Class Action – Summary Judgment
Peter L. Bosse and Tanya T. Austin obtained summary judgment on behalf of Safety Insurance Company in McGilloway v. Safety Ins. Co., a putative class action filed in Suffolk Superior Court. In McGIlloway, the plaintiff sought to recover “diminished value” damages based on the purported reduced value of his vehicle, which had been damaged in an auto accident with Safety’s insured and subsequently fully repaired. Arguing that potential buyers of the vehicle could easily determine the vehicle’s accident history via online search and would assign a lower value to the vehicle after it had been involved in an accident (regardless of its full repair), the plaintiff asserted that Safety had violated G.L. c. 93A and 176D by failing to calculate and pay diminished value damages at the same time as it calculated the value of the physical damage to the vehicle. The plaintiff also sought declaratory judgment regarding Safety’s obligation to provide coverage for such damages.
Safety moved for summary judgment on all claims, asserting that Massachusetts law did not permit a plaintiff to recover both the costs of repairing damaged property, and the diminished value of that property. As “diminished value” damages were not amounts a claimant was “legally entitled to collect” as required by the policy, Safety asserted that no coverage was afforded. In response, the plaintiff argued that prior Massachusetts cases regarding the proper measure of recovery had been limited to land, rather than tangible property, and that in the case of automobiles diminished value should be recoverable. As a matter of first impression—confirming an identical recent holding by the U.S. District Court for the District of Massachusetts in a similar case– the Superior Court held that Massachusetts law did not permit a claimant to recover damages for the diminished value of fully repaired property. Thus, not only was coverage not afforded under the policy, but Safety did not violate G.L. c. 93A or 176D by failing to provide such coverage. The Court further recognized that the Code of Massachusetts Regulations governing automobile damage appraisal did not contemplate the availability of diminished value damages, indicating that the Commissioner of Insurance did not interpret the standard Massachusetts Automobile Policy as providing coverage for such in any event. In light of the fact that neither the Commissioner of Insurance nor any Massachusetts court had ever indicated that diminished value damages might be payable under a liability policy, the Court went on to note that even if the plaintiff had had a viable claim for coverage, Safety’s “plausible, reasoned legal position” would not have been a violation of G.L. c. 93A.
This decision, by establishing the proper measure of damages for personal property in Massachusetts, serves to preclude future claims for intangible damages alleged to arise from the availability of information that might influence a potential buyer. The decision further reinforces an insurer’s right to disclaim coverage based on a reasoned legal position, even where no Massachusetts court has directly addressed the issue in dispute.