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Morgan v. Massachusetts Homeland Insurance Co.

Appeals Court of Massachusetts, Hampden

January 20, 2017


          Heard: November 9, 2016

         Civil action commenced in the Superior Court Department on March 8, 2012.

         Motions for class certification and for summary judgment were heard by Edward J. McDonough, Jr., J.; and the case was heard by Bertha D. Josephson, J.

          Brett J. Vottero (Eric D. Applebaum also present) for the plaintiff.

          Michael S. Batson (Michael C. Kinton also present) for the defendant.

          Present: Kafker, C.J., Kinder, & Lemire, JJ.

          KAFKER, C.J.

         The plaintiff, Anthony G. Morgan, brought this civil action against the defendant, Massachusetts Homeland Insurance Company (Homeland or insurer), alleging that Homeland engaged in unfair or deceptive claim settlement practices in violation of G. L. c. 176D, § 3(9), and G. L. c. 93A, in the course of settling his total loss auto insurance claim.[1] See G. L. c. 93A, §§ 2, 9. Even though the claim was settled within two months of the accident, with the plaintiff's acceptance of the insurer's offer, the plaintiff claimed that the insurer violated c. 176D and c. 93A because it did not take into account the "retail book value" of his vehicle, as required by 211 Code Mass. Regs. § 133.05(1)(a) (2003). The plaintiff also filed a motion to certify a class action pursuant to G. L. c. 93A, § 9(2). A judge of the Superior Court (motion judge) denied class certification and entered a summary judgment on that count of the complaint. After a jury-waived trial on the plaintiff's individual c. 93A claim, the trial judge (who was not the motion judge) found that, although Homeland had violated c. 93A, the plaintiff was not injured by the violation, and entered judgment for Homeland on that count of the complaint. On appeal, the plaintiff argues that the judges erred by (1) denying his motion for class certification; and (2) concluding that he was not injured by Homeland's c. 93A violation. Homeland cross-appeals, challenging the trial judge's ruling that it violated c. 93A. We conclude that the motion for class certification was properly denied, and that there was no c. 93A violation.


         On January 9, 2011, the plaintiff's 2005 Chevrolet Colorado was significantly damaged in an accident. Homeland, the plaintiff's auto insurer, determined the vehicle to be a total loss. Homeland was therefore required to offer the plaintiff an amount for the actual cash value of the vehicle. See 211 Code Mass. Regs. § 133.05.[2] When calculating the actual cash value of a total loss vehicle, an insurer must consider four factors, one of which is the "retail book value" of a vehicle "of like kind and quality, but for the damage incurred."[3] 211 Code Mass. Regs. § 133.05(1) (a) .

         On January 12, 2011, Homeland determined the actual cash value of the plaintiff's vehicle to be $11, 891. Homeland used a software program generated by a third party, Certified Collateral Corporation (CCC), which maintains a database of vehicles for sale from dealers and private parties in various markets. The motion judge found that the CCC report "incorporated a significant amount of information, including, but not limited to, vehicle description, vehicle options, vehicle history, the local market, the vehicle's pre-accident condition, the value of comparable vehicles, and vehicle mileage." The record provides more particularly that CCC's database "include[s] vehicles for sale at dealerships that CCC has physically inspected and dealer and private party advertised vehicle information from more than 1, 700 publications." Using the vehicle's identification number and the plaintiff's zip code, CCC compiled a list from its database of twelve comparable vehicles available for sale in the local market. Three of the vehicles were listed for sale at local dealerships that CCC had physically inspected; nine were listed for sale on Autotrader, a publicly accessible online database of vehicles for sale from dealers and private parties listed by age, make, model, mileage, and city and State.[4] See, e.g., Kesling v. Hubler Nissan, Inc., 997 N.E.2d 327, 330 (Ind. 2013). CCC then adjusted those values for the condition of the plaintiff's vehicle, and, using a weighted average formula, arrived at an actual cash value of $11, 891.[5]

         When informed of this valuation on January 20, 2011, the plaintiff insisted that his vehicle was worth more than $14, 000, citing a report by the National Automobile Dealers Association (NADA) that showed a "clean retail" value of $14, 500.[6] NADA maintains a publicly accessible online database of used car values in each region of the country, from which reports on particular vehicles may be generated. NADA, an industry trade association, also periodically publishes "books" containing these values in regional editions. See Braucher, Rash and Ride-Through Redux: The Terms for Holding on to Cars, Homes and Other Collateral Under the 2005 Act, 13 Am. Bankr. Inst. L. Rev. 457, 466 n.37 (2005) (Braucher). See also FTC v. CCC Holdings Inc., 605 F.Supp.2d 26, 33 (D.D.C. 2009).

         After receiving the plaintiff's c. 93A demand letter on February 11, 2011, and the NADA report, Homeland increased its valuation of the vehicle to $13, 024.66, which was found by the motion judge to reflect "an average of the NADA, Auto[t]rader, and CCC valuations." Homeland subsequently increased its valuation to $13, 650, which resulted in a settlement offer of $14, 003.12.[7] The plaintiff accepted a check in that amount.


         1. Class certification.

         The plaintiff claims that the judge erred in denying his motion to certify a class of all Homeland auto insureds who received payment for a total loss claim. He apparently claims a class should be certified based on Homeland's alleged use of the CCC software to determine its original offers, which, according to the plaintiff, did not account for the higher "retail book value, " in violation of 211 Code Mass. Regs. § 133.05(1) (a) . We disagree.

         To bring a class action under c. 93A, the plaintiff must show that he seeks relief for an unfair or deceptive act or practice, that the act or practice "caused similar injury to numerous other persons similarly situated, " and that he would "adequately and fairly represent[]" such persons. G. L. c. 93A, § 9(2), inserted by St. 1969, § 690. The plaintiff must "provide 'information sufficient to enable the motion judge to form a reasonable judgment' that the class meets the relevant requirements." Bellermann v. Fitchburg Gas & Elec. Light Co., 470 Mass. 43, 52 (2014), quoting from Weld v. Glaxo Wellcome Inc., 434 Mass. 81, 87 (2001). In deciding on a motion for class certification under c. 93A, a judge must bear in mind the "pressing need for an effective private remedy."[8] Aspinall v. Philip Morris Cos., 442 Mass. 381, 391-392 (2004), quoting from Fletcher v. Cape Cod Gas Co., 394 Mass. 595, 605-606 (1985) . We review a denial of class certification under c. 93A for an abuse of discretion. Bellermann, 470 Mass. at 51. We conclude that the motion judge did not abuse his discretion in declining to certify the plaintiff's class action, as the plaintiff failed to provide sufficient information to support a reasonable judgment that others were similarly situated and similarly injured. See id. at 54.

         We begin with the specifics of the plaintiff's case. Homeland based its original offer on the CCC report, which included information from Autotrader; the insurer later made upward adjustments after considering the NADA report presented by the plaintiff. The record, however, provides little to no information regarding how other putative class members' total loss claims were calculated, negotiated, and settled. As the motion judge explained, "Morgan has failed to adduce any evidence of injury to any other party." There is also insufficient information in the record to support a reasonable judgment that Homeland employed a uniform approach in handling total loss claims. Homeland's nationwide policy provides only that CCC reports "may" be used to calculate the actual cash value of a total loss vehicle and that "sources [such] as Auto[t]rader, NADA, Edmunds, Redbook and KBB [Kelly Blue Book]" may be consulted. Additionally, the record does not support a reasonable judgment that reliance on the CCC software, rather than NADA or other retail book values, similarly affected other members of the putative class. The plaintiff did not dispute that "CCC valuations are sometimes higher than other commercially available book valuations."[9] Thus, the beneficial or detrimental effect of the use of the CCC reports in determining even the original offer would depend on each putative class member's particular circumstances. This determination would further depend on each class member's zip code and vehicle condition, based on CCC's methodology. Thus, there is insufficient evidence to support a reasonable judgment that the plaintiff and the putative class members were similarly situated.

         Moreover, we cannot discern how the plaintiff here was actually harmed by the use of the CCC report, or how his alleged harm compared to that of the other putative class members. After basing its original offer on the lower CCC number, which included Autotrader listings, Homeland did consider the NADA report in upwardly adjusting the value of the plaintiff's vehicle. The plaintiff then ultimately received a check close to the amount of his original demand, approximately $14, 000. The end result was very nearly what he requested and included ...

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