Addressing an issue of first impression, the Supreme Judicial Court (SJC) announced last week that an insurer’s liability for multiple damages under Chapter 93A for unfair claim settlement practices committed in violation of Chapter 176D does not include the post-judgment interest accrued on an underlying judgment. Anderson v. National Union Fire Ins. Co. of Pittsburgh PA, No. SJC-12108, 2017 Mass. LEXIS 25 (Feb. 2, 2017).

The decision is among the first authored by Justice Gaziano, who was elevated to the SJC this past summer. The appeal was argued by Kathleen M. Sullivan, former dean of Stanford Law School and current partner at Quinn Emmanuel, for the appellants, and Leonard H. Kesten of Brody Hardoon Perkins & Kesten LLP, for the appellees.

Facts

Briefly, a Massachusetts jury awarded the plaintiff damages for the injuries he sustained when he was hit by a bus while crossing Staniford Street in Boston. The judgment was for $2,244,588.93, including $1,569,330 for the plaintiff’s actual damages (after a reduction for comparative negligence) and approximately $450,000 of prejudgment interest. The defendant bus company appealed the jury award and lost. Accordingly, the plaintiff ultimately received an additional $1,284,243.17 for post-judgment interest accrued during the pendency of the appeal.

In a separate third party coverage action, the plaintiff sued the bus company’s insurer for unfair and deceptive trade acts or practices in violation of Chapter 93A, based on the insurer’s failure to effectuate a prompt, fair, and equitable settlement once the bus company’s liability became reasonably clear, in violation of Chapter 176D. After a ten-day jury-waived trial, the judge sought to impose the “maximum available sanctions” against the insurer after finding it knowingly and willfully violated Chapter 93A. In an amended judgment, the trial court awarded the plaintiff three times the amount of the underlying judgment, inclusive of post-judgment interest (i.e., 3 x $3,252,857.80). After losing in the Appeals Court, the defendant insurer petitioned the SJC to reverse the entry of judgment, insofar as it included in its calculation of multiple damages the post-judgment interest accrued on the underlying judgment.

Issue

The sole issue before the SJC was whether the trial court properly included the post-judgment interest accrued on the underlying judgment in its calculation of the punitive damages award. In other words, the question presented was: after finding a violation of Chapter 93A and determining that the maximum possible sanctions were warranted, should the trial court have trebled the underlying judgment with post-judgment interest (i.e., $3,252,857.80) or without (i.e.,  $2,244,588.93)?

Decision

The SJC started its analysis by acknowledging that the statutory language in Chapter 93A (G.L. c. 93A, § 9), which refers to multiplying “the amount of judgment,” does not provide express guidance on whether the “judgment” should include post-judgment interest. To resolve that question, the Court looked to the pre-judgment and post-judgment statutes themselves.

The statute governing pre-judgment interest, G.L. c. 231, § 6B, provides that, in a tort case involving personal injury or damage to property:

[T]here shall be added by the clerk of court to the amount of damages interest thereon … from the date of the commencement of the action.

By contrast, the statute governing post-judgment interest, G.L. c. 235, § 8, provides that:

Every judgment for the payment of money shall bear interest from the date of its entry …

The SJC found it significant, and ultimately dispositive, that whereas the pre-judgment interest statute states that the interest is added to the judgment, and is therefore part of it, the post-judgment statute states that the interest bears on the judgment, and is therefore distinct from it.

The Court also noted in its decision that the Massachusetts form of executions (see G.L. c. 235, § 8) distinguishes between a judgment and post-judgment interest, as does Mass. R. Civ. P. 54(f), which sets forth the rules for computing post-judgment interest. Moreover, the Court noted that while the purpose of the pre-judgment statute is to compensate claimants for their loss, the purpose of the post-judgment statute is, by contrast, in part to discourage frivolous appeals.

Finally, the Court cited the rule of lenity, an arcane canon of statutory construction providing that ambiguous penal statutes should be construed narrowly in favor of the defendant. This last justification is noteworthy in light of the SJC’s frequent characterization of Chapter 93A as a remedial statute, which according to another canon of statutory construction, means that it should be interpreted broadly to achieve its desired effects. See, e.g., Kraft Power Corp. v. Merrill, 464 Mass. 145, 162-63 (2013).

The effect of the SJC’s ruling in Anderson is to give clarity to the measure of damages under Chapter 93A. When such damages are based on an underlying judgment, any post-judgment interest is excluded from Chapter 93A liability.