Opinion
21-P-718
04-26-2022
Michelle PUOPOLO & others v. The COMMERCE INSURANCE COMPANY.
MEMORANDUM AND ORDER PURSUANT TO RULE 23.0
Michelle Puopolo, Jessica Nohmy, and Victor Pagan (plaintiffs) filed suit against their insurer, Commerce Insurance Company (Commerce), alleging breach of contract and violations of G. L. c. 93A, after Commerce deducted excess storage fees charged by out-of-network body shops from actual cash value (ACV) payments Commerce made to the plaintiffs. A judge of the Superior Court allowed the plaintiffs' motion to certify a class soon thereafter. Following the close of discovery, the same judge allowed Commerce's motion for summary judgment and denied the class members' cross motion for summary judgment on their breach of contract claim. He also allowed Commerce's motion to decertify the class. The plaintiffs now appeal the judgment and order. We affirm.
Background. We recount the undisputed facts, reserving certain details for later discussion. All of the plaintiffs purchased motor vehicle insurance policies with Commerce. Between 2015 and 2019, the plaintiffs' vehicles were involved in collisions. In the wake of the accidents, the plaintiffs willingly chose to have their vehicles towed to repair shops outside of Commerce's referral network. The shops they selected charged daily rates far exceeding those negotiated between Commerce and its in-network shops.
Plaintiffs Puopolo and Nohmy were insured under a 2008 edition of the policy, while plaintiff Pagan was insured under a 2016 edition of the policy.
Massachusetts law requires Commerce to maintain a network of referral shops, though it may not require an insured to have repairs made at a particular shop. See 211 Code Mass. Regs. § 123.05(5) (1993); 211 Code Mass. Regs. § 123.06 (2005).
Commerce pays its referral shops thirty-five dollars per day in storage fees. Puopolo brought her vehicle to Commonwealth Auto Body before reporting the accident to Commerce; Pagan chose to move his vehicle from New Beverly Auto Clinic, which charged thirty-five dollars a day, to J & G Transmission Auto Body, which charged ninety-five dollars a day; finally, Nohmy chose to move her vehicle from Biondi's Service Center, which charged thirty-five dollars a day, to Susi Auto Body, which charged one hundred dollars a day, as she knew the shop's owners.
Commerce declared all three vehicles a total loss. Pursuant to its policy, in exchange for assuming title to the plaintiffs' vehicles, Commerce offered to pay their actual cash value. Before doing so, to release the garage keeper liens the shops held on the vehicles, see G. L. c. 255, § 25, Commerce paid each autobody shop directly for the plaintiffs' accrued storage charges. Commerce did not dispute or attempt to reduce the charges, and it did not inform the plaintiffs that it believed the storage costs were unreasonable. It then proceeded to deduct from the plaintiffs' ACV payments the portion of the storage bill that it felt exceeded a reasonable rate. The plaintiffs filed the present suit as a result of these deductions.
The 2016 policy states in part that "[Commerce] will pay the cost to repair the auto or any of its parts up to the actual cash value of the auto or any of its parts at the time of the collision..... The most we will pay will be either the actual cash value of the auto or the cost to repair the auto, whichever is less." The 2008 policy contains substantially similar language.
Discussion. We review a decision on a motion for summary judgment de novo without deference to the motion judge. Boelter v. Selectmen of Wayland, 479 Mass. 233, 237 (2018). "Summary judgment is appropriate where there are no material facts in dispute and the moving party is entitled to judgment as a matter of law." Federal Nat'l Mtge. Ass'n v. Rego, 474 Mass. 329, 332 (2016). We view the evidence in the light most favorable to the plaintiffs, as the parties against whom judgment entered. See Conservation Comm'n of Norton v. Pesa, 488 Mass. 325, 330 (2021). We may consider any ground that supports the judgment. See Augat, Inc. v. Liberty Mut. Ins. Co., 410 Mass. 117, 120 (1991).
1. Breach of contract claim. The plaintiffs first contend that the motion judge erred in granting summary judgment to Commerce on the contract claim as Commerce was contractually obligated to pay the entire ACV amount and committed a breach by failing to do so. The interpretation of policy language in an insurance contract is a question of law for the court, as is the application of that language to undisputed facts. See Boazova v. Safety Ins. Co., 462 Mass. 346, 350 (2012) ; Herbert A. Sullivan, Inc. v. Utica Mut. Ins. Co., 439 Mass. 387, 394 (2003).
The plaintiffs recognize that Commerce was entitled to reduce the ACV payments by the amount of their deductibles, however.
We begin by summarizing the operative contractual language. Both the 2008 and 2016 policies state that in the event of a collision, Commerce will pay up to the vehicle's actual cash value. Commerce's 2008 edition policy does not expressly provide coverage for vehicle storage costs. Rather, it says that Commerce will pay for the "reasonable expenses incurred" where the plaintiffs do "whatever is reasonable to protect the automobile from further damage or loss." The 2016 edition, however, states that "[Commerce] will also pay reasonable and necessary expenses for towing, recovery and storage of your auto."
We need not assess whether storage falls within "reasonable expenses incurred" in protecting the vehicle from further damage. For the reasons discussed below, summary judgment was proper even if it does.
The 2016 policy further states that Commerce will "not pay for any liability assumed under any other contract or agreement."
The plaintiffs claim that Commerce committed a breach of the above provisions when it subtracted excessive storage costs from their ACV payments. As an initial matter, neither contract states nor suggests that the ACV is an irreducible sum or that it is irreducible after the subtraction of a deductible. Moreover, the plaintiffs' argument overlooks a word of fundamental importance to the contracts: reasonable. "The interpretation of language in an insurance contract is no different from the interpretation of any other contract.... Every word ... must be presumed to have been employed with a purpose and must be given meaning and effect wherever practicable" (quotations and citations omitted). Metropolitan Prop. & Cas. Ins. Co. v. Morrison, 460 Mass. 352, 362 (2011). With this in mind, both contracts make plain that Commerce is not obligated to pay storage expenses exceeding a reasonable amount. The parties agree that Commerce assumed the portion of the storage charges it deemed reasonable. Thus, the only way that the plaintiffs can show a breach of contract is to dispute the reasonableness of Commerce's deduction.
Therefore, the plaintiffs' argument that Commerce did not have the contractual authority to reduce the ACV by unreasonable storage charges is unpersuasive.
But the plaintiffs failed to present evidence on this issue. See Pederson v. Time, Inc., 404 Mass. 14, 17 (1989) ("the party opposing the motion must ... allege specific facts which would establish the existence of a genuine issue of material fact in order to defeat a motion for summary judgment"). The evidence of what constituted a reasonable daily storage fee came exclusively from Commerce -- which established via affidavits that thirty-five dollars is a standard daily storage charge throughout the Commonwealth. See Mass. R. Civ. P. 56 (c), as amended, 436 Mass. 1404 (2002). Because the plaintiffs were obligated to rebut this evidence to survive summary judgment and did not do so, the judge properly granted Commerce's motion. See Mass. R. Civ. P. 56 (e), 365 Mass. 824 (1974).
Commerce presented evidence that storage for both police-ordered tows and salvage vendors costs thirty-five dollars per day. It also presented evidence that most of its roughly 800 preferred shops charge between twenty-five and thirty-five dollars a day.
The plaintiffs also argue that the judge erred in failing to account for the common law in granting summary judgment, under which Commerce was prohibited from "unilaterally" reducing the ACV payment. Here, the plaintiffs rely on Medical Malpractice Joint Underwriting Ass'n of Mass. v. Goldberg, 425 Mass. 46, 58-59 (1997), a third-party liability medical malpractice case, for the proposition that the common law prohibits an insurer from seeking reimbursement from its insured after making a liability claim payment without obtaining consent from the insured or a declaration of no coverage. Since Commerce paid the storage charges without doing either, the plaintiffs contend that it was barred from seeking reimbursement by reducing its ACV payments. However, we think that the holding of Goldberg was specific to the context and concerns of liability insurance. See id.; Metropolitan Life Ins. Co. v. Cotter, 464 Mass. 623, 642-643 (2013). We therefore decline to expand the reach of the decision. To the extent that the plaintiffs rely on Boston Gas Co. v. Century Indem. Co., 454 Mass. 337, 372-373 (2009), for the proposition that an insurer may only seek contribution from an insured if it obtained prior written consent, we note that the decision was specific to the issue of insurance coverage for progressive injury claims and did not expressly address questions of consent.
2. General Laws c. 93A and 176D claims. The plaintiffs next challenge the grant of summary judgment on their c. 93A claims. Their complaint alleged six separate c. 93A violations. Count II alleged c. 93A violations based on Commerce's breach of contract and violations of common law. Count III alleged a c. 93A violation based on Commerce's failure to follow the Commonwealth Automobile Reinsurers (CAR) private passenger claims performance standards. And Counts IV–VII stated c. 93A claims based on various unfair settlement practices alleged to violate G. L. c. 176D, § 3 (9).
"Although whether a particular set of acts, in their factual setting, is unfair or deceptive is a question of fact, the boundaries of what may qualify for consideration as a [G. L.] c. 93A violation is a question of law." Silva v. Steadfast Ins. Co., 87 Mass. App. Ct. 800, 806 (2015), quoting Chervin v. Travelers Ins. Co., 448 Mass. 95, 112 (2006). The motion judge properly concluded that none of the plaintiffs' c. 93A claims presented material issues of fact.
First, since the plaintiffs failed to show a breach of contract or a violation of common law, their c. 93A claims based on these grounds are without merit, and we need not address them further. See Hawley v. Preferred Mut. Ins. Co., 88 Mass. App. Ct. 360, 367-368 (2015).
Even if the plaintiffs could show a breach of contract, they could not establish a claim under c. 93A on those grounds, as "[a] good faith dispute as to whether money is owed, or performance of some kind is due, is not the stuff of which a c. 93A claim is made." Hawley v. Preferred Mut. Ins. Co., 88 Mass. App. Ct. 360, 368 (2015), quoting Duclersaint v. Federal Nat'l Mtge. Ass'n, 427 Mass. 809, 814 (1998).
Second, we turn to the plaintiffs' claims involving Commerce's violation of the CAR standards. As required by G. L. c. 175, § 113H, CAR must establish performance standards, approved by the Commissioner of Insurance, "for the handling and payment of claims by [ ] servicing carriers." G. L. c. 175, § 113H (C ). While insurers must comply with the standards, the plaintiffs have not articulated how a failure to do so constitutes a c. 93A violation. See PMP Assocs., v. Globe Newspaper Co., 366 Mass. 593, 596 (1975) (identifying considerations for determining whether practice unfair); G. L. c. 175, § 113H (E ) (aggrieved party may seek ruling from Commissioner that insurer's practice is unfair). Nor have they shown that Commerce violated the standards at all -- the dispositive consideration here. The plaintiffs claim that Commerce violated standard six, "Storage and towing costs," which states in relevant part that insurers like Commerce "must have a plan to ensure that non-regulated towing and storage charges are reasonable, or to resist and reduce said charges if unreasonable." The plaintiffs focus on the second clause and argue that Commerce was obligated to negotiate storage payments with non-preferred shops like those selected by the plaintiffs, and that Commerce violated the standard when it declined to contest the charges before paying them. However, the plaintiffs' reading of the standard overlooks its disjunctive form. Commerce need only satisfy one of the two requirements. Because Commerce has amply demonstrated that it has plans to ensure that storage charges are reasonable -- via its referral network and "Early Tow" program -- there is no dispute that it is in compliance with standard six. The motion judge correctly granted summary judgment on this basis, concluding that "[n]othing in the CAR [standards] requires Commerce to challenge, resist, or reduce unreasonable storage charges imposed by non-referral repair shops chosen by insureds."
Third, the motion judge correctly granted summary judgment on the remaining claims of unfair settlement practices under G. L. c. 176D, § 3 (9), as Commerce did not commit a breach of the policy terms, and thus, as the judge explained, its "claims practices in setting off excessive storage charges against ACV payouts were and are lawful." See Premier Ins. Co. of Mass. v. Furtado, 428 Mass. 507, 510 (1998) (no violation of G. L. c. 176D, § 3 [9] where insurer's liability not "reasonably clear"); Guity v. Commerce Ins. Co., 36 Mass. App. Ct. 339, 343 (1994) ("A plausible, reasoned legal position ... is outside the scope of the punitive aspects of the combined application of c. 93A and c. 176D").
Because we conclude that the motion judge properly granted summary judgment to Commerce, we need not reach the issue of class certification.
Judgment affirmed.
Order decertifying class affirmed.