State Farm wants North Carolina class action thrown out, or court to order appraisal
State Farm argues that a North Carolina class action lawsuit filed against it, which disputes total loss vehicle actual cash values (ACVs), should be thrown out for lack of standing or stayed pending court-ordered vehicle appraisal.
The suit alleges that State Farm reduced the retail cost of vehicles comparable to total losses to reduce payouts by 4–9%. It alleges violations of North Carolina’s Unfair and Deceptive Trade Practices Act (UDTPA) and Unfair Claims Settlement Practices Act (UCSPA), as well as breach of contract specific to plaintiff Craig Brewer.
Brewer contends that State Farm’s alleged reduction decreased his payout by 5.5%.
“Without participating in appraisal, plaintiff [Brewer] lacks standing to assert any of his claims against State Farm because ACV, as determined by appraisal, might be equal to or even less than what State Farm already paid plaintiff,” states a Nov. 25 memorandum filed by State Farm. “Under the policy, appraisal — and not a claim for breach of contract or any other cause of action — necessarily determines ACV of plaintiff’s vehicle. Other federal courts have held in similar cases that, without participating in appraisal, a plaintiff lacks standing.”
State Farm argues in the motion that the breach of conflict claim is invalid because “ACV will (and must) be determined through appraisal, per the express language of the policy.”
“Plaintiff cannot state a claim for breach of contract based on State Farm’s use of the CCC condition adjustment because the policy does not impose a methodological duty on State Farm,” the memorandum states. “Rather, the policy requires only that State Farm pay ACV… While plaintiff makes conclusory allegations that ‘State Farm materially breached its contract with [him],’ plaintiff fails to identify any specific provisions in the policy that State Farm allegedly breached. That failure, too, warrants dismissal.”
State Farm argues that the UDTPA and UCSPA allegations should be dismissed because they are contract claims disguised as statutory claims, with no plausible allegations of any violation having been shown.
“Despite plaintiff’s attempts to mask his contract dispute as statutory claims, this suit is about whether State Farm paid Plaintiff ACV for his vehicle,” the memorandum states. “Because the filing of this suit indicated that plaintiff disputed ACV, State Farm demanded appraisal to resolve the dispute under the terms of the policy, and plaintiff refused to participate… Under the policy, however, once one party has demanded appraisal, the process is mandatory, and the outcome is binding.”
As for the class allegations, State Farm wants those thrown out “because determining ACV of a total loss vehicle is highly individualized, which defeats predominance.”
Specific to Brewer’s policy, State Farm says its liability is limited to “‘the lesser of’ either ‘[a]ctual cash value of the damaged property; or [the] [a]mount necessary to repair or replace the property with other property of like kind and quality.'”
It notes that the policy also “contemplates ‘[a]n adjustment for depreciation and physical condition will be made in determining actual cash value at the time of loss.'”
“Plaintiff might argue that he does not challenge ACV but instead challenges State Farm’s use of the condition adjustment with respect to comparable vehicles,” the memorandum states. “This argument does not rescue his claims. First, if plaintiff is not challenging ACV, then his alleged injury-in-fact is ‘divorced from any concrete harm,’ and he thus lacks standing… And, regardless of the labels used in the complaint, plaintiff repeatedly alleges that State Farm is ‘avoiding paying the full and correct amount for vehicle total loss claims…’ Accordingly, this lawsuit — like others before it — is ‘at its core, about the valuation of plaintiff ’s automobile.'”
State Farm argues that Brewer had the option under his policy to “demand” an appraisal.
“The policy further provides that ‘[n]o legal action may be brought against us until there has been full compliance with all the terms of this [p]olicy,'” the memorandum states.
State Farm cited a federal case, Bryant v. State Farm, that made similar claims to Brewer’s to note that the district court granted its motion to dismiss based on the plaintiff’s lack of standing.
According to the memorandum, the court ruled that “‘unless and until the appraisal process is completed, it is not clear whether or not [plaintiff] has been injured or incurred any damages.'”
“The Bryant court’s analysis applies here because the amount of loss (i.e., ACV) as determined by appraisal could be equal to or even less than what State Farm has already paid plaintiff,” the memorandum states. “And under the terms of the policy, State Farm will pay plaintiff the difference if appraisal results in a higher ACV than what State Farm has already paid… In short, appraisal will necessarily resolve any dispute over ACV. By refusing to participate in appraisal, plaintiff cannot plausibly allege any injury.”
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