A Massachusetts judge has denied class certifications for claimants seeking compensation from two insurers for the lost resale value of their vehicles that were damaged in accidents and then repaired.
Suffolk County Superior Court Justice Kenneth W. Salinger ruled that the damages and liability determinations sought require individual proof and cannot be addressed through class actions.
Plaintiffs Jarret McGilloway, Linda Estrella and Adam Ercolini are seeking class certifications for their claims against Safety Insurance Co. and Commerce Insurance Co. condition precedent, but does not compensate for the alleged loss of resale value.
The plaintiffs argued that the insurers committed breaches of contract, and also engaged in unfair business practices, by not compensating each class member for the lost resale value allegedly incurred by their motor vehicle. after being damaged in a collision and then completely repaired.
The plaintiffs moved for class certifications of their claims for breach of contract and for violation of Chapter 93A, the state’s consumer protection law. They filed separate motions in each of these consolidated cases, seeking certification of one class with claims against Safety and another class with claims against Commerce.
The proposed class of plaintiffs with claims against Safety has at least 26,000 members, while the class asserting claims against Commerce has roughly 470,000 members.
The type of loss that plaintiffs seek to recover is known as inherent diminished value or IDV. This term refers to “the concept that the fair market value of a vehicle may be lower after a collision and repair” and it corresponds to “the difference between the resale value of a motorcycle that vehicle immediately after a collision and the market value of the vehicle after a collision and subsequent repairs.”
Supreme Court Decision
The class action move follows a 2018 Massachusetts Supreme Judicial Court (SJC) ruling that Massachusetts’ standard auto insurance policy requires insurers to pay third-party collision damage claims for IDV of vehicles that have been damaged and subsequently repaired.
However, as stated by Superior Court Justice Salinger, the SJC emphasized that insurers should only pay IDV if the claimant establishes that his vehicle suffered from IDV, and the amount of damages to IDV owed to him.
The SIC clarified that it does not propose “that every vehicle involved in a collision and subsequently repaired suffers an IDV,” explaining that “individual proof is required to show that a given car continues to have some form of reduced value due to a collision or car accident, even after repairs have been made.”
Regarding the proposed classes, Justice Salinger found that there is still a material dispute as to whether any of the plaintiffs’ vehicles suffered IDV as a result of a collision and, if so, if and to what extent. amount such damage can be calculated. Each plaintiff has the burden of proof on these issues.
Regarding the rules governing class certifications, the Superior Court found that the proposed classes satisfied some but not all of the requirements.
They meet the requirements of quantity, uniformity, averageness, and adequacy of representation. In terms of numbers, the proposed class of plaintiffs with claims against Safety has at least 26,000 members, and the class with claims against Commerce has roughly 470,000 members.
As for common and typical, all members of the class are presumed to assert the same theories of liability and seek the same general type of damages. And with respect to adequate representation, the interests of the named plaintiffs are aligned with those of other putative class members, and plaintiff’s counsel is well qualified to conduct litigation on behalf of the proposed class members.
That was good news for the plaintiffs.
Missing Criteria
However, the judge continued, the proposed classes do not meet the requirements for primacy and superiority or the requirements under the consumer protection law (Chapter 93A), that class members suffer from similar damages. The failure to show primacy and superiority also weighs against certifying the classes of 93A claims, the judge added.
The court cited Commerce’s valuation expert’s testimony that determining whether a vehicle’s resale market value is less than it was immediately before the collision “requires detailed and individualized consideration.” analyze many factors, including the nature and severity of the damage and the quality of the repair ‘if the car has a previous accident history; how the car will be sold after the repair (for example, private sale, retail sale, trade-in); the general type of vehicle (eg affordable sedans, minivans, high-end luxury cars, etc.); and the buyer market share involved in any next sale.”
There is also testimony that many cars damaged in a collision and then completely repaired do not suffer any IDV, but instead have a value equal to and sometimes more after the repair than the value before the collision.
Plaintiffs themselves conceded during oral argument that many class members may not have suffered from IDV.
The judge did not favor plaintiffs’ testimony that IDV damages could be determined using anything other than a standard vehicle valuation guide (such as one published by the National Automobile Dealers Association) and the appraisal report of damage for each vehicle. However, the judge added, even if each IDV analysis may be simpler than the Commerce expert testifies, that does not change the fact that “liability cannot be determined on a class basis and instead must decide individually for the tens of thousands or hundreds of thousands of members of each proposed class.”
‘Individual Proof’
The court found that “individual proof, analysis, and findings are necessary to determine whether any presumed member of the vehicle class suffered some amount” of the IDV and, if so , how many.
The court said the evidence confirms what the SJC said in its 2018 decision.
“Because the issue of liability requires individual proof and cannot be decided on a class-wide basis, the Court finds and concludes that common issues do not prevail individually, a class action is not superior to an individual judgment of claims, and class denials. the certification is therefore appropriate,” the judge wrote.
Likewise, class certification is not appropriate under Chapter 93A for the additional reason that not all class members were subjected to similar unfair or deceptive conduct and suffered similar damages. Therefore, class certification under 93A is also inappropriate.
Plaintiffs further argue that the issue of which class members suffered damages in the form of unpaid IDV raises only a question of damages that can be addressed later, and need not be prevent class certification.
The court disagreed. “There is a difference between determining the extent of the damage (the question of damages) and deciding whether there is any damage (which goes to liability). While the obstacles to the quantification of damages may not prevent the certification of class, the presumed class must first show economic; absence of a common ground,” the judge explained.
There is no liability for breach of a contract, such as an insurance policy, if the alleged wrongful act did not cause the injury. A business or consumer is not entitled to collect even nominal damages under 93A without proving that the violation caused some kind of “different” and “distinct” damage.
The need in this case for an individual inquiry to resolve such issues would involve more than “just a question of damages,” and make it appropriate to deny class certification, the court held. as
Topics
Massachusetts Auto Laws
