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Recent Massachusetts Case Addresses Element of Sales Tax in Property Damage Portion of Motor Vehicle Accident Liability Claim

tax calculation

Many times, the plaintiff in a personal injury lawsuit arising from a motor vehicle collision also has a claim for property damage to his or her automobile. In most cases, the property damage portion of the case is settled separately from the issues arising in the personal injury claim.

Depending upon the situation, the plaintiff’s property damage claim may include repair costs to his or her vehicle, fair market value of the car (if it is a total loss), towing, storage fees, and rental charges for a replacement vehicle (while the plaintiff’s car is being repaired). A recent case explored whether another element of damages – tax – may be included in appropriate cases.

Facts of the Case

In a case recently decided by the Massachusetts Appeals Court, the plaintiff’s vehicle was rendered a total loss due to a two-vehicle accident in 2014. The plaintiff entered into settlement negotiations with the defendant, who was the liability insurance carrier for the driver whose negligence allegedly caused the accident in which the plaintiff’s car was totaled. The defendant admitted that its insured was at fault and that the plaintiff’s vehicle was a total loss.

The defendant placed a total loss value of $5286 on the plaintiff’s automobile and offered him $4872 (the total loss value minus the salvage value, as the plaintiff opted to retain his car) to satisfy his claim. The plaintiff rejected the offer and filed suit, averring that the defendant should have included sales tax in assessing the money due him, even though he had not provided proof that he purchased a new vehicle after the accident.

The trial court granted summary judgment to the defendant.

The Appellate Court’s Decision

The appeals court affirmed the lower court’s decision. The court first noted that the insured’s policy contained language to the effect that the defendant was to pay the amount that the plaintiff was entitled to collect for property damage via a settlement or judgment. In rejecting the plaintiff’s argument that sales tax should be recoverable under the policy regardless of whether he chose to replace his vehicle, the court noted that the plaintiff was only entitled to “be made whole” for the damage caused by the tortfeasor.

Insomuch as the defendant was only responsible for placing the plaintiff back in the position that he was in prior to the accident, the plaintiff was mistaken in his argument that certain language in the insured’s policy pertaining to the payment of sales tax applied to him. Rather, the defendant was only required to pay sales tax upon proof that the plaintiff had actually incurred such tax in the purchasing of a replacement automobile. Because he had not done so, he was not owed any compensation for sales tax associated with the property damage claim.

Have Questions About a Massachusetts Car Accident Claim?

There are many issues in a typical car or truck wreck case, including not only property damage but also the amount of compensation due the plaintiff because of his or her lost wages, pain and suffering, and medical expenses necessitated by the accident. The knowledgeable Cape Code car accident team at the Law Offices of John C. Manoog, III, can help you understand your legal rights if you have been injured in a motor vehicle collision. Our offices are located in Plymouth and Hyannis; we serve all of the greater Cape Cod area.

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