Not for Publication in West's Federal Reporter

United States Court of Appeals For the First Circuit

No. 23-1005

MICHAEL MERULLO, on behalf of himself and all others similarly situated,

Plaintiff, Appellant,

v.

AMICA MUTUAL INSURANCE COMPANY,

Defendant, Appellee.

APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MASSACHUSETTS

[Hon. Denise J. Casper, U.S. District Judge]

Before

Kayatta, Lipez, and Gelpí, Circuit Judges.

Kevin J. McCullough, with whom Michael C. Forrest and Forrest, Mazow, McCullough, Yasi & Yasi, P.C. were on brief, for appellant. Christopher M. Reilly, with whom Anthony J. Antonellis, Mara E. Finkelstein, and Sloane and Walsh, LLP were on brief, for appellee.

September 20, 2023 KAYATTA, Circuit Judge. Following Michael Merullo's

collision with a driver insured by Amica Mutual Insurance Company,

Merullo submitted a claim to Amica for the "inherent diminished

value" ("IDV") of his car resulting from the accident. Amica

denied the claim, asserting that such damage was not covered under

the driver's liability policy. Merullo subsequently filed suit.

Because the particular arguments that Merullo advances on appeal

fail to convince us that coverage is provided, we affirm the

district court's decision dismissing his claims.

I.

On May 29, 2020, Merullo's vehicle was damaged in a

collision with a driver insured by Amica. The driver was covered

under the 2016 edition of the Massachusetts standard auto policy

(the "2016 Policy"), as approved by the state insurance

commissioner. Following the accident, Merullo "demanded payment

from Amica to repair his vehicle and for the [inherent diminished

value] the vehicle suffered as a result of the accident." Merullo

v. Amica Mut. Ins. Co., No. 22-CV-10410,

, at *2

(D. Mass. Dec. 5, 2022). IDV is "the concept that a vehicle's

fair market value may be less following a collision and

repairs . . . . [I]t 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

- 2 - repairs." McGilloway v. Safety Ins. Co.,

, 1194

n.4 (Mass. 2021).

Citing Part 4 of the 2016 Policy, Amica refused to cover

any IDV damage, asserting that such damage was not covered under

the plain language of the policy. Part 4, which provides third-

party liability coverage, in relevant part states:

Under this Part, we will pay for damage or destruction of the tangible property of others caused by an accident and arising from the ownership, maintenance, or use of an auto, including loading or unloading. The amount we will pay is the amount the owner of the property is legally entitled to collect through a court judgment or settlement for the damaged property. We will pay only if you, a household member, or someone else using your auto with your consent is legally responsible for the accident. The amount we will pay includes, if any, applicable sales tax and the loss of use of the damaged property. The amount we will pay does not include compensation for physical damage to, or towing or recovery of, your auto or other auto used by you or a household member with the consent of the owner, or any decreased value or intangible loss claimed to result from the property damage unless otherwise required by law.

(emphasis added).

Merullo subsequently initiated this action in

Massachusetts state court. He brought the lawsuit as a putative

class action, seeking relief for breach of contract and a variety

of Massachusetts chapter 93A and 176D violations arising from

- 3 - Amica's allegedly unfair business practices in handling IDV

claims.

Amica removed the case to the United States District

Court for the District of Massachusetts, and then filed a motion

to dismiss all of Merullo's claims under Federal Rule of Civil

Procedure 12(b)(6), which the district court granted. Merullo

timely appealed.

II.

"We review a district court's grant of a motion to

dismiss for failure to state a claim de novo." Douglas v. Hirshon,

, 54–55 (1st Cir. 2023). In this case, as in most

cases, we consider only those arguments that were raised in the

district court and properly developed on appeal. Carrozza v. CVS

Pharmacy, Inc.,

(1st Cir. 2021); United States v.

Zannino,

(1st Cir. 1990).

With respect to Merullo's breach of contract claim, the

parties agree that Massachusetts substantive law governs our

interpretation of the policy. Under Massachusetts law, the

"'interpretation of an insurance policy is a question of law.'

'We interpret the words of the standard policy in light of their

plain meaning, giving full effect to the document as a whole.'"

McGilloway, 174 N.E.3d at 1196 (citation omitted) (first quoting

Mass. Insurers Insolvency Fund v. Premier Ins. Co.,

(Mass. 2007); and then quoting Given v. Com. Ins. Co.,

- 4 -

(Mass. 2003)). "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.'"

at 1196 (quoting Hazen Paper Co. v.

U.S. Fid. & Guar. Co.,

(Mass. 1990)). As we

describe below, none of the arguments Merullo puts forth on appeal

justifies disturbing the district court's conclusion that Part 4

of the 2016 Policy does not cover IDV claims.

A.

This appeal centers around the following provision

within Part 4: "The amount we will pay does not

include compensation for . . . any decreased value or intangible

loss claimed to result from the property damage unless otherwise

required by law." On its face, this sentence (the "IDV Exclusion")

excludes IDV coverage unless such coverage is "required by law."

Merullo argues that Massachusetts law, via two related steps, does

indeed require such coverage. He points first to the holding in

McGilloway that IDV damages are recoverable against the driver-

insured who is liable for damages to another person's car. 174

N.E.3d at 1196. He then points to Massachusetts General Law

chapter 90, section 34O, which he says requires insurers to

provide coverage coextensive with the insured's liability (up to

$5,000).

- 5 - Merullo is correct in describing the holding of

McGilloway. But he stops short of establishing that section 34O

requires that a property damage liability insurance policy provide

coverage coextensive with the insured's liability. To see why, we

turn to section 34O:

Every insurer issuing or executing a motor vehicle liability policy or bond shall also provide property damage liability coverage for the policyholder or obligor. Property damage liability insurance is insurance containing provisions as prescribed in this section, among such other provisions, including conditions, exclusions, and limitations, as the commissioner of insurance may approve.

Every policy of property damage liability insurance shall provide that the insurer will pay on behalf of the insured all sums the insured shall become legally obligated to pay as damages because of injury to or destruction of property, including loss of use thereof, caused by accident and arising out of the ownership, maintenance or use, including loading and unloading of the insured motor vehicle, subject to a limit of not less than five thousand dollars because of injury to or destruction of property of others in any one accident.

Mass. Gen. Law ch. 90, § 34O. Merullo is correct that one could

read the second quoted paragraph, in isolation, as a mandate that

"property damage liability insurance" cover all damages for which

the insured is liable (up to $5,000). And as we have noted, a

driver in Massachusetts is liable to others for IDV damages that

the driver causes.

- 6 - But Merullo fails to address the statute's definition of

"property damage liability insurance" as "insurance containing

provisions as prescribed in this section, among such other

provisions, including conditions, exclusions, and limitations, as

the commissioner of insurance may approve." Id. (emphasis added).

This omission is especially glaring for two reasons. First, the

omitted definition appears in the sentence immediately preceding

the one that Merullo emphasizes. Second, the district court

specifically relied on this definition to conclude that the

commissioner of insurance could exclude IDV coverage in Part 4 of

the 2016 Policy. See Merullo,

, at *4.

Merullo's failure to address the statute's full

definition of liability insurance proves fatal to his claim. At

least on its face, this provision allows the commissioner to

approve coverage exclusions. And the commissioner approved the

2016 Policy, complete with its exclusion for "any decreased value

or intangible loss claimed to result from the property damage

unless otherwise required by law." We certainly recognize the

tension between section 34O's authorization of coverage exclusions

and its subsequent command to pay "all sums [up to $5,000] the

insured shall become legally obligated to pay." Mass. Gen. Law

ch. 90, § 34O. But Merullo does nothing to resolve this tension

in his favor.

- 7 - In theory, one might stitch all this together by finding

that the commissioner approved a conditional exclusion for IDV

damages, where the condition was that the law did not otherwise

require coverage of such damages. And once it became clear that

the insured would, in fact, be liable for IDV damages, the

statutory mandate in section 34O that the policy cover "all sums

the insured shall become legally obligated to pay [up to $5,000]"

became the "law" that "otherwise required" coverage for those

damages.

But Merullo never fairly presented such a theory to the

district court, or to this court on appeal. Merullo's briefs do

not advance this position, and neither Amica nor the district court

responded to it. Merullo does offer a different theory that the

commissioner would not be "empowered" to approve any policy that

failed to cover damages for which the insured could theoretically

be liable. But even as to that theory he offers no explanation of

the limits of the commissioner's exclusion power, or any analysis

of how that exclusion power might bear on our reading of the

policy's text, so we are left with only a bare assertion.

The law is clear in this circuit that "issues adverted

to in a perfunctory manner, unaccompanied by some effort at

developed argumentation, are deemed waived. It is not enough

merely to mention a possible argument in the most skeletal way,

leaving the court to do counsel's work, create the ossature for

- 8 - the argument, and put flesh on its bones." Zannino,

(citations omitted); Caniglia v. Strom,

, 135–36

(1st Cir. 2020) ("In this circuit, it is settled beyond

peradventure that a reviewing court is not obliged to do a lawyer's

work for him by putting meat on the bones of a skeletal

argument."). The absence of any attempt to explain why the

commissioner's power to approve exclusions does not foreclose IDV

coverage in the standard form policy is especially problematic in

this case. Here, we have a standard form policy subject to

Massachusetts law, and little familiarity with the ins and outs of

Massachusetts auto insurance regulation. So, we would normally

consider certifying the coverage issue to the Massachusetts

Supreme Judicial Court. But Merullo did not seek certification in

the district court or on appeal. And the absence of any briefing

on the pivotal issue makes this case a poorly fitted candidate for

review by the SJC. We therefore see no reason to deviate from our

normal practice, and we treat as waived any argument that

section 34O requires coverage in this case.

B.

Merullo did assert at oral argument yet another, very

different theory: that the IDV Exclusion addresses only claims for

damage suffered by the insured, and thus does not bar IDV coverage

with respect to damage suffered by third parties. Normally, this

would be too late to raise an argument in favor of reversing the

- 9 - district court. See Conduragis v. Prospect Chartercare, LLC,

, 518 n.2 (1st Cir. 2018). Here, though, Merullo raised

and briefed the argument below. And its weakness -- as pointed

out at argument by Amica's counsel -- is clear. So, we exercise

our discretion to consider and dispose of the argument. See United

States v. Leoner-Aguirre,

(1st Cir. 2019).

As stated above, the IDV Exclusion provides: "The amount

we will pay does not include compensation for physical damage to,

or towing or recovery of, your auto or other auto used by you or

a household member with the consent of the owner, or any decreased

value or intangible loss claimed to result from the property damage

unless otherwise required by law." This sentence establishes two

separate exclusions: It excludes compensation for (i) "physical

damage to, or towing or recovery of, your auto or other auto used

by you or a household member with the consent of the owner" or

(ii) "any decreased value or intangible loss claimed to result

from the property damage." The parties agree that the first

exclusion, through its reference to "your auto or other auto used

by you or a household member with the consent of the owner,"

applies only to first-party claims brought by the insured. Merullo

asserts that the second exclusion -- for IDV claims -- is also so

limited, and that IDV coverage is therefore required with respect

to third-party claims.

- 10 - There are two key defects in Merullo's argument. First,

there is nothing in the text to indicate that the term "your auto"

applies to the sentence's second clause. If "your auto" were meant

to apply to the IDV clause, then the IDV clause would likely have

been placed alongside the other types of damage mentioned, rather

than after the "your auto" clause. Thus, the policy would read:

"The amount we will pay does not include compensation for physical

damage to, towing or recovery of, [or any decreased value or

intangible loss claimed to result from physical damage to] your

auto or other auto used by you or a household member with the

consent of the owner." But instead, IDV is mentioned in an

entirely distinct clause, separated from the first by "or" plus a

comma.

Second, Part 7 of the 2016 Policy, which addresses

first-party collision coverage, already unambiguously excludes IDV

claims, providing:

We will 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 collision. We will not pay for any decrease in value claimed to result from the loss. The most we will pay will be either the actual cash value of the auto or the cost to repair the auto, whichever is less.

(emphasis added). We thus see no reason why Part 4 -- which

addresses third-party liability coverage -- would specify that IDV

- 11 - is not covered with respect to first-party claims. Part 7 makes

that clear on its own.

Putting this analysis together, both exclusions in

Part 4 make sense. The first one makes clear that Part 4 applies

only to third-party claims, and the insured should look to other

parts of the policy for coverage of the insured's own vehicle.

And the second one, as stated above, addresses IDV within the

context of the third-party claims otherwise covered in Part 4.

III.

The failure of Merullo's breach of contract claim is

fatal to his remaining claims alleging that Amica engaged in

"unfair claims settlement practices." Merullo alleges various

violations of Massachusetts chapters 93A and 176D, which jointly

regulate unfair settlement practices in the insurance industry.

See McGilloway, 174 N.E.3d at 1199. But as the district court

correctly pointed out, Merullo's unfair settlement claims all rest

on the same faulty premise: that Amica "was required to pay IDV

and failed to do so." Merullo,

, at *5. As

discussed above, Merullo's presented arguments do not persuade us

that Amica was, in fact, required to pay IDV damages. Therefore,

the district court correctly concluded that Amica's refusal to pay

those damages was neither unfair nor deceptive.

- 12 - IV.

For the foregoing reasons, the judgment of the district

court is affirmed.

- 13 -