Clippinger v. State Farm Mut. Auto. Ins. Co.

• Decision Date: 19 October 2021
• Docket Number: 2:20-cv-02482-TLP-cgc
• Parties: JESSICA CLIPPINGER, on behalf of herself and all others similarly situated, Plaintiff, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE CO. and AUDATEX NORTH AMERICA, INC., d/b/a AUDAEXPLORE, a Delaware Corporation, Defendants.
• Court: U.S. District Court — Western District of Tennessee

JESSICA CLIPPINGER, on behalf of herself and all others similarly situated, Plaintiff,
v.
STATE FARM MUTUAL AUTOMOBILE INSURANCE CO. and AUDATEX NORTH AMERICA, INC., d/b/a AUDAEXPLORE, a Delaware Corporation, Defendants.

No. 2:20-cv-02482-TLP-cgc

United States District Court, W.D. Tennessee, Western Division

October 19, 2021

ORDER DENYING DEFENDANT STATE FARM MUTUAL AUTOMOBILE INSURANCE CO.'S MOTION FOR SUMMARY JUDGMENT AND GRANTING MOTION TO COMPEL APPRAISAL AND STAY

THOMAS L. PARKER UNITED STATES DISTRICT JUDGE

Defendant State Farm Mutual Automobile Insurance Co. moves for summary judgment on all Plaintiff Jessica Clippinger's claims. (ECF No. 68.) In the alternative, Defendant asks that the Court compel appraisal and stay this action. (Id.) Plaintiff responded in opposition (ECF No. 93), and Defendant replied. (ECF No. 95.) For the reasons below, the Court DENIES Defendant's motion for summary judgment and GRANTS the motion to compel appraisal and stay.

BACKGROUND

I. Undisputed Facts

The parties exchanged statements of undisputed facts and responses. (ECF Nos. 68-1 & 91, 96.) And so, these facts, taken from those filings are undisputed unless otherwise stated.

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A. Factual Background and Plaintiff's Allegations

Plaintiff has a contract with Defendant for automobile insurance. (ECF Nos. 68-1 at PageID 665; 91 at PageID 1063.) Plaintiff had a car accident in May 2019 and submitted an insurance claim to Defendant. (ECF Nos. 68-1 at PageID 665; 91 at PageID 1063-64.) Defendant then found Plaintiff's insured vehicle, a 2017 Dodge Grand Caravan, a “total loss.” (Id.)

Defendant sent Plaintiff a total loss valuation of her vehicle. (ECF Nos. 68-1 at PageID 666; 91 at PageID 1064.) And Defendant based that valuation on “a valuation report obtained from Audatex using the AMDV [Autosource Market-Driven Valuation] software program.” (Id.) In that valuation report, Audatex listed the values of four vehicles comparable to the loss vehicle. (ECF Nos. 68-1 at PageID 667; 91 at PageID 1065-66.) But Audatex deducted from the value of each vehicle a percentage representing the cost of “typical negotiation.” (Id.) And so Defendant reduced the value of each of the base values of the comparable vehicles by 5%^[1]. (ECF No. 91 at PageID 1066.) What is more, Defendant failed to itemize or explain the reasoning for this deduction. (ECF Nos. 68-1 at PageID 667; 91 at PageID 1065-66.)

Plaintiff's class action complaint alleges that Defendant improperly calculated the actual cash value of its insureds' total loss vehicles. (ECF No. 1-1 at PageID 13.) She claims that the contract requires Defendant to cover the total loss of her vehicle, and that Defendant can do so

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either by replacing it or giving Plaintiff the “actual cash value”^[2] of the loss vehicle. (ECF Nos. 68-1 at PageID 666-67; 91 at PageID 1065.) By applying this negotiation reduction, Plaintiff alleges that Defendant violates its insurance contracts and Tennessee law by paying its insureds less than the actual cash value of their loss vehicles. Plaintiff thus sues Defendant for breach of contract, breach of the covenant of good faith and fair dealing, and for a declaratory judgment that Defendant's actions breached its insurance contracts and violated Tennessee law. (ECF Nos. 68-1 at PageID 667; 91 at PageID 1066.)

B. The Appraisal Provision

In response, Defendant argues that Plaintiff's insurance policy (Policy Form 9842A (the “Policy”)) contains a mandatory appraisal provision. Under that provision,

(1) The owner of the covered vehicle and we^[3] must agree upon the actual cash value of the covered vehicle. If there is disagreement as to the actual cash value of the covered vehicle, then the disagreement will be resolved by appraisal upon written request of the owner or us, using the following procedures

(a) The owner and we will each select a competent appraiser

(b) The two appraisers will select a third competent appraiser. If they are unable to agree on a third appraiser within 30 days, then either the owner or we may petition a court that has jurisdiction to select the third appraiser.

(c) Each party will pay the cost of its own appraiser, attorneys, and expert witnesses, as well as any other expenses incurred by that party. Both parties will share equally the cost of the third appraiser.

(d) The appraisers shall only determine the actual cash value of the covered vehicle. Appraisers shall have no authority to decide any other questions of fact, decide any questions of law, or conduct appraisal on a class-wide or class representative basis.

(e) A written appraisal that is both agreed upon by and signed by any two appraisers, and that also contains an explanation of how they arrived at their appraisal, will be binding on the owner of the covered vehicle and us.

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(f) We do not waive any of our rights by submitting to an appraisal.

(ECF No. 68-5 at PageID 757-58.) The Policy also states that “[l]egal action may not be brought against [Defendant] until there has been full compliance with all the provisions of this policy.” (Id. at PageID 767.)

After Plaintiff sued Defendant, Defendant requested appraisal in writing. (ECF Nos. 68-1 at PageID 669; 91 at PageID 1069.) But Plaintiff refused to participate. (Id.) Because of this refusal, Defendant now moves for summary judgment.

II. Defendant's Motion for Summary Judgment or, in the Alternative, to Compel Appraisal

Defendant now argues that there is no genuine issue of material fact about whether Plaintiff received the Policy and then refused to participate in appraisal after Defendant invoked that provision. (ECF No. 68-2 at PageID 673.) Defendant also contends that the appraisal provision is mandatory under the Policy. (Id. at PageID 684.) So because Plaintiff refused appraisal, Defendant claims that Plaintiff (1) lacks standing, (2) cannot establish an injury or damages, and (3) failed to satisfy a condition precedent to suit. (Id.)

Plaintiff counters that she has standing because she has proof that Defendant undervalued her car by applying the negotiation adjustment. (ECF No. 93 at PageID 1160-64.) She argues that she need not complete appraisal to have standing and that appraisal is not a condition precedent to suit. (Id. at PageID 1164-68.) And finally, Plaintiff claims that the appraisal provision is unenforceable because it is unconscionable, lacks mutuality of obligation, and because Defendant waived its right to enforce it. (Id. at PageID 1168-73.)

Next the Court will discuss the legal standards for summary judgment.

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LEGAL STANDARDS

A party is entitled to summary judgment “if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). “A fact is ‘material' for purposes of summary judgment if proof of that fact would establish or refute an essential element of the cause of action or defense.” Bruederle v. Louisville Metro Gov't, 687 F.3d 771, 776 (6th Cir. 2012) (citing Kendall v. Hoover Co., 751 F.2d 171, 174 (6th Cir. 1984)).

“In considering a motion for summary judgment, [the] court construes all reasonable inferences in favor of the nonmoving party.” Robertson v. Lucas, 753 F.3d 606, 614 (6th Cir. 2014) (citing Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986)). And “[t]he moving party bears the initial burden of demonstrating the absence of any genuine issue of material fact.” Mosholder v. Barnhardt, 679 F.3d 443, 448 (6th Cir. 2012) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986)).

“Once the moving party satisfies its initial burden, the burden shifts to the nonmoving party to set forth specific facts showing a triable issue of material fact.” Id. at 448-49; Matsushita, 475 U.S. at 587. This means that, if “the non-moving party fails to make a sufficient showing of an essential element of his case on which he bears the burden of proof, the moving parties are entitled to judgment as a matter of law and summary judgment is proper.” Martinez v. Cracker Barrel Old Country Store, Inc., 703 F.3d 911, 914 (6th Cir. 2013) (quoting Chapman v. United Auto Workers Loc. 1005, 670 F.3d 677, 680 (6th Cir. 2012) (en banc)); see also Kalich v. AT&T Mobility, LLC, 679 F.3d 464, 469 (6th Cir. 2012).

What is more, “to show that a fact is, or is not, genuinely disputed, both parties are required to either cite to particular parts of materials in the record or show that the materials cited

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do not establish the absence or presence of a genuine dispute, or that an adverse party cannot produce admissible evidence to support the fact.” Bruederle, 687 F.3d at 776 (internal quotations and citations omitted); see also Mosholder, 679 F.3d at 448 (“To support its motion, the moving party may show ‘that there is an absence of evidence to support the nonmoving party's case.'” (quoting Celotex, 477 U.S. at 325)). But “[c]redibility determinations, the weighing of the evidence, and the drawing of legitimate inferences from the facts are jury functions, not those of a judge[.]” Martinez, 703 F.3d at 914 (alteration in original) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986)). And so, “[t]he court need consider only the cited materials, but it may consider other materials in the record.” Fed.R.Civ.P. 56(c)(3).

In the end, the “question is whether ‘the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law.'” Johnson v. Memphis Light Gas & Water Div., 777 F.3d 838, 843 (6th Cir. 2015) (quoting Liberty Lobby, 477 U.S. at 251-52). “[A] mere ‘scintilla' of evidence in support of the non-moving party's position is insufficient to defeat summary judgment; rather, the non-moving party must present evidence upon which a reasonable jury could find in...