This story is reprinted with permission from FC&&S Legal, the industry's only comprehensive digital resource designed for insurance coverage law professionals. Visit the website to subscribe.
The U.S. Court of Appeals for the Eleventh Circuit has ruled that an insurer's advertising slogan – “like a good neighbor, State Farm is there” — was “puffery” and an insured could not claim that it amounted to a misrepresentation of material fact sufficient to support a fraud claim against the insurer.
|The Case
Joseph Broadway was injured in an automobile accident when his car was struck by a negligent driver. Mr. Broadway recovered $25,000 from the at-fault driver's automobile insurance company; that was the coverage limit.
Mr. Broadway then sought to recover underinsured motorist (“UIM”) benefits from his own auto insurer, State Farm Mutual Automobile Insurance Company. He contended that his damages exceeded the amount he had recovered from the at-fault driver's insurance and he sought to recover the full coverage amount of his UIM benefits under his State Farm policy: $25,000.
State Farm offered Mr. Broadway only $5,000 in satisfaction of his claim, and he sued, purporting to assert claims for breach of contract, bad faith, and fraud.
The U.S. District Court for the Middle District of Alabama granted summary judgment in favor of State Farm, and Mr. Broadway appealed.
Among other things, he argued that the State Farm insurance agent from whom he had purchased his policy had committed fraud by representing falsely to him – through State Farm's advertising slogan — that State Farm would treat him like a “Good Neighbor.”
|The Eleventh Circuit's decision
The Eleventh Circuit affirmed.
In its decision, the circuit court explained that, to state a claim for fraud under Alabama law, a plaintiff must allege, among other things, a misrepresentation of a material fact. It added that, under Alabama law, statements of opinion amounting to nothing more than “puffery” were not statements concerning material facts upon which individuals had a right to act and, therefore, would not support a fraud claim.
The circuit court then said that it could not say that State Farm's advertising slogan — “like a good neighbor, State Farm is there” — was a representation of a material fact. Rather, the circuit court declared, the advertising slogan constituted “nothing more than a statement of opinion or 'puffery.'”
Because Mr. Broadway had failed to allege a misrepresentation of material fact, the Eleventh Circuit concluded, the district court had decided correctly that he had failed to state a claim under Alabama law for fraud.
The case is Broadway v. State Farm Mutual Automobile Ins. Co., No. 16-13363 (11th Cir. March 28, 2017).
Steven A. Meyerowitz, Esq., is the director of FC&S Legal, the editor-in-chief of the Insurance Coverage Law Report, and the founder and president of Meyerowitz Communications Inc. Email him at [email protected].
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