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09/09/77 MASSACHUSETTS ASSOCIATION INDEPENDENT

September 9, 1977

MASSACHUSETTS ASSOCIATION OF INDEPENDENT INSURANCE AGENTS AND BROKERS, INC., *FN1 & OTHERS *FN2
v.
COMMISSIONER OF INSURANCE



Suffolk. Civil action commenced in the Supreme Judicial Court for the county of Suffolk on November 20, 1974. The case was heard by Hennessey, C.J., on a motion to dismiss.

Quirico, Braucher, Wilkins, & Liacos, JJ.

SYLLABUS BY THE COURT

Practice, Civil, Declaratory proceeding, Parties. Jurisdiction, Declaratory relief. Commissioner of Insurance. Insurance, Group marketing plan. Words, "Real party in interest."

The opinion of the court was delivered by: Liacos

Allegations in a declaratory proceeding against the Commissioner of Insurance by a trade association of licensed insurance agents and brokers in their individual capacities, setting forth a dispute over the defendant's interpretation of G. L. c. 175, § 193R, and the validity of a regulation issued by him pursuant to such interpretation, and claiming injury to the plaintiffs in the conduct of their business and loss of customers due to unfair competition contrary to legislative policy, established both an "actual controversy" under c. 231A, § 1, and standing of the plaintiffs to secure resolution of the dispute. [292-296]

A trade association incorporated under G. L. c. 180, with a membership of many licensed insurance agents and brokers, and authorized by statute to sue and be sued, should be recognized as the "real party in interest" under Mass. R. Civ. P. 17 (a), 365 Mass. 763 (1974), and entitled to bring a proceeding on behalf of its unnamed members for a declaratory judgment respecting a regulation issued by the Commissioner of Insurance. [296-298]

This is an appeal from an order of a single Justice dismissing the plaintiffs' complaint under G. L. c. 231A seeking to challenge the validity of Regulation 3-74, entitled "Rules and Regulations Regarding Insurance Issued Pursuant to a Group Marketing Plan," issued on October 31, 1974, by the Commissioner of Insurance (commissioner). The regulation in question, purporting to implement the provisions of G. L. c. 175, § 193R, inserted by St. 1973, c. 1098, sets forth the criteria for so called group marketing plans. The statute on its face *fn3 concerns not only such plans but also "mass merchandising" plans. *fn4

The plaintiffs allege that the regulation is invalid and in contravention of the express provisions and intent of the statute. Their position is that G. L. c. 175, § 193R, requires the commissioner to make reasonable rules and regulations regarding insurance issued pursuant to both group marketing plans and mass merchandising plans, and that any narrowing by regulation of the limitations of the statute to group marketing would lead to unfair competition. The commissioner's position, as reflected in Regulation 3-74, is to the contrary. *fn5

The plaintiffs alleged in their complaint *fn6 that insurers were offering, and that the commissioner had approved, mass merchandising plans at lower rates than were available to individuals, which plans were not in conformity with G. L. c. 175, § 193R. They also alleged that they were participants in a heavily regulated industry with the purpose of the regulatory scheme being to protect those in the plaintiffs' position from the unfair and illegal competition being offered by the unregulated mass merchandising programs. They claimed that they were being injured in the conduct of their business and were suffering substantial losses of customers. The commissioner filed a motion to dismiss the amended complaint based on the grounds of lack of actual controversy and requisite standing by the plaintiffs. The single Justice dismissed the complaint.

1. In order for a court to entertain a petition for declaratory relief, an "actual controversy" sufficient to withstand a motion to dismiss must appear on the pleadings. G. L. c. 231A, § 1. Even if there is an actual controversy, the particular plaintiff must demonstrate the requisite legal standing to secure its resolution. Hillman v. Second Bank-State St. Trust Co., 338 Mass. 15, 19 (1958). The question whether an actual controversy exists is closely related to the issue of standing. South Shore Nat'l Bank v. Board of Bank Incorporation, 351 Mass. 363, 366-367 (1966).

The purpose of both the actual controversy and the standing requirements is to ensure the effectuation of the statutory purpose of G. L. c. 231A, which is to enable a court "to afford relief from . . . uncertainty and insecurity with respect to rights, duties, status and other legal relations." G. L. c. 231A, § 9, inserted by St. 1945, c. 582, § 1. Such proceedings are concerned with the resolution of real, not hypothetical, controversies; the declaration issued is intended to have an immediate impact on the rights of the parties. Employers' Commercial Union Ins. Co. v. Commissioner of Ins., 362 Mass. 34, 38 (1972). Travelers Ins. Co. v. Graye, 358 Mass. 238, 240 (1970).

Although the "actual controversy" and standing requirements should be liberally construed in accord with the provisions of G. L. c. 231A, § 9, there are limits to the matters which can be heard in an action for a declaratory judgment. Southbridge v. Southbridge Water Supply Co., 371 Mass. 209, 213-215 (1976).

In the sense that the matter at issue here involves a dispute over an official interpretation of a statute and the validity of a regulation promulgated pursuant to that interpretation, a justiciable controversy exists. Woods v. Newton, 349 Mass. 373, 376 (1965). School Comm. of Cambridge v. Superintendent of Schools, 320 Mass. 516 (1946). G. L. c. 231A, § 2. However, controversy in the abstract is not sufficient to allow a plaintiff to invoke the declaratory judgment remedy. Supreme Council of the Royal Arcanum v. State Tax Comm'n, 358 Mass. 111 (1970). The plaintiff must also be one who, by virtue of a legally cognizable injury, is a person entitled to initiate judicial resolution of the controversy. See K.C. Davis, Administrative Law § 22.04, at 427 (1972).

A party has standing when it can allege an injury within the area of concern of the statute or regulatory scheme under which the injurious action has occurred. Circle Lounge & Grille, Inc. v. Board of Appeal of Boston, 324 Mass. 427 (1949). Westland Hous. Corp. v. Commissioner of Ins., 352 Mass. 374 ...


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