Massachusetts SJC: Postjudgment Interest Is Not Multiplied in Chapter 93A/176D Awards Against Insurers
By: Gregory J. May
On February 2, 2017, the Massachusetts Supreme Judicial Court (SJC) held that the calculation of a multiple damages award against an insurer for willful and knowing unfair insurance settlement practices under Massachusetts General Laws c. 93A and c. 176D does not include the amount of postjudgment interest on the underlying tort judgment. Anderson v. National Union Fire Ins. Co. of Pittsburgh PA, SJC-12108 (February 2, 2017).
The husband and wife plaintiffs in Anderson sought damages from a hospital for personal injury suffered after the hospital's bus struck the husband. The plaintiffs also filed a separate action against the hospital’s insurer under Chapters 93A and 176D for failure to effectuate a prompt settlement when liability was reasonably clear and for engaging in certain unfair and deceptive conduct. In 2003, the jury found in favor of the plaintiffs on their tort claim against the hospital, and awarded them approximately $2.2 million. The judgment was affirmed by the Appeals Court in 2008. The hospital's insurer paid that amount as well as another $1.2 million in postjudgment interest that had accrued over the five-year period between entry of judgment and the insurer's payment.
A trial judge then conducted a bench trial on the plaintiffs' Chapters 93A and 176D claims against the hospital's insurer. He found that the insurer's willful and knowing violation of Chapter 176D supported an award of double damages under Chapter 93A. The judge included the $1.2 million in postjudgment interest in his double damages calculation. The insurer appealed on the grounds that the statutes do not explicitly authorize the multiplication of postjudgment interest.
The SJC noted that Chapter 93A allows the multiplication of "the amount of the judgment," but does not provide express guidance as to whether "judgment" includes postjudgment interest. According to the court, prejudgment interest compensates the prevailing party for the time value of money accrued before case resolution and is really just another form of compensatory damages regularly included in a "judgment."
In contrast, the SJC found that the Legislature has stated in other relevant statutes that a judgment "bears" postjudgment interest. The SJC reasoned that postjudgment interest is thus something "separate and distinct" from the judgment that compensates for the delay in payment after the nonprevailing party's obligation to pay has been established.
The SJC did not agree with the plaintiffs' view that, because Chapter 93A is a "penal statute," the court should read it so broadly as to include postjudgment interest within the "judgment" to be multiplied. The SJC found that the Legislature did not expressly include postjudgment interest within a "judgment" subject to Chapter 93A, and the court could not impose an additional measure of punishment without an explicit legislative directive.
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