Eddie Yaklin Ford Lincoln Mercury Nissan Inc. v. Am. Rd. Ins. Co.
| Decision Date | 04 August 2017 |
| Docket Number | CIVIL NO. 2:15-CV-399 |
| Parties | EDDIE YAKLIN FORD LINCOLN MERCURY NISSAN INC., Plaintiff, v. AMERICAN ROAD INSURANCE COMPANY, et al, Defendants. |
| Court | U.S. District Court — Southern District of Texas |
BE IT REMEMBERED that on this 4th day of August, 2017, this Court considered Defendants American Road Insurance Company and American Road Services Company's (together "American Road") Motion for Summary Judgment, Dkt. No. 34, and Defendant Universal Underwritings Insurance Company's ("UUIC") Motion for Summary Judgment, Dkt. No. 29. For the reasons stated below, the Court grants in parts and denies in part American Road's motion and grants UUIC's motion.
American Road and UUIC each move for summary judgment against Plaintiff Eddie Yaklin Ford Lincoln Mercury Nissan Inc. ("Yaklin Ford"). UUIC filed its motion on June 6, 2016. See UUIC Mot., Dkt. No. 29. American Road filed its motion on June 30, 2016. See Am. R. Mot., Dkt. No. 34. Yaklin Ford has responded to both summary judgment motions. See Pl.'s Resp. Brs., Dkt. Nos. 33, 45.
Yaklin Ford is an authorized Ford dealership located in Kingsville, Texas. Dkt. No. 45 at ¶ 34. On Saturday, April 6, 2013, Yaklin Ford received a call from a prospective purchaser. See Statement and Proof of Loss ("Statement of Loss"), Dkt. No. 35 at APP 21. The caller inquired about purchasing a used 2012 Mercedes Benz from Yaklin Ford. The salesman with whom the unknown caller spoke instructed the caller to submit an online credit application. Later that day, Yaklin Ford received an online credit application by the name of "Scott Heidenreich," see Dkt. No. 35 at APP 24, and inquiry from the prospective purchaser. Statement of Loss, Dkt. No. 35 at APP 21. The online applications are available on a platform called RouteOne which is partly owned by Ford Motor Credit Company ("Ford Motor Credit"), the parent company of American Road. Dkt. No. 45, at ¶¶ 34-35. The Yaklin Ford salesman handling the transaction asked for and received a faxed copy of the customer's driver's license. Statement of Loss, Dkt. No. 35 at APP 21. Yaklin Ford's complaint states that it received "copies" in the plural, but Yaklin Ford's Statement of Loss indicates that the Yaklin Ford salesman handling the transaction received one faxed copy. Compare Compl. at 2 with id. The name on the driver's license, "Scott Heindreich," did not match the name on the online application, "Scott Heidenreich." Dkt. No. 34 at 8; compare Dkt. No. 35 at APP 23 with Dkt. No. 35 at APP 24. There were other discrepancies between the applications and the driver's license, such as different zip codes.
From April 6 to April 8, 2013, Yaklin Ford made and received several calls to and from the prospective purchaser. Statement of Loss, Dkt. No. 35 at APP 21. After receiving the credit application, Yaklin Ford sent a finance application to Ford Motor Credit. Processing the finance application involved checking the purchaser's credit. See Dkt. No. 34 at 9; Dkt. No. 35-1 at APP 29-30. The credit report score of "Scott Heidenreich" was 844 (which American Road states is a good score). See Dkt. No. 34 at 10; Dkt. No. 35-1 at APP 29. The buyer was willing to purchase optional insurance. Id. The credit application report flagged several issues as follows:
Dkt. No. 35-1 at APP 29.
The report also contained an identity scan alert, which reads:
After receiving the credit report, Yaklin Ford proceeded with the transaction. Yaklin Ford sent the purchaser in Chicago the contract through United Parcel Service ("UPS") overnight service. Statement of Loss, Dkt. No. 35 at APP 21. The contract was delivered to the Chicago address listed on the driver's license on April 10, 2013. UPS delivery confirmation records show that an individual by the name of "Denrick"1 signed for the delivery. For the Mercedes and for additional insurance, the purchaser ultimately received financing in the amount of $72,103.84. Dkt. No. 35 at APP 18. The summary judgment evidence is unclear as to the amount that Yaklin Ford seeks to recover from Defendants.2
A delivery service picked up the car and both sets of keys from Yaklin Ford later in April. Throughout the transaction, the purchaser never appeared on dealership premises or met with a dealership employee in person. Rather, the entire process of sale was done through mail, fax, or the internet. Statement of Loss, Dkt. No. 35 at APP 21.
In May 2013, a police detective in Illinois and a U.S. Secret Service Agent contacted Yaklin Ford for information relating to the sale of the Mercedes. Police and agents investigating an identity fraud complaint filed by Scott Heidenreich identified Yaklin Ford as the seller of the Mercedes. Id. After becoming aware of the identity fraud investigations, Lana Gallatin ("Gallatin"), Comptroller of YaklinFord, contacted Scott Heidenreich. She reached Heidenreich at a telephone number different from the one that Yaklin Ford had previously used to contact the Mercedes purchaser. Id. at APP 22. Heidenreich stated that he had never before contacted the Yaklin Ford dealership, nor had he purchased the used Mercedes. Following this conversation, Yaklin Ford contacted Ford Motor Credit and American Road.
The Mercedes was subject to a lien through the Ford Motor Credit. Dkt. No. 29 at 6. American Road Insurance Company had also issued a "floor plan" policy to Ford Motor Credit under policy number 71-3108-21-01 (hereinafter the "American Road Policy."). Id. The Mercedes was insured by the American Road Policy. Additionally, UUIC issued to Yaklin Ford a Unicover policy number 322888 for the policy period of January 1, 2013 to January 1, 2014 ("UUIC Policy"). Id.
Yaklin Ford reimbursed Ford Motor Credit for the funds Ford Motor Credit had advanced for the Mercedes purchase. Dkt. No. 45 at ¶ 35. On May 31, 2013, Yaklin Ford submitted a claim to American Road seeking coverage for the loss under a part of the contract called the False Pretense Endorsement. Id. at ¶ 36. Yaklin Ford pays additional premiums for this endorsement. Id. This endorsement applies "[w]here Dealer voluntarily parts with the Financed Vehicle where false identification is presented." False Pretense Endorsement, Dkt. No. 35 at APP 16. On July 31, 2013, Gallatin submitted the Statement of Loss Statement to American Road in support of its claim for $61,525 less the $500 deductible. Dkt. No. 35 at APP 32; see also Dkt. No. 1-8 at 2. On August 1, 2013, American Road denied coverage based on Yaklin Ford's failure to meet the express conditions precedent in the False Pretense Endorsement. A letter from American Road to Yaklin Ford dated August 1, 2013 reads:
The dealer did not meet the policy conditions precedent to coverage by showing evidence that reasonable and adequate care was taken to confirm the identity of the individual(s) that purchased or took delivery of the vehicle as outlined in the Auto Wholesale Policy and the Dealer manual. Also, the dealer did not satisfy one or more of the coverage conditions as there is no proof or verification of false identification or fraudulent check, or fraudulent title.
Dkt. No. 35 at APP 32. Yaklin Ford also made a claim for its loss with UUIC. UUIC determined that Yaklin Ford does not have insurance for the Mercedez Benz. Compl. at 3. American Road alleges that Yaklin was able to recover and resell the fraudulently purchased Mercedes, and attaches unobjected-to evidence indicating that Yaklin Ford resold the Mercedes for $38,110.00. Dkt. No 35-1 at APP 43.3
Yaklin Ford brings a contract claim against Defendants, alleging that Defendants (1) failed to properly and promptly investigate, estimate, and pay Yaklin Ford's claim in full for covered property damage; (2) failed and refused to pay Yaklin Ford a just amount in accordance with its contractual obligations, agreements, and representations; (3) and breached the insurance contract with Yaklin Ford. Compl. at 4. Yaklin Ford also brings claims under the Texas Insurance Code, see V.T.C.A., Insurance Code § 541.001, the Texas Deceptive Trade Practices Act ("DTPA"), see V.T.C.A., Bus. & C. § 17.50, the Texas Administrative Code, see 28 T.A.C. § 21.203, and common law for breach of covenant of good faith and fair dealing, unconscionability, unfair settlement practices, and fraud. Compl. at 5-8. Yaklin Ford filed this suit in the 105th District Court of Kleburg County, Texas on July 30, 2015. Dkt. No. 21-1 at 6-7. American Road removed the case to the Southern District of Texas based on diversity jurisdiction in September 2015. Dkt. No. 34 at 6; Dkt. No. 21-1 at 10.
Under the American Road Policy, Yaklin Ford has Comprehensive, Blanket Collision, and False Pretense coverage. See American Road Policy, Dkt. No. 35, at 1. Yaklin Ford and American Road dispute (1) whether Yaklin Ford is covered under the False Pretense Endorsement and (2) whether Yaklin Ford's loss qualifies for coverage under the Comprehensive Coverage theft provision. See Dkt. No. 34 at 13; Dkt. No. 45 at 15-16.
Under the Federal Rules of Civil Procedure, summary judgment is appropriate when the court concludes "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). When considering a motion for summary judgment "[t]he evidence of the non-movant is to be believed, and all justifiable inferences are to be drawn in his favor." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986). The inquiry is "whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party...
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