Case Title: McGilloway v. Safety Insurance Co.

Citation: 

Docket Number: SJC-13053

State: massachusetts

Court: Massachusetts Supreme Court

Date: 2021-10-19T00:00:00Z

Document:
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SJC-13053 
 
JARRETT McGILLOWAY1 & another2  vs.  SAFETY INSURANCE COMPANY 
(and a consolidated case3). 
 
 
 
Suffolk.     May 5, 2021. - October 19, 2021. 
 
Present:  Budd, C.J., Gaziano, Lowy, Cypher, Kafker, Wendlandt, 
& Georges, JJ. 
 
 
Motor Vehicle, Insurance.  Insurance, Motor vehicle insurance, 
Construction of policy, Unfair act or practice.  Contract, 
Insurance, Performance and breach.  Value.  Consumer 
Protection Act, Unfair act or practice. 
 
 
 
Civil actions commenced in the Superior Court Department on 
June 30 and December 11, 2017. 
 
After consolidation, the cases were heard by Kenneth W. 
Salinger, J., on motions for summary judgment. 
 
The Supreme Judicial Court granted an application for 
direct appellate review. 
 
 
Kevin J. McCullough for Jarrett McGilloway & others. 
Nelson G. Apjohn for Commerce Insurance Company. 
 
 
1 On behalf of himself and all others similarly situated. 
 
2 Linda Estrella, on behalf of herself and all others 
similarly situated. 
 
3 Adam Ercolini vs. Commerce Insurance Company. 
2 
 
Peter L. Bosse for Safety Insurance Company. 
The following submitted briefs for amici curiae: 
Thomas R. Murphy & Kevin J. Powers for Massachusetts 
Academy of Trial Attorneys. 
John Pagliaro & Martin J. Newhouse for New England Legal 
Foundation. 
Wystan M. Ackerman for American Property Casualty Insurance 
Association & another. 
 
 
 
GEORGES, J.  The plaintiffs in these consolidated actions, 
Jarrett McGilloway, Linda Estrella, and Adam Ercolini, each 
owned an automobile that was involved in a collision with an 
automobile owned or operated by a party insured by either Safety 
Insurance Company (Safety) or Commerce Insurance Company 
(Commerce) (collectively, defendants).  The defendants paid to 
repair the plaintiffs' automobiles to their precollision 
condition but declined to compensate the plaintiffs for alleged 
inherent diminished value (IDV) damages to the vehicles.4  The 
issues in these cases are (1) whether, under part 4 of the 
standard Massachusetts automobile insurance policy, 2008 edition 
(standard policy), an automobile insurer must pay a claim for 
the IDV of a car that has been damaged and subsequently 
repaired, and (2) whether the defendants violated either G. L. 
c. 93A (consumer protection act) or G. L. c. 176D (statute 
 
4 As explained by the motion judge, inherent diminished 
value (IDV) is "the concept that a vehicle's fair market value 
may be less following a collision and repairs, and that it 
equals the 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." 
3 
 
prohibiting unfair and deceptive insurance practices) in the 
course of their dealings with the plaintiffs. 
We conclude that part 4 of the standard policy requires the 
defendants, as automobile insurers, to pay claims for IDV to 
vehicles that are damaged and subsequently repaired, provided 
that the claimant establishes both (1) that his or her vehicle 
suffered IDV, and (2) the amount of IDV damages owed to him or 
her.  We further conclude, however, that there was no violation 
of either G. L. c. 93A or G. L. c. 176D.  We remand the cases to 
the Superior Court for further proceedings consistent with this 
opinion.5 
 
Background.  We summarize the relevant facts, which are 
undisputed, as well as the procedural posture of these cases. 
The plaintiffs purchased their vehicles between 2012 and 
2016.  Each plaintiff's vehicle was involved in a collision, 
resulting in damage to the vehicle caused by another driver who 
was insured by a standard policy that either Safety or Commerce 
 
5 We acknowledge the amicus briefs submitted by the New 
England Legal Foundation and by the American Property Casualty 
Insurance Association and National Association of Mutual 
Insurance Companies in support of the defendants, as well as the 
amicus letter submitted by the Massachusetts Academy of Trial 
Attorneys in support of the plaintiffs. 
 
4 
 
had issued.  Part 4 of the standard policy provides, in relevant 
part:6 
"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.  We will pay only if you or a 
household member is legally responsible for the accident.  
We will also pay if someone else using your auto with your 
consent is legally responsible for the accident.  Damages 
include any applicable sales tax and the costs resulting 
from the loss of use of the damaged property."  (Emphases 
in original.) 
 
Each plaintiff thereafter sought compensation from one of 
the defendants for the damage to the plaintiff's automobile as a 
third-party claimant pursuant to part 4 of the standard policy.7  
In each case, the insurer paid the plaintiff the full cost to 
repair the automobile to its precollision condition, but 
declined to compensate the plaintiff for the alleged IDV of the 
vehicle due to the collision. 
In June of 2017, McGilloway filed a class action complaint 
in the Superior Court against Safety, which he later amended to 
add Estrella as a plaintiff, seeking a declaration that part 4 
of the standard policy provides coverage for IDV damages.  In 
addition to the declaratory relief sought, McGilloway and 
 
6 Unless otherwise specified, in discussing the standard 
policy, we refer solely to the 2008 edition. 
 
7 For the difference between first-party and third-party 
insurance claims, see note 11, infra. 
5 
 
Estrella's amended complaint asserted claims for (1) breach of 
contract based on Safety's failure to pay them IDV damages 
pursuant to part 4 of the standard policy, (2) unfair business 
practices in violation of G. L. c. 93A, and (3) unfair claim 
settlement practices as defined by G. L. c. 176D, § 3 (9).  In 
December 2017, Ercolini commenced an action against Commerce, 
similarly seeking declaratory relief and making an identical 
breach of contract claim.  Following transfer of Ercolini's case 
to the business litigation session, the two cases then were 
consolidated to address whether IDV damages are covered under 
part 4 of the standard policy. 
On the parties' cross motions for summary judgment, which 
were consolidated into one action for this purpose, the judge 
allowed the defendants' motions and denied the plaintiffs' 
motion, concluding that the defendants were not required to pay 
any IDV damages beyond the cost to fully repair the collision 
damages to the plaintiffs' vehicles.  The judge also concluded 
that the defendants had not violated G. L. c. 93A or G. L. 
c. 176D in the course of their dealings with the plaintiffs.  
The plaintiffs appealed, and we granted their combined request 
for direct appellate review. 
 
Discussion.  1.  Standard of review.  "Where the parties 
have cross-moved for summary judgment, we review a grant of 
summary judgment de novo to determine whether, viewing the 
6 
 
evidence in the light most favorable to the unsuccessful 
opposing party and drawing all permissible inferences and 
resolving any evidentiary conflicts in that party's favor, the 
successful opposing party is entitled to judgment as a matter of 
law."  Rahim v. District Attorney for the Suffolk Dist., 486 
Mass. 544, 546 (2020), quoting Dzung Duy Nguyen v. Massachusetts 
Inst. of Tech., 479 Mass. 436, 448 (2018).  "Because our review 
is de novo, we accord no deference to the decision of the motion 
judge."  Caron v. Horace Mann Ins. Co., 466 Mass. 218, 221 
(2013), quoting DeWolfe v. Hingham Ctr., Ltd., 464 Mass. 795, 
799 (2013). 
 
2.  Inherent diminished value.  "The interpretation of an 
insurance policy is a question of law . . . ."  Massachusetts 
Insurers Insolvency Fund v. Premier Ins. Co., 449 Mass. 422, 426 
(2007).  "We interpret the words of the standard policy in light 
of their plain meaning, giving full effect to the document as a 
whole" (citation omitted).8  Given v. Commerce Ins. Co., 440 
 
 
8 "[T]he approved wording of the standard policy is 
controlled by the Commissioner of Insurance [(commissioner)] and 
not by any insurer."  Golchin v. Liberty Mut. Ins. Co., 460 
Mass. 222, 225 (2011), S.C., 466 Mass. 156 (2013), quoting Given 
v. Commerce Ins. Co., 440 Mass. 207, 210 (2003).  See G. L. 
c. 175, § 113A.  An advisory ruling promulgated by the 
commissioner pursuant to G. L. c. 30A, § 8, interpreting a 
provision in the standard policy, is entitled to deference as an 
agency decision.  See Given, supra at 214 n.8.  However, the 
defendants do not cite, and we are not aware of, any advisory 
ruling by the commissioner interpreting part 4 of the standard 
 
7 
 
Mass. 207, 209 (2003).  "A policy of insurance whose provisions 
are plainly and definitely expressed in appropriate language 
must be enforced in accordance with its terms" (citation 
omitted).  Clark Sch. for Creative Learning, Inc. v. 
Philadelphia Indem. Ins. Co., 734 F.3d 51, 55 (1st Cir. 2013).  
In discerning the meaning of the contract provisions, we are 
guided by "what an objectively reasonable insured, reading the 
relevant policy language, would expect to be covered."  Hazen 
Paper Co. v. United States Fid. & Guar. Co., 407 Mass. 689, 700 
(1990). 
 
The plaintiffs argue that they are entitled to collect IDV 
damages from the defendants under part 4 of the standard policy 
because IDV damages are included as part of "the amounts [the 
claimant] is legally entitled to collect for property damage 
through a court judgment or settlement."  Conversely, the 
defendants argue that the motion judge did not err in allowing 
their motions for summary judgment because Massachusetts tort 
law does not permit IDV recovery.  The defendants also contend 
that even if IDV damages are recoverable, such damages are not 
covered under the standard policy because Massachusetts 
regulations governing the claims made pursuant to the standard 
 
policy.  We thus interpret part 4 in accordance with our long-
standing principles of contract interpretation. 
8 
 
policy are silent as to how insurers should treat IDV damages.  
We agree with the plaintiffs. 
We previously have held that "the term property damage 
. . . can include intangible damage such as the diminution in 
value of tangible property" (citation omitted).  Continental 
Cas. Co. v. Gilbane Bldg. Co., 391 Mass. 143, 148 (1984).  See 
Trinity Church in Boston v. John Hancock Mut. Life Ins. Co., 399 
Mass. 43, 48 (1987), citing Hopkins v. American Pneumatic Serv. 
Co., 194 Mass. 582, 583 (1907) ("The general rule for measuring 
property damage is diminution in market value").  Here, a plain 
reading of the phrase "the amounts that person is legally 
entitled to collect for property damage through a court judgment 
or settlement" entitles a claimant "to be made whole and 
compensated for what he has lost."  G.E. Lothrop Theatres Co. v. 
Edison Elec. Illuminating Co. of Boston, 290 Mass. 189, 194 
(1935).  See Governo Law Firm LLC v. Bergeron, 487 Mass. 188, 
199 (2021) (same).  See also Rockwood v. Allen, 7 Mass. 254, 256 
(1811) ("it is a general and very sound rule of law, that where 
an injury has been sustained, for which the law gives a remedy, 
that remedy shall be commensurate to the injury sustained").  
Because the plain language of part 4 of the standard policy does 
not limit recovery to merely repair or replacement costs, such 
recovery must compensate a claimant for any loss of value the 
claimant incurred as a result of a collision, offset by the 
9 
 
increase in value that may occur from repairs to the vehicle.  
In short, if a third-party claimant's vehicle suffers IDV even 
after it is fully repaired, then under part 4 of the standard 
policy, the insurer may be liable to the claimant for IDV 
damages so that he or she may be "made whole" once again.9 
"The purpose of tort damages is to compensate an injured 
person for a loss suffered and only for that.  The law attempts 
to put the plaintiff in a position as nearly as possible 
equivalent to his [or her] position before the tort.  Recovery 
is permitted not in order to penalize the tortfeasor, but only 
to give damages 'precisely commensurate with the injury.'"  
 
9 Our decision is in line with those of numerous other 
jurisdictions that have recognized IDV damages in the context of 
property damage claims, including damage claims relating to 
automobiles.  See, e.g., American Serv. Ctr. Assocs. v. Helton, 
867 A.2d 235, 243 (D.C. 2005) (claim for property damage to 
motor vehicle caused by collision with another vehicle; "when a 
plaintiff can prove that the value of an injured chattel after 
repair is less than the chattel's worth before the injury, 
recovery may be had for both the reasonable cost of repair and 
the residual diminution in value after repair, provided that the 
award does not exceed the gross diminution in value"); State 
Farm Mut. Auto. Ins. Co. v. Mabry, 274 Ga. 498, 508-509 (2001) 
(insurer required to pay claimant IDV damages under insurance 
policy where vehicle suffered IDV following repair); Papenheim 
v. Lovell, 530 N.W.2d 668, 672 (Iowa 1995) ("If repairing the 
vehicle does not return the car to its pre-accident condition as 
measured by its market value, then the owner is not compensated 
for the detriment caused if only awarded cost of repairs"); 
Brennen v. Aston, 2003 OK 91, ¶ 12 (property damage claim 
relating to truck; "[i]nsofar as [Oklahoma Uniform Jury 
Instruction] 4.14 permits recovery of damages for the post-
repair depreciation in value of a damaged item of personal 
property, it correctly states the law of Oklahoma"). 
10 
 
United States v. Ebinger, 386 F.2d 557, 561 (2d Cir. 1967), 
quoting Harris v. Standard Acc. & Ins. Co., 297 F.2d 627, 631-
632 (2d Cir. 1961), cert. denied, 369 U.S. 843 (1962).  See 
Restatement (Second) of Torts § 928 (1979) ("When one is 
entitled to a judgment for harm to chattels not amounting to a 
total destruction in value, the damages include compensation for 
. . . the reasonable cost of repair or restoration, with due 
allowance for any difference between the original value and the 
value after repairs . . .").10 
Contrary to the defendants' assertions, our case law does 
not foreclose the plaintiffs from recovering IDV damages as 
third-party claimants under part 4 of the standard policy.11  
 
10 While we acknowledge that we are not bound by "the views 
of the American Law Institute as set forth in its various 
Restatements," Bongaards v. Millen, 440 Mass. 10, 29 (2003), we 
have often considered the various Restatements of the Law as 
"prestigious sources of potentially persuasive authority," id.  
We recently adopted an approach recommended by the Restatement 
(Third) of Torts, see Doull v. Foster, 487 Mass. 1, 2-3 (2021), 
and have cited approvingly the views of the Restatement (Second) 
of Torts numerous times, see, e.g., Jupin v. Kask, 447 Mass. 
141, 147-148 & n.6, 151, 158-159 (2006), citing Restatement 
(Second) of Torts §§ 284, 298 comment b, 302 comment a, 302B, 
314 comment b, 318 comment c, 448, 821B comment b (1965); Shafir 
v. Steele, 431 Mass. 365, 369 (2000) (adopting Restatement 
[Second] of Torts § 766A [1979]); United Truck Leasing Corp. v. 
Geltman, 406 Mass. 811, 816 (1990) (adopting Restatement 
[Second] of Torts §§ 766 and 766B [1979]). 
 
11 In a first-party insurance claim, the claimant seeks 
compensation from his or her own insurance provider.  In a 
third-party automobile insurance claim, the type at issue here, 
the claimant seeks compensation from another person's insurance 
 
11 
 
Indeed, when we previously considered IDV damages in connection 
with automobile insurance, we did so in the context of first-
party claimants under a different part of an earlier edition of 
the standard policy.12  See Given, 440 Mass. at 208.  In that 
case, we considered whether a first-party claimant could recover 
IDV damages under part 7 of the sixth edition of the standard 
policy, which provided that the insurer "will pay for any direct 
and accidental damage to [the claimant's] auto caused by a 
collision."13  See id. at 208, 209 ("At issue . . . is whether 
inherent diminished value is included within the term 'direct 
and accidental damage to [an] auto caused by a collision,' as 
that is the 'damage' compensable under part [7] of the standard 
 
provider -- typically, the insurer of the other party in a 
collision. 
 
12 More specifically, in Given, 440 Mass. at 208, the court 
analyzed part 7 of the sixth edition of the standard policy.  
Here, we are asked to consider part 4 of the 2008 edition of the 
standard policy.  The language of part 7 of the sixth edition of 
the standard policy is substantially similar to the language of 
part 7 of the 2008 edition of the standard policy in all 
relevant parts. 
 
13 Part 7 of the sixth edition of the standard policy, which 
was at issue in Given, provided, in relevant part: 
 
"[W]e [the insurer] will pay for any direct and accidental 
damage to your [the insured's] auto caused by a collision. 
. . .  We will pay for each loss up to the actual cash 
value of the auto or any of its parts at the time of the 
collision.  If the repair of a damaged part will impair the 
operational safety of the auto, we will replace the part." 
 
Given, 440 Mass. at 208-209. 
12 
 
policy").  In Given, we concluded that the plain language of 
part 7 did not obligate the insurer to compensate the claimant 
for IDV damages.  Id. at 212. 
Given is distinguishable for three reasons.  First, unlike 
part 7, which provides that the insurer "will pay for any direct 
and accidental damage to your auto caused by a collision," id. 
at 208, part 4 permits a third-party claimant to recover "the 
amounts [the claimant] is legally entitled to collect for 
property damage through a court judgment or settlement."14  
Second, we noted in Given that the plain language of part 7 of 
the standard policy establishes a binary system of recovery:  
"Under the express terms of the standard policy, Given was 
entitled to compensation either for diminution in value caused 
by the collision (if she chose not to repair her vehicle) or for 
the cost of repair (if she chose to have repairs performed).  
She was not entitled to both."  Id. at 212.  Recovery under part 
4, however, contains no such limitation on recovery, let alone 
any limitation tied to a claimant's decision to have his or her 
vehicle repaired.  Third, our holding in Given relied in part on 
the eleventh paragraph of the sixth edition of the standard 
policy's "general provisions and exclusions" section, which bars 
 
14 The motion judge similarly concluded that Given "does not 
control here" because "the policy provision at issue in that 
case is materially different [from] the provisions that govern 
[the plaintiffs'] claims." 
13 
 
an insurer from "pay[ing] more than what it would cost to repair 
or replace the damaged property," and thus conflicts with the 
concept of IDV damages.  Id.  Paragraph eleven, however, applies 
only to damages due under "Parts 7, 8 and 9," and thus does not 
bear on our analysis of part 4 in these cases.  For these 
reasons, Given does not apply here. 
 
Commerce maintains that our holding today will "cause a 
seismic shift in the insurance marketplace," which in turn will 
"economically destabilize the insurance marketplace."  At oral 
argument, counsel for Commerce also argued that IDV damages are 
"very difficult, if not impossible" to calculate with regard to 
vehicles.  However, as the motion judge noted, Safety "admits 
that IDV may be suffered in some cases" and "concedes that IDV 
may be quantifiable."  Moreover, as discussed supra, numerous 
other States recognize and permit recovery of IDV damages.  
Accordingly, we are not persuaded by Commerce's arguments here. 
 
For the foregoing reasons, we conclude that the motion 
judge's allowance of summary judgment was improper, as IDV 
damages are indeed recoverable under part 4 of the standard 
policy, and thus the defendants are not entitled to judgment as 
a matter of law.  Contrast Augat, Inc. v. Liberty Mut. Ins. Co., 
410 Mass. 117, 120 (1991) (summary judgment appropriate where no 
material facts were at issue).  We do not, however, suggest that 
every automobile that is involved in a collision and is 
14 
 
subsequently repaired has suffered an IDV.  Rather, and as other 
jurisdictions have held, individualized proof is required to 
demonstrate that a given automobile has sustained some form of 
diminution in value due to a collision or vehicular accident, 
even after repairs are made.  Specifically, a plaintiff must 
establish (1) that his or her vehicle has suffered IDV damages, 
and (2) the amount of IDV damages at issue.  Here, a material 
dispute still exists regarding whether any of the plaintiffs' 
vehicles have suffered IDV due to a collision and, if so, 
whether and in what amount such damage can be quantified; as 
just stated, each plaintiff has the burden of proof on these 
issues.  We thus reverse the motion judge's allowance of summary 
judgment for the defendants on the plaintiffs' breach of 
contract claims and remand the cases to the Superior Court for 
further proceedings on these outstanding issues. 
 
3.  Unfair business practices.  The plaintiffs also argue 
that the motion judge erred in allowing the insurers' motion for 
summary judgment with respect to the claims under G. L. c. 93A 
and G. L. c. 176D, § 3 (9). 
General Laws c. 176D, § 3 (9), "regulates the insurance 
business and identifies 'unfair claim settlement practices,'" 
Rawan v. Continental Cas. Co., 483 Mass. 654, 663 (2019), in an 
effort "to encourage settlement of insurance claims . . . and 
discourage insurers from forcing claimants into unnecessary 
15 
 
litigation to obtain relief," Morrison v. Toys "R" Us, Inc., 
Mass., 441 Mass. 451, 454 (2004), quoting Hopkins v. Liberty 
Mut. Ins. Co., 434 Mass. 556, 567-568 (2001).  "A violation of 
G. L. c. 176D amounts to an unfair or deceptive act or practice 
for purposes of claims made under G. L. c. 93A."  Rawan, supra.  
A consumer "whose rights are affected by another person 
violating the provisions of" G. L. c. 176D, § 3 (9), may bring 
an action in the Superior Court for damages pursuant to G. L. 
c. 93A, § 9 (1).  See Wheatley v. Massachusetts Insurers 
Insolvency Fund, 456 Mass. 594, 594-595 (2010), S.C., 465 Mass. 
297 (2013). 
Recovery under G. L. c. 93A for a violation of G. L. 
c. 176D, § 3 (9), is unlikely when "[a]n insurance company . . . 
in good faith denies a claim of coverage on the basis of a 
plausible interpretation of its insurance policy."  Gulezian v. 
Lincoln Ins. Co., 399 Mass. 606, 613 (1987).  See Lumbermens 
Mut. Cas. Co. v. Offices Unlimited, Inc., 419 Mass. 462, 468 
(1995) (same); Guity v. Commerce Ins. Co., 36 Mass. App. Ct. 
339, 343 (1994) ("A plausible, reasoned legal position that may 
ultimately turn out to be mistaken -- or simply, as here, 
unsuccessful -- is outside the scope of the punitive aspects of 
the combined application of [G. L.] c. 93A and c. 176D").  See 
also Van Dyke v. St. Paul Fire & Marine Ins. Co., 388 Mass. 671, 
675-678 (1983).  We note that "a good faith dispute as to 
16 
 
whether money is owed, or performance of some kind is due, is 
not the stuff of which a c. 93A claim is made."  Duclersaint v. 
Federal Nat'l Mtge. Ass'n, 427 Mass. 809, 814 (1998). 
Here, we do not discern any evidence of "bad faith or 
ulterior motives," Boston Symphony Orch., Inc. v. Commercial 
Union Ins. Co., 406 Mass. 7, 14 (1989), in the defendants' 
rejection of the plaintiffs' claims for IDV damages.  The 
defendants point out that the commissioner has not yet 
recognized that part 4 of the standard policy covers IDV 
damages, and this court previously has not considered the issue.  
Thus, because the insurers relied on a "plausible, although 
ultimately incorrect, interpretation of its policy," we cannot 
find anything "immoral, unethical or oppressive in such an 
action" requiring recovery under G. L. c. 93A.  Id. at 15, 
citing PMP Assocs. v. Globe Newspaper Co., 366 Mass. 593, 595-
596 (1975).  Accordingly, we affirm the motion judge's grant of 
summary judgment in favor of the insurers as to these claims. 
 
Conclusion.  Because we conclude that IDV damages, if 
adequately proved, are recoverable under part 4 of the standard 
policy, we vacate the motion judge's allowance of summary 
judgment with respect to the plaintiffs' claims of breach of 
contract.  We affirm the motion judge's grant of summary 
judgment in favor of the defendants on the plaintiffs' unfair 
business practices claims pursuant to G. L. c. 93A and G. L. 
17 
 
c. 176D, § 3 (9).  We remand the cases to the Superior Court for 
further proceedings consistent with this opinion. 
 
 
 
 
 
 
 
So ordered.