Massachusetts bad faith
Massachusetts Bad Faith: The 93A Demand Letter Does Nothing on a Commercial File
Section 9 hands a homeowner a thirty-day clock. Section 11 hands a business insured nothing of the kind.
Photo: Wikimedia Commons / Emmanuel Huybrechts
In short
In Massachusetts only a residential claimant proceeding under c. 93A § 9 must send a thirty-day pre-suit demand letter, and only that claimant can invoke c. 176D § 3(9) directly. A business insured suing under § 11 owes no demand letter, and Polaroid Corp. v. Travelers Indemnity Co. holds that § 11 grants no independent right to recover for a § 3(9) violation. Chapter 176D § 3(9) itself contains no deadline measured in days.
Chapter 176D § 3(9) runs fourteen lettered subsections, (a) through (n), and not one of them names a number of days. The duties are qualitative: acknowledge and act "reasonably promptly" on claim communications, affirm or deny coverage "within a reasonable time after proof of loss statements have been completed," effectuate "prompt, fair and equitable settlements of claims in which liability has become reasonably clear." A reader who came looking for a Massachusetts acknowledgment deadline leaves without one. 2
The only day count in the scheme
The count lives in c. 93A § 9(3): "At least thirty days prior to the filing of any such action, a written demand for relief, identifying the claimant and reasonably describing the unfair or deceptive act or practice relied upon and the injury suffered, shall be mailed or delivered to any prospective respondent." § 9(1) reaches "any person whose rights are affected by another person violating the provisions of clause (9) of section three of chapter one hundred and seventy-six D," which is how a homeowner turns a qualitative handling standard into a cause of action. 1
The demand is excused where the prospective respondent keeps no place of business or no assets in the commonwealth.
Under § 9(3), a respondent who makes a written tender inside that window and sees it rejected may thereby "limit any recovery to the relief tendered," if the court finds the tender reasonable in relation to the injury actually suffered. § 9(4) does separate work: the court "shall deny recovery of attorney's fees and costs which are incurred after the rejection of a reasonable written offer of settlement made within thirty days of the mailing or delivery of the written demand for relief." 1 A damages ceiling and a fee shutoff, both bought with one reasonable offer priced honestly inside the same thirty days.
The multiplier reads "up to three but not less than two times" actual damages where the violation was willful or knowing, or where "the refusal to grant relief upon demand was made in bad faith with knowledge or reason to know" of the violation. Refusing the demand in bad faith is independently sufficient, and the floor is double. The multiplicand carries the real weight. § 9(3) directs that the amount multiplied "shall be the amount of the judgment on all claims arising out of the same and underlying transaction or occurrence, regardless of the existence or nonexistence of insurance coverage available in payment of the claim." 1 In Rhodes v. AIG Domestic Claims, Inc., 461 Mass. 486 (2012), the SJC applied that instruction, rejected loss of use as the measure, and doubled the judgment on the underlying claim. 3 The multiplier language the court quoted in 2012 is the language on the books today.
| Residential claimant (§ 9) | Business insured (§ 11) | |
|---|---|---|
| Pre-suit demand letter | Required at least thirty days before filing suit | No demand provision appears in the text of § 11 |
| c. 176D § 3(9) invoked directly | Yes, through the express reach of § 9(1) | No. Polaroid: § 11 grants no independent right to recover for a § 3(9) violation |
| Reasonable written offer inside thirty days | Can cap recovery at the relief tendered and deny post-rejection fees and costs | No pre-suit window. Carrier may tender a written offer of settlement for single damages with its answer |
| Multiplier exposure | Up to three but not less than two times actual damages, measured against the judgment on all claims from the occurrence | Multiplier available, but the predicate must be an unfair act under section two rather than § 3(9) |
| Limitations period | Four years under c. 260 § 5A | Four years under c. 260 § 5A |
§ 11, Polaroid, and the commercial insured
§ 9(1) opens by carving out "any person, other than a person entitled to bring action under section eleven." A business insured is that person. Section 11 governs anyone "who engages in the conduct of any trade or commerce," takes its liability predicate from section two, and makes no reference to c. 176D or to any demand letter. Under § 11 the carrier "may tender with his answer in any such action a written offer of settlement for single damages," so the pricing decision § 9 forces before suit can wait for a pleading. 5 Polaroid Corp. v. Travelers Indemnity Co., 414 Mass. 747 (1993) closed the remaining gap, holding that "§ 11 does not grant an independent right to recover for violations of G. L. c. 176D, § 3 (9)." 4 Section 11 also requires the conduct to occur "primarily and substantially within the commonwealth," with the burden on the respondent.
A public adjuster does not draft or serve the pre-suit demand. That is the practice of law, and counsel signs it. What the adjuster builds is the § 3(9) predicate underneath it: a dated communication log, the date the sworn proof of loss was completed, and the carrier's response record measured from that date rather than from first notice. Subsection (e) runs from completion, so a proof of loss left undated leaves the one subsection with a date in it nothing to count from. 2 First notice timing sets the baseline at the front of the file. Subsection (e) is what gets measured at the back.
Four years, either way. M.G.L. c. 260 § 5A sets a four-year limitations period covering c. 93A and c. 176D actions alike. 6 Nothing in § 11 requires a commercial insured to move before filing, so it is the only deadline c. 93A puts on the file.
The policy carries a shorter one. The standard fire policy form under c. 175 § 99 bars suit "unless commenced within two years from the time the loss occurred," and nothing in c. 93A extends it. 7
Does Massachusetts set a deadline for a carrier to acknowledge a claim?
No. Chapter 176D § 3(9) contains fourteen lettered subsections and no day counts. The duty is to acknowledge and act "reasonably promptly" upon claim communications and to affirm or deny coverage within a reasonable time after proof of loss statements have been completed. The only fixed period in the scheme is the thirty days that follow a c. 93A § 9(3) demand letter.
Can a public adjuster send a 93A demand letter?
No. The statutory pre-suit demand under § 9(3) is a filing prerequisite for a lawsuit, and drafting it is the practice of law. The adjuster's contribution is the record the letter rests on: the communication log, the proof-of-loss completion date, and the carrier's documented responses measured from it.
Does the thirty-day demand letter apply to a commercial policy?
It depends on which section the insured sues under. A business bringing a c. 93A § 11 claim faces no demand-letter requirement in the statute's text, and Polaroid Corp. v. Travelers Indemnity Co., 414 Mass. 747 (1993) held that § 11 grants no independent right to recover for a c. 176D § 3(9) violation. The policy's own suit-limitation clause is separate: the standard fire policy form under c. 175 § 99 bars suit unless commenced within two years from the time the loss occurred.
Is a 93A violation always trebled?
No. The statute provides for "up to three but not less than two times" actual damages where the violation was willful or knowing, or where the refusal to grant relief upon demand was made in bad faith. Double is the floor. In Rhodes v. AIG Domestic Claims, Inc., 461 Mass. 486 (2012) the SJC doubled the judgment on the underlying claim.
Sources cited
- M.G.L. c. 93A, § 9 — Civil actions and remedies; demand for relief; damages— The General Court of the Commonwealth of Massachusetts
- M.G.L. c. 176D, § 3 — Unfair methods of competition and unfair or deceptive acts or practices— The General Court of the Commonwealth of Massachusetts
- Rhodes v. AIG Domestic Claims, Inc., 461 Mass. 486 (2012)— Massachusetts Supreme Judicial Court (via CourtListener)
- Polaroid Corp. v. Travelers Indemnity Co., 414 Mass. 747 (1993)— Massachusetts Supreme Judicial Court (via CourtListener)
- M.G.L. c. 93A, § 11 — Persons engaged in business; actions for damages— The General Court of the Commonwealth of Massachusetts
- M.G.L. c. 260, § 5A — Actions under consumer protection laws; four-year limitation— The General Court of the Commonwealth of Massachusetts
- M.G.L. c. 175, § 99 — Fire policy; standard form (two-year suit limitation)— The General Court of the Commonwealth of Massachusetts
Statutory clocks, tracked on every file.
claimOS calendars these deadlines automatically on each claim: acknowledgement, decision, payment, and the suit limitation, each with its code section attached and visible to the whole team.