United States Court of Appeals For the First Circuit

No. 23-1332

JONATHAN MARTINS, individually and on behalf of all others similarly situated,

Plaintiff, Appellant,

v.

VERMONT MUTUAL INSURANCE COMPANY,

Defendant, Appellee.

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

[Hon. F. Dennis Saylor, IV, U.S. District Judge]

Before

Kayatta, Selya, and Howard, Circuit Judges.

Kevin J. McCullough, with whom Michael C. Forrest and Mazow/McCullough, P.C. were on brief, for appellant. Michael S. Batson, with whom Michael C. Kinton and Clyde & Co US LLP were on brief, for appellee.

February 6, 2024 SELYA, Circuit Judge. Scripture teaches that "there is

no new thing under the sun." Ecclesiastes 1:9. Yet — in an

industry as old as time itself1 — new twists still occur. This is

such a case.

Plaintiff-appellant Jonathan Martins (Martins) attempts

to prosecute a new strain of claim against a liability insurer,

defendant-appellee Vermont Mutual Insurance Company (Vermont

Mutual). The district court entered summary judgment in favor of

Vermont Mutual. See Martins v. Vermont Mut. Ins. Co.,

, 67 (D. Mass. 2023). We affirm.

I

We briefly rehearse the relevant facts and travel of the

case. We draw our narrative from the summary judgment record and

construe the facts in the light most flattering to the party

against whom summary judgment was entered (here, Martins). See

Pleasantdale Condos., LLC v. Wakefield,

(1st

Cir. 2022). By the same token, we draw all reasonable inferences

from the factual record to Martins's behoof. See

Martins is a citizen and resident of Malden,

Massachusetts. Vermont Mutual is an insurance company with a

1 Cf. Hammurabi's Code of Laws § 235 (L.W. King trans.) ("If a shipbuilder build a boat for some one, and do not make it tight, if during that same year that boat is sent away and suffers injury, the shipbuilder shall take the boat apart and put it together tight at his own expense. The tight boat he shall give to the boat owner.").

- 2 - principal place of business in Montpelier, Vermont. On January

23, 2017, Martins's 2015 Nissan Altima was damaged when it was

involved in a crash with a vehicle driven by Elhadjmamado Dansoko.

At the time of the collision, Dansoko was insured under a policy

issued by Vermont Mutual.

Dansoko's policy was written on a form that constituted

the 2008 edition of the standard Massachusetts automobile

insurance policy. Part 4 of this policy vouchsafed that the

insurer would

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.

Martins reported the accident to his insurer, Safety

Insurance Company (Safeco), which paid him $11,711.80 to cover the

full cost of repairs to his car. Vermont Mutual, in turn, paid

Safeco $12,942.80, which included the costs of repairs, $331 for

towing and storage fees, and $900 toward the temporary use of a

rental car. Vermont Mutual appears later to have paid Martins an

additional $635.91 to cover the remaining expense of his rental

car.

Notwithstanding these payments, an attorney representing

Martins sent a letter on June 26, 2017, to Vermont Mutual demanding

payment of $6,129 for the "inherent diminished value" (IDV) of the

- 3 - car. A Vermont Mutual representative responded, denying any

responsibility either to Martins or to the putative class. In the

same response, though, Vermont Mutual made a settlement offer.

Martins spurned the offer. Instead — on August 23, 2017 — his

attorney sent a demand letter under Mass. Gen. Laws ch. 93A, which

alleged that Vermont Mutual had a practice of intentionally and

knowingly making unfair and unreasonably low offers to cover claims

for IDV damages of third-party claimants.

That same day, Martins filed a putative class action

against Vermont Mutual in a Massachusetts state court, claiming

breach of contract and seeking a declaration of rights. After

Vermont Mutual denied the material allegations of Martins's

complaint and tendered an increased settlement offer (which

Martins rejected), Martins amended his complaint. The amended

complaint asserted a claim for breach of contract (count 1), five

claims under Mass. Gen. Laws ch. 93A (counts 2 through 6), and a

claim for declaratory relief (count 7). Noting the existence of

diverse citizenship and the requisite amount in controversy, see

(a), (d), Vermont Mutual removed the case to the

United States District Court for the District of Massachusetts,

see

§ 1441.

Following further proceedings, not relevant here, the

district court eventually granted summary judgment in favor of

Vermont Mutual. See Martins v. Vermont Mut. Ins. Co., 411 F. Supp.

- 4 - 3d 166, 173 (D. Mass. 2019). The court held that Part 4 of the

standard Massachusetts automobile policy did not provide coverage

for IDV damages. See id. at 172-73. A timely appeal ensued.

While Martins's appeal was pending, the Massachusetts

Supreme Judicial Court (SJC) held that Part 4 did, in fact, provide

coverage to third parties for IDV damages. See McGilloway v.

Safety Ins. Co.,

, 1199 (Mass. 2021). Martins

proceeded to send another demand letter to Vermont Mutual, inviting

it to adjust both Martins's claim for IDV damages and the claims

of other putative class members. Vermont Mutual declined the

invitation but made yet another settlement offer. Martins rejected

the new offer. Meanwhile, this court — in an unpublished judgment

— vacated the district court's entry of summary judgment and

remanded the case for reconsideration in light of McGilloway. See

Martins v. Vermont Mut. Ins. Co., No. 19-1878,

, at

*1 (1st Cir. Nov. 9, 2021).

After Martins stipulated to the dismissal of all of his

claims save for counts 1 and 7 and once again declined a settlement

offer, he moved to amend his complaint to include new claims under

Mass. Gen. Laws ch. 93A and ch. 176D. In a single swoop, the

district court considered this motion, the earlier motion for class

certification, and the parties' motions for summary judgment on

the two remaining claims. It first denied the motion to amend the

complaint, finding that motion to be both unduly delayed and

- 5 - futile. See Martins, 662 F. Supp. 3d at 62-63. It then denied

Martins's motion for summary judgment as to count 1 and granted

Vermont Mutual's cross-motion, holding that there was no viable

breach-of-contract claim against Vermont Mutual because Martins

had not obtained a final judgment against Vermont Mutual's insured

(Dansoko). See id. at 66. Finally, the district court refused to

certify the class, denied Martins's motion for summary judgment on

count 7, and granted Vermont Mutual's cross-motion for summary

judgment. See id. at 66-67.

This timely appeal followed.

II

We review the district court's order for summary

judgment de novo. See Pleasantdale,

. To prevail

on summary judgment, the moving party must show that there is no

genuine issue as to any material fact and that it is entitled to

judgment as a matter of law. See Fed. R. Civ. P. 56(a); Morelli

v. Webster,

(1st Cir. 2009).

Because Martins's action was brought in diversity

jurisdiction pursuant to the Class Action Fairness Act, see

(d), state law supplies the substantive rules of

decision, see Erie R.R. Co. v. Tompkins,

(1938).

In this instance, we accept the parties' reasonable agreement that

Massachusetts law controls. See Borden v. Paul Revere Life Ins.

Co.,

(1st Cir. 1991) (holding that "a federal

- 6 - court sitting in diversity is free, if it chooses, to forgo

independent analysis and accept the parties' agreement" as to which

state's law controls).

Before us, Martins takes issue only with the district

court's resolution of his breach-of-contract claim.2 He offers

two reasons why — in his view — the district court's decision

should not stand. Neither reason is convincing.

A

Martins first contends that he is entitled to recover

IDV damages directly from Vermont Mutual and, thus, has a valid

breach-of-contract claim. This is the case, he says, even though

he never obtained an underlying judgment against (or settlement

with) Dansoko. In support, Martins cites to the SJC's decision in

Flattery v. Gregory,

(Mass. 1986). There, the SJC

merely "recognize[d] again the principle of law that, 'when one

person, for a valuable consideration, engages with another, by

simple contract, to do some act for the benefit of a third, the

latter, who would enjoy the benefit of the act, may maintain an

action for the breach of such engagement.'"

at 1260 (quoting

2 Although Martins mentions the district court's denial of both his motion to amend and motion for class certification in his statement of issues, he has wholly failed to develop these arguments. Consequently, any such arguments are deemed waived. See United States v. Zannino,

(1st Cir. 1990) ("[I]ssues adverted to in a perfunctory manner, unaccompanied by some effort at developed argumentation, are deemed waived.").

- 7 - Rae v. Air-Speed, Inc.,

(Mass. 1982)). When

read in conjunction with the SJC's recent decision in McGilloway

extending IDV damages to third parties, Martins asseverates, the

combination clears the way for him to bring a direct

breach-of-contract claim against Vermont Mutual. And he puts the

frosting on the cake by suggesting that

"mandates that a judgment need not be necessary for a

liability automobile insurer's duty to be imposed upon the

insurer."

We do not agree. To begin with Martins's latter

suggestion, we find his reading of the statutory text to be

off-kilter. The provision in question states that "the

satisfaction by the insured of a final judgment for such loss or

damage shall not be a condition precedent to the right or duty of

the company to make payment on account of said loss or damage."

. Martins reads this provision

through rose-colored glasses — as affording a third-party claimant

a direct cause of action against an insurer. But that is not what

the provision states. All that it says is that a third-party

claimant need not wait until the insured tortfeasor has satisfied

the final judgment before demanding that an insurer pay damages.

We think that the provision says what it means and means what it

says — and it says nothing about whether a third-party beneficiary

- 8 - (such as Martins) can directly maintain a cause of action against

an insurer in the first place.3

Martins's reading of the case law fares no better.

Although the language that he cites from Flattery indicates that

he is an intended third-party beneficiary and has a potential

breach-of-contract cause of action against Vermont Mutual, neither

that language nor anything else in the cited case says a word about

the mechanics of acting on such a cause of action. In fact, the

Flattery plaintiff obtained a judgment against the defendant

before initiating the lawsuit. See

. Because

the case at hand revolves around the very question of whether

obtaining a judgment is a necessary predicate for maintaining a

cause of action against Vermont Mutual, Flattery is of little help.

We add, moreover, that there is established case law

that cuts sharply against Martins's claim that he has an already

existing cause of action against Vermont Mutual. In Rogan v.

Liberty Mutual Insurance Co., the SJC explicitly declared that

"[t]he statutes affording a remedy for an injured plaintiff against

an insurer issuing a liability policy require as a prerequisite to

3Martins makes a number of arguments predicated on provisions contained in Mass. Gen. Laws ch. 93A and ch. 176D. Because the district court denied his motion to amend his complaint to include claims based on these provisions and because he does not appeal that denial, we do not consider these arguments.

- 9 - suit 'the recovery of a final judgment' against the insured

wrongdoer."

(Mass. 1940).

Martins attempts to portray Rogan as an anachronism — an

"inapplicable authority from 1940." But his effort to blunt the

force of Rogan comes up empty-handed. Although Martins is correct

in noting that the defendant in Rogan was ultimately deemed not to

be liable because he was not within the jurisdiction of the court

that issued the final judgment, see

that circumstance does

not render Rogan's determination that a final judgment is a

prerequisite to a cause of action inapplicable.

So, too, Martins's suggestion that Flattery superseded

Rogan represents a triumph of hope over reason. As we noted

earlier, Flattery did not spell out how a third-party beneficiary

obtains a cause of action. Rather — as the district court

perspicaciously observed — "Flattery is . . . entirely consistent

with Rogan." Martins, 662 F. Supp. 3d at 65 n.2. Given that the

SJC has never overruled — or even come close to overruling — the

principle enunciated in Rogan, see Shapiro v. State Farm Mut. Ins.

Co.,

(Mass. 1968) ("A valid judgment in the

original action, of course, is a prerequisite of the present

suit."); see also Lifchits v. Integon Nat'l Ins. Co., No. 18-12637,

, at *5 (D. Mass. Aug. 17, 2020) (holding that,

absent claim under Mass. Gen. Laws chs. 93A or 176D, plaintiffs

- 10 - may not institute direct actions against insurers), we discern no

impediment to applying Rogan's holding to the case at hand.4

B

Martins next argues that Vermont Mutual is estopped from

denying that it is liable to him for IDV damages. By paying for

the cost of repairs, towing, storage, and car rental, his thesis

runs, Vermont Mutual has accepted general liability. And in light

of McGilloway, Martins insists, this liability now extends to IDV

damages. Having thus already partially performed its duty and

paid some damages, Martins says, Vermont Mutual is now estopped

from denying that it owes IDV damages.

This argument gains Martins no traction. For one thing,

there is an obvious difference between an insurer being obligated

to make a reasonable settlement offer and an insurer conceding

liability. See Chiulli v. Liberty Mut. Ins., Inc.,

, 481 (Mass. App. Ct. 2020) (explaining that "the insurer's

obligation to make a reasonable settlement offer is independent of

how a jury might view the question of liability"). For another

thing, in order to establish estoppel, Martins would have to show

4 We note that there is nothing in McGilloway that tips the scales in the other direction. Although the SJC revived and remanded the breach-of-contract claim made by the third party against the insurer of the tortfeasor, see 174 N.E.3d at 1199, it did so without any discussion at all concerning whether such claims might be untenable for reasons other than those raised by the parties in that case. We are, therefore, not inclined to find that Rogan was implicitly overruled.

- 11 - not only that Vermont Mutual made a representation intended to

induce his reliance but also that he reasonably relied on such a

representation and that he consequently suffered a detriment. See

Sullivan v. Chief Just. for Admin. & Mgmt. of Trial Ct.,

, 711 (Mass. 2006). Inasmuch as Martins does not even attempt

to make these showings, his estoppel claim necessarily crumbles.

III

We need go no further. For the reasons elucidated above,

the judgment of the district court is

Affirmed.

- 12 -