Seely v. GEICO Advant Ageinsurance Co.

• Decision Date: 06 March 2023
• Docket Number: M2021-01263-COA-R3-CV
• Parties: DAVID SEELY et al. v. GEICO ADVANT AGEINSURANCE COMPANY
• Court: Tennessee Court of Appeals

1

DAVID SEELY et al. v. GEICO ADVANT AGEINSURANCE COMPANY

No. M2021-01263-COA-R3-CV

Court of Appeals of Tennessee, Nashville

March 6, 2023

Session December 7, 2022

Appeal from the Circuit Court for Davidson County No. 19C2818 Thomas W. Brothers, Judge

This is a dispute between two insureds, David Seely and Subhadra Guanawardana ("Plaintiffs"), who co-own the insured vehicle, and their automobile insurance carrier, GEICO Advantage Insurance Company. The dispute arises from a vehicular accident in a McDonald's restaurant parking lot. Following its investigation into the cause of the accident, GEICO determined that Mr. Seely was at fault when his vehicle collided with another. As a consequence, GEICO paid the claim asserted by the other motorist, placed an "at fault designation" on Plaintiffs' Comprehensive Loss Underwriting Exchange ("CLUE") reports,^[1] and raised Plaintiffs' premium. Thereafter, Plaintiffs commenced this action against GEICO asserting claims for (1) bad faith, (2) unconscionable contract, (3) violation of the Tennessee Consumer Protection Act, (4) violation of the Fair Credit Reporting Act, and (5) defamation. The trial court dismissed all claims, some pursuant to Tennessee Rule of Civil Procedure 12.02(6) for failure to state a claim, and the remaining claims were dismissed on summary judgment. This appeal followed. We affirm.

Tenn R. App. P. 3 Appeal as of Right; Judgment of the Circuit Court Affirmed

David Seely and Subhadra Guanawardana, pro se, appellants.

C Benton Patton and Jamie A. Leaver, Brentwood, Tennessee, for the appellee, GEICO Advantage Insurance Company.

Frank G. Clement, Jr., P.J., M.S., delivered the opinion of the Court, in which W. Neal McBrayer and Jeffrey Usman, JJ joined.

OPINION

FRANK G. CLEMENT JR., P.J., M.S.

Facts and Procedural History

The accident occurred on February 9, 2018, when Mr. Seely collided with another vehicle owned by Rebecca Wegman in a McDonald's parking lot. Ms. Wegman promptly submitted a property damage claim to GEICO, stating that she was parked at McDonald's parking lot when Mr. Seely's vehicle backed out of a parking spot and hit her vehicle. GEICO contacted both Plaintiffs to investigate Ms. Wegman's claim. Based on statements by Plaintiffs and Ms. Wegman GEICO determined that Mr. Seely was at fault and paid Ms. Wegman's claim.

Four months later, on June 13, 2012, Mr. Seely informed GEICO that the accident was not his fault; instead, it was caused by brake failure, proof of which, he contended, was "on record." GEICO responded by asking Mr. Seely to provide evidence to support this claim. According to GEICO, Plaintiffs had not previously indicated that the accident was caused by a brake malfunction. On June 18, 2018, Mr. Seely provided GEICO with information from the National Highway Traffic Administration regarding brake component failures. Mr. Seely also provided receipts for brake caliper purchases relating to his vehicle.^[2] After reviewing the information Mr. Seely provided, GEICO maintained its earlier decision that Mr. Seely was at fault. As a consequence, GEICO placed an "at-fault designation" on Plaintiffs' CLUE report. Because of the at fault designation, and acting in accordance with GEICO's Tennessee Rating Plan, GEICO also increased the premium on Plaintiffs' policy.

On May 28, 2019, Plaintiffs commenced this action against GEICO in the general sessions court. The general sessions court dismissed Plaintiffs' lawsuit and Plaintiffs timely appealed to the circuit court. On June 30, 2020, the circuit court ordered Plaintiffs to file a formal complaint to specify each cause of action Plaintiffs wished to assert; the order also required that GEICO file an answer to the complaint.

Plaintiffs filed their Complaint on July 20, 2020 alleging five causes of action: (1) bad faith, (2) unconscionable contract, (3) violation of the Tennessee Consumer Protection Act, (4) violation of the Fair Credit Reporting Act, and (5) defamation. More specifically, the five counts, as set forth in the complaint, read as follows:

Count I

40. Bad faith: Plaintiffs contend that GEICO committed bad faith in creating a contract that defies statute, deceiving insureds during the claims process and converting money received in an insurance contract. GEICO did not pay the claim in a fair and equitable manner as required by statute. In unjustly raising the Plaintiffs' premiums they found a way to recoup their loss several fold over the years. These actions violate of Tenn. Codes § 56-7-I 05, 56-8-103 and 56-8-105.

Count II

41. Unconscionable contract or clause: By intentionally crafting a Rating Plan that denies statutory protection to a specific group of insureds, Defendant created an unconscionable contract. Any adverse action taken using said contract should not be enforceable.

Count III

42.Tenn. Code § 47-18-101 et seq: By creating an unconscionable contract and hiding its impact from the affected insureds, GEICO has engaged in unfair and deceptive practices. Defendant unjustly enriches themselves by raising rates on insureds with no statutory justification.

Count IV

43.Fair Credit Reporting Act: By erroneously reporting the accident as "AF" on Plaintiffs' CLUE reports, and refusing to correct it upon notice, GEICO violated the Act. By failing to follow the dispute resolution process set forth in the FCRA 15 U.S.C. § 1681i(a)(5) and failing to re-underwrite or re-rate the insured, GEICO violated Tennessee Code § 56-5-406.

Count V

44. Defamation: By filing an erroneous entry in Plaintiffs' CLUE reports GEICO damaged not only their driving records but affected their creditworthiness and good names.

GEICO responded by simultaneously filing an Answer and a Partial Motion to Dismiss four of Plaintiffs' five claims: (1) bad faith, (2) unconscionable contract, (3) violation of the Tennessee Consumer Protection Act, and (4) violation of the Fair Credit Reporting Act. Pursuant to an order entered on September 29, 2020, the trial court granted the motion in part, dismissing three of the four causes of action. The court denied the motion as to Plaintiffs' unconscionable contract claim, stating:

Plaintiffs assert the accident for which the "at fault" designation was assigned is the result of a brake malfunction, not negligence on behalf of the driver.

Plaintiffs further assert the Defendant had the mechanical failure "on record." Nevertheless, the Complaint claims insurance premiums were raised as a result of the accident, despite no act of negligence by the Plaintiffs. Therefore, the Plaintiffs' claim of unconscionability is in essence a claim against the Defendant's ability to create and enforce an insurance policy that directly contravenes existing statutory protections. Taking all relevant and material factual allegations in the complaint as true, the Court finds the Plaintiffs have sufficiently pled such facts as necessary to sustain a claim of unconscionable contract.

Plaintiffs subsequently filed a Motion to Alter or Amend, as well as a Motion to Amend the Complaint. On November 16, 2020, the trial court entered an Amended Order on GEICO's Partial Motion to Dismiss that stated it "supersedes and replaces the prior order entered on September 29, 2020." The amended order was almost identical to the September 29, 2020 order except for the fact the order stated that the dismissal of the three claims in question was "with prejudice."

With regard to the motion to amend the complaint, in a separate order entered on November 20, 2020, the trial court denied the motion stating:

The Court denies the Motion to Amend, at this time, without prejudice to refiling based upon this Court's new Order ruling on the defendant's Partial Motion to Dismiss. If plaintiffs intend to proceed with the Motion to Amend the Complaint the Motion will be filed, timely, after the Court's revised ruling on defendant's Partial Motion to Dismiss.

Thereafter, Plaintiffs filed a Motion for Summary Judgment regarding the two remaining claims - defamation and unconscionability. They also filed a second motion to amend the complaint. GEICO filed responses in opposition to both motions.

With regard to the second motion to amend the complaint, in an order entered on May 21, 2021, the trial court stated the basis for the denial of Plaintiffs' Motion was two-fold. As to the Fair Credit Reporting Act claim, the court denied it because Plaintiffs had not set aside the order dismissing that claim; thus, there was no claim to be amended. As for the defamation claim, the order reads: "the requested amendment comes too late in this litigation given the fact that the case has now been set for trial . . . and that the time frame for discovery to be completed has passed."

As for Plaintiffs' Motion for Summary Judgment on its claims for defamation and unconscionable contract, the trial court denied their motion on various grounds. One, it found material facts in dispute in regard to the unconscionable contract claim; thus, the motion was denied in that respect. As for the defamation claim, which was based on the allegation that GEICO filed an erroneous entry in Plaintiffs' CLUE reports, which allegedly affected their credit worthiness and good names, the court found that Plaintiffs had the burden to prove that GEICO filed the at-fault designation report with malice or willful intent to injure Plaintiffs. The court denied Plaintiffs' motion stating:

Respectfully, the Court finds that this evidence is insufficient to support a finding of malice or willful intent to injure. Failure to remove an at-fault injury based solely on the assertion by the insured that the action was not at fault, and not supported by any of the evidence to support a finding that Geico had some purposeful intent to

...