McGilloway v. Safety Ins. Co.

Decision Date19 October 2021
Docket NumberSJC-13053
Citation174 N.E.3d 1191
Parties Jarrett MCGILLOWAY & another v. SAFETY INSURANCE COMPANY (and a consolidated case).
CourtUnited States State Supreme Judicial Court of Massachusetts Supreme Court

Kevin J. McCullough,Salem, for Jarrett McGilloway & others.

Nelson G. Apjohn,Boston, for Commerce Insurance Company.

Peter L. Bosse, Worcester, for Safety Insurance Company.

The following submitted briefs for amici curiae:

Thomas R. Murphy, Salem, & Kevin J. Powers, Boston, for Massachusetts Academy of Trial Attorneys.

John Pagliaro & Martin J. Newhouse, Boston, for New England Legal Foundation.

Wystan M. Ackerman, for American Property Casualty Insurance Association & another.

Present: Budd, C.J., Gaziano, Lowy, Cypher, Kafker, Wendlandt, & Georges, JJ.


The plaintiffs in these consolidated actions, Jarrett McGilloway, Linda Estrella, and Adam Ercolini, each owned an automobile that was involved in a collision with an automobile owned or operated by a party insured by either Safety Insurance Company (Safety) or Commerce Insurance Company (Commerce) (collectively, defendants). The defendants paid to repair the plaintiffs’ automobiles to their precollision condition but declined to compensate the plaintiffs for alleged inherent diminished value (IDV) damages to the vehicles.4 The issues in these cases are (1) whether, under part 4 of the standard Massachusetts automobile insurance policy, 2008 edition (standard policy), an automobile insurer must pay a claim for the IDV of a car that has been damaged and subsequently repaired, and (2) whether the defendants violated either G. L. c. 93A (consumer protection act) or G. L. c. 176D (statute prohibiting unfair and deceptive insurance practices) in the course of their dealings with the plaintiffs.

We conclude that part 4 of the standard policy requires the defendants, as automobile insurers, to pay claims for IDV to vehicles that are damaged and subsequently repaired, provided that the claimant establishes both (1) that his or her vehicle suffered IDV, and (2) the amount of IDV damages owed to him or her. We further conclude, however, that there was no violation of either G. L. c. 93A or G. L. c. 176D. We remand the cases to the Superior Court for further proceedings consistent with this opinion.5

Background. We summarize the relevant facts, which are undisputed, as well as the procedural posture of these cases.

The plaintiffs purchased their vehicles between 2012 and 2016. Each plaintiff's vehicle was involved in a collision, resulting in damage to the vehicle caused by another driver who was insured by a standard policy that either Safety or Commerce had issued. Part 4 of the standard policy provides, in relevant part:6

"Under this Part, we will pay damages to someone else whose auto or other property is damaged in an accident. The damages we will pay are the amounts that person is legally entitled to collect for property damage through a court judgment or settlement. We will pay only if you or a household member is legally responsible for the accident. We will also pay if someone else using your auto with your consent is legally responsible for the accident. Damages include any applicable sales tax and the costs resulting from the loss of use of the damaged property." (Emphases in original.)

Each plaintiff thereafter sought compensation from one of the defendants for the damage to the plaintiff's automobile as a third-party claimant pursuant to part 4 of the standard policy.7 In each case, the insurer paid the plaintiff the full cost to repair the automobile to its precollision condition, but declined to compensate the plaintiff for the alleged IDV of the vehicle due to the collision.

In June of 2017, McGilloway filed a class action complaint in the Superior Court against Safety, which he later amended to add Estrella as a plaintiff, seeking a declaration that part 4 of the standard policy provides coverage for IDV damages. In addition to the declaratory relief sought, McGilloway and Estrella's amended complaint asserted claims for (1) breach of contract based on Safety's failure to pay them IDV damages pursuant to part 4 of the standard policy, (2) unfair business practices in violation of G. L. c. 93A, and (3) unfair claim settlement practices as defined by G. L. c. 176D, § 3 (9). In December 2017, Ercolini commenced an action against Commerce, similarly seeking declaratory relief and making an identical breach of contract claim. Following transfer of Ercolini's case to the business litigation session, the two cases then were consolidated to address whether IDV damages are covered under part 4 of the standard policy.

On the partiescross motions for summary judgment, which were consolidated into one action for this purpose, the judge allowed the defendants’ motions and denied the plaintiffs’ motion, concluding that the defendants were not required to pay any IDV damages beyond the cost to fully repair the collision damages to the plaintiffs’ vehicles. The judge also concluded that the defendants had not violated G. L. c. 93A or G. L. c. 176D in the course of their dealings with the plaintiffs. The plaintiffs appealed, and we granted their combined request for direct appellate review.

Discussion. 1. Standard of review. "Where the parties have cross-moved for summary judgment, we review a grant of summary judgment de novo to determine whether, viewing the evidence in the light most favorable to the unsuccessful opposing party and drawing all permissible inferences and resolving any evidentiary conflicts in that party's favor, the successful opposing party is entitled to judgment as a matter of law." Rahim v. District Attorney for the Suffolk Dist., 486 Mass. 544, 546, 159 N.E.3d 690 (2020), quoting Dzung Duy Nguyen v. Massachusetts Inst. of Tech., 479 Mass. 436, 448, 96 N.E.3d 128 (2018). "Because our review is de novo, we accord no deference to the decision of the motion judge." Caron v. Horace Mann Ins. Co., 466 Mass. 218, 221, 993 N.E.2d 708 (2013), quoting DeWolfe v. Hingham Ctr., Ltd., 464 Mass. 795, 799, 985 N.E.2d 1187 (2013).

2. Inherent diminished value. "The interpretation of an insurance policy is a question of law ...." Massachusetts Insurers Insolvency Fund v. Premier Ins. Co., 449 Mass. 422, 426, 869 N.E.2d 576 (2007). "We interpret the words of the standard policy in light of their plain meaning, giving full effect to the document as a whole" (citation omitted).8 Given v. Commerce Ins. Co., 440 Mass. 207, 209, 796 N.E.2d 1275 (2003). "A policy of insurance whose provisions are plainly and definitely expressed in appropriate language must be enforced in accordance with its terms" (citation omitted). Clark Sch. for Creative Learning, Inc. v. Philadelphia Indem. Ins. Co., 734 F.3d 51, 55 (1st Cir. 2013). In discerning the meaning of the contract provisions, we are guided by "what an objectively reasonable insured, reading the relevant policy language, would expect to be covered." Hazen Paper Co. v. United States Fid. & Guar. Co., 407 Mass. 689, 700, 555 N.E.2d 576 (1990).

The plaintiffs argue that they are entitled to collect IDV damages from the defendants under part 4 of the standard policy because IDV damages are included as part of "the amounts [the claimant] is legally entitled to collect for property damage through a court judgment or settlement." Conversely, the defendants argue that the motion judge did not err in allowing their motions for summary judgment because Massachusetts tort law does not permit IDV recovery. The defendants also contend that even if IDV damages are recoverable, such damages are not covered under the standard policy because Massachusetts regulations governing the claims made pursuant to the standard policy are silent as to how insurers should treat IDV damages. We agree with the plaintiffs.

We previously have held that "the term property damage ... can include intangible damage such as the diminution in value of tangible property" (citation omitted). Continental Cas. Co. v. Gilbane Bldg. Co., 391 Mass. 143, 148, 461 N.E.2d 209 (1984). See Trinity Church in Boston v. John Hancock Mut. Life Ins. Co., 399 Mass. 43, 48, 502 N.E.2d 532 (1987), citing Hopkins v. American Pneumatic Serv. Co., 194 Mass. 582, 583, 80 N.E. 624 (1907) ("The general rule for measuring property damage is diminution in market value"). Here, a plain reading of the phrase "the amounts that person is legally entitled to collect for property damage through a court judgment or settlement" entitles a claimant "to be made whole and compensated for what he has lost." G.E. Lothrop Theatres Co. v. Edison Elec. Illuminating Co. of Boston, 290 Mass. 189, 194, 195 N.E. 305 (1935). See Governo Law Firm LLC v. Bergeron, 487 Mass. 188, 199, 166 N.E.3d 416 (2021) (same). See also Rockwood v. Allen, 7 Mass. 254, 256 (1811) ("it is a general and very sound rule of law, that where an injury has been sustained, for which the law gives a remedy, that remedy shall be commensurate to the injury sustained"). Because the plain language of part 4 of the standard policy does not limit recovery to merely repair or replacement costs, such recovery must compensate a claimant for any loss of value the claimant incurred as a result of a collision, offset by the increase in value that may occur from repairs to the vehicle. In short, if a third-party claimant's vehicle suffers IDV even after it is fully repaired, then under part 4 of the standard policy, the insurer may be liable to the claimant for IDV damages so that he or she may be "made whole" once again.9

"The purpose of tort damages is to compensate an injured person for a loss suffered and only for that. The law attempts to put the plaintiff in a position as nearly as possible equivalent to his [or her] position before the tort. Recovery is permitted not in order to penalize the tortfeasor, but only to give damages ‘precisely commensurate with the injury.’ " United States v. Ebinger, 386 F.2d 557, 561 (2d Cir. 1967), quo...

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