On March 28, 2018, the Appeals Court published a decision, Johanna Lief-Socolow et al. v. Annette Liquori et al., overturning a Superior Court judgment awarding $500,000.00 in punitive damages, $203,775.00 in attorney fees, and $30,473.25 in costs against the Plymouth Rock Assurance Company (Plymouth Rock).
The judgment of the Superior Court, which the Appeals Court reversed, had found Plymouth Rock liable for unfair claim practices in a suit arising out of Plymouth Rock’s handling of an automobile damage personal injury claim. The decision of the Appeals Court remanded the case to the Superior Court and ordered the Superior Court to enter judgment in favor of Plymouth Rock.
No dispute over liability but major disagreement over damages
The unfair claim practice case arose out of an auto accident in Agawam, MA on August 19, 2009. Annette Liquori, while driving a vehicle owned by Nicola Liquori, struck a vehicle operated by Ms. Lief-Socolow. Plymouth Rock insured the Liquori vehicle and did not dispute its insureds’ liability for the accident.
Immediately after the accident, Ms. Lief-Socolow did not manifest any injuries. Although she took a passenger to the emergency room, Ms. Lief-Socolow did not treat there. Instead, after the emergency room discharged her passenger, Ms. Lief-Socolow arranged for taxi transportation to the Six Flags Amusement Park for herself, her passenger and their six children where they remained until closing. She also rented a vehicle that night and drove herself and her three children ninety miles to their home in South Salem, NY.
A couple of days after the accident Ms. Lief-Socolow sought treatment from her primary care physician about having headaches, insomnia and back pain. Her symptoms worsened, and she became increasingly forgetful, disorganized, irritable and showed evidence of less intelligence than she had before the accident. Two months after the accident, Ms. Lief-Socolow’ husband who was an attorney notified Plymouth Rock that a radiology report had indicated his wife had a possible “brain shearing injury” as a result of the accident.
Six weeks later, Plymouth Rock received a demand letter for its full policy limit of $250,000.00 with a radiology report concerning Ms. Lief-Socolow injuries stating, “there are findings highly suspicious for non-hemorrhagic shearing injuries.” However, the radiology report also suggested other potential causes unrelated to a motor vehicle accident. Also, with the radiology report and the demand letter, Plymouth Rock received a neurologist’s impression that Ms. Lief-Socolow had suffered a “mild traumatic brain injury” which this doctor opined explained all her symptoms.
Plymouth Rock eventually received more medical records mentioning possible causes for Ms. Lief-Socolow’s symptoms other than the auto accident involving Plymouth Rock’s insureds.
Because of the conflicting medical reports evidencing other causes for Ms. Lief-Socolow’s symptomology, Plymouth Rock’s settlement offers were not overly generous. It believed Ms. Lief-Socolow had not sufficiently shown its insureds’ negligence had caused any of conditions for which she claimed damages.
Following Ms. Lief-Socolow’s initial policy limits demand, Plymouth Rock offered $9,000.00 to settle the claim. It did not increase this offer until October 2010 when it offered $16,000.00. In December 2010, after Ms. Lief-Socolow filed suit in the Superior Court, Plymouth Rock made a final offer of $35,000.00.
Arbitration award of $905,000.00 but claimants agreed to a $250,000.00 cap
The December 2010 complaint alleged a claim by Ms. Lief-Socolow for negligence against Annette Liquori and claims for negligence and negligent entrustment against Nicola Liquori, along with claims for loss of consortium against both Liquoris by Ms. Lief-Socolow’s husband and three children. The complaint also alleged a separate unfair claim practice claim against Plymouth Rock under M.G.L. c. 93A and M.G.L. c. 176D.
After two years of litigation, the parties agreed to arbitration on the personal injury claims. The unfair claim practice claim against Plymouth Rock was not arbitrated but reserved for the Superior Court to decide.
The arbitration agreement contained a “high-low” agreement with a maximum payout award equal to Plymouth Rock’s policy limit of $250,000.00 and a minimum payout award equal to Plymouth Rock’ last offer of $35,000.00.
The arbitrator, however, was not made aware of the existence of a high-low agreement and proceeded to hear the evidence and reached a decision independent of the high-low agreement.
After three days of hearings, the arbitrator issued an eight-page decision finding the medical evidence supported Ms. Lief-Socolow’s personal injury claim. He awarded $905,000.00 to Ms. Lief-Socolow and her family. Plymouth Rock immediately paid its policy limit of $250,000.00 under the maximum payment term of the high-low agreement.
Notwithstanding, Plymouth Rock’s payment of its policy limit, the Lief-Socolows (plaintiffs) moved to confirm the $905,000.00 award in the Superior Court. The Court denied the motion characterizing the plaintiffs’ argument as “too clever by half” pointing out:
The plaintiffs are seeking to circumvent the “high-low” arbitration agreement entered into by the plaintiffs and the defendants Liquori in order to have a (voluntarily) non-collectable judgment of $905,000 enter against the defendants Liquori, which judgment would establish a base amount to be multiplied in the event the plaintiffs successfully prosecute their Chapters 176D and 93A claims against the defendant Plymouth Rock.
Although the Court did not allow the $905,000.00 award to establish the base amount for any punitive damages found against Plymouth Rock, the judge did rule subsequently that the high of the high-low agreement or $250,000 would be the measure of punitive damages for any willful and knowing unfair claim practices found against Plymouth Rock.
Four-day trial finds Plymouth Rock liable for unfair claim practices
In December 2015 the Superior Court judge held a 4-day jury-waived trial in which seven witnesses testified. Each side’s witnesses included an expert witness opining as to the proper claim practices for an insurer such as Plymouth Rock under the circumstance of a disputed damage claim such as Ms. Lief-Socolow.
On July 11, 2016, the Superior Court judge issued her “Memorandum of Decision and Order.” She found Plymouth Rock had violated M.G.L. c. 93A by its “willful failure to conduct a reasonable investigation” and because Plymouth Rock’s “settlement offers were unfair and deceptive acts.” Based on her further findings that Plymouth Rock’s actions were “willful and knowing” violations, she awarded treble damages against Plymouth Rock with the measure of damages being the $250,000.00 limit on the high-low agreement.
However, in calculating the damages, she ordered the entry of judgment based upon three times the underlying arbitration award but inclusive of Plymouth Rock’s payment. Thus, the punitive damage judgment entered equaled $500,000.00. The judge also awarded the plaintiffs $203,775.00 in attorney fees and $30,473.25 in costs.
Plymouth Rock filed an appeal to the Appeals Court, and Ms. Lief-Socolow and her family followed with the filing of their cross-appeal.
Appeals Court finds no unfair claim practices in Plymouth Rock’s investigation or offers
On the appeal of the Superior Court judgment, the plaintiffs argued that a judgment should have entered for the $905,000 of the arbitration award and this amount should have been the basis for calculating any punitive damages against Plymouth Rock.
In the alternative, the plaintiffs argued a trebling of the $250,000.00 award the should have been $750,000.00 rather than $500,000.00, the Superior Court judge ordered.
Plymouth Rock for its part argued that the Superior Court judge had committed an error in finding it liable for unfair claim practices and awarding punitive damages. In Plymouth Rock’s opinion, the evidence showed its claim handling had been reasonable considering the disputed nature of the personal injuries Ms. Lief-Socolow had claimed, and the medical and legal opinions Plymouth Rock had relied upon in good faith.
The Appeals Court judges first agreed with the Superior Court judge. The plaintiffs had no right to confirm any arbitration award since “The purpose of confirming an arbitration award is to enable a plaintiff to collect an unsatisfied award” and “A trial court has no jurisdiction to hear an action to confirm an arbitration award if it has been fully satisfied.”
However, the Appeals Court completely disagreed with the Superior Court judge on the issue of Plymouth Rock having committed any unfair claim practices. The judges deciding the appeal ruled the Superior Court had been in error in finding Plymouth Rock had not conducted a reasonable investigation of Ms. Lief-Socolow’s claim or that the settlement offers of Plymouth Rock were unfair claims practices and unfair and deceptive acts under M.G.L. c. 93A.
The judges stated that the medical evidence relating to the value Ms. Lief-Socolow’s claim was unclear and not conclusive. Plymouth Rock in making the offers had accepted liability but, in the Court’s opinion, had fairly contested the damages involved, albeit unsuccessfully.
The Court also noted that the plaintiffs by agreeing to the high-low’s minimum and maximum had evidenced their acceptance that a reasonable range for Ms. Lief-Socolow’s damages was between the $35,000.00 offered by Plymouth Rock and the Liquoris’ policy limit of $250,000.00.
The Court found Plymouth Rock in hiring a neurologist who opined that Ms. Lief-Socolow had not suffered any neurological damage after a medical records review involving three independent medical examination reports fulfilled Plymouth Rock’s investigatory obligation under M.G.L. c. 93A.
Plymouth Rock had also relied on the experience and opinion of its attorney, with whom Plymouth Rock had worked for twenty years. The Appeals Court judges found Plymouth Rock’s reliance on seasoned counsel was justified and did not constitute an unreasonable investigation.
Based on the Appeals Court’s disagreement with the Superior Court’s findings, the Appeals Court’s final decision did not increase the damages Plymouth Rock owed as the plaintiffs hoped. Instead, the Appeals Court panel entered an order finding Plymouth Rock had no liability for any unfair claims practices in handling Ms. Lief-Socolow’s claim and ordered that judgment enter in the Superior Court in favor of Plymouth Rock.
The Appeals Court decision wiped out any recovery by the plaintiffs beyond the policy limit paid by Plymouth Rock under the arbitration high-low agreement.
Twenty days to apply for further appellate review to the Supreme Judicial Court
The Massachusetts Appeals Court is an intermediate appellate court. The ultimate judicial authority resides with the Supreme Judicial Court. Parties dissatisfied with an Appeal Court’s decision may apply for further appellate review. However, the allowance of any further appeal is discretionary with the Supreme Judicial Court.
Under the Massachusetts Rules of Appellate Procedure, the Lief-Socolow plaintiffs will have until April 18, 2018, to apply for further appellate review.
Based upon the decision of the Appeals Court to take away the judgment in favor of the plaintiffs, there is no doubt the plaintiffs will make an application for further appellate review to the Supreme Judicial Court.