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MA Appeals Court Applies 93A Multiple Damage Provision Outside Context of Insurance Company’s Failure to Settle

G.L. c. 93A imposes multiple damages on a defendant who commits a willful or knowing violation of the chapter or who refuses to grant relief in response to a 93A demand letter in bad faith with knowledge or reason to know that its conduct violated G.L. c. 93A. A key provision of G.L. c. 93A states that, “[f]or the purposes of this chapter, the amount of actual damages to be multiplied by the court shall be the amount of judgment on all claims arising of the same and underlying transaction or occurrence regardless of the existence or nonexistence of insurance coverage available in payment of the claim.” M.G.L. c. 93A, §§ (9) and (11). The Legislature added this language in 1989 in an attempt to increase the penalty on insurers that violated G.L. c. 93A by failing to settle claims where liability was reasonably clear. In the past, the statute’s amended language has typically been applied against insurers. See e.g. Rhodes v. AIG Domestic Claims, Inc., 461 Mass. 486 (2012).

The Appeals Court, however, recently applied the amendment to a defendant that was not an insurer. In Butera Auburn, LLC, et al. v. Williams, et al., 83 Mass. App. Ct. 496 (2013), Williams owned The Cat Hospital (TCH), a veterinary practice in Auburn, MA. TCH was the one of the only hospitals in the area licensed to treat cats with radioactive medicines. Butera, another veterinarian, bought Williams’ practice. The agreement included a non-compete clause, which prevented Williams from soliciting Butera’s clients, or taking any action, directly or indirectly, that would be harmful to Butera’s reputation or his goodwill.

Once the sale was complete, Williams made a deal with Veterinary Centers of America (VCA), a competitor of TCH, to open up a radiation treatment 60 miles away. Instead of informing her clients that she was leaving TCH to start her own practice, Williams sent out an announcement and advertised on the VCA’s website that TCH was relocating to the VCA’s Westfield facility. She also sent a letter on TCH’s stationary to the Department of Public Health informing them that TCH had relocated and requested that the department withdraw TCH as a licensed location and instead add VCA’s facility as a licensed location. This ultimately made it impossible for Butera to continue his practice at TCH. Butera sued Williams for breach of contract and a Ch. 93A violation.

Both the breach of contract claim and the 93A claim were submitted to a jury, which found for the plaintiff on both counts. The trial judge instructed the jury to avoid duplicative awards and the jury found that the 93A violation caused $13,000 in damages while the breach of contract caused $87,500 in damages. The jury also specifically found that the two claims arose out of the same transaction. The trial judge, however, only doubled the $13,000 in damages specifically allocated to the 93A violation, not the $87,500 in damages that were attributed to the breach of contract claim. On appeal, the Appeals Court held that since both claims arose out of the same underlying transaction, multiple damages should have been based on the entire judgment so that $100,500 should have been doubled.

Based on the Appeals Court’s broad reading of the 1989 amendment to Ch. 93A to include cases beyond the insurance context, defendants that are not insurance companies may now be held liable for multiple damages based on the amount of the entire judgment, including damages that are not specifically allocated to the Ch. 93A claim. This interpretation can drastically increase the monetary value of a potential plaintiff’s G.L. c. 93A recovery.

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