McPheeters v. United Servs. Auto. Ass'n

549 F.Supp.3d 737

Roberta A. MCPHEETERS, et al., individually and on behalf of all others similarly situated, Plaintiffs,

v.UNITED SERVICES AUTOMOBILE ASSOCIATION, et al., Defendants.

Case No. 1:20-cv-414

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

Signed July 13, 2021

Kevin C. Hulick, Stuart E. Scott, Spangenberg Shibley & Liber LLP, Cleveland, OH, Andrew J. Shamis, Pro Hac Vice, Shamis & Gentile, P.A., Miami, FL, Christopher Chagas Gold, Pro Hac Vice, I. Scott Adam Edelsberg, Pro Hac Vice, Edelsberg Law, P.A., Aventura, FL, Edmund A. Normand, Pro Hac Vice, Jacob Lawrence Phillips, Pro Hac Vice, Normand Law, PLLC, Orlando, FL, Joshua Moyer, Pro Hac Vice, Shamis & Gentile, P.A. San Diego Office, San Diego, CA, for Plaintiff Roberta McPheeters.

Kevin C. Hulick, Stuart E. Scott, Spangenberg Shibley & Liber LLP, Cleveland, OH, I. Scott Adam Edelsberg, Pro Hac Vice, Edelsberg Law, P.A., Aventura, FL, Andrew J. Shamis, Pro Hac Vice, Shamis & Gentile, P.A., Miami, FL, Edmund A. Normand, Pro Hac Vice, Jacob Lawrence Phillips, Pro Hac Vice, Normand Law, PLLC, Orlando, FL, Joshua Moyer, Pro Hac Vice, Shamis & Gentile, P.A. San Diego Office, San Diego, CA, for Plaintiff Latondra Traylor.

Kevin C. Hulick, Stuart E. Scott, Spangenberg Shibley & Liber LLP, Cleveland, OH, Christopher Chagas Gold, Pro Hac Vice, Edelsberg Law, P.A., Aventura, FL, Edmund A. Normand, Pro Hac Vice, Jacob Lawrence Phillips, Normand Law, PLLC, Orlando, FL, Joshua Moyer, Pro Hac Vice, Shamis & Gentile, P.A. San Diego Office, San Diego, CA, for Plaintiff Bernard Ivory.

Andrea C. Wiltrout, Mathew G. Drocton, Rand L. McClellan, Rodger L. Eckelberry, Baker & Hostetler LLP, Columbus, OH, Carrie Dettmer Slye, Baker & Hostetler, Cincinnati, OH, for Defendant United Services Automobile Association.

Andrea C. Wiltrout, Mathew G. Drocton, Rand L. McClellan, Rodger L. Eckelberry, Baker & Hostetler LLP, Columbus, OH, Carrie Dettmer Slye, Baker & Hostetler, Cincinnati, OH, Stuart E. Scott, Spangenberg Shibley & Liber LLP, Cleveland, OH, for Defendant Garrison Property and Casualty Insurance Company.

Rodger L. Eckelberry, Mathew G. Drocton, Rand L. McClellan, Baker & Hostetler LLP, Columbus, OH, for Defendant USAA Casualty Insurance Company.

ORDER:

(1) DENYING DEFENDANTS’ MOTION FOR JUDGMENT ON THE PLEADINGS;

(2) DENYING DEFENDANTS’ MOTION TO CERTIFY A QUESTION OF CONTROLLING LAW;

(3) DENYING AS MOOT DEFENDANTS’ MOTION TO STAY DISCOVERY; AND

(4) GRANTING IN PART DEFENDANTS’ MOTION TO SEAL

Timothy S. Black, United States District Judge

This civil case is before the Court on Defendants United Services Automobile Association, Garrison Property and Casualty Insurance Company, and USAA Casualty Insurance Company (collectively, "USAA")’s motion for judgment on the pleadings, or, alternatively, to certify a controlling question of law to the Supreme Court of Ohio, and motion to stay discovery (Doc. 32), the parties’ responsive memoranda (Docs. 50, 42), USAA's notice of supplemental authority (Doc. 48), and Plaintiffs’ response to the supplemental authority. (Doc. 49). Also before the Court is USAA's motion to seal (Doc. 41), and the parties’ responsive memoranda and supporting documents (Docs. 42, 43, 45, 46, 47).¹

I. BACKGROUND

A. Relevant Facts

The relevant facts of this case are not significantly in dispute. Plaintiffs ("Plaintiffs"), all Ohio residents, held auto insurance policies with Defendant insurer USAA. (Doc. 30 at ¶2). Plaintiffs sustained damage to their vehicles and submitted claims. (Id. at ¶1). USAA declared Plaintiffs’ vehicles "total losses" because, in each case, the cost to repair the vehicle exceeded its pre-accident values minus its worth as salvage. (Id. at ¶¶ 2, 4). For the purposes of this motion, the Court assumes Plaintiffs submitted these claims without having first purchased replacement vehicles. In any case, in settlement of the claims, USAA did not compensate Plaintiffs for the cost of sales tax on replacement vehicles. (Id. at 60).

Plaintiffs filed suit, seeking damages for the alleged breach of the insurance contract, on behalf of themselves and those similarly situated.²

USAA has now moved for judgment on the pleadings, pursuant to Federal Rule of Civil Procedure 12(c) ; alternatively, to certify a question to the Ohio state Supreme Court; and for other relief. (Doc. 32). USAA moves for judgment on the pleadings on the basis that USAA has no obligation under the terms of the policy to compensate Plaintiffs for sales tax on replacement vehicles the Plaintiffs have not yet purchased. (Id. )

B. "Loss" and "Actual Cash Value" as used in the policy

The auto insurance policy contains two sections that frame the issues in this case: a coverage provision centered on the term "loss" ... and a limit of liability section that invokes "actual cash value" ("ACV").

Coverage for "loss" is described as as follows:

"We will pay for loss caused by collision to your covered auto, including its equipment, and personal property contained in your covered auto, minus any applicable deductible shown on the Declarations." (Doc. 30-1, PageID# 876).

In turn, the policy defines "loss" as:

"direct and accidental damage to the operational safety, function, or appearance of, or theft of, your covered auto or personal property contained in your covered auto. Loss includes a total loss, but does not include any damage other than the cost to repair or replace." (Id. , PageID #875).

The limit of liability section employs markedly different language. In relevant part, it states:

LIMIT OF LIABILITY

A. Total loss to your covered auto. Our limit of liability under Comprehensive Coverage and Collision Coverage is the actual cash value of the vehicle, inclusive of any custom equipment.

[...]

2. We will declare your covered auto to be a total loss if, in our judgment, the cost to repair it would be greater than its actual cash value minus its salvage value after the loss. (Id. , PageID #877).

The policy also defines ACV. In relevant part, ACV is "the amount that it would cost, at the time of loss, to buy a comparable vehicle...." (Id. , PageID# 875).

II. MOTION FOR JUDGMENT ON THE PLEADINGS

A. Standard of Review

The standard of review for a Rule 12(c) motion is the same as for a motion under Rule 12(b)(6) for failure to state a claim upon which relief can be granted. Fritz v. Charter Twp. of Comstock , 592 F.3d 718, 722 (6th Cir. 2010). "For purposes of a motion for judgment on the pleadings, all well-pleaded material allegations of the pleadings of the opposing party must be taken as true, and the motion may be granted only if the moving party is nevertheless clearly entitled to judgment." Id. (citing JPMorgan Chase Bank v. Winget , 510 F.3d 577, 581 (6th Cir. 2007) ). That is, a court should grant a motion for judgment on the pleadings under Rule 12(c) only if "no material issue of fact exists and the party making the motion is entitled to judgment as a matter of law." Winget , 510 F.3d at 582 (quoting Paskvan v. City of Cleveland Civil Serv. Comm'n , 946 F.2d 1233, 1235 (6th Cir. 1991) ).

To show grounds for relief, Federal Rule of Civil Procedure 8(a) requires that the complaint contain a "short and plain statement of the claim showing that the pleader is entitled to relief." The Rule "demands more than an unadorned, the-defendant-unlawfully-harmed-me accusation." Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (citing Bell Atl. Corp. v. Twombly , 550 U.S. 544, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ). Pleadings offering mere " ‘labels and conclusions’ or ‘a formulaic recitation of the elements of a cause of action will not do.’ " Id. (citing Twombly , 550 U.S. at 555, 127 S.Ct. 1955 ). In fact, in determining a motion to dismiss, "courts ‘are not bound to accept as true a legal conclusion couched as a factual allegation[.]’ " Twombly , 550 U.S. at 555, 127 S.Ct. 1955 (citing Papasan v. Allain , 478 U.S. 265, 106 S.Ct. 2932, 92 L.Ed.2d 209 (1986) ). Further, "[f]actual allegations must be enough to raise a right to relief above the speculative level[.]" Id.

Accordingly, "a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’ " Iqbal , 556 U.S. at 678, 129 S.Ct. 1937. A claim is plausible where "plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. Plausibility "is not akin to a ‘probability requirement,’ but it asks for more than a sheer possibility that a defendant has acted unlawfully." Id. "[W]here the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged—but it has not ‘show[n]’—‘that the pleader is entitled to relief,’ " and the case shall be dismissed. Id.

B. Analysis

USAA argues, as a matter of law, that the insurance policy does not provide insureds with compensation for sales tax on as-yet unpurchased replacement vehicles. The Court discerns three broad points of contention: 1) the policy's coverage for "loss"; 2) the import of "limit of liability" and "ACV"; and 3) the effect of Ohio insurance regulations on the obligations laid out in the policy. Before analyzing these in turn, the Court must address three preliminary issues.

The first regards the unique burden placed on the insurer under Ohio law when it comes to interpreting a disputed insurance contract. Specifically, "[w]here provisions of a contract of insurance are reasonably susceptible of more than one interpretation, they will be construed strictly against the insurer and liberally in favor of the insured." Ostendorf v. Grange Indem. Ins. Co. , No. 2:19-CV-1147, 2020 WL 134169, at *3 (S.D. Ohio 2020). Thus, to show entitlement to judgment, USAA "must establish not merely that the policy is capable of the construction it favors, but rather that such an interpretation is the only one that can fairly be placed on the language in question." Andersen v....