Gerlach v. Allstate Insurance Company
| Decision Date | 17 February 1972 |
| Docket Number | Civ. No. 70-1757. |
| Citation | 338 F. Supp. 642 |
| Parties | Marion GERLACH, and all persons similarly situated, Plaintiffs, v. ALLSTATE INSURANCE COMPANY, Defendant. |
| Court | U.S. District Court — Southern District of Florida |
Irvine C. Spear Law Offices, Miami Beach, Fla., for plaintiffs.
Smathers & Thompson, Miami, Fla., for defendant.
SUMMARY JUDGMENT FOR DEFENDANT
This is an action brought under the Truth in Lending Act (15 U.S.C. Sec. 1601 et seq.) by the plaintiff, Marion Gerlach, hereafter plaintiff, against the defendant, Allstate Insurance Company, hereafter Allstate, assertedly a "creditor" of plaintiff in a "consumer credit" transaction, to recover the $100 penalty and attorney's fees provided by 15 U.S.C. Sec. 1640(a) for failure to disclose information required by the Act in such a transaction.
Jurisdiction in this Court is specifically provided by 15 U.S.C. Sec. 1640(e).
Plaintiff also seeks to maintain this action as a class action on behalf of all others similarly situated.
All facts which the parties believe to be material to a determination of the merits of this action have been agreed to in the pretrial stipulation, which recites that there are no issues of fact to be tried, and that the parties do not believe a trial is necessary.
Plaintiff and Allstate each move for a summary judgment.
The agreed facts, insofar as they are material, are:
Plaintiff is a citizen and resident of Miami, Florida.
Allstate is an Illinois corporation engaged in a general lines insurance business, and is authorized to and is doing a general lines insurance business in Florida. The Florida business done by Allstate, insofar as the underwriting, collection of premiums and handling of claims is concerned, is completely managed and controlled out of Allstate's regional office in St. Petersburg, Florida, and is largely autonomous from Allstate's home office in Northbrook, Illinois. The administrative work in the handling of policies, notices, premiums, cancellations, etc., as far as possible, is accomplished by computers located at Allstate's St. Petersburg regional office. The Allstate agents who deal with the Florida insurance buying public, for the most part, are stationed in and operate out of the retail merchandising stores of Sears, Roebuck and Co. located throughout Florida.
The business which Allstate does in Florida is conducted in accordance with Florida's comprehensive laws regulating insurance (F.S. Insurance Code, Chs. 624-632, F.S.A.), under the supervision of the Insurance Commissioner of Florida.
One of Allstate's principal lines in Florida is automobile insurance.
On November 28, 1967 plaintiff executed an application for an Allstate automobile insurance policy. This Application contained, over plaintiff's signature, a number of declarations of fact concerning plaintiff and her automobile material to the issuance of automobile insurance coverage. It did not contain any agreement on plaintiff's part to pay premium for the insurance. Further, plaintiff has never executed any contract to pay premium.
The Allstate agent who prepared plaintiff's application for her signature explained to plaintiff that she had an election to pay premium under any one of the three following plans:
The agent further explained that a premium payment under one of these plans was required at the time he accepted the application and bound the coverage; further, that if she elected to pay in installments, there would be a flat service, or payment, charge (at that time $0.50) payable with each installment payment, which charge would be the same for each installment payment, regardless of the number of such payments.
Plaintiff elected to pay premium in ten installments, paid the agent 10% of the annual premium and the service charge, the agent noted the payment in the application form, and bound Allstate to the coverage in the box provided in the application form for that purpose.
Thereafter, Allstate's regional office in St. Petersburg issued and delivered plaintiff's policy. The policy guarantees that it will be extended, or renewed by Allstate every year for five years, provided, in substance, that plaintiff makes the premium payments and does not lose her driver's license. The premium rate provided for on each annual renewal is to be the Allstate rate prevailing at the time of renewal.
The policy also provides for cancellation of the insurance coverage upon plaintiff's failure to pay premium, as well as cancellation by plaintiff at will.
Each November 29 since 1967 Allstate has issued to plaintiff a certificate for extension of insurance coverage under plaintiff's policy for an additional year at the premium rate then prevailing.
With each certificate of extension Allstate has issued to plaintiff a premium payment notice setting forth the then prevailing annual premium and giving plaintiff the same election as to premium payment plans, i. e., in one payment, in three payments or in ten payments, that she was given at the inception of the coverage. The amount of the payment under each of these plans is set forth, as well as the service charge, which is now $1.00 with each installment payment.
Plaintiff is still paying under the ten payment plan.
In addition to the premium notice issued with each annual extension certificate, in advance of the 29th of each month in which a premium payment is payable, Allstate has issued plaintiff a notice that the premium is payable on the 29th of the month, and of the amount of the payment and the amount of the service charge.
On occasion since November 29, 1967, plaintiff has failed to make a premium payment on time. Also on occasion, Allstate has issued to plaintiff a notice that unless the premium payment was made by a day certain, the insurance would terminate on that day. On each such occasion plaintiff has made the premium payment before the termination date. Plaintiff's policy is still in force.
Allstate has followed the same procedure with respect to the three plans of premium payment, and annual extension of insurance coverage for five years, with millions of Allstate automobile insurance policyholders throughout the United States, and many thousands of such policyholders in Dade County, Florida. In addition, the same three plans of premium payment are in effect for other lines of insurance coverage afforded by Allstate, such as homeowners insurance, and other types of coverage.
Each premium payment made under any of the installment plans pays for insurance coverage to a date beyond the time the next premium payment is due. When, under an installment plan of premium payment, a premium is not paid on a payment date, a computer calculates the date to which the last premium payment made paid for insurance coverage in advance, and, allowing at least the ten days' notice required by Florida law for cancellation for non-payment of premium (F.S. Sec. 627.0852(3) (a), F.S.A.), issues a notice to the policyholder that unless the premium payment is made by a date certain, i. e., either the end of the statutory ten days or the date to which coverage has been paid, whichever is later, the coverage is terminated. If payment is not made by such termination date, the policy is cancelled. In no event, regardless of the time or manner of cancellation, does Allstate seek to enforce, or make, any claim against the policyholder for premium earned, but not paid for.
Although Allstate clearly advises its policyholders of the dollar amount of the service charge collected with each premium installment payment, it makes no contention that it gives its policyholder all the items of information required by the Truth in Lending Act (15 U.S.C. Secs. 1638(a), 1639), and the regulations thereunder (Regulation Z, 12 C.F.R. Sec. 226.8(e) and (d)).
Under the pleadings and the agreed facts, the following legal issues are presented:
I. CLASS ACTION
Plaintiff originally claimed the right to maintain this action as a class action on behalf of all others similarly situated nationwide. Allstate, in opposition, submitted affidavits that it has millions of policyholders who have elected to make payment of premiums in installments under plans identical with that offered to plaintiff. Plaintiff thereafter indicated that she would prefer to maintain this action as a class action on behalf only of those Allstate automobile policyholders within Dade County, Florida. This would still involve some 50,000 policyholders to whom, since their identity is ascertainable from Allstate files at its regional office in St. Petersburg, Florida, at least first class mail notice would be required as to each member of the class.
In addition, the identification of such policyholder, requiring as it would a special computer programming and run, would entail a substantial expense running into several thousands of dollars. Plaintiff has not indicated a willingness to bear this expense.
The maintenance of this action as a class action on the basis asserted in the complaint, even if restricted to Dade County, Florida,...
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