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McGilloway v. Safety Insurance Co.

Superior Court of Massachusetts, Suffolk

October 1, 2018

Jarrett MCGILLOWAY et al., on Behalf of Themselves and All Others Similarly Situated
v.
SAFETY INSURANCE COMPANY

          MEMORANDUM OF DECISION AND ORDER ON DEFENDANT SAFETY INSURANCE COMPANY’S MOTION TO DISMISS SECOND AMENDED COMPLAINT

          Janet L. Sanders, Justice of the Superior Court

          This is a putative class action against Safety Insurance Company (Safety) challenging an alleged policy and practice of denying payment to third-party claimants for the "inherent diminished value" to their vehicles above and beyond the costs of repairing the vehicles following an accident. After plaintiffs twice amended their complaint (and after the parties had engaged in some discovery), Safety moved to dismiss pursuant to Mass.R.Civ.P. 12(b)(6). This Court concludes that Safety’s Motion must be DENIED, without prejudice to revisiting these issues by way of a motion for summary judgment.

         BACKGROUND

         The Second Amended Complaint (SAC) contains the following allegations, assumed as true for purposes of Safety’s motion.

         On August 20, 2016, plaintiff Jarrett McGilloway’s 2013 Jeep Grand Cherokee Laredo was involved in a motor vehicle accident involving Safety’s insured, Ultimate Parking, LLC. Ultimate was insured under a Safety insurance policy that included indemnity benefits available to pay for third-party property damage. McGilloway made a demand to Safety and submitted all information necessary for Safety to fully adjust McGilloway’s property damage claim. Safety determined that Ultimate was indeed liable for the damage to McGilloway’s vehicle and, after examining, appraising, and assessing the damage, paid $5, 717.78 to McGilloway. This did not include any amount representing the inherent diminution in value (DIV) of the vehicle.

         On February 15, 2017, plaintiff Linda Estrella’s 2015 Chevrolet Impala Limited was involved in a motor vehicle accident involving Safety’s insured, Nicholas Farmer. Farmer was insured under a Safety insurance policy, which included indemnity benefits available to pay for third-party property damage. Like McGilloway, Estrella made a demand to Safety for payment. After determining that Farmer was liable for the damage to Estrella’s vehicle, Safety paid Estrella some amount to repair the car. Like McGilloway, Estrella was not compensated for DIV damages.

         By failing to pay plaintiffs and those similarly situated for that loss, the SAC alleges that Safety has breached its obligations under the applicable insurance policies. The SAC also alleges a violation of Chapter 93A and/or Chapter 176D.

         DISCUSSION

         This case raises the novel issue of whether an insurer must pay claimants under its auto insurance policy not only for the cost of repairing a vehicle involved in an accident but also some additional amount to compensate a claimant for the fact (as alleged by plaintiffs) that a fully repaired vehicle is worth less in the resale market than a comparable vehicle that has not suffered such damage. In support of its motion to dismiss, Safety argues among other things that the policy requires it to pay third-party claimants only those amount that such claimants are "legally entitled" to collect through a court judgment or settlement and that, in the absence of such a judgment or settlement, it has no legal obligation to pay DIV damages. Alternatively, it argues that the plaintiffs have not sustained a loss that is capable of calculation until and unless they sell their repaired vehicles. More generally, Safety argues that Massachusetts law does not permit a plaintiff to recover both the cost of repair and the diminished value of property, and that, having acknowledged that they were paid for the repair costs, plaintiffs fail to state a claim upon which relief may be granted. In opposing Safety’s motion, plaintiffs cite to discovery showing that Safety has admitted such damages are capable of calculation even without a judgment or settlement, and that Safety has itself interpreted the policy to permit the recovery of DIV damages. Plaintiffs also cite to out of state authority for the proposition that the owner of a negligently damaged motor vehicle may collect both for the cost of repairing the vehicle and for the difference between the fair market value of the vehicle before the accident and the value of the vehicle in its repaired condition.

          After a careful review of the Complaint and the memoranda submitted by the parties, this Court concludes that the issues raised in the instant motion are better left for resolution once a more complete factual record has been developed. This is precisely the approach that the parties have taken in another action pending in this session that raises identical issues. See Ercolini v. Commerce Ins. Co., Civ. No. 2018-01627-BLS 2. In Ercolini, the parties have agreed to phased discovery which focuses first on the question of whether the insurer is legally obligated to pay DIV damages to a third-party claimant. In the event that the insurer moves for summary judgment on that issue in Ercolini, that should be coordinated with the instant case so as to promote an efficient use of judicial resources and to avoid inconsistent results.[1] That some discovery would be helpful is further supported by the fact that, in opposing the instant motion, plaintiffs rely on discovery already conducted. Finally, given the absence of any clear Massachusetts precedent answering the questions which this action raises, it is all the more important that this Court not rule on these issues prematurely. Accordingly, this matter is scheduled for a Rule 16 Conference on November __ 2018 at 2:00 p.m. to determine a tracking order for discovery and to discuss how this case may be coordinated with Ercolini.

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Notes:

[1] This will be easy to do, since the same law firm represents the plaintiffs in both Ercolini and ...


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