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August 25, 2014

SJC Clarifies Statutory Duty to Defend as Between Car Manufacturers and Car Dealers

The Massachusetts Supreme Judicial Court (SJC) recently interpreted a statute under M.G.L. c. 93B, section 8(a), which requires a car manufacturer, under certain circumstances, to defend a car dealer against a claim "predicated upon the negligent design or manufacture of a new motor vehicle, or any part or component thereof." While a "duty to defend" often arises based on the terms of contractual relationships between parties, it is less common that a duty to defend arises in a statutory context.

In Ferreira v. Chrysler Group, LLC, the plaintiff had purchased a new Jeep Wrangler from the car dealership, Somerset Auto Group ("Somerset"). The vehicle was manufactured by Chrysler Group LLC, and came with a standard limited warranty, which covered all costs of parts and labor necessary to repair any defects on the vehicle for a period of thirty-six months or 36,000 miles, whichever came first. The plaintiff alleged that after he purchased it, the vehicle underwent six separate repairs, and was out of service for up to forty-two days at a time. In a demand letter to Chrysler and Somerset, the plaintiff alleged that Chrysler's inability to repair the vehicle constituted a breach of warranty, a violation of M.G.L. ch. 93A (unfair and deceptive acts and practices), and the Massachusetts Lemon Law, while Somerset's inability to repair the vehicle was a breach of warranty and a violation of 93A.

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May 22, 2014

Ruling Emphasizes Punitive Nature of Attorney's Fees Award Pursuant to M.G.L. c. 93A

In Holland v. Jachmann, the Massachusetts Supreme Judicial Court (SJC) considered whether the attorney's fees attributable to the plaintiff business's in-house counsel are recoverable as part of assessed damages in a successful claim under M.G.L. c. 93A (Chapter 93A). There, the dispute arose out of a complicated business transaction that effectively split the plaintiff company in two. The defendants were found to have violated Chapter 93A on eight counts, including flagrant breaches of contract and deceptive business practices.

Chapter 93A gives a court discretion to award attorney's fees incurred in connection with an action for unfair and/or deceptive acts or practices in violation of the statute, as well as recovery of double or treble damages. As the SJC observed, the legislative purpose of the statute is to deter misconduct, making the multiple damages and attorney's fee awards punitive in nature.

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