Insurance – Chapter 176D – Settlement

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Where a plaintiff alleged that the defendant insurance company engaged in unfair insurance claim settlement practices, a grant of summary judgment in favor of the insurer must be vacated in part, as a reasonable jury could find that the defendants did not extend a prompt and fair settlement offer after liability became reasonably clear.

“In January 2015, Paula Appleton suffered severe injuries after a pickup truck struck her car from behind. Appleton filed an insurance claim against the driver, whose policy was administered by AIG Claims, Inc. (‘AIG’). Over the next four years, Appleton and AIG exchanged settlement offers and attended three mediations but were unable to reach a settlement. Following a trial, a Massachusetts state court jury ultimately awarded Appleton $7.5 million in damages in March 2019.

“Appleton then sued AIG and a related defendant in federal court. She contended that the defendants failed to meet their statutory obligations under Massachusetts law to conduct an independent, objective investigation into her insurance claim and to extend a prompt and fair settlement offer after the value of her damages became clear.

“The federal district court granted the defendants’ motion for summary judgment in full. It concluded that the undisputed facts established that the defendants did conduct a reasonable investigation into Appleton’s case and that their duty to extend a prompt and fair settlement offer was not triggered because the value of her damages never became clear. Because we determine that a reasonable jury could find that Appleton’s damages became clear in early 2018 and that the defendants failed to extend a prompt and fair settlement offer afterwards, we vacate the district court’s summary judgment ruling in part and remand for trial on Appleton’s settlement claim. …

“We disagree with the district court’s ruling on Appleton’s section 3(9)(f) claim. As we explain, the record contains genuine disputes of material fact as to whether liability became reasonably clear and whether the defendants extended a prompt and fair settlement offer afterwards. And, viewing the evidence in the light most favorable to Appleton, we find that a reasonable jury could conclude that the defendants did not satisfy their section 3(9)(f) obligations. Thus, we vacate the grant of summary judgment on that claim and remand for trial. We agree with the district court, however, that the defendants are entitled to judgment as a matter of law on Appleton’s section 3(9)(d) claim. …

“… Viewing the record in the light most favorable to her, we conclude that a reasonable jury could find that AIG’s failure to increase its settlement offer of $2.65 million for almost a year after it received multiple estimates placing likely damages at about $7.5 million was unreasonable. …

“Thus, we conclude that there is a triable issue on whether damages became reasonably clear by January 2018, triggering the defendants’ obligation to extend a prompt and fair settlement offer under section 3(9)(f). …

“Accordingly, we conclude that a reasonable jury could find that the defendants did not extend a prompt and fair settlement offer after liability became reasonably clear in January 2018. We thus vacate the district court’s grant of summary judgment as to Appleton’s section 3(9)(f) claim. …

“None of Appleton’s arguments support sending her section 3(9)(d) claim to a jury. …

“For all these reasons, we vacate the district court’s grant of summary judgment on Appleton’s section 3(9)(f) claim, affirm its grant of summary judgment on her section 3(9)(d) claim, and remand for further proceedings consistent with this opinion. The parties shall bear their own costs.”

Appleton v. National Union Fire Ins. Co. of Pittsburgh, et al. (Lawyers Weekly No. 01-162-25) (29 pages) (Rikelman, J.) Appealed from a decision by Guzman, J., in the U.S. District Court for the District of Massachusetts. Kathy Jo Cook, with whom Timothy Wilton, Abbie G. Rosen and Sheff & Cook were on brief, for the plaintiff-appellant; William A. Schneider, with whom Morrison Mahoney LLP was on brief, for the defendants-appellees (Docket No. 24-1952) (July 29, 2025).

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