A federal appeals court has denied class-action status to those who own vehicles declared an overall total loss by Liberty Mutual, stating that the plaintiffs hadn't proved that the “condition adjustment” used by CCC Intelligent Solutions led to all owners receiving under their vehicles were worth.
The 9th Circuit upheld the ruling of U.S. District Judge Robert J. Bryan that each of the potential plaintiffs would need to prove a loss of revenue, and that weighing each class member’s claim would be “unmanageable.”
“Individual trials will be a better method to adjudicate those issues,” Circuit Judge Ryan Nelson wrote for the 9th Circuit in the ruling, issued Feb. 11.
Because the plaintiff’s claims of breach of contract and unfair trade practices require evidence of a personal injury, Bryan “was correct to use ‘that old basketball phrase, “no harm, no foul.”' If there wasn't any injury, then there was no breach of contract or unfair trade practice,” Nelson wrote.
The court declined to deal with the plaintiff’s contention that the use of the unexplained “condition adjustment” is against the law in Washington, in which the suit was filed. It asserted that an issue for the Washington insurance commissioner, “the state who could prosecute this sort of alleged violation.”
According to the ruling, the plaintiffs filed suit following the insurance commissioner chose to not pursue their complaint.
The decision may have an impact on three similar lawsuits against CCC, Allstate, Geico, and USAA that the 9th circuit has delayed ruling on, awaiting the end result of the Liberty Mutual case, according to lawyers representing CCC.
The plaintiffs, Leeana Lara and Cameron Lundquist, sued Liberty Mutual and CCC, claiming that Liberty Mutual’s valuation method had resulted in “systematic under-valuations and underpayments” in violation of its insurance contracts with its customers.
In determining the “cash value” that it must pay its insureds, Liberty Mutual relies on CCC’s data for comparable used vehicles recently sold or offered for sale in the insured’s geographic area.
Lara and Lundquist claimed that the alleged underpayments derive from CCC’s use of a “value adjustment” to account for the main difference in condition between the average car owned by a private person and the cars on the market at dealerships.
“[E]ven though each comparable vehicle has unique characteristics, the reports reduce the value of multiple comparable vehicles through the same amount, right down to the final dollar, with no itemization or explanation for the total amount,” the plaintiffs said.
The suit, filed in April 2022, claimed that Liberty Mutual, using CCC data, deducted $936 in the $17,224 importance of Lundquist’s 1998 Dodge Ram 2500 Quad Cab that was totaled within an accident in 2022.
The valuation report listed values of three different comparable vehicles and applied the same $936 adjustment to any or all three, “without itemizing or explaining the foundation from the adjustment as needed by Washington law,” the suit claims.
Lara was put into the lawsuit in October 2022. She'd been paid $15,560.93 to stay a total loss claim on her behalf 2022 Dodge Charger SXT, a reduction of $842 in the unadjusted valuation. The CCC report listed two comparable vehicles, because both versions had also had an $842 adjustment applied, according to the complaint.
“These blind and arbitrary reductions bear no relation to the particular fair market price from the comparable vehicles or the loss vehicle. The application of a random condition adjustment to lessen the value of comparable vehicles artificially reduces the valuation of the loss vehicle to profit the insurer at the cost of the insured,” the plaintiffs said.
They claimed the adjustments “artificially and improperly reduce claim payments by hundreds or 1000s of dollars.”
“When a person's vehicle is totaled within an accident, a car insurance policy company mustn't underpay claims by governing the data used to value the vehicle,” i was told that. “Specifically, Washington law prohibits insurance providers from reducing claim values with arbitrary, unexplained, and unjustified alterations in the condition of comparable vehicles that bear no regards to actual cash value. An insurer mustn't misstate or conceal material facts that bear upon its estimate of value.”
In a joint statement, CCC's lawyers at Latham known as the decision “particularly impactful in light of numerous putative class actions – all involving similar claims against CCC and its insurer customers – which are still pending.”
That includes the cases against CCC, Allstate, Geico, and USAA that are still pending before the 9th Circuit, the Latham team said.
Repair skillfully developed have noted that, with the increase in the value of used vehicles, the fair market value assigned often means the difference between a vehicle that’s repairable, and one that’s junked.
Low valuations often lead to total losses on vehicles that may happen to be fixed, and insurers will total vehicles using the reasoning that salvage values are high, Auto Claim Specialists Managing Director Robert McDorman said during a class at SEMA 2022.
Some insurance policies state that companies can total vehicles for whatever amount they determine, McDorman said, as the insurer's ultimate obligation is to result in the consumer whole. Shops and policyholders must always make sure insurers are following their own policies, he said.
A similar class-action case over total loss valuations, Dominick Volino and John Plotts v. Progressive, is making its way with the U.S. District Court for the Southern District of recent York. That case, that involves the use of Mitchell data but doesn't name that company like a defendant, is incorporated in the discovery phase.
