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Kantzelis v. Commerce Insurance Co.

Superior Court of Massachusetts, Suffolk, Business Litigation Session

November 13, 2017

Alex KANTZELIS, on behalf of himself and all others similarly situated

          Caption Date: November 9, 2017


          Mitchell H. Kaplan, Justice

         In this action, the plaintiff, Alex Kantzelis, asserts claims arising out of the defendant, The Commerce Insurance Company’s (Commerce), failure to make payments directly to a secured lender that financed the plaintiff’s purchase of his automobile after Commerce denied coverage for the plaintiff’s collision claim because of misrepresentations in the plaintiff’s application for insurance. He brings this action on his own behalf as well as on behalf of a putative class of similarly situated Commerce insureds.

         The operative complaint governing the plaintiff’s claims is his Third Amended Class Action Complaint (the Complaint). The original complaint was filed on October 13, 2016. It was amended once as a matter of right and once with Commerce’s assent. Commerce answered this second amended complaint, and also moved to dismiss on the grounds that the plaintiff lacked standing to bring the claims he asserted because he had suffered no damages. At a hearing on that motion, the court noted that the plaintiff’s contention that his debt to the finance firm that financed his purchase of the car would have been extinguished if Commerce had paid the secured lender, as it was allegedly required to do under the insurance policy, was not supported by the policy language- if Commerce paid the loss to the lender it would be substituted as the creditor for the amount of the loss so paid.[1] The court went on to comment that it was conceivable that a person in the plaintiff’s position might have suffered some other loss because Commerce did not pay the lender, for example if the car was repossessed and this caused consequential damages to the insured. Plaintiff’s counsel suggested that he could allege these kinds of special damages. The court gave the plaintiff an opportunity to file the third amended complaint, which, as noted above, is now the operative complaint in this case.

         The case is now before the court on Commerce’s " Motion to Strike Class Allegations." Commerce contends that because the plaintiff’s claims rest on his allegations of special consequential damages unique to him, they cannot be the predicate for class-based claims. Whether such a motion to strike may be brought under Massachusetts jurisprudence is a question of first impression and discussed below. Of course, a denial of this motion would not be tantamount to the certification of a class, the plaintiff would still have to move for class certification under Mass.R.Civ.P. 23 and provide evidentiary support for class treatment. Rather, the practical issue raised by this motion is whether there are sufficient facts pled in the Complaint to permit the class claims to proceed and the plaintiff to take class discovery from Commerce.


         The following facts are taken from the allegations in the Complaint and the several exhibits attached to it. They are assumed to be true for the purposes of this motion.

         Additionally, in prior proceedings the plaintiff, through counsel, conceded that he could not challenge Commerce’s decision to deny his claim based on a false statement in his insurance application and prosecute claims on behalf of a class. He explained that he was not contesting the denial of coverage of his claim. In consequence, the court also assumes that, for the purposes of this motion, the facts underlying Commerce’s denial of coverage are true.

         In 2013, the plaintiff purchased a 2010 BMW 535X1 Sedan (the BMW). The purchase was financed by BMW Bank of North America (BMW Bank) which obtained a lien on the car. On November 12, 2013, the plaintiff applied to Commerce for an auto insurance policy (the Policy). The Policy issued for the period November 14, 2013 to November 14, 2014. The coverage page reflected that the plaintiff resided in Massachusetts. The BMW was involved in an accident on September 5, 2014 in Fort Lauderdale, Florida, and the plaintiff submitted a damages claim to Commerce for collision/comprehensive coverage.

         Commerce assigned an appraisal service to inspect the car. By letter dated September 15, 2014, Commerce notified the plaintiff that the BMW had been inspected and found to be a total loss. It recommended that it be moved from the BMW dealership where it was then being stored to a salvage facility. It also stated: " if you have a loan on your vehicle, please contact the bank or lien holder to give them permission to speak with Commerce." There is no allegation that the plaintiff did this.

         The appraisal service that inspected the BMW notified Commerce that this was the third time that the BMW had been appraised and it believed that the plaintiff lived in Florida. This prompted an investigation by Commerce which confirmed that the plaintiff did live in Florida. By letter dated October 7, 2014, Commerce informed the plaintiff of the results of its investigation and that it was denying the claim. The letter noted that the BMW was still being stored at the BMW dealership in Fort Lauderdale and recommended that the plaintiff contact the dealership to have the car returned to him.

         At the time of the accident, the plaintiff owed BMW Bank $25, 390 on the loan secured by the BMW. " Commerce determined that [the BMW] suffered a loss less than the full amount of the loan." [2] Commerce did not advise the plaintiff that Commerce would not pay the secured lender, unless the lender made a demand on Commerce. Commerce also did not notify BMW Bank when it cancelled the plaintiff’s auto insurance Policy. There is no allegation that the plaintiff notified BMW Bank of the accident or the denial of coverage, or that BMW Bank made a demand on Commerce for payment under the policy.

         The plaintiff made payments to BMW of $4, 359 after his claim was denied, including $60 in late payment charges. He was also assessed an $850 repossession fee.[3]

         The Complaint alleges that the plaintiff suffered various losses because Commerce did not tender payment in the amount of the lien to Commerce.[4] They can be summarized as follows:

The plaintiff’s defense against BMW Bank for non-payment of the loan was weaker.
The plaintiff was deprived of multiple defenses and counterclaims which he would have had against Commerce, but not against BMW Bank.
The plaintiff was dunned by creditors for failure to make payment of the BMW Bank loan.
The BMW was repossessed and he was assessed a fee.
The plaintiff suffered negative credit consequences.
The amount of plaintiff’s liability to BMW increased.
The plaintiff suffered a loss of time and money.
The plaintiff has an outstanding debt to BMW Bank, or its ...

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