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In any given year, Massachusetts auto insurers handle tens of thousands of total loss claims. Disputes over the “actual cash value” (ACV) of a particular vehicle between insureds and their insurers can be intense. Legal battles over how insurers calculate ACV are less common but no less intense.
In the latest chapter of a plaintiff contesting an insurer’s method of calculating ACV, the Superior Court’s Business Litigation Session (BLS) has delivered a significant decision, denying class action certification in a lawsuit against The Commerce Insurance Company. The suit, brought by plaintiff Harold Parsons, sought to represent two classes of policyholders that could have exceeded 100,000 members combined.
Second suit over calculating ACV
The ruling in Parsons v. The Commerce Insurance Company stems from a long-running dispute over the use of third-party valuation software for calculating the actual cash value (ACV) of total loss vehicles. The BLS suit follows a prior legal action by an auto finance company led by the plaintiff’s father. The BLS’s decision to deny the Plaintiff Parson’s lawsuit class action status, focusing on the necessity of individualized proof of harm in total loss claims, established a bar that the Court found the Plaintiff could not meet for class action status.
Background: A Multi-Year Battle Over Valuation Methods
The Parsons lawsuit raises the same issues of a prior, related case involving Source One Financial Corporation, a specialized finance company that buys auto finance contracts from used car dealers. The plaintiff’s father is the Chief Financial Officer of Source One.
In 2020, Source One filed its own lawsuit against GEICO, alleging nearly identical claims to those in the Parsons case. Source One claimed that GEICO violated Massachusetts regulation 211 CMR 133.05, which governs the determination of ACV.
In its lawsuit in federal court, Source One alleged that the CCC valuation reports GEICO used were non-compliant because they based their calculations on data from comparable vehicles that were not actually “available for purchase” at the time of the valuation and failed to consider the original “purchase price” of the loss vehicles—both of which are factors the regulation requires insurers to consider when determining a vehicle’s actual cash value. As a result of these regulatory violations, Source One alleged that GEICO underpaid insureds for their total losses.
The federal court dismissed Source One’s suit in 2021 on procedural grounds. The judge ruled that Source One, as a mere lienholder, lacked the legal standing to bring a claim for a regulatory violation. The court also found that Source One had failed to join the actual insured vehicle owners, who were deemed necessary parties to the action because they had their own independent rights.
The Parsons v. Commerce suit, filed with the BLS, raises the same core issues as the dismissed Source One suit, except it seeks to join all actual insureds with total loss vehicle claims through a class action spearheaded by an insured plaintiff. The complaint alleged that Commerce breached its insurance contract and violated G.L. c. 93A by systematically underpaying total loss claims. The plaintiff’s central claims were that Commerce:
- Used CCC valuation reports that artificially reduced vehicle values through uniform “condition adjustments.”
- Based on valuations of comparable vehicles that were not actually available for purchase.
- Maintained a policy of ignoring the price the insured originally paid for the vehicle, a factor the ACV regulation requires insurers to consider.
The Class Allegations involving up to 106,000 Insureds
To pursue these claims on a mass basis, the plaintiff sought to certify two distinct classes of policyholders. The proposed “Condition Adjustment Class” was defined as:
All individuals covered under a Commerce standard form Massachusetts automobile insurance policy who…received a total loss payment based in whole or in part (1) in reliance on the CCC database of vehicles, and (2) on a CCC report in which the reported price of comparable vehicles and/or the retail book value of the vehicle was reduced by a “dealer ready condition adjustment.”
The proposed “Price Paid Class” was defined as:
All individuals covered under a Commerce standard form Massachusetts automobile insurance policy who…received a total loss payment where Commerce failed to consider the price paid for the loss vehicle plus the value of prior improvements to the vehicle at the time of the accident, less appropriate depreciation in determining the actual cash value of the loss vehicle.
The plaintiff estimated that the “Condition Adjustment Class” would encompass at least 77,500 members, while the “Price Paid Class” would include at least 106,250 members. The certification of these classes would have created enormous potential liability for Commerce and, by extension, other insurers using the same methodology for valuing total loss property damage claims.
The Court’s Reasoning for Denying The Lawsuit Class Action Status
In a detailed decision dated June 17, 2025, Superior Court Justice Kenneth W. Salinger denied the plaintiff’s motion for class certification. The core of the ruling was the conclusion that “individualized inquiry would be required for each member of the proposed classes to determine whether Commerce paid or offered to pay them less than their vehicle’s ACV, and thus to determine whether Commerce is liable.”
The decision hinged on the plaintiff’s inability to meet the specific requirements for a class action under G.L. c. 93A, § 9(2). To certify such a class, a plaintiff must demonstrate that the defendant’s allegedly deceptive practice “caused similar injury to numerous other persons similarly situated.”
Justice Salinger found that the proposed class members were not “similarly situated” and had not suffered a “similar injury” because the actual effect of Commerce’s use of a CCC report would “vary widely depending on the [insured].” A valuation report with a condition adjustment might be detrimental to the owner of a pristine vehicle, but it could potentially be beneficial to the owner of a car with significant pre-existing wear and tear. Therefore, without a thorough examination of each claim, it was impossible to say that the practice caused a “similar injury” across the class.
The court emphasized that determining liability itself—not just the amount of damages—would necessitate a fact-specific analysis for every individual vehicle. A fact-finder would need to assess:
- The specific pre-collision condition of each vehicle, including its engine, tires, body, and interior components.
- The actual market for truly comparable vehicles at the time of the loss.
- Any prior unrepaired damage or recent improvements that would affect the vehicle’s value.
Crucially, the court rejected the plaintiff’s argument that this was merely a downstream question of calculating damages. Justice Salinger drew a sharp line between the two concepts, stating, “There is a difference between determining the extent of harm (the question of damages) and deciding whether there was any harm at all (which goes to liability).” The ruling emphasized that a claim under G.L. c. 93A requires proof of a “separate, identifiable harm” that is distinct from the regulatory violation itself. Simply alleging that Commerce used a flawed methodology was not enough; the plaintiff had to have a class-wide method of proving that the methodology actually caused an economic loss to each member, which the court found was impossible without individualized inquiries.
In its reasoning, the court leaned on established precedent from both Massachusetts and other jurisdictions that reached the same conclusion in nearly identical disputes.
Key Takeaways from the Court’s Ruling
The Parsons decision provides several takeaways:
The High Bar for Certifying Total Loss Class Actions: The ruling highlights the challenges plaintiffs face in obtaining class certification when proof of injury is not uniform. Even when a company-wide, systemic practice is alleged, the fundamental need to prove that each individual class member was actually harmed can be enough to defeat class status.
The Individualized Nature of ACV Assessment: The court has reaffirmed the principle that determining a vehicle’s actual cash value is an inherently fact-specific process. It is not a task that can be reduced to a “mechanical formula” applied across thousands of unique claims, especially when vehicle condition is a primary driver of value.
The Distinction Between a Regulatory Violation and Actionable Harm: The court’s decision makes a clear distinction between an alleged violation of an insurance regulation and an actionable claim for damages. A plaintiff must do more than point to a flawed process; they must have a common method of proving that the flawed process caused a distinct economic loss to the members of the class.
The Path Forward: While Commerce avoided the class action threat, the court’s order allows the plaintiff’s individual claim to proceed. The substantive legal questions about the validity of Commerce’s valuation methodologies and its use of condition adjustments remain to be litigated, just not on a class-wide scale.
Conclusion
The Parsons v. Commerce decision muted a potential massive class action threat against a major Massachusetts insurer. For now, unless reversed on appeal, the ruling establishes a legal precedent reinforcing the inherently individualized nature of total loss claim settlements in the Commonwealth, pushing back against efforts to challenge these practices on a mass scale.
