Insurance – Reinsurance certificates – Chapter 93A

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Where an insurance company has moved to dismiss a G.L.c. 93A counterclaim, the motion should be denied despite the fact that two reinsurance certificates at issue are governed by New York law.

“This action concerns the scope of Clear Blue Specialty Insurance Company’s obligations under a complex, multi-level reinsurance structure. Clear Blue is seeking a declaration that it owes nothing under its reinsurance certificates. The BPI Insureds (R-SPV II, L.L.C., BPI Credit 3, LLC, and BPI Credit 4, LLC) assert amended counterclaims for breach of contract damages, seeking their own declaratory relief, and claiming that Clear Blue violated G.L.c. 93A.

“The Court will deny Clear Blue’s motion to dismiss because the BPI Insureds have standing, no necessary parties are missing from the case, and the factual allegations in the amended counterclaims plausibly suggest that Clear Blue breached its obligations under two reinsurance certificates, engaged in unfair insurance settlement practices in violation of c. 93A, and could face additional liability under a third reinsurance certificate. …

“The Court must apply New York law in construing the CPI Policies and the Reinsurance Certificates. …

“First, the fact that Clear Blue’s reinsurance contracts are governed by New York law, through their incorporation of choice-of-law provisions in the underlying CPI Policies, does not mean Clear Blue may not be sued under c. 93A because it is a Massachusetts statute. …

“Second, whether alleged misconduct has sufficient connection to Massachusetts to implicate c. 93A, §11, usually cannot be resolved on a motion to dismiss. …

“The burden of proof will be on Clear Blue to prove that its allegedly unfair or deceptive conduct did not occur primarily and substantially in Massachusetts. …

“As a result, the BPI Insureds are not required as part of their counterclaims to plead facts sufficient to withstand a defense that that the center of gravity of his claim is not within Massachusetts. … Since the BPI Insureds contend that their alleged loss occurred in Massachusetts and that Clear Blue specifically directed its allegedly unfair trade practices at the BPI Insureds in Massachusetts, Clear Blue’s assertion that the center of gravity of its alleged misconduct was not in Massachusetts cannot be decided on the pleadings.

“Third, the counterclaim under G.L.c. 93A is not based on Clear Blue’s alleged breaches of contract. Instead, it is based on the allegations that Clear Blue engaged in unfair insurance claims handling and settlement practices. Claims handling by an insurer falls within the scope of ‘trade or commerce’ as defined in G.L.c. 93A, §1(b). … And allegations that an insurer or reinsurer refused to pay a claim by an insured business without having any good faith basis for doing so plausibly suggest that it engaged in unfair trade practices that violated c. 93A, §11. …

“The motion by Clear Blue Specialty Insurance Company to dismiss all counterclaims asserted against it (docket no. 19) is denied.”

Clear Blue Specialty Insurance Company v. R-SPV II, L.L.C., et al. (Lawyers Weekly No. 09-073-25) (11 pages) (Salinger, J.) (Suffolk Superior Court) (Docket No. 2484CV01898-BLS2) (May 15, 2025).

Click here to read the full text of the opinion.