The long-running saga of whether three plaintiffs can represent a class against Commerce Insurance and Safety Insurance seeking inherent diminished value damages for 80,000 third-party property damage claimants has come to an end in the Superior Court.
The plaintiffs first filed their suits in 2017, seeking from the two insurers third-party property damage payments for the “inherent diminished value” or “IDV” of their vehicles. “As subsequently defined by the courts, IDV losses were made up of “[T]he difference between the resale market value of a motor vehicle immediately before a collision and the vehicle’s market value after a collision and subsequent repairs.”
After the Superior Court found that the 2008 Massachusetts automobile insurance policy property damage section, Part 4, did not cover any loss for IDV, the plaintiffs appealed.
The Supreme Judicial Court accepted the case and ruled that under the 2008 policy form, IDV losses were recoverable losses, if proven, in third-party property damage claims.
The SJC remanded the plaintiffs’ claims to the Superior Court for further proceedings consistent with its decision.
Plaintiffs move in Superior Court to certify classes with over 80,000 IDV claimants
After eighteen months of further litigation, the three plaintiffs moved to certify their classes against the two insurers. See Agency Checklists’ article of June 13, 2023, “Court Asked To Certify Classes Totaling Over 80,000 IDV Claims Against Commerce And Safety.”
The class definitions the plaintiffs proposed for each case included, in part: “All third-party collision damage claimants who suffered property damage as a result of a Safety or Commerce insured or a Safety or Commerce insured vehicle driver, where;
- Safety or Commerce determined that its insured, or its insured vehicle driver, was liable for the property damage to the claimant’s vehicle under the 2008 automobile policy form.
- Safety or Commerce has paid the third-party property damage claim, either to the claimant, the repair shop, subrogating insurer, or other person or entity.
- The claimant’s vehicle suffered at least $500 in damage as a result of the collision; and
- Safety or Commerce did not pay IDV damages associated with the respective loss.
The plaintiffs’ also defined the members of the classes to include claimants whose loss occurred no more than six years before the plaintiffs’ particular legal actions were filed (June 3, 2011, for the claims against Safety, and December 11, 2011, for the claims against Commerce).
The parties did not dispute that during the relevant time periods, there were more than 50,000 involved third-party property damage claims where Commerce determined its insureds were liable but for which Commerce did not pay any inherent diminished value damages.
Likewise, the discovery allegedly showed that Safety processed 33,172 third-party automobile property damage claims, during which Safety determined its insured was liable for the loss.
Superior Court rules quickly on class certification of IDV claims
Counsel for the plaintiffs and the defendant insurance companies argued their motions and oppositions to certifying the classes, as defined by the plaintiffs, on June 7, 2023.
They did not have to wait long for their decision. The judge hearing the motions for class certification, Kenneth W Salinger, issued a 3,500-word opinion denying class certification on June 20, 2023.
His ruling found that to certify classes of claimants under the Massachusetts rules of court, a judge had to find that the proposed class would satisfy the requirements of numerosity, commonality, typicality, and adequacy of representation.
Here, Judge Salinger found that the proposed Commerce and Safety satisfied the numerosity condition since both the Commerce and Safety classes would have members in the tens of thousand.
As to the commonality and typicality of the claims in the proposed classes, the judge found all the class members would assert the same theories of liability and seek the same general kind of damages for the IDV losses.
On the adequacy of representation, Judge Salinger found all the interests of the plaintiffs were aligned with the interests of the potential class members.
The Court denied the plaintiffs’ motion because individual damage determinations needed
The Court denied the plaintiffs’ motion for class certification on the “predominance” issue. To certify a class, the Court must find “the questions of law or fact common to the members of the class predominate over any questions affecting only individual members.”
The Judge found that individualized proof, analysis, and findings would be required to determine whether any putative class member’s vehicle suffered some amount of IDV and, if so, how much.
In reaching this conclusion, the judge accepted the sworn testimony of Commerce’s valuation expert, who stated that if a vehicle is involved in a collision, sustains damage, and is then fully repaired, determining whether the vehicle’s resale market value is less than it would have been immediately before the collision requires a detailed and individualized analysis of numerous factors, such as:
- The nature and severity of the damage and the quality of the repairs.
- Whether the vehicle had a prior accident history.
- In what manner is the vehicle to be sold after being repaired (e.g., private sale, retail sale, trade-in)?
- The general class of vehicle (e.g., inexpensive sedans, minivans, high-end luxury vehicles, etc.); and
- The market segment of buyer involved in any subsequent sale
Court rejects plaintiffs’ expert opinion on calculating IDV damages
The plaintiffs presented the expert opinion that IDV damages can be calculated using only a standard vehicle valuation guide (such as that published by the National Automobile Dealers Association) and the damage appraisal report for each vehicle.
The Court rejected this opinion as an “unexplained opinion” and reiterated that it was satisfied that each class member’s claim would need to be evaluated on an individual basis to determine whether and to what extent any damaged and repaired vehicle suffered IDV.
The Court further commented, however, on the plaintiffs’ expert’s assertion that each IDV loss analysis could be much simpler than what Commerce’s expert described. Even if this were true, the Court noted, it would not change the need for individual inquiry on each claim. The degree of legal liability, and therefore the percentage of the IDV recoverable, could not be determined for everyone in the class. It would need to be decided individually “for each of the tens or hundreds of thousands of proposed class members.”
The Court’s final order on the plaintiffs’ motion for class certification
“Plaintiffs’ motions for class certification are denied.”
Agency Checklists will keep our readers posted since the plaintiffs likely will seek an interlocutory appeal of the denial of their class certification motions from an appellate court.
Insurance Coverage Legal Expert/Co-Founder & Publisher of Agency Checklists
Over the course of my legal career, I have argued a number of cases in the Massachusetts Supreme Judicial Court as well as helped agents, insurance companies, and lawmakers alike with the complexities and idiosyncrasies of insurance law in the Commonwealth.
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