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Thompson v. Progressive Universal Insurance Co.

United States District Court, W.D. Wisconsin

November 14, 2019




         On behalf of herself and others similarly situated, plaintiff Darcee Thompson brings a claim against defendant Progressive Universal Insurance Company for failing to pay the sales taxes, title and registration fees on a replacement vehicle under the terms of her automobile insurance policy. Before the court is defendant's motion to dismiss plaintiff's claim under Federal Rule of Civil Procedure 12(b)(6) (dkt. #13), which will be granted for the reasons that follow.


         Thompson's 2015 Kia Optima LX was insured under the terms of her policy with Progressive, which she attaches as Exhibit A to her complaint. (Compl. (dkt. #1) ¶ 13 & Ex. A.) Specifically, Progressive agreed to pay Thompson the lesser of “the actual cash value of the stolen or damaged property at the time of the loss reduced by the applicable deductible” or “the amount necessary to replace the stolen or damaged property reduced by the applicable deductible.” (Compl., Ex. A (dkt. #1-1) 19.) The policy further provides that “actual cash value is determined by the market value, age, and condition of the vehicle at the time the loss occurred.” (Id. at 21.)

         Thompson was involved in a collision on June 16, 2015 (Compl. (dkt. #1) ¶ 19), which the parties agree rendered her new Optima a total loss (id. ¶ 20). After investigating, Progressive purported to pay Thompson the actual cash value (“the ACV”) of the vehicle under her policy as determined by its market value, age, and condition at the time of the accident reduced by the applicable deductible. (Id. ¶ 25.) As calculated by Progressive, however, neither sales tax nor title and registration fees imposed in purchasing a replacement vehicle were incorporated into its definition of market value. (Id. ¶ 23.)[2]Thompson maintains that the failure to include the tax and fees constitutes a breach of the policy.


         A motion to dismiss under Rule 12(b)(6) is designed to test the complaint's legal sufficiency. See Fed. R. Civ. P. 12(b)(6). The court must “constru[e] the complaint in the light most favorable to the plaintiff, accepting as true all well-pleaded facts alleged, and drawing all possible inferences in [the plaintiff's] favor.” Hecker v. Deere & Co., 556 F.3d 575, 580 (7th Cir. 2009). Dismissal is warranted only if no recourse could be granted under any set of facts consistent with the allegations. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009); Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 563 (2007).

         To survive a motion to dismiss, therefore, a plaintiff need only allege sufficient facts to state a plausible claim for relief. Spierer v. Rossman, 798 F.3d 502, 510 (7th Cir. 2015) (citing Twombly, 550 U.S. at 570). Still, “when it is ‘clear from the face of the complaint, and matters of which the court may take judicial notice, that the plaintiff's claims are barred as a matter of law,' dismissal is appropriate.” Parungao v. Cmty. Health Sys., Inc., 858 F.3d 452, 457 (7th Cir. 2017) (quoting Conopco, Inc. v. Roll Int'l, 231 F.3d 82, 86 (2d Cir. 2000)).

         Here, Progressive argues that dismissal of plaintiff's claim is compelled by the unambiguous definition of ACV in the policy, which includes no reference to sales tax nor registration fees. (Def.'s Br. (dkt. #14) 6.) In response, Thompson argues that ACV is not defined by the policy, “but rather only lists factors that are included in calculating ACV, none of which eliminates Progressive's liability for sales tax or vehicle title and registration fees.” (Pl.'s Opp'n (dkt. #19) 1 (emphasis added).) If Progressive is right, then the unambiguous definition in the insurance policy should control and its motion to dismiss should be granted. On the other hand, if the language in the insurance policy “is susceptible to more than one reasonable interpretation, ” then Progressive's motion must be denied because: “(1) evidence extrinsic to the contract itself may be used to determine the parties' intent and (2) ambiguous contracts are construed against the drafter” and “in favor of the insured.” Coppins v. Allstate Indem. Co., 2014 WI.App. 125, ¶ 24, 359 Wis.2d 179, 857 N.W.2d 896 (quoting Folkman v. Quamme, 2003 WI 116, ¶¶ 12-13, 264 Wis.2d 617, 665 N.W.2d 857).

         Plaintiff supports her reading of ACV, and more particularly “market value, ” by pointing to case law, which she claims demonstrates that market value must include replacement cost. The cases plaintiff cites for support, however, are distinguishable. First, plaintiff cites two Seventh Circuit cases to demonstrate that ACV includes replacement cost, but neither case concerns measuring ACV in the insurance context. See United States v. Draves, 103 F.3d 1328 (7th Cir. 1997) (concerning a criminal case litigating over credit card fraud); United States v. Crown Equipment Corp., 86 F.3d 700 (7th Cir. 1996) (determining actual damages by market value in the context of commodities taken into government possession for price control purposes).

         Second, plaintiff cites to several cases from Wisconsin, the Seventh Circuit, and other jurisdictions that concern the interpretation of insurance policies that, unlike the policy at issue, did not define ACV whatsoever. For example, plaintiff cites Wisconsin Screw Company v. Firemen's Fund Insurance Company, 297 F.3d 697 (7th Cir. 1962), a case in which the Seventh Circuit held under Wisconsin law that ACV in an insurance policy could be determined by considering replacement cost if ACV is not defined. Id. at 700; see also Sos v. State Farm Mut. Auto. Ins. Co., No. 6:17-cv-890-Orl-40KRS, slip op. at *7 (M.D. Fla. Mar. 13, 2019) (analyzing policy that did not define ACV); Doelger & Kirsten, Inc. v. Nat'l Union Fire Ins. Co. of Pittsburgh, Pa., 42 Wis.2d 518, 521, 167 N.W.2d 198 (Wis. 1969) (same); Coppins, 2014 WI.App. 125 (same).

         Unlike these cases, the policy here explicitly states that ACV is “determined by the market value, age, and condition of the vehicle at the time the loss occurred.” (Compl. Ex. A (dkt. #1-1) 21.) While the above cases support the general proposition that ACV may include replacement costs in the absence of a definition, these cases do not support the proposition that a policy that defines ACV must include replacement costs, especially where the policy at issue considers an alternative basis for recovery of replacement costs at Progressive's election.

         Similarly, the fact that the Wisconsin Commissioner of Insurance in a 20-year-old market conduct report recommended to an insurance company that sales tax should be included in an all-inclusive settlement of a totaled vehicle holds little persuasive weight in evaluating the specific policy language at issue, which defines ACV in a manner that distinguishes it from replacement costs. (Pl.'s Opp'n (dkt. #19) 8-9.) Moreover, as defendant points out, the report does not even describe the terms and conditions of the policy under consideration by the Commissioner and, therefore, there is no basis for finding that the policy language was at all similar to the disputed language in the policy here.[3]

         As for the cases that plaintiff relies upon that do define ACV, the definitions expressly include replacement costs. For example, in Mills v. Foremost Insurance Company, 511 F.3d 1300 (11th Cir. 2008), the Eleventh Circuit considered a policy that defined ACV as “‘the cost to repair or replace property with new materials of like kind and quality' less certain depreciation.” Id. at 1305; see also Roth v. GEICO Gen. Ins. Co., no. 16-62942- Civ-DIMITROULEAS, 2018 WL 3412852, *3 (S.D. Fla. June 13, 2019) (discussing a policy that defines ACV as “the replacement cost of the auto or property less depreciation or betterment”); Bastian v. United Serv. Auto. Ass'n., 150 F.Supp.3d 1284, 1289 (M.D. Fla. 2015) (discussing a policy that defines ACV of a vehicle as “the amount it would cost, at the time of loss, to buy a comparable vehicle.”); Lukes v. Am. Family Mut. Ins. Co., 455 F.Supp.2d 1010, 1015 (D. Ariz. ...

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