Rhodes v. AIG Domestic Claims, Inc. (SJC-10911)
In Rhodes v. AIG Domestic Claims, Inc., SJC-10911 (February 10, 2012), the SJC reaffirmed that damages for knowing or willful violation of c. 93A/176D will be calculated based on the underlying judgment amount where the underlying tort action proceeds to a judgment. The recent SJC decision paved the way for $22 million in c. 93A damages against an excess insurer and underscored the importance of understanding how damages are calculated in unfair claim settlement claims. As a result, the SJC remanded the case to the trial court to calculate the double damage award using the underlying $11.3 million tort judgment as the amount to be doubled.
The SJC did not distinguish between pre-judgment and post-judgment violations of c. 93A/17D and held that findings of willful or knowing violations either before or after entry of the tort judgment were sufficient to warrant the imposition of double damage. In Rhodes, the trial court found that the insurer committed pre-judgment violations that did not cause any actual damages. The trial court also found that the insurer committed a willful and knowing post-judgment violation of c. 93A/176D by making an offer of settlement substantially less than the judgment amount and awarded â€œloss of useâ€ damages (i.e. lost interest) based on this finding.
The SJC overturned the trial court and found that the language and history of Chapter 93A as amended require that double damages be calculated based on the amount of the underlying tort judgment. The SJC held that the post-judgment violation was sufficient to warrant the imposition of c. 93A/176D damages but that the proper measure of damages for the willful and knowing violation was calculation of double damages based on the underlying tort judgment rather than the loss of use method applied by the trial court.
Please contact David Hassett at (508) 791-6287 if you have any questions or comments about this decision.