A long-running dispute between an insurer and a towing company over allegations of predatory billing practices has now triggered a seven-figure court battle over legal fees and costs.
The lawsuit was first filed in 2014 and subsequently amended by Commerce Insurance Company (“Commerce”), seeking to recover alleged overcharges from Big Wheel Truck Sales, Inc. (“Big Wheel”), a heavy-duty towing company. Commerce asserted Big Wheel’s charges for unregulated towing services, equipment usage fees, and administrative fees totaling $309,968.33 on 16 insured claims from 2011-2018 were unfair and inflated.
After a five-month jury-waived trial ending in June 2023, the Worcester Superior Court judge found that while Commerce had demonstrated questionable business practices by Big Wheel, it failed to provide sufficient expert testimony to prove its central allegation of systematic overbilling for unnecessary equipment. However, the Court did rule that Big Wheel’s routine 10% “administrative fee” tacked onto invoices violated the Massachusetts consumer protection law, Chapter 93A, by being unfair and deceptive.
The judge awarded Commerce $24,409.83 based on the total administrative fees charged across the claims. However, a finding that Big Wheel violated Chapter 93A triggered a mandatory award of reasonable attorneys’ fees and costs to Commerce.
On December 6, 2023, Commerce filed an application seeking $910,708.42 in legal fees, expert fees, and litigation costs from Big Wheel pursuant to C. 93A. Big Wheel now has until January 8, 2024, to submit an opposition brief contesting the amounts requested by Commerce.
Burden on Commerce to Prove Violation of C. 93A’s Fairness Standards
Commerce’s complaint alleging unfair billing practices consisted of a single count under Massachusetts General Law C. 93A, which in its § 2(a) declares “unfair or deceptive acts or practices in the conduct of any trade or commerce” to be unlawful.
While primarily a consumer protection statute, § 11 of Chapter 93A allows businesses, like Commerce, to sue other commercial enterprises, like Big Wheel, when they suffer monetary losses due to “use or employment by another person who engages in any trade or commerce of an unfair method of competition or an unfair or deceptive act or practice.”
To prevail, Commerce had to prove Big Wheel violated § 2’s prohibition on unfair or deceptive acts. Under § 11, Commerce could recover its actual damages, or up to treble damages, if the statutory violation was deemed willful or knowing. However, § 11 mandates that irrespective of damages, a prevailing party receives reasonable attorneys’ fees and costs.
In Commerce’s suit, the key legal issue was whether Big Wheel’s equipment usage and billing practices violated C. 93A standards of unfairness and, if so, whether statutorily prescribed multiple damages and fee shifting would apply. As Plaintiff, Commerce bore the burden of proof on these questions at trial.
The reasonableness and necessity of equipment charges had to be evaluated through expert testimony as to the equipment used by Big Wheel for each of the tow jobs required to remove the insured vehicles from the accident scene.
Question of equipment reasonably needed to comply with State Police “Quick Clearance” policy
Massachusetts has a “Quick Clearance” policy for accident scenes and seeks to balance safety and efficiency when reopening highways. The State Police Tow Service Agreement (“TSA”) obligates companies like Big Wheel to clear disabled vehicles and debris promptly. Big Wheel argued its multiple expensive rotator trucks aligned with safety aims and industry standards for heavy-duty recovery operators per the TSA from 2011-2018.
However, Commerce contended Big Wheel exploited the TSA’s vague equipment guidelines to overutilize unnecessary rotators, not to expedite clearance, but to charge exorbitant rates exceeding, in one accident recovery, $90,000. Big Wheel rebutted, arguing the TSA did not mandate the cheapest tools, yet also did not require the costliest beyond what efficiently gets the job done.
The judge concluded that absent credible expert testimony on industry standards, she could not determine if Big Wheel unfairly and deceptively leveraged expensive rotators when less costly equipment would have sufficed. The judge’s decision turned on the necessity for independent expert testimony to evaluate the propriety of Big Wheel’s usage and rates for high-cost recovery equipment.
Court rejects Commerce’s expert’s testimony on Big Wheel’s equipment charges
While expressing concerns about some of Big Wheel’s questionable business practices, the Court ultimately ruled it did not have an adequate basis absent quality expert testimony to conclude that Big Wheel’s charges for equipment and services were unfair or deceptive in violation of C. 93A. She found Commerce did not satisfy its burden of proof on the equipment charges, which formed the major component of its complaint.
While both Commerce and Big Wheel presented expert witnesses to testify on industry standards and the reasonableness of charges, the Court found issues with both experts that undermined their credibility. Commerce’s expert, Robert Watson, overstated his experience in some areas of the towing industry and did not demonstrate the needed objectivity when it came to evaluating Big Wheel’s practices. On the other hand, Big Wheel’s expert was deemed overly biased in favor of Big Wheel. He went so far as to insist that not one penny of Big Wheel’s charges across 16 complex claims was excessive.
Facing two imperfect experts, the Court stated it could not credit the testimony of either one on the central issue of whether Big Wheel’s charges for equipment and services were unfair or excessive. This lack of credible expert testimony created a fatal evidentiary gap for Commerce in meeting its burden to prove the misuse of equipment allegations against Big Wheel.
Big Wheel’s 10% administrative fee
Commerce also contested Big Wheel routinely charging a 10% “administrative fee” on top of its invoices across most of the 16 claims, totaling $24,409.83.
Big Wheel asserted its administrative fee covered numerous tasks, such as taking and processing accident scene photos, collecting and documenting information from onsite supervisors and crews, detailing equipment used, and preparing invoices. Additionally, the fee encompassed interactions with vehicle owners, insurance appraisers, and representatives, including facilitating tow yard visits, dispatching invoices and photos, and aiding in vehicle removal.
Court finds administrative fee violates Chapter 93A
Concerning Big Wheel’s administrative fee of 10% of all charges, the court found the administrative workload took at most 1-2 hours per claim. Tasks like taking photos or drafting narratives were already billed for Big Wheel employees’ time on the scene. Simple activities like making folders or typing invoices were completed in “minutes.” Phone calls were limited since Big Wheel refused to negotiate bills. The judge thus concluded the administrative fees had no relationship to actual time spent and were “arbitrary and grossly excessive.”
Moreover, Big Wheel inflated the 10% fee further by including external charges like police details or vendor invoices, which Commerce would have paid separately absent Big Wheel’s markup. The court rejected Big Wheel’s contention that interacting with police agencies was appropriately part of an administrative fee.
In the judge’s view, tacking on bloated administrative fees provided no benefit to insurers but simply allowed Big Wheel to add 10% to all bills. Big Wheel also failed to specify which administrative tasks justified the fee for each claim.
For these reasons, the court ruled Big Wheel’s routine practice of charging 10% administrative fees on top of already questionable invoices constituted an unfair and deceptive business act in violation of Massachusetts consumer protection law Chapter 93A. However, the Court did not find any willful or knowing violation that would have triggered double or treble damages.
The Court awarded Commerce $24,409.83, reflecting the total administrative fees charged across the claims. The administrative fee award by the Court allowed Commerce to apply for a mandatory legal fee and costs award, which it did on December 6, 2023.
Looming Fight Over Commerce’s Massive Fee Request
Commerce’s December 6, 2023 fee application spans 944 pages – consisting of a six-page attorney affidavit plus 935 pages of legal billing records, expert and vendor invoices, and trial transcript costs – Commerce specified the various components of legal fees, costs, and expenses it seeks to recover: $529,082.88 in attorneys’ fees and $31,631.46 in expenses for lead law firm McGovern & Ganem; $134,692.35 in fees/costs for additional firm Smith & Brink; expert witness fees of $32,266.45 and $174,372.78; and $16,690.50 in trial transcript costs. All told, Commerce submitted a total tab of $910,708.42 as its reasonable litigation cost recovery allowed under c.93A based on the Court’s award of $24,409.83 for Big Wheel’s unfair and deceptive 10% administrative charge violating c. C. 93A.
Big Wheel has until January 8, 2024, to oppose Commerce’s application. Big Wheel will almost certainly argue against certain categories to minimize the judgment.
Specifically, Big Wheel may challenge expert witness fees and any attorney time related to experts, given the trial judge’s finding that Commerce failed to present a credible expert on equipment charges. However, the length and complexity of this four-month trial still make a substantial six-figure award likely, though meaningfully below the $910k request.
The Court will soon referee exactly how much Big Wheel must pay Commerce for the latter’s partial victory in this hotly contested, high-dollar dispute over towing industry practices.
Agency Checklists will advise of the Judge’s decision when it is issued.
Big Wheel has previously litigated the issue of its tow bills and charges. See Agency Checklists’ article of April 4, 2017, “No Loss Of Use For Big Wheel Towing On Safety Auto Policy When Vehicle Towed From State Property.”