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SJC-12108
ODIN ANDERSON & others1 vs. NATIONAL UNION FIRE INSURANCE
COMPANY OF PITTSBURGH PA & others.2
Middlesex. October 6, 2016. - February 2, 2017.
Present: Gants, C.J., Botsford, Lenk, Hines, Gaziano, & Lowy,
Budd, JJ.
Consumer Protection Act, Insurance, Unfair or deceptive act,
Offer of settlement, Damages. Insurance, Settlement of
claim. Damages, Consumer protection case, Interest,
Punitive. Interest. Judgment, Interest. Practice, Civil,
Judgment, Damages, Interest.
Civil action commenced in the Superior Court Department on
March 13, 2003.
The case was heard by Brian A. Davis, J., and motions to
alter or amend the judgment were also heard by him.
After review by the Appeals Court, the Supreme Judicial
Court granted leave to obtain further appellate review.
1
Kerstin Anderson and Katarina Anderson, by her father and
next friend, Odin Anderson.
2
American International Group Technical Services, Inc., &
AIG Claims Services, Inc.
2
Kathleen M. Sullivan for National Union Fire Insurance
Company of Pittsburgh PA.
Leonard H. Kesten (Richard E. Brody also present) for the
plaintiffs.
GAZIANO, J. In this appeal, we consider the proper measure
of punitive damages to be assessed against defendants who engage
in unfair or deceptive insurance settlement practices in
violation of G. L. c. 176D, § 3, and G. L. c. 93A, § 9 (3). The
plaintiffs -- Odin Anderson, his wife, and his daughter -- filed
a personal injury action in the Superior Court for serious
injuries Odin3 suffered after being struck by a bus owned by
Partners Healthcare Systems, Inc. (Partners), that was being
driven by one of its employees. The plaintiffs filed a separate
action, under G. L. c. 176D, and G. L. c. 93A, against Partner's
insurers and claims representatives; proceedings in that action
were stayed pending resolution of the underlying tort claims.
After a trial, a Superior Court jury awarded Anderson $2,961,0004
in damages in the personal injury action, and awarded his wife
and daughter $110,000 each. At a subsequent, jury-waived trial,
a different Superior Court judge found that the insurers and
claims representatives violated G. L. c. 93A and G. L. c. 176D
by their "egregious," "deliberate or callously indifferent"
3
Because the plaintiffs share a last name, we refer to them
by their first names.
4
This amount was later reduced by forty-seven per cent
based on the jury's finding of comparative negligence.
3
actions, "designed to conceal the truth, improperly skew the
legal system and deprive the Andersons of fair compensation for
their injuries for almost a decade." Based on these findings,
the judge concluded that the insurers' and claims
representatives' "misconduct warrants the maximum available
sanction . . . , both as punishment for what transpired and as a
deterrent to similar conduct in the future." He awarded the
plaintiffs treble damages, using as the "amount of the judgment"
to be multiplied the combined amount of the underlying tort
judgment and the accrued postjudgment interest on that judgment.
See G. L. c. 93A, § 9 (3); G. L. c. 176D, § 3 (9) (f) (where
violation of G. L. c. 176D is wilful, damages are to be
multiplied pursuant to G. L. c. 93A, § 9 [3]). The Appeals
Court affirmed the judgment of liability and the amount of the
award of damages, in an unpublished memorandum and order issued
pursuant to its rule 1:28. See Anderson v. National Fire Ins.
Co. of Pittsburgh PA, 88 Mass. App. Ct. 1117 (2015).
We granted the defendants' application for further
appellate review, limited to the issue whether postjudgment
interest was included properly in the "amount of the judgment"
to be multiplied under G. L. c. 93A, § 9 (3). We conclude that
in a case where the amount of actual damages to be multiplied
due to a wilful or knowing violation of G. L. c. 93A or G L.
4
c. 176D are based on the amount of an underlying judgment, that
amount does not include postjudgment interest.
1. Background. On September 2, 1998, while crossing
Staniford Street in Boston, Odin was struck and injured by a bus
owned by Partners and operated by Partners' employee Norman
Rice. As a result of the collision, he sustained serious
injuries, including a fractured skull and intracerebral
hemorrhage, that ultimately required more than one year of
medical treatment.
At the time of the accident, Partners and Rice were insured
under primary and excess policies issued by National Union Fire
Insurance Company of Pittsburgh PA. American International
Group Claims Services, Inc., the primary insurer, and American
International Group Technical Services, Inc., the excess
insurer, were responsible for adjusting claims on these
policies.
The plaintiffs, through counsel, sought to reach a
settlement agreement with the defendants. The defendants
rejected the plaintiffs' demand for settlement and declined to
enter into settlement negotiations. As a result, in May, 2001,
the plaintiffs filed a personal injury action against Partners
and Rice, claiming negligent operation of a motor vehicle,
negligent infliction of emotional distress, and loss of
consortium. In March, 2003, the plaintiffs filed a separate
5
action against all of the defendants under G. L. c. 176D, § 3,
and G. L. c. 93A, § 9 (3), alleging wilful and egregious failure
to conduct a reasonable investigation of the plaintiffs' claims,
and failure to effectuate a prompt, fair, and equitable
settlement, notwithstanding that liability had become
"reasonably clear" by the time the plaintiffs filed their
initial complaint. Proceedings in the second action were
stayed, on the parties' joint motion, pending resolution of the
underlying tort action.
Trial in the tort case took place in June and July of 2003.
The jury found that Odin had suffered $2,961,000 in damages but
that he was comparatively negligent for forty-seven per cent of
his injuries, thereby reducing the award of damages to
$1,569,330.5 Judgment entered for Odin on July 10, 2003, in the
amount of $2,244,588.93; the total amount included costs and
mandatary prejudgment interest, as required under G. L. c. 231,
§ 6B, of approximately $450,000.
The defendants appealed to the Appeals Court from certain
evidentiary rulings and from the judge's instructions on
comparative negligence. In August, 2008, the Appeals Court
affirmed the judgment, Anderson v. Rice, 72 Mass. App. Ct. 1114
5
The jury also awarded $110,000 each to Kerstin and
Katarina, Odin's wife and daughter. In April, 2007, the parties
reached an agreement to settle the loss of consortium claims,
and Kerstin and Katarina each received $204,569.13.
6
(2008), and we thereafter denied the defendants' application for
further appellate review, see 452 Mass. 1107 (2008). In
December, 2008, the defendants paid the amount of the damages
due to Odin on the underlying tort judgment, as well as the five
years of statutorily-mandated postjudgment interest accrued on
that judgment between its date of entry in the Superior Court
and the issuance of the Appeals Court's opinion. The amount
ultimately paid to Odin totaled $3,252,857.80, which included
$1,284,243.17 in postjudgment interest.
In September, 2013, a second Superior Court judge conducted
a ten-day jury-waived trial on the G. L. c. 176D and G. L.
c. 93A action. His decision containing findings of fact,
rulings of law, and an order for judgment issued in April, 2014.
The judge found that the defendants violated G. L. c. 176D,
§ 3 (9) (d), by failing to "conduct a reasonable investigation
. . . based on all available evidence," including by suppressing
unfavorable evidence and offering fictitious evidence; failing
to "effectuate prompt, fair and equitable settlement of claims
in which liability . . . ha[d] become reasonably clear"; and
pursuing an unreasonable appeal of the underlying personal
injury judgment. The judge also concluded that the defendants'
violations of G. L. c. 176D had been wilful and egregious,
warranting an award of punitive damages under G. L. c. 93A,
§ 9 (3). The judge determined that the amount to be multiplied
7
under G. L. c. 93A, § 9 (3), was double the amount of the
underlying personal injury judgment that had entered in 2003,
combined with the postjudgment interest that had accrued between
the date of entry and the date of the defendants' payment in
2008.
The parties filed motions to modify the judgment, pursuant
to Mass. R. Civ. P. 59 (e), 365 Mass. 827 (1974). The
plaintiffs asserted that the judge's doubling of the amount of
the underlying 2003 judgment was inconsistent with his stated
purpose to impose "maximum available sanctions." They argued
that the maximum award of punitive damages available under G. L.
c. 93A, § 9 (3), is three times the amount of the judgment
rendered in the underlying tort action. The defendants argued,
by contrast, that the judge improperly included postjudgment
interest in the amount to be multiplied. In June, 2014, the
judge issued an amended judgment that increased the amount of
the punitive damages to three times the amount of the underlying
judgment. He also rejected the defendants' "unduly restrictive
view" of punitive damages under G. L. c. 93A, § 9 (3), and
retained the postjudgment interest in the amount to be
multiplied.6
6
The judge awarded the plaintiffs punitive damages in the
amounts of $9,758,573.40 to Odin and $613,707.39 each to Kerstin
and Katarina. Of that amount, approximately $4.2 million was
8
2. Discussion. The statutory framework governing the
plaintiffs' claims is well established. See Rhodes v. AIG
Domestic Claims, Inc., 461 Mass. 486, 494-495 (2012) (describing
interplay between related G. L. c. 176D, § 3 [9] [f], and G. L.
c. 93A, § 9 [3], claims). An insurance company commits an
unfair claim settlement practice if it "[f]ail[s] to effectuate
prompt, fair and equitable settlements of claims in which
liability has become reasonably clear." G. L. c. 176D,
§ 3 (9) (f). "[A]ny person whose rights are affected by another
person violating the provisions of [G. L. c. 176D, § 3 (9) (f),]
is entitled to bring an action to recover for the violation
under G. L. c. 93A, § 9" (quotations omitted). See Rhodes,
supra at 494. If the fact finder concludes that an insurer has
failed to effectuate a prompt, fair, and equitable settlement,
causing injury, the plaintiff is entitled to the greater of
actual damages or statutory damages of twenty-five dollars.
G. L. c. 93A, § 9 (3). Where an insurer's action was "willful
or knowing" (or, as here, both), the judge must award multiple
damages. Id. General Laws c. 93A, § 9 (3), requires that the
judge "shall" award punitive damages of "up to three but not
less than two times" the actual damages in the underlying
action. The statute further provides that "[f]or the purposes
attributable to the trebling of approximately $1.4 million in
postjudgment interest.
9
of this chapter, the amount of actual damages to be multiplied
by the court shall be the amount of the judgment on all claims
arising out of the same and underlying transaction or
occurrence." (emphasis supplied). Id.
The question before us is whether "the amount of the
judgment" that serves as the measure of "actual damages" to be
doubled or trebled under G. L. c. 93A, § 9 (3), includes the
amount of any postjudgment interest that accrued on that
judgment before it was paid. In examining this issue we
consider (a) the plain language of G. L. c. 93A, § 9 (3); (b)
the nature of pre- and postjudgment interest; and (c) the
purpose of the punitive damages available under the statute.
a. Statutory language. As with every statutory analysis,
our interpretation of G. L. c. 93A, § 9 (3), begins with the
plain language of the statute. See International Fid. Ins. Co.
v. Wilson, 387 Mass. 841, 853 (1983). "All the words of a
statute are to be given their ordinary and usual meaning, and
each clause or phrase is to be construed with reference to every
other clause or phrase without giving undue emphasis to any one
group of words, so that, if reasonably possible, all parts shall
be construed as consistent with each other so as to form a
harmonious enactment effectual to accomplish its manifest
purpose." Worcester v. College Hill Props., LLC, 465 Mass. 134,
139 (2013), quoting Selectmen of Topsfield v. State Racing
10
Comm'n, 324 Mass. 309, 312–313 (1949). Although the "[w]ords
and phrases" of the statutory text "shall be construed according
to the common and approved usage of the language," "technical
words and phrases and such others as may have acquired a
peculiar and appropriate meaning in law shall be construed and
understood according to such meaning." G. L. c. 4, § 6, Third.
Where "the language is clear and unambiguous, it is conclusive
as to the intent of the Legislature." Deutsche Bank Nat'l Trust
Co. v. Fitchburg Capital, LLC, 471 Mass. 248, 253 (2015).
In common understanding, a "judgment" is "a legal decision;
an order or sentence given by a judge or law court"; or "a debt,
resulting from a court order." Webster's New Universal
Unabridged Dictionary 990 (2d ed. 1983). This is consistent
with the more technical, legal definition of a "judgment" as a
"court's final determination of the rights and obligations of
the parties in a case." Black's Law Dictionary 970 (10th ed.
2014). See Shawmut Community Bank, N.A. v. Zagami, 419 Mass.
220, 225 (1994), quoting Gibbs Ford, Inc. v. United Truck
Leasing Co., 399 Mass. 8, 11 (1987) ("the term 'judgment' refers
to the final adjudicating act of the judge 'disposing of all
claims against all the parties to the action'").
The statutory language in question here, "the amount of the
judgment," does not provide any express guidance as to whether
the "judgment" to be multiplied for wilful or knowing misconduct
11
encompasses postjudgment interest. Nor is this question
clarified elsewhere in the statute. Where, as here, the meaning
of the statutory language is "sufficiently ambiguous to support
multiple, rational interpretations, . . . we look to the cause
of its enactment, the mischief or imperfection to be remedied
and the main object to be accomplished, to the end that the
purpose of its framers may be effectuated" (citations and
quotations omitted). Kain v. Department of Envtl. Protection,
474 Mass. 278, 286 (2016).
b. Nature of pre- and postjudgment interest. As the
Legislature has enacted two statutes mandating the payment of
interest on judgments, see G. L. c. 231, § 6B (prejudgment
interest); G. L. c. 235, § 8 (postjudgment interest), we turn to
them for guidance.7 See Connors v. Annino, 460 Mass. 790, 796
(2011), quoting Canton v. Commissioner of the Mass. Highway
Dep't, 455 Mass. 783, 791–792 (2010) (we attempt to "construe
statutes that relate to the same subject matter as a harmonious
whole and avoid absurd results"). See, e.g., Canton, supra
(construing differing provisions of Massachusetts Environmental
7
In common usage, "interest" is defined as "money paid for
the use of money." Webster's New Universal Unabridged
Dictionary 956 (2d ed. 1983). In legal understanding,
"interest" is "compensation . . . allowed by law for the use or
detention of money, or for the loss of money by one who is
entitled to its use." Black's Law Dictionary 935 (l0th ed.
2014). Interest is thus, by its nature, an amount charged and
owed that is distinct from the amount of the principal.
12
Protection Act). "If the language of the statute is 'fairly
susceptible [of] a construction that would lead to a logical and
sensible result' . . . we will construe [it] so 'as to make [it
an] . . . effectual piece[] of legislation in harmony with
common sense and sound reason.'" Commonwealth v. Williams, 427
Mass. 59, 62, (1998), quoting Commonwealth v. A Juvenile, 16
Mass. App. Ct. 251, 254 (1983).
With respect to prejudgment interest, G. L. c. 231, § 6B,
provides that, in a tort case involving personal injury or
damage to property, "there shall be added by the clerk of court
to the amount of damages interest thereon . . . from the date of
commencement of the action." (emphasis supplied). Because
prejudgment interest is "added . . . to the amount of damages,"
it becomes an integral part of the amount of the judgment
itself. See, e.g., R.W. Granger & Sons v. J & S Insulation,
Inc., 435 Mass. 66, 84 (2001) (prejudgment interest forms part
of underlying judgment and therefore is multiplied in computing
award under G. L. c. 93A); City Coal Co. of Springfield, Inc. v.
Noonan, 424 Mass. 693, 695 (1997), S.C., 434 Mass. 709 (2001)
(prejudgment interest forms part of judgment for purpose of
calculating postjudgment interest). Prejudgment interest is
included in the judgment because it compensates the prevailing
party for the time value of money accrued before resolution of
the legal dispute, and thus represents an "integral component of
13
compensatory damages." Smith v. Massachusetts Bay Transp.
Auth., 462 Mass. 370, 376 (2012).
By contrast, postjudgment interest "is not an element of
compensatory damages." Id. Postjudgment interest serves to
provide compensation to the prevailing party for delay in
payment after a nonprevailing party's underlying obligation has
been established. See Chapman v. University of Mass. Med. Ctr.,
423 Mass. 584, 587 (1996) (postjudgment interest is not part of
underlying claim). Thus, the postjudgment interest statute,
G. L. c. 235, § 8, provides that "[e]very judgment for the
payment of money shall bear interest from the day of its
entry . . ." (emphasis supplied). See Kaiser Aluminum & Chem.
Corp. v. Bonjorno, 494 U.S. 827, 835-836 (1990) ("purpose of
postjudgment interest is to compensate the successful plaintiff
for being deprived of compensation for the loss from the time
between the ascertainment of the damage and the payment by the
defendant" [citation omitted]). Put another way, in every
context other than G. L. c. 93A, while prejudgment interest is
added to a judgment and therefore forms an integral part of it,
postjudgment interest is borne by the judgment and is separate
and distinct from it.
The plaintiffs urge that we read the requirement of G. L.
c. 235, § 8, as indicating that, in the context of G. L. c. 93A,
postjudgment interest is part of the judgment itself, subject to
14
doubling or trebling for wilful or knowing misconduct. In our
view, however, the language of the statute implies the opposite
conclusion. That a judgment "bears" interest suggests that
interest is not an inherent part of the judgment itself but,
rather, something accrued in addition. See Black's Law
Dictionary 183 (10th ed. 2014) (defining to "bear" as to
"support or carry" or to "produce as yield"). That a judgment
supports, carries, or produces interest indicates that the
interest is separate and distinct from the judgment. The
statutory language is consistent with this common understanding
of its words: the Legislature chose not to include in the
statute mandating postjudgment interest that such interest is to
be "added . . . to the amount of damages," in direct contrast to
the language it chose with respect to prejudgment interest.8 See
G. L. c. 231, § 6B.
The view that postjudgment interest is separate and
distinct from the underlying amount of the damages is supported
by statutory provisions and rules of civil procedure in other
contexts, such as those governing the form of executions.
8
Although the issues confronting us were different, and the
question of postjudgment interest was not the focus of the
decisions, on two prior occasions we have treated postjudgment
interest as properly excluded from the "amount of the judgment"
for purposes of a multiplied damage calculation under G. L.
c. 93A, § 9 (3). See Rhodes v. AIG Domestic Claims, Inc., 461
Mass. 486, 498-500 (2012); R.W. Granger & Sons v. J & S
Insulation, Inc., 435 Mass. 66, 84 (2001).
15
General Laws c. 235, § 8, provides that an execution of a money
judgment shall "specify the day upon which judgment is entered,
and shall require the collection or satisfaction thereof with
interest from the date of its entry." Likewise, Mass. R. Civ.
P. 54 (f), 382 Mass. 822 (1980), provides that "[e]very judgment
for the payment of money shall bear interest up to the date of
payment of said judgment" (emphasis supplied).9 If postjudgment
interest were, like prejudgment interest, a part of the
underlying amount of damages, there would be no need separately
to specify both sums in an execution.
c. Purpose of punitive damages under G. L. c. 93A § 9 (3).
We recognize, as we have previously, that multiple damages
awarded under G. L. c. 93A, § 9 (3), are punitive in nature.
See Rhodes, 461 Mass. at 498 ("There is general consensus among
courts and commentators that the 1989 amendment [establishing
the award of multiple damages] was intended to increase the
potential penalties for insurers who engaged in unfair claim
settlement practices"); id. at 503. The statute is thus a
"penal statute" akin to other statutes "designed to enforce the
law by punishing offenders, rather than simply by enforcing
9
Rule 54 (f) of the Massachusetts Rules of Civil Procedure,
382 Mass. 822 (1980), provides that where an "execution or order
directing the payment of [a] judgment" is issued, the amount of
"interest from the date of entry of . . . judgment to the date
of [the] execution or order shall . . . be computed by the
clerk, and the amount of such interest shall be stated on the
execution or order."
16
restitution to those damaged." See Collatos v. Boston
Retirement Bd., 396 Mass. 684, 686 (1986) (construing pension
forfeiture statute).
The trial judge included postjudgment interest in the
amount to be trebled based on his determination that the
"maximum available sanction" was warranted. Thus, we consider
the plaintiffs' contention that the "amount of the judgment" to
be multiplied properly should include postjudgment interest, in
order to discourage defendants from "holding the verdict money
'hostage' during the appellate process" and to effectuate the
legislative purpose of providing an additional, substantial
sanction to discourage others from similar misconduct.
For several reasons, we conclude that the plaintiffs'
contention that the Legislature must have intended to include
postjudgment interest in "the amount of the judgment to be
multiplied" in order to protect injured parties against bad
faith appeals by insurance companies is unwarranted.10 The
10
Relying on Boyer v. Bowles, 316 Mass. 90, 95 (1944), as
did the Appeals Court, the plaintiffs argue that postjudgment
interest, while not computed when a judgment is entered, is part
of the judgment because it is definitively derived from a known
mathematical calculation based on the amount of the initial
award. In 1944, this court observed that "the meaning of the
final decree is plain. Though not computed, the amount of
interest to be paid was certain, on the principle that whatever
can be made certain by mere arithmetic is already certain.
Substantially the decree is as though the interest had been
computed and stated, and added to the principal." Id. That
case, however, predated the provision for multiple damages in
17
Legislature established the statutory twelve per cent
postjudgment interest rate specifically to protect prevailing
parties during the appellate process. In addition, several
other statutory and procedural means exist to discourage
frivolous or bad-faith appeals. See, e.g., G. L. c. 211A, § 15
(costs and interest for delay caused by frivolous appeal); G. L.
c. 231, § 6F (awards of costs, expenses, and attorney's fees as
sanction for advancing claim or defense found to be
"insubstantial, frivolous and not advanced in good faith");
Mass. R. A. P. 25, as appearing in 376 Mass. 949 (1979) (damages
and interest where delay result of frivolous appeal). These
also include G. L. c. 93A, § 9 (3), itself, claims under which
may be triggered by postjudgment conduct. See Rhodes, 461 Mass.
at 495 (considering postjudgment violations of c. 93A).
Ultimately, we find it persuasive that the Legislature did not
specify explicitly in the postjudgment interest statute that
such interest is to be "added . . . to the amount of damages,"
as it did with regard to prejudgment interest in G. L. c. 231,
§ 6B.
Moreover, under the rule of lenity, given the absence of an
express textual provision or an indication of legislative
G. L. c. 93A § 9 (3), by more than forty years, and discussed
both pre- and postjudgment interest. The statement that the
plaintiffs reference was made with regard to prejudgment
interest. See Boyer, supra.
18
intent, G. L. c. 93A, § 9 (3), cannot be read implicitly to
allow (or to require, as the multiplication of an award of
damages for wilful misconduct is mandatory) doubling or trebling
an award of postjudgment interest. See Libby v. New York, N.H.
& H.R.R., 273 Mass. 522, 525–526 (1930).
In sum, the plaintiffs have advanced no reason other than
further punishing a defendant whose violation was wilful or
knowing to suggest that, in enacting G. L. c. 93A, the
Legislature intended a departure from the treatment of
postjudgment interest in other contexts. We therefore decline
to read into the statute an additional measure of punishment
that the Legislature did not set forth explicitly. Commissioner
of Correction v. Superior Court Dep't of the Trial Court for the
County of Worcester, 446 Mass. 123, 126 (2006) ("We do not read
into the statute a provision which the Legislature did not see
fit to put there, nor add words that the Legislature had an
option to, but chose not to include").
3. Conclusion. The judgment is vacated, and the matter is
remanded to the Superior Court for entry of a revised judgment,
consistent with this opinion.
So ordered.