Davis v. Geico Cas. Co.

659 F.Supp.3d 843

Janet DAVIS, Angel Randall, Alma Lee Resendez, Mandy Phelan,and Trey Roberts, individually and on behalf of all others similarly situated, Plaintiffs, v. GEICO CASUALTY CO., et al., Defendants.

Case No. 2:19-cv-2477

United States District Court, S.D. Ohio, Eastern Division

Signed March 2, 2023

Daniel Richard Karon, Karon LLC, Cleveland, OH, Beau D. Hollowell, Cleveland, OH, Andrew John Shamis, Shamis & Gentile P.A., Miami, FL, Bradley W. Pratt, Pro Hac Vice, Pratt Clay, LLC, Atlanta, GA, Christopher Baker Hall, Pro Hac Vice, Hall & Lampros, LLP, Atlanta, GA, Christopher Chagas Gold, Pro Hac Vice, Scott Adam Edelsberg, I, Pro Hac Vice, Edelsberg Law, P.A., Aventura, FL, Rachel Dapeer, Pro Hac Vice, Dapeer Law, PA, Aventura, FL, Edmund A. Normand, Pro Hac Vice, Jacob Lawrence Phillips, Pro Hac Vice, Normand Law, PLLC, Orlando, FL, for Plaintiffs Janet Davis, Angel Randall, Mandy Phelan.

Daniel Richard Karon, Karon LLC, Cleveland, OH, Beau D. Hollowell, Cleveland, OH, Andrew John Shamis, Shamis & Gentile P.A., Miami, FL, Bradley W. Pratt, Pro Hac Vice, Pratt Clay, LLC, Atlanta, GA, Christopher Baker Hall, Pro Hac Vice, Hall & Lampros, LLP, Atlanta, GA, Edmund A. Normand, Pro Hac Vice, Jacob Lawrence Phillips, Pro Hac Vice, Normand Law, PLLC, Orlando, FL, Rachel Dapeer, Pro Hac Vice, Dapeer Law, PA, Aventura, FL, Scott Adam Edelsberg, I, Pro Hac Vice, Edelsberg Law, P.A., Aventura, FL, for Plaintiff Trey Roberts.

Kristine Maher, Bricker Graydon LLP, Cincinnati, OH, Alexander P. Fuchs, Pro Hac Vice, Eversheds Sutherland (US) LLP, New York, NY, Kymberly Kochis, New York, NY, Jessica Rae Rodgers, Pro Hac Vice, Eversheds Sutherland, Washington, DC, for Defendants GEICO Casualty Company, Geico Advantage Insurance Company, Geico Choice Insurance Company.

Kristine Maher, Bricker Graydon LLP, Cincinnati, OH, Kymberly Kochis, New York, NY, Jessica Rae Rodgers, Pro Hac Vice, Eversheds Sutherland, Washington, DC, for Defendants GEICO General Insurance Company, Geico Secure Insurance Company.

OPINION AND ORDER

EDMUND A. SARGUS, JR., UNITED STATES DISTRICT JUDGE

This matter is before the Court on Defendants GEICO Casualty Company, GEICO Advantage Insurance Company, GEICO Choice Insurance Company, GEICO General Insurance Company, and GEICO Secure Insurance Company's (collectively, "GEICO" or "Defendants") Motion to Stay (ECF No. 124), GEICO's Motion for Summary Judgment (ECF Nos. 128, 134), GEICO's motions to exclude expert testimony and reports (ECF Nos. 179, 180), and Plaintiffs Janet Davis, Angel Randall, Alma Lee Resendez, Mandy Phelan, and Trey Roberts' (collectively, "Plaintiffs"), on behalf of themselves and all others similarly situated, Motion for Summary Judgment (ECF No. 129, 136) and Plaintiffs' unopposed motion for extension of time to respond to GEICO's motions to exclude (ECF No. 181). For the following reasons, the Court DENIES as moot GEICO's motions to exclude expert testimony and reports (ECF Nos. 179, 180); GRANTS in part and DENIES in part GEICO's Motion for Summary Judgment (ECF Nos. 128, 134); GRANTS in part and DENIES in part Plaintiffs' Motion for Summary Judgment (ECF Nos. 129, 136); DENIES as moot GEICO's Motion to Stay (ECF No. 124); and DENIES as moot Plaintiffs' extension request (ECF No. 181).

This class action asks the following question: Did GEICO breach its contractual obligations to Plaintiffs under their automobile insurance policies when, after Plaintiffs suffered a total loss to their insured vehicles, GEICO opted to pay Plaintiffs for the physical damage to their vehicles without including the costs associated with sales tax, transfer of title fees, and title registration fees? The Court answers "yes." While the policy language is silent as to these taxes and fees, Plaintiffs' interpretation is reasonable—and that is enough. When an insurance law is ambiguous, Ohio law requires courts to interpret insurance policies strictly against the insurer, so long as the insured's interpretation is reasonable. The Court finds, as many have, that GEICO was required to pay Plaintiffs the "actual cash value" of their total-loss vehicles, which includes those expenses that are likely part of the typical replacement costs of the vehicle, such as sales tax, title fees, and title registration fees.

I. BACKGROUND

The five named plaintiffs ("Plaintiffs") in this case were each involved in a car accident between 2009 and 2020. At the time of the accidents, Plaintiffs' vehicles were insured under an insurance policy (the "Policy") that was issued by GEICO Casualty and its subsidiaries (together, "GEICO" or "Defendants"). The Plaintiffs each filed a claim with GEICO. GEICO determined that their vehicles were total losses, meaning that it was uneconomical or impossible to repair the vehicles. GEICO thereafter issued Plaintiffs settlement amounts equal to their totaled vehicle's "actual cash value" ("ACV") to compensate them for their vehicles. Plaintiffs bring this action, on behalf of themselves and all others similarly situated, arguing that the settlement amounts failed to include additional compensation for sales tax, title fees, and title registration fees. Plaintiffs assert that GEICO's Policy entitles them to such compensation.

A. GEICO's Policy

Section III of the Policy, titled Physical Damage Coverages, governs GEICO's obligations in the case of loss or damage to an insured's car. (Policy at 7, ECF No. 129-1.) The Policy provides, in pertinent part:

DEFINITIONS

1. Actual cash value is the replacement cost of the auto or property less depreciation or betterment.

2. Betterment is improvement of the auto or property to a value greater than its pre-loss condition.

[. . .] 5. Depreciation means a decrease or loss in value to the auto or property because of use, disuse, physical wear and tear, age, outdatedness or other causes . . . .

7. Loss means direct and accidental loss of or damage to;

(a) the auto, including its equipment; or

(b) other insured property

[. . .]

9. Owned auto means:

(b) a private passenger . . . auto . . . , ownership of which is acquired by you during the policy period or for which you enter into a lease during the policy period for a term of six months or more . . . .

[. . .]

LOSSES WE WILL PAY FOR YOU

1. We will pay for each loss, less the applicable deductible . . . to the owned or non-owned auto.

[. . .]

Collision

1. We will pay for collisionloss to the owned or non-owned auto for the amount of each loss less the applicable deductible.

[. . .]

LIMIT OF LIABILITY

The limit of our liability for loss;

1. is the actual cash value of the property at the time of the loss;

2. Will not exceed the prevailing competitive price to repair or replace the property at the time of loss . . . with other of like kind and quality . . . .

[. . .]

5. . . . Actual cash value of property will be determined at the time of the loss and will include an adjustment for depreciation/betterment and for the physical condition of the property.

[. . .]

CONDITIONS

[. . .]

7. PAYMENT OF LOSS

We may at our option:

(a) pay for the loss; or

(b) repair or replace the damaged or stolen property.

(ECF No. 129-1 at 7-10.)

The parties do not dispute that the Policy must be interpreted pursuant to the laws of the state of Ohio and conform to Ohio law. (Pl.'s Resp. Defs. Stmt. Material Facts, ECF No. 143 at 4.)

B. Sales Tax, Title Transfer Fees, and Title Registration Fees

In Ohio, an individual or entity purchasing or leasing a vehicle is responsible for the payment of sales tax. When a vehicle is purchased, the amount of the sales tax is based on the purchase price of the vehicle. Ohio Rev. Code §§ 5739.025(A), 5739.01(H). Ohio imposed statewide sales tax during the class period of 5.50% before September 1, 2013, and 5.75% thereafter. Ohio Rev. Code § 5739.02(A); Defs. Resp. Pls.' Stmt. Material Facts, ECF No. 141-2 at 10. In the context of acquiring a leased vehicle, although the parties dispute the appropriate measure for determining the sales tax, the parties do not dispute that a sales tax applies. (Defs. Resp. Pls.' Stmt. Material Facts, ECF No. 141-2 at 12-13.)

Ohio law generally requires every vehicle to be legally titled. Ohio Rev. Code § 4505.03. Ohio also imposes a one-time $15.00 fee to transfer title to record ownership of a vehicle. Ohio Rev. Code § 4505.09(A)(1)(b). In the event of a total loss, insureds can transfer their existing registration to a new vehicle, which cost $4.50 until December 2019, at which point the fee increased to $6.00. Ohio Rev. Code § 4503.12(A)(4); Defs. Resp. Pls.' Stmt. Material Facts, ECF No. 141-2 at 10; Documents and Fees, OHIOBMV, https://www.bmv.ohio.gov/doc-fees.aspx (last visited Feb. 23, 2023).

During the relevant period, GEICO did not pay sales tax, title fees and registration transfer fees in the settlement of Ohio first party total loss claims unless the insured submitted documentation proving that such taxes and fees were incurred on the purchase or lease of a replacement vehicle. (Koontz Dep., ECF No. 129-3, PageID 3718-20.) In other words, only after an insured had provided GEICO with proof of replacing the totaled vehicle did GEICO reimburse the insured for the applicable sales tax, title transfer fees, and title registration fees.

C. Procedural History

On June 13, 2019, Plaintiffs filed this class action on behalf of themselves and others similarly situated. (See generally Compl., ECF No. 1.) Shortly thereafter, GEICO filed a Motion to Dismiss for Failure to State a Claim, which the Court denied on January 7, 2020. (ECF No. 25.) On March 3, 2021, the Court permitted Plaintiffs to file a Third Amended Complaint, in which Plaintiffs allege that GEICO is liable for breach of contract for failing to pay sales tax, title fees, and title registration fees to insureds with total losses as required by GEICO's Policy. (ECF No. 77 at ¶¶ 104-115.)

The Court granted Plaintiffs' motion for class certification on December 13, 2021. (Op. & Order, ECF No. 123.) In response to the Order granting...