Class action suit over 'salvage' against USAA allowed to move forward
The suit alleges USAA improperly takes title to vehicles it considers unrepairable, without knowledge or consent of the owner.
A Dallas trial court’s class action certification based on the insurer’s alleged taking of title without proper notice could impact drivers involved in USAA-insured vehicle accidents. The case, in litigation for more than a decade, required the named plaintiff, Sunny Letot, to overcome a 2014 summary judgment in favor of United Services Automobile Association (USAA).
The issue has to do with whether USAA improperly takes title to vehicles it considers unrepairable, without knowledge or consent of the owner.
It was not until 2017 that the Fifth District Court of Appeals withdrew its earlier opinion and found the trial court, 192nd District, erred in granting summary judgment.
Robert Owen of the Dallas firm Martin, Disiere, Jefferson & Wisdom represented USAA on the appeal. “USAA is reviewing the Court’s opinion and further appellate options,” Owen said.
Letot’s Dallas attorney, Jeffrey Tillotson, said: “We applaud the Dallas court of appeals’ strong and well-reasoned opinion. In some respects, however, this case is like ‘Groundhog Day’: USAA keeps making the same arguments over and over and the [appellate court] keeps rejecting them. We remind them that we have pursued this lawsuit for 10 years. This is our second win before the court of appeals, and we are ready to push this case forward to a trial on the merits on behalf of the entire class.”
Owner retained reports
Letot had a 1983 Mercedes-Benz 300SD that was nearly restored when in 2009 a USAA-insured driver collided with her. USAA valued the Mercedes at $2,728 and had a repair estimate of $8,859.
USAA determined the car was a total loss, and mailed Letot a check for $2,738. However, Letot’s attorney returned the check and demanded USAA pay $10,700.
Without Letot’s knowledge or consent, USAA filed with the Texas Department of Transportation, or TxDOT, an owner retained report for a “nonrepairable” vehicle with a paid claim.
This causes TxDOT to automatically record the property as a salvage vehicle, preventing further transfer of title. Letot knew nothing of this until TxDOT notified her 21 days after the accident.
Letot demanded that USAA inform TxDOT that the Mercedes was not salvage, but USAA took no action.
Once the case of Letot v. USAA Casualty Insurance was ripe for a hearing on the class-action certification, Letot narrowed the claim to the single issue of conversion.
The hearing took place Oct. 14, 2020.
Discovery revealed that it was USAA’s routine procedure to file owner retained reports immediately after issuing checks, regardless of whether the claimant was given an opportunity to accept payment.
It was also discovered that USAA filed 80 to 100 such reports per week.
The trial court certified the class as all persons that filed a claim where USAA found the vehicle a “total loss” and filed an owner retained report with the state within three days of USAA sending a check.
USAA appealed on six issues: (1) the class is unascertainable and overly broad; (2) it fails to meet the numerosity requirement; (3) it doesn’t meet the commonality and typicality requirements; (4) it doesn’t establish how benefits of a class action outweigh the detriments; (5) it should not have named Letot class representative; and (6) it lacked a claim for injunctive relief.
A Fifth District opinion issued Feb. 10, 2022, found that all of USAA’s arguments failed. The court noted repeatedly that most of USAA’s arguments ignored its own policy of taking control of the vehicles via reports to TxDOT. The insurer instead focused on whether customers complained or some other issue unrelated to the scope of the class action.
“The focus is not on determining whether a vehicle was an actual salvage vehicle but rather on the timing of USAA filing an owner retained report,” the Fifth Court stated. “At trial, Letot entered into evidence, without objection, nearly 2,000 Owner Retained Reports filed by USAA showing a date of filing three days or less from the ‘Date of Claim Payment.’”
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