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McCall v. Aegis Surety Bonds and Insurance Services

Superior Court of Massachusetts, Suffolk

April 20, 2016

CONNELL McCALL, Plaintiff,
v.
AEGIS SURETY BONDS AND INSURANCE SERVICES a/k/a AEGIS SECURITY INSURANCE COMPANY, Defendant

          MEMORANDUM OF DECISION AND ORDER ON PLAINTIFF'S MOTION FOR JUDGMENT ON THE PLEADINGS

          Douglas H. Wilkins, Justice of the Superior Court.

         The plaintiff, Connell McCall (" Plaintiff" or " McCall") brought this action on a surety bond against the defendant, Aegis Surety Bonds and Insurance Services, LLC a/k/a Aegis Security Insurance Company (" Defendant" or " Aegis"). Before the court is Plaintiff's Motion for Partial Judgment on the Pleadings (" Motion"), which the defendant opposed. The Motion seeks judgment on Count 1 (Declaratory Judgment) and Count 2 (Breach of Contract-Bond). After hearing, the Motion is ALLOWED.

         BACKGROUND

         On April 27, 2013, McCall purchased a vehicle from Edd's Auto Exchange, Inc. (" Edd's"). Aegis issued a $25, 000 bond to Edds (Exhibit A to the Complaint), covering Edd's from December 6, 2012 through December 5, 2013. The bond is payable to " a person who obtains a final judgment in a court of competent jurisdiction against the Principal for an act or omission on which the bond is conditioned if the act or omission occurred during the term of the bond." [emphasis added]. The bond incorporated by reference G. L. c. 140, § 58(c)(1)(iv), which reads in relevant part:

The bond or its equivalent shall be for the benefit of a person who purchases a vehicle from a Class 2 [used car dealer] licensee, and who suffers loss on account of . . . the dealer's unfair and deceptive acts or practices, misrepresentations, failure to disclose material facts or failure to honor a warranty claim or arbitration order in a retail transaction. [emphasis added].

         On August 31, 2013, McCall filed for arbitration against Edd's under the Massachusetts Lemon Law, G. L. c. 90, § 7N1/4. On October 11, 2013, an arbitrator issued a final decision in favor of McCall. Edd's appealed the final arbitration award to the Lynn District Court in an action under G. L. c. 90, § 7N1/4, entitled Edd's Auto Exchange v. Connell McCall, Lynn District Court No. 1313 cv 1103. Edd's never posted the required bond for that suit. On March 30, 2015, final judgment entered in favor of McCall, who filed a claim against the bond on or before July 2, 2015. Aegis denied McCall's claim in a letter response dated August 14, 2015. McCall commenced this action on November 16, 2015.

         DISCUSSION

          " Rule 12(c) of the Massachusetts Rules of Civil Procedure provides that, '[a]fter the pleadings are closed but within such time as not to delay the trial, any party may move for judgment on the pleadings . . .'" Ritchie v. Department of State Police, 60 Mass.App.Ct. 655, 659, 805 N.E.2d 54 (2004), quoting Mass. R. Civ. P. 12(c), 365 Mass. 754 (1974). The test for Rule 12(b)(6) motions govern a motion brought under Mass. R. Civ. P. 12(c). See Welch v. Sudbury Youth Soccer Association, 453 Mass. 352, 353, 901 N.E.2d 1222 (2009). Accordingly, " the Court may consider documents referenced in the plaintiff's complaint without converting the motion to dismiss into a motion for summary judgment." Johnston v. Box, 453 Mass. 569, 581-582 n. 19, 903 N.E.2d 1115 (2009) (brackets and quoted citation omitted), quoting Shaw v. Digital Equip. Corp., 82 F.3d 1194, 1220 (1st Cir. 1996) (material must be " integral to or explicitly relied upon in the complaint").

         Resolution of the Motion turns upon the relevant portion of G. L. c. 140, § 58(c)(2), which sets forth the statute of limitations for claims against the surety bond. The statute reads:

(2) Recovery against the bond or its equivalent may be made by any person who obtains a final judgment in a court of competent jurisdiction against the dealer for an act or omission on which the bond is condition if the act or omission occurred during the term of the bond. Every bond shall also provide that no suit may be maintained to enforce any liability on the bond unless brought within 1 year after the event giving rise to the cause of action. [emphasis added].

         The key question is whether McCall's " cause of action" arose when McCall discovered the problems with the car or when McCall obtained a judgment. Resolution of that question is not difficult.

          The only " cause of action" addressed by § 58(c)(2) is the " suit . . . to enforce any liability on the bond", i.e. an action for " [r]ecovery against the bond or its equivalent." Under the first sentence, that suit must await entry of " a final judgment." Where the plaintiff cannot sue until entry of judgment, no sensible reading would lead to a conclusion that he had a cause of action before that time. The language " event giving rise to the cause of action" therefore can only be referring to the entry of judgment mentioned in the previous sentence. " Where " the language of a statute is clear and unambiguous, it is conclusive as to the intent of the Legislature.' Global NAPs, Inc. v. Awiszus, [457 Mass. 489, 496, 930 N.E.2d 1262 (2010)]." Passatempo v. McMenimen, 461 Mass. 279, 287, 960 N.E.2d 275 (2012).

         Aegis argues that the phrase " event giving rise to the cause of action" refers to the six events enumerated in G. L. c. 140, § 58(c)(1)(i)-(vi), including five kinds of wrongs committed at the time the used car was purchased, [1] failure to honor a warranty claim or arbitration order or failure to pay off a lien on a trade-in if the dealer assumed the lien. None of these actions gives rise to a cause of action on the bond, however. The bond itself is payable only to " a person who obtains a final judgment in a court of competent jurisdiction against the Principal ...." Moreover, Aegis' interpretation makes no sense. By the time the consumer receives a judgment against the dealer, one year is very likely to have passed, as it did here. The one year period for suit, clearly intended by the Legislature, would be illusory. Even if the language were ambiguous, the Court would reject Aegis' interpretation which would defeat the statute's overall consumer protection purpose. Shepard v. Finance Associates of Auburn, Inc., 366 Mass. 182, 191, 316 N.E.2d 597 (1974) (consumer protection statute should be " liberally construed to effectuate its remedial purpose"). See generally Passatempo, 461 Mass. at 287 (construing statute " to effectuate the intent of the Legislature in enacting it"), quoting Global NAPS, 457 Mass. at 496.

         Apart from the statute of limitations, there is no question about liability on the bond. The pleadings establish that the plaintiff has recovered a judgment against Edd's, has made demand on Aegis, and that Aegis has failed to honor ...


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