Declaratory Judgment Suits Require a Private Right of Action

In Source One Financial Corporation v. Geico Indemnity Company (Memo and Order June 30, 2021), the United States District Court for the District of Massachusetts allowed the motion if Geico Indemnity Company, the defendant, to dismiss, determining that Source One Financial Corporation, the plaintiff, lacked standing and failed to join parties that were necessary to the action.

The plaintiff sought a declaratory judgment alleging that the defendant violated M.G.L. ch. 176D because it violated a Massachusetts regulation dealing with vehicle valuation (211 CMR 133.05). Specifically, the plaintiff alleged that the defendant underpaid the plaintiff as a result of the defendant’s calculations.

The Court explained, “[a] claim for declaratory relief is ‘properly brought’ where the plaintiff demonstrates that an actual controversy exists, that the plaintiff has legal standing to sue, and that all necessary parties have been joined” (quoting Buffalo-Water 1, LLC v. Fidelity Real Estate Co. (2018) (citations omitted)).  Further, “it is not enough that the plaintiff be injured by some act or omission of the defendant; the defendant must additionally have violated some duty owed to the plaintiff” (quoting Enos v. Sec’y of Env’t Affs. (2000) (internal quotations and citations omitted).

To satisfy the standing requirement for a declaratory judgment action, the Court made clear that “the underlying statute or regulation must contain a private right of action available to the plaintiff.”  The statute permitting declaratory judgment actions (M.G.L. ch. 231A) is not itself sufficient.

The Court determined that the plaintiff lacked standing because M.G.L. ch. 176D does not provide for any such private right of action. The appropriate recourse for a M.G.L. ch. 176D violation would be a would be to bring a claim pursuant to M.G.L. ch. 93A, which the plaintiff did not do.

Finally, the Court determined that the plaintiff failed to join all necessary parties to the action. The plaintiff’s Complaint mentioned individual owners whose loss claims for their vehicles were allegedly miscalculated, yet those parties were not joined. The Court assessed that those owners had “a clear interest in the outcome of this dispute because it would entitle them to seek money damages for unpaid claims.” The declaratory judgment statute necessitates the joinder of those who would be impacted by the action.


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