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In Vineyard Aircraft Hangers Inc. v. New Hampshire Insurance Company, the United States District Court for the District of Massachusetts reaffirmed the distinction between a wrongful coverage denial and conduct that rises to the level of a Chapter 93A violation. The dispute arose from the denial of coverage under an insurance policy for damage to an aircraft sustained while taxiing out of an aircraft hangar, with the parties contesting the applicability of a policy exclusion.
Although the court found that the insurer breached its duty to defend due to an ambiguous exclusion, it rejected the plaintiff’s Chapter 93A claim. Liability under Chapter 93A, Section 11 requires more than an incorrect coverage position. Instead, a party must present evidence of bad-faith conduct, coercion, or other unscrupulous conduct. Here, the insurer’s denial rested on a plausible, good-faith interpretation of an admittedly ambiguous provision, and the dispute reflected a legitimate difference of opinion over policy language, rather than any deceptive or oppressive tactic. In granting summary judgment to the insurer on the Chapter 93A claim, the court underscored that even a losing coverage position, without evidence of bad faith or extortionate settlement pressure, does not transform an ordinary contract dispute into an unfair or deceptive act under Massachusetts law.
A mistaken coverage denial, even one that breaches the duty to defend, does not violate Chapter 93A absent evidence of bad faith or coercive conduct.
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