Auto Flat Car Crushers, Inc. v. Hanover Insurance Co.
17 N.E.3d 1066
Mass.2014Background
- Auto Flat Car Crushers (Auto Flat) operated a vehicle-crushing business and was insured by Hanover under a commercial garage policy. While removing vehicles in 2004, DEP issued a notice of responsibility identifying Auto Flat as potentially liable for hazardous-material releases and ordered cleanup.
- Auto Flat demanded defense and indemnity from Hanover; Hanover denied coverage citing policy scope and pollution exclusions and refused to defend. Auto Flat funded defense and remediation out of pocket.
- Auto Flat sued Hanover in 2009 seeking declaratory relief (duty to defend and to indemnify), breach of contract (failure to defend/indemnify), and a G. L. c. 93A §11 claim for unfair or deceptive practices based on Hanover’s refusal to defend.
- A Superior Court judge granted partial summary judgment establishing Hanover’s duty to defend. After that judgment, Hanover reimbursed Auto Flat (with interest) for the defense and cleanup expenses; Auto Flat accepted the payments but reserved its rights, including its §11 claim.
- Later, a judge granted Hanover summary judgment on Auto Flat’s breach-of-contract and indemnity claims on the ground that Auto Flat had been fully compensated; a different judge denied Hanover summary judgment on the §11 claim, finding Auto Flat suffered a monetary loss as a historical fact.
- The Supreme Judicial Court considered whether accepting full reimbursement and lacking a contract-damages judgment barred Auto Flat’s §11 claim and whether the contract claims remained viable after reimbursement.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether acceptance of full reimbursement bars a G. L. c. 93A §11 claim | Auto Flat: Actual damages are the historical out-of-pocket losses; reimbursement does not bar §11 relief and any prior payments are an offset | Hanover: Full reimbursement eliminates any actual damages and thus precludes §11 relief | Held: Reimbursement does not bar §11; a plaintiff who suffered monetary loss may proceed under §11 even if later compensated; prior payments are offsets, not bars |
| Whether §11 requires uncompensated loss | Auto Flat: No; statute requires a historical loss of money or property, not persistent uncompensated loss | Hanover: §11 requires uncompensated loss to support a claim | Held: §11 does not require uncompensated loss; concrete monetary loss suffices even if later reimbursed |
| Whether a prior judgment fixing contract damages is prerequisite to §11 multiple damages | Auto Flat: Judgment not required; actual damages proved at trial may be multiplied; payments offset after multiplication | Hanover: Multiplication is tied to a judgment; absent judgment plaintiff can recover only limited items (e.g., interest) | Held: No prerequisite; where no judgment exists the court multiplies proven actual damages; the 1989 amendment makes the amount of a judgment an alternate basis for multiplication but does not make judgment a prerequisite to §11 recovery |
| Whether contract claims (breach of duty to defend/indemnify) survive acceptance of full reimbursement | Auto Flat: Should be able to obtain a judgment on breach (duty to defend was declared) and pursue contract damages as predicate for §11 | Hanover: Acceptance of full reimbursement removes contract damages and requires dismissal | Held: Contract claims dismissed as moot once plaintiff accepted full reimbursement for those losses; declaratory judgment on duty to defend does not preserve contract damage claims after payment |
Key Cases Cited
- Ameripride Linen & Apparel Servs., Inc. v. Eat Well, Inc., 65 Mass. App. Ct. 63 (treatment of prior compensation as offset against §11 multiple damages)
- R.W. Granger & Sons v. J & S Insulation, Inc., 435 Mass. 66 (purpose of §11 to deter misconduct; multiplication can serve public policy)
- Polaroid Corp. v. Travelers Indem. Co., 414 Mass. 747 (breach of duty to defend entitles insured to contract damages including natural consequences)
- Clegg v. Butler, 424 Mass. 413 (actual damages for insurer’s delay often are loss-of-use/interest)
- Wolfberg v. Hunter, 385 Mass. 390 (offsetting prior recoveries against multiplied §11 awards)
- Rhodes v. AIG Domestic Claims, Inc., 461 Mass. 486 (1989 amendment expanded base for multiplication; context of insurer bad-faith claim settlement)
- Fascione v. CNA Ins. Cos., 435 Mass. 88 (preservation of §11 claims despite late tender of payment under other statutory schemes)
- Kapp v. Arbella Mut. Ins. Co., 426 Mass. 683 (explains role of judgment as basis for multiplication under §11)
- Hershenow v. Enterprise Rent-A-Car Co. of Boston, 445 Mass. 790 (§11 requires concrete loss of money or property to establish injury)