First Circuit Clarifies “Reasonably Clear Damages” Trigger for Prompt and Fair Settlement Duties Under Massachusetts Chapters 93A & 176D

Introduction

Appleton v. National Union Fire Insurance Co. of Pittsburgh, PA (1st Cir. July 29, 2025) is a seminal decision addressing insurers’ statutory duties under Massachusetts General Laws Chapter 176D, § 3(9)(f) (prompt, fair settlement once “liability has become reasonably clear”) and § 3(9)(d) (reasonable investigation).

The appellant, Paula Appleton, suffered catastrophic injuries in a 2015 motor-vehicle collision. After years of failed settlement negotiations with the insurer (AIG/National Union), a state-court jury awarded her $7.465 million. She then sued the insurer in federal court, alleging unfair claim-settlement practices. The district court granted summary judgment to the insurer on both statutory theories. On appeal, the First Circuit vacated that ruling in part, holding that a jury could decide whether damages were “reasonably clear” by January 2018 and whether the insurer’s subsequent offers were prompt and fair. The court, however, affirmed summary judgment on the investigation claim.

Summary of the Judgment

1. The First Circuit reversed in part, allowing Appleton’s § 3(9)(f) claim to proceed to trial. A reasonable jury could find that:

• By early 2018, multiple internal and external valuations (ranging $5–8.5 million and clustering around $7.5 million) made Appleton’s damages “reasonably clear.”
• Despite that clarity, AIG held its $2.65 million offer steady for nearly a year and then increased only to $3.25 million, potentially violating its duty to “promptly put a fair and reasonable offer on the table.”

2. The court affirmed the dismissal of Appleton’s § 3(9)(d) claim. Even viewing the evidence favorably to Appleton, the insurer’s investigation—though imperfect—was neither perfunctory nor biased as a matter of law.

Analysis

1. Precedents Cited and Their Influence

• Bobick v. U.S. Fid. & Guar. Co., 790 N.E.2d 653 (Mass. 2003) – Core authority on § 3(9)(f). Bobick’s directive that insurers must make a “fair and reasonable offer” once liability becomes apparent framed the First Circuit’s analysis. Appleton extends Bobick by explaining how internal valuations alone can render damages “reasonably clear.”
• Clegg v. Butler, 676 N.E.2d 1134 (Mass. 1997) – Established that “liability” in § 3(9)(f) includes both fault and damages. Appleton relies on Clegg but narrows the focus to damages because fault was conceded.
• Silva v. Norfolk & Dedham, 75 N.E.3d 1132 (Mass. App. Ct. 2017) & O'Leary-Alison v. Metropolitan, 752 N.E.2d 795 (Mass. App. Ct. 2001) – Provide factors to determine when damages are reasonably clear (defendant’s own evaluations, industry standards, expert testimony, absence of legitimate dispute). The court imported these factors wholesale.
• Terry v. Hospital Mut., 195 N.E.3d 441 (Mass. App. Ct. 2022) – Illustration of an unreasonable offer equalling one-third of the insurer’s valuation; Appleton analogised this to AIG’s sub-50 % offer compared to its internal $7.5 M valuation.
• First Circuit’s own River Farm Realty Trust v. Farm Family, 943 F.3d 27 (1st Cir. 2019) – Confirms objective “reasonable person” standard; cited to underscore that fault being conceded narrowed the issue to damages.

2. The Court’s Legal Reasoning

Step 1 – Reasonably Clear Damages

The court used an objective standard: Would a reasonable person with the same information conclude damages were clear? Three convergent data points—defense counsel’s $6.5–8.5 M estimate, a senior claims committee’s $4.9 M figure (leading to a reserve increase to $7.5 M), and a mock-jury average of $7.53 M—supplied enough evidence to create a triable issue. Crucially, disagreement over the exact dollar figure does not negate clarity under Clegg.

Step 2 – Prompt and Fair Settlement

Applying Bobick, the court measured AIG’s $2.65 M (later $3.25 M) offer against:

• Its own $7.5 M valuation;
• The eventual $7.465 M verdict;
• The prolonged 11-month delay before moving off $2.65 M;
• The fact that AIG had already participated in two mediations (i.e., this was not an opening salvo).

Because Massachusetts law demands a reasonable offer even when plaintiffs over-demand, AIG’s reliance on Appleton’s $16 million figure could not, at summary-judgment stage, excuse its lowball posture.

Section 3(9)(d) – Reasonable Investigation

The First Circuit drew a line between a slow or imperfect investigation and a statutorily unreasonable one. Appleton failed to show bias, cherry-picking, or wholesale failure to investigate—criteria that state and federal courts typically require for § 3(9)(d) liability. Waiting for a complete demand package and retaining multiple experts over the life of the litigation sufficed as “basic steps toward obtaining an independent or neutral assessment.”

3. Impact of the Decision

a. Easier for Plaintiffs to Survive Summary Judgment on § 3(9)(f). The court signals that convergent internal assessments, even without external admissions, may satisfy the “reasonably clear” threshold. Insurers can no longer rely on plaintiff’s high demands or imprecise damage ranges to defeat the statute at summary judgment.

b. Focus on Timing of Offer. The decision emphasizes the latency between clarity of damages and movement in offers. Claims handlers will need robust documentation explaining any delay once reserves or internal valuations cross a certain threshold.

c. Distinction Between §§ 3(9)(d) & 3(9)(f) Strengthened. Appleton clarifies that an insurer can conduct a legally “reasonable” investigation yet still incur liability for failing to settle once damages become clear. The two duties are sequential and independent.

d. Compliance Protocols. Carriers writing Massachusetts risks may revisit best-practice timelines for reserve adjustments, claim-review committees, and mediation authority levels to avoid Appleton-type exposure.

Complex Concepts Simplified

• “Reasonably Clear” Liability: Not an exact dollar match—just clarity sufficient that a reasonable person would concede substantial damages are due.
• § 3(9)(f) vs. § 3(9)(d): (f) is about settlement conduct once liability/damages are clear; (d) is about the investigation process leading up to that point.
• High-Low Agreement: A pre-trial contract setting a damages floor and ceiling regardless of verdict. Mentioned because AIG floated several such proposals the eve of trial.
• Reserve: The amount an insurer sets aside on its books to pay a claim. A significant reserve increase can evidence the insurer’s own valuation and thus clarity of damages.

Conclusion

Appleton establishes that when an insurer’s internal data repeatedly values a claim in a specific range, Massachusetts law may deem damages “reasonably clear,” triggering a non-delegable, prompt duty to make a fair settlement offer—even when the claimant’s demand appears inflated and even in the face of ongoing negotiation. The ruling reinforces consumer-protective objectives of Chapters 93A and 176D, pushes insurers toward earlier, higher offers once their own metrics confirm exposure, and demarcates investigative adequacy from settlement conduct. Future litigants will cite Appleton to survive summary judgment where internal valuations are discoverable, while insurers will need to synchronize reserves, authority, and offers more tightly to Massachusetts’ statutory duties.