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Commerce Insurance Company v. First Help Financial, LLC

Superior Court of Massachusetts, Suffolk

April 16, 2019

FIRST HELP FINANCIAL, LLC and Marcio R. Rodrigues-Pessoa


          Kenneth W. Salinger, Justice of the Superior Court

          First Help Financial, LLC, is listed as a secured lender on a Massachusetts motor vehicle insurance policy issued by Commerce Insurance Company to Marcio Rodrigues-Pessoa. First Help seeks to recover for collision damages to the vehicle under the policy’s "Secured Lenders" provision. Commerce asserts that First Help’s claim is barred by the policy’s "Vehicle Sharing and Public or Livery Conveyance Exclusion" because the collision happened while the vehicle was being used to carry passengers for hire through the transportation network company called Uber. Commerce filed suit to obtain declaratory judgment as to whether First Help may recover under the policy.

          Commerce and First Help have submitted the matter as a "case stated," asking the Court to declare their legal rights based on agreed facts.

          The Court may decide this matter even though Rodrigues-Pessoa was never served with process and the claims against him should therefore be dismissed. Rodrigues-Pessoa is not a necessary party because his rights as the named insured are not at issue; the dispute as presented in the agreed facts only affects First Help’s independent rights as a secured lender.

          First Help is entitled on the agreed facts to recover collision damages from Commerce. First Help cannot use the doctrine of issue preclusion to defeat Commerce’s claim because the prior decision it cites involved a different issue. But, on the merits, First Help’s claim under the Secured Lenders provision is not barred by the Public Conveyance Exclusion, even though the collision happened while the vehicle owner was allowing a friend to use his car to drive for Uber.

          Judgment will enter declaring First Help’s right to recover against Commerce and dismissing the claims against Mr. Rodrigues-Pessoa without prejudgment.

          1. Factual Background.

          No findings of fact are needed because Commerce and First Help stipulated to an agreed statement of facts, asked the Court treat that statement and accompanying documents as the complete factual record, agreed that the Court may draw reasonable inferences in applying the law to those facts, and asked the Court to resolve their dispute on a "case stated" basis.[1] "Where a statement of agreed facts contains all the material facts on which the rights of the parties are to be determined in accordance with law, it constitutes a ‘case stated.’ "[2] The Court must accept the parties’ agreed statement of facts "as indisputably true."[3] When parties present a matter as a case stated "all that remains is for the judge to apply the correct principles of law and decide the case."[4]

          The facts agreed to by Commerce and First Help, which the Court accepts as true, establish the following.

          1.1. The Insurance Policy.

          Commerce issued a standard Massachusetts Automobile Insurance Policy to Mr. Rodrigues-Pessoa for the period December 2, 2016, to December 2, 2017. This Policy, number GKR297, provided various coverages, including collision damage coverage with a $ 500 deductible. The vehicle insured under this policy was a 2015 Ford Fusion. First Help had a security interest in the vehicle. It was listed as a "Secured Lender" on the Policy’s coverage selection pages.

          The collision provision of the Policy provides no-fault coverage. Commerce agreed to "pay for any direct and accidental damage" to the insured vehicle, no matter "who is at fault." The Policy places an upper limit on the collision damage coverage, stating that Commerce will pay no more than "the cash value of the auto or the cost to physically repaid the auto, whichever is less," and that in all cases Commerce would subtract the $ 500 deductible from the amount it owed for collision damage.

          The Policy includes a "Vehicle Sharing and Public or Livery Conveyance Exclusion" that bars the named insured from recovering collision damages incurred while the insured vehicle is being used in connection with a transportation network company like Uber or Lyft. This provision provides, in relevant part, that:

[Commerce] will not pay damages or benefits under any Coverage Part of your policy while your auto is: * * *
Available for use as a public or livery conveyance, including use of your auto for hire through a ride sharing arrangement, or a Transportation Network Company (TNC) which operates under an agreement for compensation. This includes but is not limited to any period of time a vehicle is being used by you or any household member who is logged into a TNC as a driver, whether or not a passenger is occupying the vehicle.
A TNC is defined as an online enabled application or digital network used to connect passengers with drivers using vehicles for the purpose of providing prearranged transportation services for compensation.

          The Court will refer to this provision as the Public Conveyance Exclusion.

          In addition, the Policy also includes a "Secured Lenders" provision that states as follows:

When your Coverage Selections Page shows that a lender has a secured interest in your auto, [Commerce] will make payments under Collision, Limited Collision and Comprehensive (Parts 7, 8 and 9) according to the legal interests of each party.
The secured lenders right of repayment will not be invalidated by your acts or neglect except that we will not pay if the loss of or damage to your auto is the result of conversion, embezzlement, or secretion by you or any household member. Also, we will not pay the secured lender if the loss of or damage to your auto is the result of arson, theft or any other means of disposal committed by you or at your direction.
When we pay any secured lender we shall, to the extent of our payment[, ] have the right to exercise any of the secured lender’s legal rights of recovery. If you do not file a proof of loss as provided in this policy, the secured lender must do so within 30 days after the loss or damage becomes known to the secured lender.

          The parties have stipulated that First Help was listed as a secured lender on the coverage selection pages and also that First Help’s interests ...

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