Superior Court of Massachusetts, Suffolk, Business Litigation Session
Alex KANTZELIS, on behalf of himself and all others similarly situated
The COMMERCE INSURANCE COMPANY
Caption Date: November 9, 2017
Mitchell H. Kaplan, Justice
action, the plaintiff, Alex Kantzelis, asserts claims arising
out of the defendant, The Commerce Insurance Companyâs
(Commerce), failure to make payments directly to a secured
lender that financed the plaintiffâs purchase of his
automobile after Commerce denied coverage for the plaintiffâs
collision claim because of misrepresentations in the
plaintiffâs 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.
operative complaint governing the plaintiffâs 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 Commerceâs
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 plaintiffâs 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. The court went on to comment that it
was conceivable that a person in the plaintiffâs 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. Plaintiffâs
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.
case is now before the court on Commerceâs " Motion to
Strike Class Allegations." Commerce contends that
because the plaintiffâs 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
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.
in prior proceedings the plaintiff, through counsel, conceded
that he could not challenge Commerceâs 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 Commerceâs denial of
coverage are true.
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.
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.
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
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."  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 plaintiffâs 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
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.
Complaint alleges that the plaintiff suffered various losses
because Commerce did not tender payment in the amount of the
lien to Commerce. They can be summarized as follows:
The plaintiffâs 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 plaintiffâs liability to BMW increased.
The plaintiff suffered a loss of time and money.
The plaintiff has an outstanding debt to BMW Bank, or its