The Massachusetts Superior Court has denied a class action against Plymouth Rock Assurance (“Plymouth Rock”) that sought to establish that on total loss comprehensive and collision claims, the insurer had to include as part of its actual cash value calculation and payment the costs of the damaged vehicle’s title, registration and inspection fees (“regulatory fees”).
The Court allowed a motion to dismiss filed by Plymouth Rock Insurance, ruling that neither the standard policy nor the provisions of 211 CMR Section 133.05(1) required Plymouth Rock to “consider or factor regulatory fees into the determination of [actual cash value].”
Over the last several years, several purported class actions have sought to expand the payments due under the Massachusetts standard automobile insurance policy to include various implied benefits not specified in the standard auto policy.
This class action complaint sought a ruling on these regulatory costs for first-party total loss claims. In 2018, the Appeals Court ruled that third-party claimants could not recover regulatory fees as part of their damages under the standard auto policy’s property damage coverage. See Agency Checklists’ article of March 13, 2018, “MA Appeals Court Rules Insurer Does Not Owe Loss Of Use on Total Losses Absent Proof of Payment.”
Two insureds claim being shortchanged on the title, registration, and inspection costs with regards to their vehicles’ actual cash value
The purported class action started with two claimants, Rebecca L. Konsevick (“Ms. Konsevick”) and Colleen A. Bartini (“Ms. Bartini), who insured their automobiles with Plymouth Rock Assurance (“Plymouth Rock”).
Ms. Konsevick owned a 2015 Infiniti Q50 that she insured with Plymouth Rock under a standard Massachusetts automobile insurance policy (“standard policy”) that included collision coverage. On May 18, 2018, Ms. Konsevick had an accident while operating her vehicle. She filed a claim for property damage, and after Plymouth Rock appraised the vehicle, they determined that the cost to repair the vehicle exceeded the cost to replace the vehicle. As a result, the vehicle was declared a total loss, with Plymouth Rock calculating the actual cash value of the vehicle.
In the case of Ms. Konsevick, Plymouth Rock determined, based upon a vendor’s calculations of the cost to purchase a similar vehicle with similar conditions and mileage, adjusted for the vehicle’s condition that its market value pre-accident was $20,695.89. The company then added $1,293.49 to account for the vehicle’s sales tax at 6.25 percent, applied the policy’s $1,000.00 deductible, and determined the actual cash value of the vehicle payable under the policy as $20,989.38.
Plymouth Rock did not pay Ms. Konsevick any additional amounts for the title, registration, or inspection costs to acquire a vehicle of like kind or quality.
Ms. Bartini owned a 2015 Nissan Murano that she also insured with Plymouth Rock under a standard policy that included collision coverage.
On November 19, 2019, she was involved in a motor vehicle accident with her vehicle and filed a collision claim with Plymouth Rock under her policy. After inspecting the vehicle, Plymouth Rock determined that the cost to repair the vehicle exceeded the cost to replace the vehicle and elected to declare the vehicle a total loss.
Similar to Ms. Konsevick’s vehicle, Plymouth Rock computed the cost for Ms. Bartini to purchase a similar vehicle with similar conditions and milage, after adjustments based on the insured vehicle’s condition, of $18,188.68. The company then added $1,136.79 to account for the vehicle’s sales tax and applied the policy’s $500.00 deductible to arrive at an actual cash value and arriving at a settlement value of the Bartini vehicle total loss of $18,825.47.
Plymouth Rock also did not pay Ms. Bartini any additional amounts for the title, registration, or inspection costs to acquire a vehicle of like kind or quality.
Ms. Bartini claims additional payments for actual cash value under regulation specifying “actual cost to purchase” for valuing total loss auto claims
On September 18, 2020, Ms. Bartini sent Plymouth Rock a statutory thirty-day demand letter under G.L. c. 93A, alleging that Plymouth Rock had violated the unfair claim practice act, G.L. c. 176D, § 3(9) and, therefore also violated § § 2 and 9 of Chapter 93A.
The unfair claim practice violations that Ms. Bartini alleged were that Plymouth Rock had failed to reimburse her fully for her Nissan’s total loss. According to Ms. Bartini, Plymouth Rock had the legal duty to put her back to her pre-loss position after her vehicle’s total loss.
In support of her position, Ms. Bartini cited the provision of the Division of Insurance regulation 211 CMR 133.00 titled “Standards for the Repair of Damaged Motor Vehicles,” which in § 133.05 deals with how automobile insurers must determine the actual cash value paid to insureds for total losses. This regulation provides that the insurer must consider the following factors:
- the retail book value for a motor vehicle of like kind and quality, but for the damage incurred;
- the price paid for the vehicle plus the value of prior improvements to the motor vehicle at the time of the accident, less appropriate depreciation;
- the decrease in value of the motor vehicle resulting from prior unrelated damage which is detected by the appraiser; and
- the actual cost of purchase of an available motor vehicle of like kind and quality but for the damage sustained.”
Ms. Bartini’s position was that Plymouth Rock had failed to consider the regulatory requirement that mandated it consider “the actual cost of purchase of an available motor vehicle of like kind and quality” because it had not paid as a part of the “actual cost to purchase, the necessary expenses incurred to title, register, and inspect a new vehicle. In most cases, these state-mandated charges amounted to about $170.00 per vehicle.
On October 21, 2020, Plymouth Rock, through counsel, denied Ms. Bartini’s claim for additional payments. The insurer denied that it had any legal duty to include these regulatory charges in its total loss calculation of an insured’s vehicle’s actual cash value.
The class complaint and Plymouth Rock’s Motion to Dismiss
Ms. Konsevick filed a suit individually against Plymouth Rock over the payment of title, registration, and inspection fees for total losses on September 21, 2020. On November 13, 2020, Ms. Konsevick filed an amended complaint that added Ms. Bartini as a co-plaintiff.
The amended complaint alleged that the provisions of the Division of Insurance regulation for computing total losses referencing the “actual cost of purchase” required Plymouth Rock to pay the motor vehicle title fees mandated under M.G.L. c. 90D Section 4(a), the registration fees required by Chapter 90, § 2, and the vehicle inspection fees (collectively, “regulatory costs”).
Per the amended complaint, the total of these mandatory regulatory costs varied between $135.00 and $195.00 for each total loss depending on the insured’s circumstances
The amended complaint sought damages, declaratory relief, punitive damages, and attorney fees. The amended complaint contained three counts: Count 1, breach of the standard policy contract: Count 2, a declaratory judgment declaring that Plymouth Rock had a duty to pay regulatory costs on total losses; and Count 3, seeking multiple damages and attorney fees under G.L. c. 176D, the unfair claim practices act, as allowed under Section 9 of Chapter 93A.
The amended complaint also sought for the Court to certify a class of Plymouth Rock insureds for Ms. Konsevick and Ms. Bartini to represent consisting of:
“All insureds, under any Massachusetts policy issued by Plymouth Rock Assurance Corporation with the same material operative policy language covering a vehicle with auto physical damage coverage, who 1) made a first-party auto property damage claim during the time period of two years prior to the filing of this Complaint to the date on which an Order certifying the class is entered, 2) where such vehicle was declared a total loss, 3) whose claim was adjusted as a total loss.”
The legal argument of the amended complaint was that while the standard policy did not define “actual cash value” and did not reference or define “total-loss,” Plymouth Rock had to take into account the regulatory costs as part of “actual cost of purchase,” to comply with Division of Insurance’s regulation under 211 CMR 133.05(d). (“the actual cost of purchase of an available motor vehicle of like kind and quality but for the damage sustained).
Plymouth Rock files a motion to dismiss the amended complaint straightaway
On January 4, 2021, Plymouth Rock filed with the Suffolk Superior Court, the court where the amended complaint was pending, a notice of its intent to make a motion to dismiss. Three weeks later, on January 25, 2021, Plymouth Rock filed its motion to dismiss, asking the Court to dismiss the amended complaint by ruling that:
- The Standard Massachusetts Auto Policy Does Not Cover Fees for Vehicle Tide, Registration and Inspection for Vehicles Deemed a Total Loss;
- Insurers May Rely on Computerized Services to Calculate Actual Cash Value;
- Plaintiffs’ Claims For Breach of Contract and Declaratory Judgment Fail as a Matter of Law; and,
- The Complaint Fails to Plead a Ch. 93A/176D Violation.
The standard auto policy and its different rules of construction
On March 4, 2021, the Superior Court judge hearing the case heard oral arguments supplementing the legal memorandum filed by Plymouth Rock in support of its motion to dismiss and the legal oppositions filed by the attorneys for Ms. Konsevick and Ms. Bartini opposing Plymouth Rock’s motion.
The major thrust of the plaintiffs’ arguments to the Court was that that the standard policy used by Plymouth Rock, and other carriers, did not define the term “actual cash value.” Under Massachusetts law, where the term “actual cash value” is not defined, the policy “should be interpreted so to effectuate the goal of putting an insured back into their pre-loss position. This requires the Court to receive “any evidence logically tending to the formation of a correct estimate of the value of the insured property at the time of the loss.”
While this rule has applied in Massachusetts for policies where the actual cash value has not been defined, such as the Massachusetts standard fire insurance policy, the Court declined to apply the broad evidence rule to the standard policy.
The judge distinguishes the other insurance policies, such as the fire policy, from the automobile insurance policy.
The Court found that the standard policy involved in this case is a contract “described by statute with standard language controlled by the Division of Insurance.” In the standard policy, the Division of Insurance, which controls the policy language, had promulgated its regulation 211 CMR 133.05(1) relating to determining the actual cash value for automobile total loss claims.
As opposed to other policies that do not define actual cash value, the judge found that the factors specified in Section 133.05 did define how Plymouth Rock and other automobile insurance companies must determine actual cash value based upon the four enumerated factors.
Under this standard, the judge found no need to delve into any factual questions concerning whether the actual cash value of the loss included regulatory fees because the provisions of 211 CMR 133.05 made that determination a question of law and not fact.
Based on that ruling, the judge next reviewed the conditions under the regulation and determined that Plymouth Rock did not have to pay regulatory fees or consider regulatory fees to determine the actual cash value of a total loss.
Initially, the Court noted that the policy was silent as to the regulatory fees being excluded, but then also noted that the policy’s silence on that point did not mean that the payment of such fees was required.
To the Court, the absence of any language in the policy requiring regulatory fees to be factored into the actual cash value was consistent with the fact that the “value” of a vehicle at the time of a collision or comprehensive loss never includes the cost of the damaged vehicle’s title, registration, and inspection, because the value of those items is not transferable.
The Court then noted that “for these reasons, anyone who purchases a vehicle must pay these regulatory fees anew and, this fact signifies that such fees represent a recurrent cost of ownership rather than a form of value inhering in the vehicle itself.”
Judge rules “actual cost” as used in 133.05(1) does not include regulatory costs
The Court next addressed the meaning of §133.05(1)(d). The Court agreed that this regulation does speak of “the actual cost of purchase of an available motor vehicle of like kind and quality but for the damage sustained.” However, the Court did not adopt the plaintiffs’ argument that this language required the payment of the regulatory fees they sought legally followed from the language used.
The Court found that the term, the “actual cost of purchase of an available motor vehicle,” meant that this is the amount that a person must pay in exchange to acquire the vehicle from a willing seller. This amount would not include the regulatory fees because they do not add any value to an automobile but are simply the costs required by the state to legally transfer the vehicle to the purchaser and drive it on the roads of the Commonwealth.
Thus, the judge found that the regulatory fees are not properly considered a component of the “actual cost” for the vehicle’s purchase. This usage, the Court emphasized, is found in the regulation employing the singular rather than the plural. The singular word “cost” references that which the purchaser pays to the seller and not to the additional “costs” that might be incurred as part of the purchase but as consequential payments made to the state.
No reasonable expectation of coverage for regulatory costs to put a new car on the road
Finally, the Court also examined the policy based on the reasonable expectations of an insured reading the standard policy’s terms that promised to “pay for any direct and accidental damage. The judge concluded that “such insured would not expect to be compensated for the collateral expenses (such as regulatory fees) that are not directly related to the cost of repairing physical damage to their vehicle.”
To the Court, the language that the policy “would 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 loss of collision] made it clear that the actual cash value represents an economic ceiling on coverage and not a promise to pay the total costs of vehicle replacement.”
The final order of the Superior Court
Per its analysis, the Court found that Ms, Konsevick and Ms. Bartini’s amended complaint failed to state a cause of action and dismissed the case with the following docket entry:
JUDGMENT on Defendants, Plymouth Rock Assurance Corporation 12(b) motion to dismiss against Plaintiff(s) Rebecca L Konsevick, Colleen A Bartini. It is ORDERED and ADJUDGED:
For the reasons set forth in the Court’s Memorandum of Decision and Order on Defendant’s Motion to Dismiss, dated March 22, 2021, the motion is ALLOWED, and the Plaintiff’s Complaint shall be, and hereby is, DISMISSED. (Emphasis in original).
The Plaintiffs have thirty days to appeal their complaint’s dismissal to the Appeals Court
Under the Massachusetts Rules of Appellate Procedure, Ms. Konsevick and Ms. Bartini have thirty days from the entry of the final judgment on the Superior Court docket dismissing their complaint to file a notice of appeal. Based on the date judgment entered on the docket, March 24, 2021, they have until April 23, 2021, to file a notice of appeal.
Agency Checklists will keep its readers posted.
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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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