On March 27, 2017, the Appeals Court affirmed a decision of the District Court’s Appellate Division, ruling that a specialized towing company could not recover against an insurer for removing an insured vehicle from the Commonwealth’s property.
The parties to the appeal, Big Wheel Truck Sales, Inc. (Big Wheel) and the Safety Insurance Company (Safety or insurer) disputed whether the compulsory property damage coverage of the standard Massachusetts automobile insurance policy applied to the cost of removing an insured vehicle from land owned by the Commonwealth when an insured did not have collision or towing coverage.
In the District Court, Big Wheel prevailed. The District Court judge found that Part 4, property damage liability, of Safety’s policy applied to Big Wheel’ s claim and that Safety had engaged in unfair claim practices in not paying tow bill. The District Court ordered Safety to pay Big Wheel $42,800.00, including the tow bill, punitive damages and attorney fees.
The Appellate Division of the District Court, on Safety’s appeal ruled that Big Wheel could not recover because it was not the owner of the land from where the insured vehicle had been removed and therefore, Big Wheel had suffered no property damage compensable under the policy.
Big Wheel appealed further to the Appeals Court seeking to vindicate its legal position that the standard property damage provisions of the Massachusetts automobile policy covered Big Wheel’s removal of any insured vehicle from a third party’s property despite whether the insured had purchased collision or towing coverage.
Single car accident requires specialized wrecker to remove vehicle from state’s property
On August 8, 2009, Mr. David Raposa was traveling on Route 195 near Swansea, he lost control of the vehicle, and it left the roadway and landed in a ditch about seventy-five feet away from the guard rail. The State police responded to the scene and called Gaskell’s Towing (Gaskell’s) to remove the vehicle. Upon arrival at the scene, Gaskell’s determined that they could not remove the vehicle from the ditch with its equipment. Under regulations relating to the common situation of vehicles having to be removed from the Commonwealth’s property with specialized equipment, Gaskell contacted Big Wheel to remove the vehicle with its larger equipment. Big Wheel completed the removal of the vehicle from the ditch and placed it on Gaskell’s truck for towing. After removing the vehicle, Big Wheel, under the relevant regulations, submitted its bill to Gaskell’s to be included with the towing invoice submitted to Safety for payment. Big Wheel also sent the invoice to Mr. Raposa.
No collision or towing coverage purchased on Raposa vehicle
David Raposa was insured by Safety under a 2008 edition of the Massachusetts Automobile Insurance Policy. At the time of the accident, Mr. Raposa’s automobile insurance policy had no optional collision coverage or towing coverage. The policy did however have property damage coverage under Part 4 that stated:
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…
Damages include…the costs resulting from the loss of use of the damaged property.
Safety in responding to Big Wheel’s payment demand only conceded that, had Mr. Raposa purchased optional collision coverage, he would have had coverage for Big Wheel’s invoice for services in removing the automobile from the Commonwealth’s property. Likewise, Safety advised that had Mr. Raposa purchased towing coverage, he would have had coverage up to the limit allowed on the policy’s declaration page. Since, however, Mr. Raposa did not have coverage for damage to his own automobile or for towing, therefore, Safety refused payment on Gaskell and Big Wheel’s invoices.
Big Wheel sued Safety and Mr. Raposa in the Fall River District Court.
District Court finds coverage under property damage part of standard auto policy
When Safety refused to pay Big Wheel because Mr. Raposa had no applicable coverage under his policy, Big Wheel proceeded against Mr. Raposa individually. After litigating the claim, and just prior to trial, Mr. Raposa agreed to the entry of a judgment for Big Wheel for its invoice of $5,470.00 Safety consented to the judgment, and Big Wheel agreed to pursue only Safety for payment of the judgment.
On cross motions for summary judgment, a judge of the District Court ruled held that the presence of Mr. Raposa’s vehicle on the Commonwealth’s property constituted loss of use of the property within the meaning of Part 4 holding:
An examination of Raposa’s policy reveals that Safety bound itself to pay ‘amounts that [a] person is legally entitled to collect for property damage through a court judgment or settlement . Damages include . . the costs resulting from the loss of use of the damaged property.’… if Raposa’s truck remained on the subject property, the Commonwealth would have suffered a loss of use of so much of the property as the truck occupied. Had the Commonwealth then removed the truck or paid someone to do so in order to restore the property to its original condition, the Commonwealth would then have been entitled to reimbursement from Raposa (and Safety). It seems reasonable then to further conclude that the presence of the truck on the property, with or without a spill of cargo, would suffice to create a claim for “property damage” on the basis of “loss of use.”
…every damaged or disabled vehicle on the Commonwealth’s roadways would be entitled to towing at the expense of an auto insurer under the compulsory coverage of Part 4
Based on this ruling the judge awarded Big Wheel the judgment of $5,400.00 obtained by Big Wheel against Raposa, but also found that Safety’s failure to pay Big Wheel violated the unfair claim practices provisions of G.L. c. 93A and c. 176D. The court awarded Big Wheel punitive damages of $10,800.00 and attorney fees of $24,179.00, for a total judgment of $42,800.00 against Safety.
Appellate Division reverses because Big Wheel did not own the land from where vehicle towed
In the Massachusetts courts system, the appeals from the District Court do not go directly to the Appeals Court. Instead, they first must be heard by the Appellate Division of the District Court. Appellate hearings before the Appellate Division are heard by three District Court judges who render a written decision. Here, as required, Safety appealed the Fall River District Court judgment to the Southern District Appellate Division. There, Safety argued that the invoice was for towing services or for damage to Mr. Raposa’s vehicle and there was no damage to another’s property within the meaning of the policy, because Big Wheel was not the owner of the land from where the Raposa vehicle had to be removed. The Appellate Division ruled against Big Wheel stating regarding the property damage insuring agreement at issue:
We find this language to be clear and unambiguous, and to limit the pool of potential claimants to persons or entities, other than the policy’ s named insured, whose auto or other property is damaged in an accident…Despite the arguments by both parties, the issue, in our view, is not whether the presence of Raposa’s SUV at the bottom of the embankment resulted in actionable loss of use of the property on which it sat, or whether any such loss of use would amount to property damage under the policy, but instead, whether Big Wheel qualifies as a claimant under this section of the Massachusetts Auto Policy. We find that it does not.
Following the Appellate Division decision for Safety, Big Wheel filed its own appeal to the Appeals Court seeking the reversal of the Appellate Division decision and the reinstatement of the District Court’s judgment.
Because of the financial stakes involved for the automobile insurance industry the Automobile Insurers Bureau filed an amicus brief to support Safety.
Appeals Court states decision in favor of Big Wheel would make auto insurers generally liable for removal of damaged or disabled vehicles
Before the Appeals Court, Big Wheel argued that the Appellate Division incorrectly ruled that Big Wheel was not entitled to payment under the policy. It argued that the Appellate Division’s finding that Big Wheel could not collect on Safety’s policy because it did not own the property from which the Mr. Raposa vehicle was removed was erroneous. In support of this argument, Big Wheel pointed out to the Appeals Court Safety’s payment for repair of the guardrail by another vendor, where the Commonwealth owned the guardrail but did not submit the invoice for payment. Before the Appeals Court, Safety agreed this procedure of paying vendors directly was the usual custom for the repair of the Commonwealth’s guardrails and roadways.
Based on this admission, the Appeals Court agreed with Big Wheel that its claim for payment was not precluded, as the Appellate Division ruled, because it did not own the property from which the vehicle was removed. However, the Appeals Court agreement that the Appellate Division had used in erroneous standard in deciding against Big Wheel did not result in a favorable ruling for Big Wheel.
Under Massachusetts law, an appellate court can affirm a lower court’s decision for a reason other than that given by the lower court. Here, the Appeals Court ruled that the Appellate Division decision was correct, but for the wrong reason.
The court noted: “The only conceivable damage supported by the record here is the ‘loss of use’” But in ruling on the loss of use issue, the court found: “The mere presence, however, of Mr. Raposa’s damaged car on the Commonwealth’s property is not a loss of use so sufficient to constitute property damage under Part 4.
The court agreed with Safety that if Big Wheel’s position were accepted:
…every damaged or disabled vehicle on the Commonwealth’s roadways would be entitled to towing at the expense of an auto insurer under the compulsory coverage of Part 4…The goal of Part 4 coverage is “to protect the insured from the claims of injury or damage to others, but not to insure against economic loss sustained by the insured.”
The final ruling of the court was that Big Wheel had no remedy against Safety but that: “Big Wheel’s remedy is against Mr. Raposa.”