Cummings v. Allstate Prop. & Cas. Ins. Co.

675 F.Supp.3d 660

Paggiwa CUMMINGS v. ALLSTATE PROPERTY AND CASUALTY INSURANCE COMPANY

CIVIL ACTION NO. 22-247-JWD-EWD

United States District Court, M.D. Louisiana

Signed May 31, 2023

Stephen J. Herman, John S. Creevy, Charles M. King, Soren E. Gisleson, Herman, Herman, Katz & Cotlar, New Orleans, LA, Adam A. Schwartzbaum, Pro Hac Vice, Edelsberg Law, P.A., Aventura, FL, Amy L. Judkins, Pro Hac Vice, Normand PLLC, Orlando, FL, Andrew J. Shamis, Pro Hac Vice, Shamis & Gentile P.A., Miami, FL, for Paggiwa Cummings.

Judy Y. Barrasso, Whitney M. Antoine, Barrasso Usdin Kupperman Freeman & Sarver, L.L.C., New Orleans, LA, Janelle E. Sharer, New Orleans, LA, Kristine M. Schanbacher, Pro Hac Vice, Mark Hanover, Pro Hac Vice, Dentons U.S. LLP, Chicago, IL, for Allstate Property and Casualty Insurance Company.

RULING AND ORDER

JOHN W. deGRAVELLES, UNITED STATES DISTRICT JUDGE

This matter comes before the Court on the Motion to Dismiss (the "Motion") (Doc. 11) filed by Defendant Allstate Property & Casualty Insurance Company ("Allstate" or "Defendant"). Plaintiff Paggiwa Cummings ("Cummings" or "Plaintiff"), individually and on behalf of others similarly situated, opposes the Motion. (Doc. 17.) Allstate has filed a reply. (Doc. 18.) Oral argument is not necessary. The Court has carefully considered the law, the facts in the record, and the arguments and submissions of the parties and is prepared to rule. For the following reasons, the Motion is denied.

I. Background

A. Relevant Facts

This is a breach of contract case brought as a class action involving Allstate's alleged underpayment to its insureds under an auto insurance policy. The following factual allegations are taken from the Class Action Complaint ("Complaint") and are presumed to be true for purposes of the instant Motion. On or about August 22, 2018, Plaintiff was involved in an auto collision. (Compl. ¶ 48, Doc. 1.) Plaintiff's vehicle was covered under her insurance policy with Allstate. (Id. ¶¶ 45-46.) Both her policy and those of the putative class members (the "Policy") were based on standardized policy language and contained identical material terms for coverage on total loss physical damage claims. (Id. ¶ 26 (citing Doc. 1-2).) The Policy¹ obligates Allstate to pay for "loss" to any insured auto that is caused by a covered event, including a collision. (Doc. 1-2 at 19-20.) In settling a claim for loss submitted by an insured, the Policy allows Allstate to either "pay for the loss in money" or "repair or replace the damaged or stolen property." (Id. at 22.)

However, Allstate's liability under the Policy is limited when a "total loss" occurs. A vehicle is declared a total loss when the "cost to repair" the damage to the insured vehicle "exceeds the value of the vehicle[.]" (Compl. ¶ 7, Doc. 1.) Under those circumstances, Allstate may instead elect to pay the "actual cash value of the property or damaged part of the property[.]" (Doc. 1-2 at 23.) This cap on Allstate's liability is specifically provided for in the Policy's "Limits of Liability" provision, which states in pertinent part:

Our limit of liability is the least of:

(1) the actual cash value of the property or damaged part of the property at the time of loss, which may include a deduction for depreciation; or

(2) the cost to repair or replace the property or part to its physical condition at the time of loss using parts produced by or for the vehicle's manufacturer, or parts from other sources, including, but not limited to, non-original equipment manufacturers, subject to applicable state laws and regulations[.]

(Id. (emphasis added).) Notably, however, the term "actual cash value" is not defined in the Policy.

Following Plaintiff's auto collision in 2018, she submitted a claim to Allstate for the physical damage to her vehicle. (Compl. ¶ 48, Doc. 1 (claim number 000514294957D01).) Allstate declared the vehicle a "total loss" and "elected pursuant to the Policy to pay the [actual cash value] of the vehicle instead of the higher cost to repair [it]." (Id. ¶ 49.) Allstate's "final net payment" to Plaintiff on her claim was $22,650.85. (Id. ¶ 51 (citing Doc. 1-4 at 1).) In calculating this amount, Allstate first determined that the vehicle "had an actual cash value of $20,853.68[;]" then, Allstate "subtracted the deductible of $250.00, added $1,970.67 for state sales tax, and added $76.50 for tag and title fees." (Id. ¶¶ 50-51 (citing Doc. 1-4 at 1).) According to the Complaint, Allstate only paid the "mandatory minimum title transfer handling fee" required by Louisiana law, which is $8.00, and the "mandatory minimum title fee" required by Louisiana law, which is $68.50. (Id. ¶ 52 (citing La. R.S. §§ 32:412.1 and 32:728).)

Thereafter, Plaintiff replaced her total-loss vehicle by purchasing a replacement vehicle. (Id. ¶ 53.) To replace a car in Louisiana, an insured must pay a variety of sales taxes and fees associated with purchasing and operating a motor vehicle. (Id. ¶ 9.) These taxes and fees include a state motor vehicle sales tax, (id. ¶ 10), a mandatory local sales tax in most parishes and municipalities, (id. ¶ 11), and a range of mandatory fees, such as title fees, registration fees, transfer fees, and tag fees (hereinafter, "regulatory fees" or "fees"), (see id. ¶¶ 14-22 (outlining various other regulatory and licensing fees associated with replacing a vehicle in Louisiana)). Plaintiff alleges that she incurred these "reasonably necessary replacement costs" when she purchased her replacement vehicle. (Id. ¶ 53.)

B. Procedural History

On April 14, 2022, Plaintiff filed suit individually and on behalf of all other putative class members who similarly were insured by Allstate and allegedly underpaid after their vehicles were declared a total loss. (Id. ¶¶ 5, 55.) Specifically, Plaintiff alleges that "Allstate systematically and uniformly underpaid Plaintiff and thousands of other putative Class Members amounts owed to its insureds who suffered the total loss of a vehicle insured with comprehensive and collision coverage." (Id. ¶ 6.) According to the Complaint, actual cash value encompasses all reasonably necessary costs to replace a vehicle, including sales tax and regulatory fees. (Id. ¶¶ 8, 27, 41.) In Plaintiff's view, Allstate breached the Policy by electing to pay actual cash value on her claim but failing to pay the full actual cash value; in other words, "Allstate breached [the] Policy by failing to pay all reasonably necessary replacement costs to Plaintiff, including Regulatory Fees related to the registration, tag fees and fees incidental to the transfer of ownership." (Id. ¶ 54.) Additionally, Plaintiff claims that she is entitled to litigation expenses, including attorneys' fees and costs, for bad faith pursuant to La. R.S. §§ 22:1892(B)(1) and 22:1973.² (Id. ¶ 60.)

Allstate moves to dismiss the Complaint under Federal Rule of Civil Procedure 12(b)(6), arguing that Plaintiff has failed to state a plausible claim for breach of contract because neither the Policy nor Louisiana law require Allstate to pay sales tax and regulatory fees as part of actual cash value. (Doc. 11-1 at 5.) Allstate further argues that, because Plaintiff has no viable claim for breach of contract, her claim for bad faith under La. R.S. §§ 22:1892 and 22:1973 fails too. (Id. at 5, 15.)

II. Rule 12(b)(6) Standard

"Federal pleading rules call for 'a short and plain statement of the claim showing that the pleader is entitled to relief,' [Fed. R. Civ. P. 8(a)(2)]; they do not countenance dismissal of a complaint for imperfect statement of the legal theory supporting the claim asserted." Johnson v. City of Shelby, Miss., 574 U.S. 10, 11, 135 S.Ct. 346, 190 L.Ed.2d 309 (2014) (citations omitted).

Interpreting Rule 8(a) of the Federal Rules of Civil Procedure, the Fifth Circuit has explained:

The complaint (1) on its face (2) must contain enough factual matter (taken as true) (3) to raise a reasonable hope or expectation (4) that discovery will reveal relevant evidence of each element of a claim. "Asking for [such] plausible grounds to infer [the element of a claim] does not impose a probability requirement at the pleading stage; it simply calls for enough facts to raise a reasonable expectation that discovery will reveal [that the elements of the claim existed]."

Lormand v. US Unwired, Inc., 565 F.3d 228, 257 (5th Cir. 2009) (internal citations omitted) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 556, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)).

Applying the above case law, the Western District of Louisiana has stated:

Therefore, while the court is not to give the "assumption of truth" to conclusions, factual allegations remain so entitled. Once those factual allegations are identified, drawing on the court's judicial experience and common sense, the analysis is whether those facts, which need not be detailed or specific, allow "the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." [Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009);] Twombly, 55[0] U.S. at 556 . This analysis is not substantively different from that set forth in Lormand, supra, nor does this jurisprudence foreclose the option that discovery must be undertaken in order to raise relevant information to support an element of the claim. The standard, under the specific language of Fed. Rule Civ. P. 8(a)(2), remains that the defendant be given adequate notice of the claim and the grounds upon which it is based. This standard is met by the "reasonable inference" the court must make that, with or without discovery, the facts set forth a plausible claim for relief under a particular theory of law provided there is a "reasonable expectation" that "discovery will reveal relevant evidence of each element of the claim." Lormand, 565 F.3d at 257[;] Twombly, 55[0] U.S. at 556 .

Diamond Servs. Corp. v. Oceanografia, S.A. De C.V., No. 10-177, 2011 WL 938785, at *3 (W.D. La. Feb. 9, 2011) (citation...