Robinson Donovan has received a favorable decision from the Massachusetts Appeals Court affirming a judgment in favor of an insurer dismissing a claim for breach of contract and unfair settlement practices pursuant to G.L. c. 93A and c. 176D.

This action, which relates to an eleven year old claim and involved a seven day bench trial, arose out of a shower leak in 2004 at a rental property owned by one of the plaintiffs.  At first, the claim appeared to have been a sudden loss caused by a broken shower pipe. Upon receipt of the claim, the insurer took action to adjust the claim and made an initial payment for the loss. The loss included mold remediation in the floors below the shower.

A month later, however, it was discovered that the loss was not the result of a broke shower pipe, but a crack in the shower tub. Given the change in circumstances, the insurer denied coverage, and refused to make any more payments on the claim.  Nearly two years after the loss, the insureds made a demand for reference, which the insurer denied.  The insureds made additional demands over the next several months, which were also denied, and eventually served a demand pursuant to G.L. c. 93A. The insureds then filed suit nearly four years after the loss.

After the seven day bench trial, the Superior Court found in favor of the insurer.  In affirming the decision, the Appeals Court made several key holdings regarding the limitations period for bringing a claim against an insurer, and the reach of G.L. c. 93A.

First, the Appeals Court stated that the time for bringing a claim against the insurer was not tolled merely by the request for a reference pursuant to G. L. c. 175, § 99, Twelfth.  The Appeals Court definitively stated that “§ 99 does not provide for tolling where the reference procedure has not yet begun.”  The Appeals Court also stated even if the time to file the complaint had been tolled, the insureds two year delay was not reasonable. The Court agreed with RD’s argument that “while [the insurer] did engage in an investigation to determine whether there was a loss under the policy, and made some payments prior to determining the actual cause of the loss, it consistently denied liability, and, further, the fact that the [insureds] repeatedly submitted requests and demands did not mean that [the insurer] accepted the loss.”

Second, the Appeals Court agreed that the insurer had proven that the loss was excluded under the policy’s exclusion of losses caused by “constant or repeated seepage or leakage of water or steam over a period of weeks, months or years from within a plumbing, heating, air conditioning or automatic fire protection sprinkler system or from within a household appliance.”  The Appeals Court also noted that even if the original cause of the loss was “sudden,” the evidence showed that the leak that caused the loss at issue had been ongoing. This evidence included testimony that the mold was likely the result of a leak lasting weeks.

Finally, the Appeals Court affirmed the conclusion that the insurer did not violate either G.L. c. 93A or c. 176D, and reaffirmed a principle from another case argued by RD in 2004 that where the insurer had no duty to indemnify, there is no liability under G. L. c. 176D.

The case is known as Hawley v. Preferred Mut. Ins. Co., No. 14-P-917. The prior case referred to in the preceding paragraph is Pacific Indem. Co. v. Lampro, 86 Mass. App. Ct. 60, 68 (2014).