Three Massachusetts drivers have hit a dead end for the second time in their drive for court certification of class actions against two auto insurers over missing payments for the lost resale value of vehicles.
Superior Court Justice Kenneth Salinger last week denied an amended bid by three lead plaintiffs to represent the class of drivers who never received inherent diminished value (IDV) payments for their vehicles. The Massachusetts Supreme Judicial Court, in a ruling interpreting the 2008 standard auto policy, has defined IDV as the loss in market value to a vehicle due to the stigma of being in an accident, even after the vehicle has been fully repaired.
In June 2023, the Superior Court denied the class actions over IDV and now Salinger has denied the second bid with the same reasoning. The court found, after evaluating expert opinions submitted by the plaintiff consumers and defendants Commerce Insurance and Safety Insurance, that liability must be determined separately for every class member and cannot be determined for a class.
In the prior ruling, the court said that “because the issue of liability requires individualized proof and cannot be decided on a class wide basis,” it follows “that common issues do not predominate over individual ones, a class action is not superior to individual adjudication of claims, and denial of class certification is therefore appropriate.”
The court relied upon expert testimony provided by Commerce Insurance that the calculation of IDV requires consideration of many factors on an individual basis. These factors include the nature and severity of the damage and the quality of the repairs; whether the vehicle had a prior accident history; the general class of vehicle, and others.
The industry also asserted that many vehicles that are damaged in a collision and then are fully-repaired do not suffer any IDV, but instead are worth just as much and sometimes even more after being repaired than they were worth before the collision.
The plaintiff’s 2021 proposal claimed that IDV for the class could be determined using nothing but a standard vehicle valuation guide like the one published by the National Automobile Dealers Association and the damage appraisal report for each vehicle.
The Superior Court dismissed the 2023 plaintiffs’ expert testimony as unsupported by research.
The 2023 ruling noted that the while the state’s high court recognized ICV, it also had stressed that insurers should have to pay IDV only if the claimant establishes both that his or her vehicle suffered IDV, and the amount of IDV damages owed to him or her.
Unhappy with that result, the plaintiffs returned with a different class definition and a new expert opinion to support a class certification. The new proposal suggested that IDV could be determined by consulting standard vehicle valuation guides, local market value data, and current auction results, and considering several other factors. To reflect this proposed methodology, the proposal would revise the prior proposed class definitions to limit the class to claimants whose vehicle required more than $5,000 in repairs and were no more than six years old at the time of the collision.
On May 31 Salinger ruled that their second attempt and their new expert opinion were no better than their first. He found they did not show any reason to revisit the court’s prior ruling and that the “conclusory expert opinions that they sought to submit were not supported by any analysis, study, data, or evidence of any kind.”
The judge criticized the new proposal by damage appraiser Robert Collins as “not tethered to anything” and for being “completely arbitrary.”
“Since there is no reason to reconsider the Court’s prior findings and conclusions that individualized determinations of liability are necessary and class certification is therefore appropriate, those findings and rulings operate as law of the case,” Salinger concluded.
The plaintiffs may still pursue their cases individually.
Their class certification efforts followed a 2021 ruling by the Massachusetts Supreme Judicial Court that the 2008 standard Massachusetts automobile insurance policy required insurers to pay third-party collision damage claims “for IDV to vehicles that are damaged and subsequently repaired.”
Jarret McGilloway, Linda Estrella and Adam Ercolini have sought to represent plaintiff classes to press claims that Safety Insurance Co. and the Commerce Insurance Co. allegedly committed breaches of contract, and engaged in unfair insurance settlement practices, by not paying every potential class member for lost resale value that their motor vehicle allegedly suffered.
The original proposed class of plaintiffs with claims against Safety would have at least 26,000 members, and the class with claims against Commerce would have roughly 470,000 members, according to the plaintiffs.
While it is settled that the 2008 standard policy provided for ICV, the issue is again before the Supreme Judicial Court. In 2016, the state insurance commissioner authorized a change in the policy language that provides coverage for any “tangible property” damage to the third party’s vehicle but excludes coverage for “any decreased value or intangible loss” resulting from the collision.
The Superior Court has ruled that this policy change in 2016 eliminates the ICV coverage and dismissed a complaint alleging the right to coverage for IDV. But that ruling is being challenged before the state’s high court. The plaintiff suing Commerce Insurance argues that the 2016 language was not intended to and does not exclude IDV coverage and that the insurance commissioner lacks the authority to make such a change.
Topics Personal Auto Massachusetts
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