Chiulli v. Liberty Mutual Insurance, Inc.

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18-P-1288 Appeals Court

ROBERT CHIULLI vs. LIBERTY MUTUAL INSURANCE, INC., & another.1

No. 18-P-1288.

Suffolk. November 12, 2019. - April 2, 2020.

Present: Meade, Maldonado, & Massing, JJ.

Consumer Protection Act, Insurance, Offer of settlement, Unfair
act or practice, Damages. Insurance, Settlement of claim,
Unfair act or practice. Damages, Consumer protection case.
Statute, Construction.

Civil action commenced in the Superior Court Department on
March 18, 2013.

Following review by this court, 87 Mass. App. Ct. 229
(2015), the case was heard by Rosemary Connolly, J.

Andrew M. Abraham (Martin R. Sabounjian also present) for
the plaintiff.
Myles W. McDonough (Christopher M. Reilly also present) for
the defendant.

MASSING, J. This case, involving unfair insurance claim

settlement practices, see G. L. c. 176D, § 3 (9), began with an

1 Everest Re Group, Ltd. Everest is not a party to this
appeal.
2

argument over a barstool at a restaurant on Newbury Street in

Boston. The argument simmered over the evening and spilled onto

the street, culminating in an exchange of blows that left the

plaintiff, Robert Chiulli, with a traumatic brain injury. Two

lawsuits followed. In the first case, which was tried in the

United States District Court for the District of Massachusetts

(Federal court case), a jury concluded that the operator of the

restaurant, Newbury Fine Dining, Inc., doing business as Sonsie

(Sonsie), and an associated entity, Lyons Group, Ltd. (Lyons

Group), were each forty-five percent at fault for Chiulli's

injuries and awarded compensatory damages of approximately $4.5

million. In the second case, which was tried jury-waived in the

Superior Court and is the subject of this appeal (State court

case), Chiulli asserted a G. L. c. 93A claim against Sonsie's

and Lyons Group's insurer, defendant Liberty Mutual Insurance,

Inc. (Liberty Mutual), for its failure to effectuate a prompt,

fair, and equitable settlement of the Federal court case once

liability had become reasonably clear. See G. L. c. 176D,

§ 3 (9) (f).2 The trial judge found that liability became

2 In the early stages of the State court case, Liberty
Mutual filed a special motion to dismiss under G. L. c. 231,
§ 59H, the anti-SLAPP (Strategic Lawsuit Against Public
Participation) statute. A Superior Court judge denied the
motion, Liberty Mutual appealed, and we affirmed the order
denying the motion. See Chiulli v. Liberty Mut. Ins., Inc., 87
Mass. App. Ct. 229 (2015).
3

reasonably clear after closing arguments in the Federal court

case, that Liberty Mutual violated c. 93A from that time until

six weeks later, and that Liberty Mutual's violation was not

willful or knowing. The trial judge awarded Chiulli damages of

$25, see G. L. c. 93A, § 9 (3), plus attorney's fees and costs.

Both parties appeal. We affirm in part and reverse in part.

Background. 1. The physical altercation. While the

precise events that led to Chiulli's injury have been fiercely

contested, no one disputes the following facts for purposes of

this appeal. One evening in June 2008, Chiulli went to Sonsie

with a group of friends. At some point in the evening, Jeffrey

Reiman sat on a barstool that had been previously occupied by

someone in Chiulli's group, prompting a heated argument between

Chiulli's group and Reiman. A bartender overheard the argument

and summoned his manager, Ivan Daskalov, who spoke with

Chiulli's group and Reiman and also asked the doorman to keep an

eye on them. Reiman moved to a different barstool.

Once Chiulli's group and Reiman were separated, Reiman

spoke by telephone with his friend, Victor Torza, who came to

Sonsie within minutes. Another friend, Garret Rease, joined

Reiman and Torza. Torza attempted to approach Chiulli's group

but was intercepted by Sonsie's manager, Daskalov, who continued

to separate the groups but permitted them to remain at the

restaurant. Shortly thereafter, Reiman approached Chiulli's
4

group, said something, and walked out of the restaurant,

followed directly by Daskalov, then Chiulli's group, and then

Torza and Rease. A fight broke out. While the parties dispute

who threw the first punch, and in particular whether it was

Chiulli, the fight ended when Rease knocked Chiulli unconscious.

Chiulli suffered a traumatic brain injury that required him to

relearn basic daily living skills, and he incurred medical bills

in excess of $600,000.

In the Federal court case, Chiulli asserted negligence

claims against Reiman, Torza, Rease, Sonsie, and Lyons Group.3

Chiulli's theory of the case, which he presented in part through

expert opinion testimony, was that Sonsie and Lyons Group

engaged in negligent security practices by failing to remove

Reiman and his friends, who were acting in a disruptive fashion,

and by failing to ensure that the sparring factions did not

leave the restaurant together. Although neither Sonsie nor

Lyons Group offered its own expert witness, they nonetheless

took the position that they had reasonably responded to the

barstool incident and that Chiulli bore ultimate responsibility

for throwing the first punch. After a three-week trial, the

jury largely agreed with Chiulli and, on November 19, 2012,

3 Chiulli initially filed his complaint in the Superior
Court; the case was removed to the United States District Court
for the District of Massachusetts on Sonsie's motion.
5

rendered a verdict finding that Sonsie and Lyons Group were each

forty-five percent at fault, that Chiulli and Rease were each

five percent at fault, and that Chiulli's damages were

$4,494,665.83. Acting on Chiulli's motion to amend the judgment

and add prejudgment interest, filed on November 21, 2012, the

Federal trial judge entered an amended judgment on September 30,

2013, in the amount of $4,501,654.74.4

2. The insurance dispute. Sonsie and Lyons Group had

liability coverage through two different policies: a policy

with Liberty Mutual that provided primary coverage up to a

$1 million limit, and a policy with defendant Everest Re Group,

Ltd. (Everest) that provided excess coverage. Liberty Mutual

was responsible for controlling the defense of the Federal court

case -- and thus controlled any settlement with Chiulli -- until

Liberty Mutual concluded that its policy limit was exhausted, at

which point it was required to tender its policy limit to

Everest so that Everest could assume control. Liberty Mutual

did not make any settlement offers to Chiulli during the course

of the Federal court case, except for one offer of $150,000

during the trial. Liberty Mutual refused to tender its policy

4 The judge reduced the jury's award of damages by five
percent, the fault attributed to Chiulli, then added twelve
percent prejudgment interest on the amount of Chiulli's past
medical expenses.
6

limit even after the jury reached its verdict awarding Chiulli

damages well over the limit.

On December 5, 2012, sixteen days after the verdict in the

Federal court case, Chiulli sent a c. 93A demand letter to

Liberty Mutual and Everest. Chiulli alleged that Liberty Mutual

and Everest had failed to effectuate a prompt, fair, and

equitable settlement of the Federal court case once liability

became reasonably clear and requested $5,701,822.25 "to resolve

[the Federal court] case, and to avoid further litigation in

which [Chiulli] will seek double or treble damages under c.

93A." By December 27, 2012, Everest was also frustrated by

Liberty Mutual's reluctance to settle and sent its own c. 93A

letter demanding that Liberty Mutual tender its policy limit

plus interest. Liberty Mutual complied the following day.

Around the same time, Chiulli sent a second c. 93A demand letter

to Liberty Mutual and Everest.5 In that letter, Chiulli

clarified that the demand of $5,701,822.25 was to resolve the

Federal court case, and that he was seeking $10 million if

Liberty Mutual and Everest also wanted a release of his c. 93A

claims. On January 4, 2013, Everest, now in control of

5 The first page of Chiulli's second demand letter was dated
December 27, 2012, but the remaining pages were dated December
31, 2012. Just before receiving this letter on January 2, 2013,
Everest made an oral settlement offer to Chiulli in the amount
of $5,101,741.
7

settlement negotiations, sent Chiulli a written offer of

$5,507,597.60 to settle the Federal court case. Chiulli

accepted the offer and signed a settlement agreement release,

which expressly excluded "any and all claims pursuant to G. L.

c. 93A et seq. and/or G. L. c. 176D, et seq." On January 30,

2013, Liberty Mutual replied to Chiulli's first demand letter,

denying any liability under c. 93A or c. 176D.

Chiulli pursued his c. 93A claim against Liberty Mutual by

filing a complaint in the Superior Court, alleging that his

damages and Sonsie's and Lyons Group's liability were reasonably

clear well before the trial of the Federal court case.6

Following a jury-waived trial in the Superior Court, the trial

judge concluded that liability became reasonably clear on

November 16, 2012, after closing arguments in the Federal court

case. "[I]ndulging Liberty [Mutual]," the judge found that

legitimate questions about Chiulli's culpability and Sonsie's

and Lyons Group's duties remained as the trial date in the

Federal court case approached. The judge also found that

Chiulli had prepared a strong case that, because of negligent

security practices, Sonsie and Lyons Group were liable

regardless of who threw the first punch -- a theory that Liberty

6 Chiulli also asserted a c. 93A claim against Everest, as
to which Everest obtained summary judgment. Chiulli does not
press any claim against Everest on appeal.
8

Mutual "never seemed to really grasp," and that Sonsie and Lyons

Group were unprepared to rebut. Going into trial, the defense

team reported to Liberty Mutual that Sonsie and Lyons Group had

a seventy percent likelihood of prevailing; Liberty Mutual's

claims adjuster believed the company's chances were closer to

eighty percent. As the trial progressed, the defense team's own

estimation of a favorable verdict for their clients dwindled to

fifty-five percent. In the judge's view, the defense team and

Liberty Mutual did not realistically assess the plaintiff's case

and overestimated their own likelihood of success. The judge

concluded that "after the last words had been spoken in closing

arguments, Liberty [Mutual] knew at that moment all it needed to

know," and that "a reasonable insurer could make an objective

review of all the evidence as it actually unfolded during the

course of the trial" and conclude that liability and damages had

become reasonably clear.

The trial judge further found that after the verdict was

returned, Liberty Mutual, by its own assessment, knew that

success on appeal or in posttrial motions was unlikely. The

judge found that Liberty Mutual had information that Chiulli

"was in dire need of cash," and that Liberty Mutual decided that

threatening an appeal "might take the wind out of [his] sails."7

7 A claim note dated November 26, 2012, regarding Liberty
Mutual's "post-trial strategy," observed, "The indication has
9

The judge found that after liability had become reasonably

clear, using Chiulli's financial condition "as a negotiating

lever," Liberty Mutual "made Chiulli continue to wait over

Thanksgiving [and] Christmas," refused to negotiate, and "hoped

that the plaintiff's deteriorated financial condition would lead

to more favorable settlement terms." Indeed, Liberty Mutual

never attempted to settle the case, but finally tendered its

policy limit to Everest on December 28, 2012, after Everest

threatened legal action.

The trial judge assessed nominal damages of $25, reasoning

that Chiulli ultimately suffered no loss of use of money from

Liberty Mutual's withholding of a reasonable settlement offer

because the ultimate settlement with Everest far exceeded the

verdict in the Federal court case. The judge further found that

Liberty Mutual's failure to make a prompt, fair, and equitable

settlement offer was not willful or knowing. The judge awarded

Chiulli his attorney's fees and costs from the day liability

became reasonably clear through the trial of the State court

case.

always been that [Chiulli] is in desperate need of money . . . .
It was agreed that when & if he calls that [defense counsel]
would feel him out & he would do so by indicating that we are
going to go forward w/an appeal. This might take the wind out
of his sails."
10

Discussion. 1. Liberty Mutual's appeal. a. Settlement-

offer defense. Liberty Mutual contends that the trial judge

erred by failing to apply the settlement-offer defense set forth

in G. L. c. 93A, § 9 (3), (4).8 This defense limits the damages,

attorney's fees, and costs that a plaintiff would otherwise be

entitled to recover for a violation of c. 93A if the plaintiff

rejects a reasonable written offer of settlement made within

thirty days of service of a c. 93A demand letter.9

Liberty Mutual argues that it is entitled to this defense

based on Everest's written settlement offer dated January 3,

2013, which was made to Chiulli within thirty days of his demand

8 In reviewing the parties' arguments, we accept the trial
judge's findings of fact unless they are clearly erroneous, but
review her conclusions of law de novo. See T.W. Nickerson, Inc.
v. Fleet Nat'l Bank, 456 Mass. 562, 569 (2010).

9 General Laws c. 93A, § 9 (3), requires plaintiffs to mail
or deliver a written demand letter before filing suit and sets
out a defense to damages, with procedural requirements (none of
which Liberty Mutual satisfied) for asserting the defense:

"Any person receiving such a demand for relief who, within
thirty days of the mailing or delivery of the demand for
relief, makes a written tender of settlement which is
rejected by the claimant may, in any subsequent action,
file the written tender and an affidavit concerning its
rejection and thereby limit any recovery to the relief
tendered if the court finds that the relief tendered was
reasonable in relation to the injury actually suffered by
the petitioner."

Section 9 (4) calls for attorney's fees and costs to be
assessed, but also states that attorney's fees and costs
"incurred after the rejection of a reasonable written offer of
settlement" timely made shall not be awarded.
11

letters.10 Citing Rhodes v. AIG Dom. Claims, Inc., 461 Mass. 486

(2012), Liberty Mutual reasons that because of the relationship

between primary and excess insurers, it could not extend its own

settlement offer to Chiulli, and that it instead had to tender

its policy limit to Everest. See id. at 505-506 (excess insurer

takes over obligation to settle insurance claim once primary

insurer tenders its policy limit). Therefore, Liberty Mutual

argues, any written settlement offer made by Everest necessarily

included Liberty Mutual's contribution.

The main flaw in Liberty Mutual's reasoning is that it

conflates the settlement of two different claims: Chiulli's

underlying claim against Sonsie and Lyons Group in the Federal

court case, which Liberty Mutual insured, and the c. 93A claim

that Chiulli asserted directly against Liberty Mutual.11

Settling the underlying insurance claim, even within thirty days

10Liberty Mutual also asserts that contract principles
required Chiulli to drop his c. 93A claims because Everest's
verbal settlement offer of $5,101,741 on January 2, 2013, see
note 5, supra, constituted acceptance of Chiulli's first demand
letter, in which he offered "to drop any 93A claim upon Liberty
and Everest's offering any reasonable amount." We need not
discuss the legal merits of this argument, as it lacks a factual
basis in the record. Chiulli's first demand letter requested
$5,701,822.25, not "any reasonable settlement offer," to drop
his c. 93A claim.

11The impediments that arise from the relationship between
primary and excess insurers all go to the primary insurer's
ability to settle the underlying claim against the insured, not
the c. 93A claim asserted directly against the insurer or
insurers.
12

of a c. 93A demand letter, does not necessarily resolve the

associated c. 93A claims, as those claims allow a plaintiff to

remedy the separate harm caused by the insurer's unfair

settlement practices. See Clegg v. Butler, 424 Mass. 413, 419 &

n.6 (1997) (recognizing that eventual settlement of underlying

claim does not settle or remedy distinct injury from unjust

delay in making settlement offer). Because of the distinction

between the two types of claims, acceptance of an insurer's

tender of payment for an insured claim "does not vitiate a claim

under G. L. c. 93A as a matter of course, unless the latter

claim has been expressly settled." Auto Flat Car Crushers, Inc.

v. Hanover Ins. Co., 469 Mass. 813, 822 (2014).

Chiulli never received a written settlement offer to

resolve the c. 93A claim he asserted against Liberty Mutual. In

its written settlement offer, Everest offered to settle only

"the underlying litigation" against Sonsie and Lyons Group. The

release agreement Chiulli signed on January 22, 2013, in

connection with the settlement of his claims against Sonsie and

Lyons Group specifically excluded his claims under c. 93A and

c. 176D. Subsequently, Liberty Mutual itself also responded to

Chiulli's c. 93A demand letter without making any offer to

settle. In these circumstances, Liberty Mutual may not properly

avail itself of the settlement-offer defense to limit its

liability for Chiulli's c. 93A claim. We do not suggest that
13

when an insurer receives a c. 93A demand alleging the failure to

effectuate a prompt, fair, and equitable settlement, it may not

make a written settlement offer to resolve both the underlying

insurance claim and any associated c. 93A claims, or that a

reasonable universal settlement offer would not entitle the

insurer to the settlement-offer defense. That is simply not

what happened here.

b. When liability became reasonably clear. The trial

judge determined that Liberty Mutual violated c. 93A12 because

Sonsie's and Lyons Group's liability had become reasonably clear

by the time the Federal court case was submitted to the jury,

yet Liberty Mutual did not make a reasonable offer to settle

Chiulli's claim against Sonsie and Lyons Group, refusing to

tender its policy limit until the excess insurer, Everest,

insisted. Liberty Mutual contests the judge's conclusion on

several grounds.

"Failing to effectuate prompt, fair and equitable

settlements of claims in which liability has become reasonably

clear" is an unfair claim settlement practice. G. L. c. 176D,

12Under G. L. c. 93A, § 9 (1), "any person whose rights are
affected by another person violating the provisions of clause
(9) of section three of chapter one hundred and seventy-six D
may bring an action in the superior court . . . for damages."
The provisions of G. L. c. 176D, § 3 (9), list numerous acts or
omissions of insurers that constitute "[u]nfair claim settlement
practices."
14

§ 3 (9) (f). The standard used to determine whether liability

is "reasonably clear" is an objective one that "calls upon the

fact finder to determine whether a reasonable person, with

knowledge of the relevant facts and law, would probably have

concluded, for good reason, that the insurer was liable to the

plaintiff." Demeo v. State Farm Mut. Auto. Ins. Co., 38 Mass.

App. Ct. 955, 956-957 (1995). Accord McLaughlin v. American

States Ins. Co., 90 Mass. App. Ct. 22, 29-30 (2016); O'Leary-

Alison v. Metropolitan Prop. & Cas. Ins. Co., 52 Mass. App. Ct.

214, 217 (2001). "[T]he question whether and when an insured's

liability became reasonably clear is based on an objective

assessment of the facts known or available at the time."

McLaughlin, supra at 31. Liability is not "reasonably clear" if

there is "a legitimate difference of opinion as to the extent of

[the insured's] liability," or a "good faith disagreement" over

the amount of damages. Bobick v. United States Fid. & Guar.

Co., 439 Mass. 652, 660 (2003).

Liberty Mutual takes issue with the above-quoted

formulation of the standard in Demeo, which the trial judge

cited in her decision. Based on selective quotation of isolated

language in other cases, Liberty Mutual argues that an insurer

need not make a reasonable settlement offer unless liability is
15

"plain" and "clear"13 -- so clear, Liberty Mutual insists, that a

plaintiff must be able to demonstrate entitlement to judgment on

the issues of liability and damages as a matter of law.

We reject any notion that decisional law has changed the

standard under c. 176D, § 3 (9) (f), from "reasonably clear" to

"clear," as such an interpretation would be "contrary to the

basic tenet of statutory construction that we must strive to

give effect to each word of a statute so that no part will be

inoperative or superfluous." Ciani v. MacGrath, 481 Mass. 174,

179 (2019). Nor is entitlement to judgment as a matter of law

the governing standard.14 Where, as here, coverage is not in

dispute, whether and when the insured's liability and damages

13For the proposition that liability must be "plain,"
Liberty Mutual relies on a passing reference in a footnote in a
single case, Miller v. Risk Mgt. Found. of the Harvard Med.
Insts., Inc., 36 Mass. App. Ct. 411, 422 n.17 (1994), which was
clearly meant as a shorthand reference to the standard. Liberty
Mutual also cites three instances where decisions refer to
liability and damages becoming "clear," omitting the statutory
modifier "reasonably." See Bobick, 439 Mass. at 659, quoting
Hopkins v. Liberty Mut. Ins. Co., 434 Mass. 556, 566 (2001);
Bolden v. O'Connor Café of Worcester, Inc., 50 Mass. App. Ct.
56, 67 (2000). Nothing in those cases, read in their entirety,
is inconsistent with the Demeo formulation. Indeed, Bolden,
supra at 63 n.12, quotes the Demeo formulation as "[t]he test
used to determine whether a defendant's liability became
'reasonable clear.'"

14For this proposition, Liberty Mutual relies on dicta in a
New Jersey case, Pickett v. Lloyd's, 131 N.J. 457, 473 (1993)
(liability not reasonably clear where insurer raises good-faith
defense based on substantive issue of noncoverage). The case is
inapposite, as here there was no dispute as to coverage.
16

become reasonably clear, which is based on the insurer's

assessment of the facts known or available at any given time, is

not susceptible of precise legal certainty. Indeed, an

insurer's obligation to tender a reasonable settlement offer

under c. 176D, § 3 (9) (f), may arise even where triable issues

of fact remain. See Bobick, 439 Mass. at 662 ("[A] jury's

verdict is not always predictable and may not constitute in all

circumstances a definitive measure of reasonableness"). The

purpose of c. 176D is to prevent insurers from exercising their

superior bargaining power to "forc[e] claimants into unnecessary

litigation to obtain relief." Clegg, 424 Mass. at 419. "[W]hat

matters in the G. L. c. 93A case is whether the [insurer]

reasonably believed that [the insured's] liability was not

clear, or was unreasonable in holding that belief." Bolden v.

O'Connor Café of Worcester, Inc., 50 Mass. App. Ct. 56, 67

(2000). The proposition that an insurer owes no duty to a

third-party claimant "until both liability and damages have been

determined in an appropriate, legal forum or agreed upon" has

been rejected. Clegg, 424 Mass. at 418.

Liberty Mutual further argues that requiring an insurer to

settle a claim before liability is established as a matter of

law violates the insured's right to a jury trial under the
17

Seventh Amendment to the United States Constitution,15 and that

the canon of "constitutional avoidance"16 should guide our

interpretation of c. 176D, § 3 (9) (f). We are not persuaded.

Liberty Mutual was contractually and statutorily required to

make an independent assessment of Sonsie's and Lyons Group's

liability, provide for their defense, and make a reasonable

offer to settle when and if their liability became reasonably

clear. See McLaughlin, 90 Mass. App. Ct. at 31 ("whether and

when an insured's liability became reasonably clear is based on

an objective assessment of the facts known or available at the

time, and is independent of how a jury in a separate trial view

the insured's liability"); Bolden, 50 Mass. App. Ct. at 67

(insurer "need only demonstrate that [insured's] liability was

not 'reasonably clear' to the [insurer], not to the jury that

heard the [underlying] liability case"). We thus agree with the

trial judge's conclusion that requiring Liberty Mutual to

effectuate a prompt, fair, and equitable settlement of the

15We note that the Seventh Amendment right to a jury trial
in civil cases applies only in Federal court; it is one of the
few provisions of the Bill of Rights that has never been held to
apply to the States. See González-Oyarzun v. Caribbean City
Bldrs., Inc., 798 F.3d 26, 29 (1st Cir. 2015).

16 Under the canon of constitutional avoidance, when faced
with "competing plausible interpretations of a statutory text,"
courts avoid the interpretation that "raises serious
constitutional doubts." Clark v. Martinez, 543 U.S. 371, 381
(2005).
18

Federal court case once liability had become reasonably clear

did "not implicate []or offend [Sonsie and Lyons Group's] right

to a jury trial in the underlying tort case."

Similarly, given that the insurer's obligation to make a

reasonable settlement offer is independent of how a jury might

view the question of liability, we reject Liberty Mutual's

contention that the trial judge "committed legal error as [she]

found 'reasonably clear' liability where the jury split fault

among the defendants and the plaintiff." We have previously

rejected the "suggestion that liability of an insured can never

be reasonably clear, as [a] matter of law, so long as other

potential tortfeasors are apparent." McLaughlin, 90 Mass. App.

Ct. at 31.

c. Causation. Liberty Mutual's argument that the trial

judge erred in finding that its delay in making a reasonable

settlement offer caused Chiulli harm is also without merit.

"Where the conduct alleged to violate G. L. c. 93A is an

unreasonable delay in settling a claim arising under an

insurance policy, we have held that a plaintiff's actual damages

generally comprise the interest lost on the money wrongfully

withheld by the insurer" (quotation and citation omitted). Auto

Flat Car Crushers, Inc., 469 Mass. at 829.17 While, as the trial

17Thus, Liberty Mutual's failure to effectuate a prompt
settlement caused Chiulli injury even if, as Liberty Mutual
19

judge noted, the settlement that Chiulli received to resolve the

Federal court case offset his loss of use damages, the

settlement of the underlying claim did not preclude Chiulli from

recovering on his c. 93A claim. See id. at 824 ("To the extent

that a plaintiff already has received compensation for its

underlying loss prior to the resolution of its G. L. c. 93A

claim, such compensation [is] treated as an offset against any

damages ultimately awarded, rather than as a bar to recovery").18

d. Conclusion with respect to Liberty Mutual's appeal. We

have no basis to disturb the trial judge's determination that

argues, the evidence did not support the judge's finding that
"Chiulli had to press his counsel to aggressively litigate even
after the verdict to pursue his recovery." The fact that Sonsie
and Lyons Group may have had nonfrivolous grounds on which to
base posttrial motions in the Federal court case does not
require the conclusion, as Liberty Mutual contends, that
liability was not reasonably clear or that Chiulli was not
injured. We are not persuaded by Liberty Mutual's repeated
assertion that it prevailed on the only posttrial issue that was
litigated in the Federal court case -- the issue of prejudgment
interest. That issue was raised in Chiulli's motion to amend
the judgment, not in any posttrial motion filed by the
defendants.

18While loss of the use of funds is the typical measure of
damages from the failure to make a prompt offer of settlement,
we note that where, as here, the claimant has recovered a
judgment on the underlying claim, the entire amount of that
judgment (here, $4,501,654.74) is subject to multiplication if
the violation is found to be willful and knowing. See Auto Flat
Car Crushers, Inc., 469 Mass. at 827-828; Rhodes, 461 Mass. at
498-499; G. L. c. 93A, § 9 (3) ("For the purposes 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").
20

Sonsie's and Lyons Group's liability were reasonably clear by

the time the Federal court case was submitted to the jury,19 or

that Chiulli was injured by Liberty Mutual's unfair insurance

settlement practices.

2. Chiulli's appeal. a. Whether the violation was

willful or knowing. Chiulli contends that the trial judge erred

in concluding that Liberty Mutual's violation was neither

willful nor knowing. See G. L. c. 93A, § 9 (3) ("if the court

finds for the petitioner, recovery shall be in the amount of

actual damages or twenty-five dollars, whichever is greater; or

up to three but not less than two times such amount if the court

finds that the use or employment of the act or practice was a

willful or knowing violation").

To determine whether Liberty Mutual's conduct "rose to the

level of a wilful and knowing violation of G. L. c. 93A, § 2,

our task is limited to reviewing the legal standard applied to

the subsidiary facts found by the judge." Hyannis Anglers Club,

Inc. v. Harris Warren Commercial Kitchens, LLC, 91 Mass. App.

Ct. 555, 560-561 (2017). However, "where a judge's ultimate

findings are inconsistent with [her] subsidiary findings, we

19Given Everest's exposure as the excess insurer, its
"prompt decision to settle, once [Liberty Mutual] paid its
limit, reinforces our determination that the extent of . . .
liability was not a matter of serious doubt." Clegg, 424 Mass.
at 421 n.8.
21

shall set aside the ultimate findings." Simon v. Weymouth

Agric. & Indus. Soc'y, 389 Mass. 146, 148-149 (1983). See

Hyannis Anglers Club, supra at 561 & n.16. Chiulli does not

challenge any of the trial judge's subsidiary findings as

clearly erroneous, but instead argues that those subsidiary

findings compel the conclusion that Liberty Mutual acted in a

willful or knowing manner. We agree.

The trial judge found that Liberty Mutual knew it had

little chance of success on appeal. Liberty Mutual also knew

that Chiulli owed money for his medical bills and was "in dire

need of cash." Faced with a $4.5 million verdict, instead of

making a reasonable offer to settle, Liberty Mutual decided to

take advantage of Chiulli's vulnerable financial condition "in

an attempt to leverage a better settlement" for itself.

Accordingly, Liberty Mutual embarked on a strategy to threaten

an untenable appeal to "take the wind out of [Chiulli's] sails."

The judge explicitly found that after liability had become

reasonably clear, "Liberty made Chiulli continue to wait over

Thanksgiving, over Christmas, forcing him to continue to

litigate and to fight to recover his verdict."

The trial judge's subsidiary findings require the

conclusion that Liberty Mutual's violation was willful or

knowing. "To be wilful or knowing, a violation need not be

malicious, but must constitute more than negligence. Within
22

that range is conduct that is intentionally gainful, . . . or

demonstrates a wilful recklessness or conscious, knowing

disregard for its likely results" (quotation and citations

omitted). Rass Corp. v. Travelers Cos., 90 Mass. App. Ct. 643,

657 (2016). Liberty Mutual's conduct, as found by the judge,

falls squarely within conduct that is "intentionally gainful":

when Liberty Mutual had an obligation to effectuate a prompt,

fair, and equitable settlement, it instead made the deliberate

choice to exploit Chiulli's financial distress for its own

gain.20 See Gore v. Arbella Mut. Ins. Co., 77 Mass. App. Ct.

518, 531-533 (2010). Nothing about this conduct could be

described as anything short of willful or knowing.21

20In concluding that Liberty Mutual's violation was not
willful or knowing, the trial judge observed, "There was good
reason at the outset for Liberty's skepticism about Sonsi[e]'s
[and Lyons Group's] liability at least up and until all the
evidence at the trial had closed." The judge's reliance on the
period "at the outset" as a basis for concluding that the
violation was not willful or knowing focuses on the wrong period
of time -- long before the closing arguments in the jury trial,
which, the judge found, was the timeframe in which Liberty
Mutual's obligation to effectuate a prompt, fair, and equitable
settlement was triggered. It was only after liability became
clear that Liberty Mutual engaged, willfully and knowingly, in
unfair settlement practices.

21Chiulli also argues that he should have been allowed to
amend his complaint, which alleged the failure of Liberty Mutual
to effectuate a prompt, fair, and equitable settlement once
liability had become reasonably clear. See G. L. c. 176D,
§ 3 (9) (f). Chiulli waited until eight years after the
incident, after a summary judgment motion had been served in the
State court case, to assert a claim based on Liberty Mutual's
failure to conduct a reasonable investigation of Sonsie's and
23

Conclusion. So much of the November 8, 2017, amended

judgment as determined that Liberty Mutual's violation of G. L.

c. 93A was not willful or knowing is vacated, and the case is

remanded to the Superior Court for entry of a finding that

Liberty Mutual's violation was willful or knowing, and for a

determination whether the amount of the judgment on all claims

arising out of this case and the underlying occurrence shall be

doubled or tripled under G. L. c. 93A, § 9 (3). In all other

respects, the amended judgment of the Superior Court is

affirmed.

So ordered.

Lyons Group's liability. See G. L. c. 176D, § 3 (9) (d). We
discern no abuse of discretion in the denial of Chiulli's motion
to amend as untimely. See Castellucci v. United States Fid. &
Guar. Co., 372 Mass. 288, 292-293 (1977).