Robert J. Long and another v. The Niles Company, Inc., March 10, 2010
2010 Mass. App. Div. 43
Negligence, Insurance Coverage Deductible, Notice, Motion for Directed Verdict
The plaintiffs (“the Longs”), are condominium unit owner who sustained water damage to their unit and afterwards learned of a $15,000.00 gap in insurance coverage. The defendant, The Niles Company, Inc. (“Niles”), is the condominium management company. At trial, a jury found Niles to be negligent in failing to inform the Longs of an increase in the insurance coverage deductible for water damage, and awarded the Longs damages in the amount of $15,000.00. Niles appealed both the jury's verdict and the trial court's denial of its motion for directed verdict and a new trial. The Appellate Division vacated the judgment for the Longs, reversed the denial of Niles' motion for directed verdict, and ordered entry of judgment for Niles.
Facts
Niles became the property manager for the Spinnaker Island and Yacht Club Association, a condominium complex on 8/1/2002. The complex's master insurance policy had a $10,000.00 deductible for water damage at the time. Tallen, a Niles employee, was tasked with sending notices to the unit owners if he became aware of a change in the master insurance policy. In November 2002, a new $25,000.00 water damage deductible went into effect. Tallen failed to inform unit owners about the deductible increase. At a November 2003 meeting, the complex's insurance agent learned of the lack of notice and advised the complex's board of managers and Tallen of the need to send notice to the unit owners. The board directed that Tallen send this notice. Tallen again failed to do so. On January 9, 2004, the Longs sustained $36,000.00 in water damage to their condo unit. The Longs learned of the $25,000.00 deductible at that time.
Review of trial judge’s denial of motion for a directed verdict.
Niles argued that the trial judge erred in denying its motion for a directed verdict based on the theory that it owed no duty of care to the Longs. Niles specifically argued that there could be no duty of care because there was no physical harm alleged, only economic injury. To prevail on their negligence claim, the Longs had to prove (1) that Niles owed them a duty of reasonable care; (2) that Niles committed a breach of that duty; (3) that damage resulted; (4) and that there was a causal relation between the breach of duty and the damage.
Niles had no contractual duty to provide the Longs with notice of insurance coverage deductible increases. The Longs argued that Niles had voluntarily assumed this duty. Massachusetts recognizes a voluntary assumption of duty as set forth in the Restatement (Second) of Torts §323 (1965). Section 323 limits tort liability for a voluntarily assumed duty to physical harms only. “Physical harm” is the “physical impairment of the human body, … or of land or chattels.” Payton v. Abbott Labs, 386 Mass. 540, 545 n.4 (1982). As the harm suffered by the Longs, a gap in insurance coverage, was not physical, it was not the type of harm for which recovery may be had under a theory of breach of a voluntarily assumed duty. Niles' motion for a directed verdict on the negligence claim should have been allowed.
Judgment for the plaintiffs vacated, denial of the defendant's motion for a directed verdict reversed, and judgment entered for Niles, the defendant.
- Prepared by AYK
