Wallace v. GEICO Gen. Ins. Co., D061074

CourtCalifornia Court of Appeals
Writing for the CourtIRION
Decision Date20 February 2013
PartiesCAROLYN WALLACE, Plaintiff and Appellant, v. GEICO GENERAL INSURANCE COMPANY et al., Defendants and Respondents.
Docket NumberD061074

CAROLYN WALLACE, Plaintiff and Appellant,
GEICO GENERAL INSURANCE COMPANY et al., Defendants and Respondents.



Filed: February 20, 2013


California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

(Super. Ct. No. 37-2008-00079950)

APPEAL from an order of the Superior Court of San Diego County, Timothy B. Taylor, Judge. Affirmed.

This is the second appeal in this putative class action in which Carolyn Wallace alleges GEICO General Insurance Company and related entities1 (collectively GEICO) wrongly denied coverage for automobile repairs performed at labor rates GEICO considered to be above prevailing market rates. In the first appeal, we reversed the trial

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court's order striking the class allegations from Wallace's complaint, which was based on the court's erroneous conclusion that GEICO's post-lawsuit tender of payment of the difference between what Wallace paid for labor and what GEICO considered reasonable based on prevailing labor rates caused her to lose standing to act as a representative plaintiff on behalf of the putative class. (Wallace v. GEICO General Ins. Co. (2010) 183 Cal.App.4th 1390 (Wallace I).) We remanded for further proceedings, including a motion regarding certification of the case as a class action. (Id. at p. 1403.)

Wallace subsequently moved for class certification. The trial court denied her motion on the ground that she had not submitted admissible evidence to establish the numerosity, ascertainability, and other procedural requirements for certification. In this second appeal, Wallace seeks reversal of the order denying class certification and also challenges earlier related rulings. We affirm.



A. Wallace's Lawsuit Against GEICO

Wallace presented GEICO an estimate for repairs after her vehicle was damaged in an accident. GEICO refused to pay the full amount of the estimate because it considered the hourly labor rate charged by the repair shop to be above the prevailing market rate. Wallace had the repairs done anyway, and she paid the difference between what GEICO agreed to pay and what the repair shop charged her for labor.

Wallace filed a putative class action against GEICO. In the operative pleading, she asserted GEICO's refusal to pay the full labor charge for her repairs constituted a

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breach of contract, a breach of the implied covenant of good faith and fair dealing, and a violation of the unfair competition law (Bus. & Prof. Code, § 17200 et seq.). On behalf of herself and a class of similarly situated individuals, Wallace sought damages, including punitive damages; "disgorgement of ill-gotten gains"; prejudgment interest; and costs, including attorney fees.

B. The Trial Court Proceedings After Remand

After we decided the first appeal and remanded the case, the parties conducted discovery on class certification issues. Wallace also filed two motions for class certification.

1. Wallace's First Motion for Class Certification

In her first class certification motion, Wallace asked the trial court to certify the following class:

"All eligible2 individual purchasers of GEICO automobile insurance who are California residents and who, within four years preceding the filing of the Complaint, (1) made a claim to GEICO for insurance coverage on automobile repairs, (2) submitted a written repair cost estimate from an automobile repair shop of his or her choice to GEICO, (3) were denied the claim by GEICO, either in whole or in part, because GEICO asserted that the labor rate in the repair estimate exceeded the labor rate that GEICO was obligated to pay, and (4) were forced to either pay the difference in labor rates or become indebted to the automobile repair shop for that amount."

Wallace argued class certification was appropriate because the proposed class members were easily ascertainable and so numerous that joinder was impractical; common issues of law and fact predominated over individual issues; her claim was typical of the

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proposed class; she and her counsel would adequately represent the proposed class; and a class action was superior to individual actions. In support of her motion, Wallace submitted declarations from two of her counsel. One declaration described counsel's extensive experience in class action litigation and was designed to establish that he would adequately represent the proposed class. The other declaration authenticated and attached copies of a letter from GEICO's counsel regarding production of claims files; our opinion in Wallace I; and selected pages from Wallace's deposition transcript.

GEICO opposed Wallace's first class certification motion. GEICO argued that Wallace's class definition was vague and overbroad; and that she had not shown, or conducted the discovery needed to show, that the proposed class members were so numerous and easily identifiable that certification was proper. GEICO also argued that the proposed class members did not share a community of interest because issues requiring individualized litigation predominated over issues that could be litigated on a classwide basis and because Wallace's claim was not typical of the proposed class. Finally, GEICO argued that a class action was not superior to other methods of adjudication, such as small claims court actions. As part of its opposition, GIECO submitted a declaration from its counsel and exhibits detailing the many efforts GEICO had made to produce to Wallace copies of documents she had requested in discovery.

The trial court denied Wallace's first motion for class certification without prejudice. The court ruled that Wallace's claim was not typical of the class, in part because GEICO had fully reimbursed Wallace for the cost of her vehicle repairs and she therefore did not meet the fourth element of the class definition. The court also ruled that

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Wallace "ha[d] not shown that numerosity exists making a class action a preferable vehicle to individual lawsuits." The court directed Wallace's counsel "promptly [to] attempt to locate an appropriate class representative who could then seek class certification after discovery."

2. Wallace's Motion to Compel GEICO to Produce Documents

In an effort to identify class members, Wallace served GEICO with several requests for production of documents, including copies of documents it had sent its insureds notifying them of its "refusal to pay in full the labor portion of any property damage estimate" based on GEICO's assertion that the labor rate in the estimate exceeded the applicable prevailing rate (hereafter, the labor rate letters). Wallace proposed two options to locate these documents and identify potential class members: (1) GEICO or its "outside vendor" would "use the labor rate[] letters . . . , or the language employed therein, as a starting point to search the relevant databases to identify all claims in which such a letter was sent"; or (2) GEICO would provide Wallace the "raw data" from the pertinent electronic databases and allow her consultants to perform the searches. Wallace requested that "a custom query (or queries) be written to search all databases where any claims data for the class period in question is stored, including but not limited to the [electronic claims file], [activity logs], and ADSERV databases, for any field of data associated with any claim that includes the term 'prevailing' or 'rates' in any database field related to a claim."

Dissatisfied with GEICO's response, Wallace moved the trial court for an order compelling GEICO to produce copies of the labor rate letters. The focus of her motion

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was the first search method mentioned above, which she called "Option One." In her motion, Wallace briefly described Option One; complained that GEICO "ha[d] been extremely evasive in terms of answering whether or not [it] deem[ed] it possible to proceed in accordance with . . . Option One"; and asserted her consultants were "confident" that responsive documents could be located pursuant to Option One.

GEICO opposed the motion to compel on several grounds. GEICO argued it could not search its own databases for labor rate letters, and proposed statistical sampling and in-house computer review as alternatives for identifying potential class members. GEICO also complained that Wallace was engaged in an "expensive fishing expedition," and argued that she should have to pay for any custom database inquiries the court might order. GEICO's opposition included declarations concerning the burden and expense of the database searches requested by Wallace.

A GEICO employee stated that it was not possible for GEICO to search its own electronic database for the labor rate letters themselves because they are stored as images without identifying metadata, but that an outside estimating vendor (CCC Information Services, Inc. (CCC)) might be able to search its databases for the letters. A representative of CCC stated that CCC "provides products and services to numerous customers in the automotive repair and the insurance industry, including GEICO." Among other...

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