not bound by that verdict and may find no Chapter 93A violation.

Kim V. Marrkand, a member of the litigation section in the Boston office of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., chairs the firm's insurance/reinsurance group and is a member of this newsletter's Board of Editors. Alec J. Zadek is also in the litigation section of Mintz Levin's Boston office and a member of the firm's insurance/reinsurance group. The views expressed in the article are those of the authors and not necessarily those of Mintz, Levin or its clients.