Burton v. Geico Cas. Co.
| Decision Date | 23 August 2021 |
| Docket Number | 4:20-cv-00360-MTS |
| Parties | TERRANCE BURTON, Plaintiff, v. GEICO CASUALTY CO., Defendant. |
| Court | U.S. District Court — Eastern District of Missouri |
This matter is before the Court on Defendant GEICO Casualty Co.'s (Geico) Motion to Compel Appraisal and Dismiss Plaintiff's Class Action Complaint. Doc. [18]. In his Complaint, Plaintiff alleged that Geico breached its insurance agreement by failing to provide him full payment for his totaled vehicle. He made a claim against Geico for breach of contract and also seeks from the Court a declaration that Geico is obligated, under the terms of his insurance policy, to pay various fees attendant to the purchase of a replacement vehicle. Geico filed the instant Motion, arguing that the Court should either stay the case and order Plaintiff to comply with an appraisal provision in the insurance policy or alternatively dismiss both Plaintiff's breach of contract claim and his request for declaratory judgment. For the reasons that follow, the Court denies the Motion to Compel Appraisal and to Dismiss Plaintiff's breach of contract claim, but it grants the Motion to Dismiss Plaintiff's request for a declaratory judgment.
This action arises out of an August 2018 accident involving Plaintiff's vehicle, which was insured by Defendant Geico. Under the “Losses We Pay” subsection of Plaintiff's insurance policy (the “Policy”) which falls under the broader section of “Physical Damages Coverages, ” Geico agreed to “pay for collision loss . . . for the amount of each loss less the applicable deductible” and also “for each loss, less the applicable deductible, caused other than by collision.” Doc. [22-1] at 12-13 (emphasis in original). “Loss” is defined as “direct and accidental loss of or damage to: (a) [t]he auto, including its equipment; or (b) [o]ther insured property.” Id. at 12. Under the heading “Payment of Loss, ” Geico reserved the right to either (1) pay for the “loss” or (2) “[r]epair or replace the damaged or stolen property.” Id. at 15. Under the “Limit of Liability” subheading, which also falls within the “Physical Damages Coverages” section, the Policy provides in relevant part that Geico's limit of liability for loss “[i]s the actual cash value of the property at the time of the loss” and “[w]ill not exceed the cost to repair or replace the property . . . with other of like kind and quality.” Id. at 14 (emphasis in original). The Policy defines “actual cash value” as “the replacement cost of the auto . . . less depreciation or betterment.” Id. at 12 (emphasis in original).
Plaintiff alleges that he filed a claim with Geico for the damage caused by the August 2018 accident, and Geico determined that his vehicle was a total loss. Doc. [1] ¶ 16-17. Geico, through a third party, calculated the base value of the vehicle to be $10, 636.00. Id. ¶¶ 23-25. Geico paid Plaintiff a net settlement amount of $10, 156.50 for his claim, including the $10, 636.00 base value of the vehicle, plus an additional $20.50 for “State and Local Regulatory Fees, ” and less Plaintiff's $500 deductible. Id. ¶ 25. But Geico did not pay Plaintiff for the sales tax on a replacement vehicle, and the $20.50, according to Plaintiff, is insufficient to cover vehicle title and registration fees in Missouri. Id. ¶¶ 26-27. Plaintiff contended that under the Policy, Geico was obligated to pay “the actual cash value of the property at the time of the loss, ” which the Policy defines as “the replacement cost of the auto or property less depreciation or betterment.” Id. ¶¶ 18-19; Doc. [221] at 12, 14. Because Missouri law requires proper vehicle registration and titling and sales tax is a mandatory cost for replacing a vehicle, Plaintiff alleged that Geico breached the Policy by not paying him for the full cost of sales tax and title and registration fees. Id. ¶¶ 20, 27-32. He filed this putative class action, alleging two counts against Geico: breach of contract (Count I) and (2) declaratory relief (Count II).
In the instant Motion, Geico argues that the parties' disagreement must be resolved through an appraisal process laid out in the Policy. Docs. [18] ¶ 1; [19] at 3-5. The appraisal provision provides:
If we and the insured do not agree on the amount of loss, either may, within 60 days after proof of loss is filed, demand an appraisal of the loss. In that event, we and the insured will each select a competent appraiser. The appraisers will select a competent and disinterested umpire. The appraisers will state separately the actual cash value and the amount of the loss. If they fail to agree, they will submit the dispute to the umpire. An award in writing of any two will determine the amount of loss. We and the insured will each pay his chosen appraiser and will bear equally the other expenses of the appraisal and umpire.
Doc. [22-1] at 15 (emphasis added). According to Geico, “Plaintiff's claims are, in sum, that GEICO underpaid the ‘Actual Cash Value' owed in settling his total loss claim by not including amounts for taxes and by underpaying fees.” Doc. [19] at 3. Because those claims “are at their core a disagreement concerning the ‘amount of loss, '” urges Geico, the appraisal provision is applicable, and the Court should stay or dismiss the case pending the parties' completion of the appraisal process in compliance with the terms of the Policy. Id. at 4-5. Alternatively, Geico argues that Plaintiff's Complaint should be dismissed for failure to state a claim under Fed.R.Civ.P. 12(b)(6). Plaintiff's breach of contract claim fails, Geico insists, because Plaintiff failed to allege both that Geico breached the policy agreement and that Plaintiff suffered damages as a result of the alleged breach. Specifically, Geico argues (1) that the policy does not provide coverage for sales tax and fees; (2) that sales tax is not a mandatory replacement cost, because Missouri law provides the owner of a totaled vehicle a sales tax credit on the purchase of a replacement vehicle; and (3) that Plaintiff has not adequately alleged why the $20.50 Geico paid him for fees is insufficient to cover the fees related to a replacement vehicle. Id. at 6-11. Finally, Geico argues the Court should dismiss Plaintiff's claim for declaratory relief because there is an adequate remedy at law in the form of damages for Plaintiff's breach of contract claim and because Plaintiff did not plead there is any “threat of a real or immediate risk of injury.” Id. at 11-12.
Under Federal Rule of Civil Procedure 12(b)(6), a party may move to dismiss a claim for “failure to state a claim upon which relief can be granted.” The purpose of such a motion is to test the legal sufficiency of a complaint. When considering a Rule 12(b)(6) motion, the Court assumes all of a complaint's factual allegations to be true and makes all reasonable inferences in favor of the nonmoving party. See Neitzke v. Williams, 490 U.S. 319, 326-27 (1989); Martin v. Iowa, 752 F.3d 725, 727 (8th Cir. 2014). A complaint must contain “a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a). To survive a motion to dismiss, the complaint must allege facts supporting each element of the plaintiff's claims, and the claims cannot rest on mere speculation. Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). Specifically, the complaint “must allege more than ‘[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements'” and instead must “allege sufficient facts that, taken as true, ‘state a claim to relief that is plausible on its face.'” K.T. v. Culver-Stockton Coll., 865 F.3d 1054, 1057 (8th Cir. 2017) (quoting Iqbal, 556 U.S. at 678). The Court “need not accept as true [a] plaintiff's conclusory allegations or legal conclusions drawn from the facts.” Glick v. W. Power Sports, Inc., 944 F.3d 714, 717 (8th Cir. 2019). The Court does not decide whether the plaintiff will ultimately prevail, but rather whether the plaintiff is entitled to present evidence in support of the claim. See Twombly, 550 U.S. at 556.
The Court is unpersuaded by Geico's argument that the appraisal provision in the Policy is applicable to the facts of this case. Missouri law is “clear that whether the appraisal provision of an insurance policy applies depends upon whether the dispute between the insurer and insured is properly characterized as a coverage dispute or a disagreement over the amount of loss.” Am. Fam. Mut., Ins. Co. v. Dixon, 450 S.W.3d 831, 835 (Mo.Ct.App. 2014) (citing Hawkinson Tread Tire Serv. Co. v. Ind. Lumbermens Mut. Ins. Co., 245 S.W.2d 24 (Mo. 1951)); accord Church Mut. Ins. Co. v. Metro. Christian Worship Ctr. of St. Louis, No. 4:19-cv-903-SNLJ, 2020 WL 7029882, at *1 (E.D. Mo. July 23, 2020) . The Court finds that the parties' dispute relates to the reach of the Policy's coverage, not a dispute, as Geico argues, regarding the amount of loss. See Cincinnati Ins. Co. v. Saint Louis Produce Mkts., Inc., No. 4:20-cv-00358-SNLJ, 2020 WL 5848075, at *3 (E.D. Mo. Oct. 1, 2020) ().
Plaintiff asserted in his Complaint that, under the Policy, Geico must pay him the sales tax and fees incident to the replacement of his totaled vehicle. Geico,...
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