Massachusetts Holds Automotive Manufacturer Owes Duty To Defend Dealer Only for Claims Alleging Manufacturer Was Sole Cause of Defective Motor Vehicle

The Supreme Judicial Court of Massachusetts confronted yesterday under what circumstances a motor vehicle manufacturer owes a duty under Massachusetts law to defend a motor vehicle dealer against a claim “predicated upon the negligent design or manufacture of a new motor vehicle, or any part or component thereof?”  The court had to interpret the state’s law that provides for indemnification and defense by motor vehicle manufacturers and distributors of certain claims brought against motor vehicle dealers.  See Mass. Gen. Laws c. 93B, § 8(a)-(b).  The court concluded that a manufacturer owes such a statutory duty where a dealer promptly notifies the manufacturer in writing that a claim has been asserted alleging damages solely caused by the fault or neglect of the manufacturer in the motor vehicle’s design.  Where, however, the claim alleges fault on both the manufacturer and the dealer, the manufacturer does not have a duty to defend the dealer.

In the case at bar, the underlying plaintiff alleged that the manufacturer designed a defective product and breached its limited warranty, but also alleged that the dealer failed to repair the fuel gauge defect and made misrepresentations.  Accordingly, neither party had the duty to defend the other because the conduct of both was at issue based on the underlying plaintiff’s allegations.