INSURANCE-RELATED COURT CASES
Digested from case reports published online
COURT DECISIONS
No coverage for inherent diminished value
Jeffrey Cubberley and Philip Seaver filed suit against The Commerce Insurance Company, seeking declaratory relief for alleged breach of contract. They claimed that Commerce was obligated to cover “inherent diminished value” (IDV) damages to their vehicles, which were damaged in collisions caused by Commerce’s insured drivers. Commerce paid for the repairs but refused to compensate for IDV damages, leading Cubberley and Seaver to argue that their vehicles were worth less in the resale market post-repair.
Cubberley and Seaver initially filed their suit in the Superior Court, and the case was later transferred to the business litigation session. The case was stayed pending the outcome of McGilloway v. Safety Ins. Co., which held that IDV damages were recoverable under the 2008 standard Massachusetts automobile policy.
After the stay was lifted, Cubberley and Seaver filed a second amended complaint. Commerce moved to dismiss the claims, arguing that the 2016 standard policy excluded IDV damages. The motion judge granted the dismissal, concluding that the policy did not cover IDV damages and that Cubberley and Seaver failed to allege facts that suggested an entitlement to relief. Cubberley and Seaver appealed, and the Supreme Judicial Court granted direct appellate review.
The Supreme Judicial Court affirmed the dismissal, holding that Cubberley and Seaver lacked standing to pursue their breach of contract claims because they had not obtained final judgments against the insureds as required by state statute. Additionally, the court found that part 4 of the 2016 standard policy explicitly excluded coverage for IDV damages to third-party vehicles.
The court also determined that neither General Laws c. 90, § 340 nor the decision in McGilloway provided a legal basis that required insurers to cover IDV damages under the 2016 standard policy. For this reason Cubberley and Seaver’s complaint did not plausibly establish an entitlement to relief.
Cubberley and Seaver v. The Commerce Insurance Company—Supreme Judicial Court of Massachusetts—No. SJC-13563—January 30, 2025.
