False advertisement lawsuit against GEICO pending dismissal
A Texas judge has ruled that the plaintiff representative in a false advertisement class action lawsuit against GEICO has failed to allege fraud with particularity, dismissing the case fully within 14 days from the order if an amended complaint isn’t filed.
The suit alleges the insurance company has falsely advertised its “Accident Forgiveness” benefit.
Plaintiff Christopher Cude’s complaint states that his premium increased by 2.5% upon renewal in May 2024 and included the Accident Forgiveness (AF) benefit for free, which would waive a surcharge associated with the first at-fault accident caused by an eligible driver on his policy.
However, in November 2024, following an at-fault accident the month before, GEICO increased Cude’s premium by 91.3%, according to the complaint.
Cude alleges violations of the Texas Deceptive Trade Practices Act (DTPA), Texas Insurance Code Chapter 541, breach of the implied covenant of good faith and fair dealing, and unjust enrichment.
GEICO sought to dismiss all the claims under Federal Rule of Civil Procedure 12(b)(6), or for abatement pursuant to the DTPA.
In the amended complaint, issues with the bad faith unjust enrichment claims must be addressed, according to a March 23 order. The court dismissed Cude’s DTPA and Insurance Code claims without prejudice.
Senior U.S. District Judge David C. Godbey wrote in the order on GEICO’s motion to dismiss that Cude asserts inapplicable causes of action and granted GEICO’s dismissal. Cude was given leave to amend the complaint in response to the order.
In background information on the case given in the order, when Cude asked GEICO to explain the increase and reminded them of the Accident Forgiveness policy, a GEICO representative said it wasn’t a premium increase, but rather a “surcharge.”
Last week, Godbey dismissed Cude’s bad faith claim “on the basis that Cude is not alleging bad faith claim handling, but rather bad acts in the inception or renewal of an auto insurance policy.” He also ruled that Cude doesn’t have a viable unjust enrichment claim.
“Cude has ample other remedies,” the order states in reference to the unjust enrichment claim. “He has asserted claims under the DTPA and Insurance Code. And although he doesn’t assert them, he also has common law remedies, such as breach of contract.
“Without considering whether Texas has a standalone unjust enrichment claim, the court holds that under these circumstances, where Cude has ample other remedies available, it will not allow an unjust enrichment claim.”
Godbey adds in the order that Cude correctly argues Texas courts distinguish this context from simple breach of contract, and notes that the plaintiff adds the element of “essentially, fraud in the inducement.”
“Cude correctly argues that Texas courts distinguish this context from simple breach of contract,” the order states. “The court therefore denies GEICO’s motion to dismiss on the basis that Cude’s DTPA and Insurance Code claims are simple breach of contract claims in disguise.
“[This] does not mean that Cude is home free, however. Cude has two problems in pleading the ‘how’ of the claims with particularity.”
Godbey wrote that while Cude argues that GEICO “engaged in a scheme to induce consumers to acquire auto insurance from it by falsely
representing the benefits of the AF Policy,” he hasn’t alleged that it worked.
“In particular, he does not plead the GEICO AF policy scheme caused him to do anything,” the order states. “The implication is that the scheme caused him to acquire or renew auto insurance from GEICO. But an implication is far from pleading with particularity. Cude must plead how and why he did something because of the AF policy.”
The order adds that Cude also fails to explain how he was damaged by the alleged scheme.
Godbey also granted GEICO’s motion to abate the case for 60 days.
Images
Featured image credit: Lanier/iStock