USAA asks Texas Supreme Court to nix class certification
The suit arises from an insured's objection to USAA's decision to declare her nearly restored 1983 Mercedes-Benz 300SD was a salvage vehicle after a collision
Counsel for USAA Casualty Ins. Co. appeared before the Texas Supreme Court to argue for reversal of a trial court’s class certification in an alleged wrongful designation of a vehicle as salvage.
In USAA Cas. Ins. Co. v Sunny Letot, Rachel A. Ekery of Alexander Dubose & Jefferson asserted the damages sought are uniquely individualized and therefore do not meet the commonality requirement for certification.
The lawsuit arises from Letot’s objection to USAA’s decision to declare to the Department of Motor Vehicles that her nearly restored 1983 Mercedes-Benz 300SD was a salvage vehicle after it was involved in a collision.
Under the Certificate of Title Act, a vehicle becomes a salvage vehicle when the damage sustained exceeds the cash value, Ekery said.
Based on its opinion of the car’s value, USAA sent Letot a $2,738 check, which she refused. In response, Letot submitted evidence to contradict USAA’s valuation and the case has been in litigation since 2014.
Ekery argued that USAA followed the law when it submitted the Owner Retained Report to the DMV and emphasized that the DMV then gives notice to the owner that it is illegal to operate a salvage vehicle on a public road and it is illegal to sell it, nor can it be registered again.
Justice Jimmy Blacklock asked what recourse an owner would have if they disagree with the insurance company’s valuation.
Ekery said an owner could do what Letot did, ask that the insurer file a correction report with the DMV. After two years of communications with Letot’s attorney, USAA finally agreed to inform the DMV that is incorrectly determined the vehicle was salvage. However, Letot never had the use of her car.
Justice Brett Busby asked why it is that the insurance company’s opinion in a dispute about whether a vehicle is salvage is the only opinion that is correct as a matter of law.
Ekery said the Texas Legislature assigned that determination to insurance companies in the interest and public safety.
The Texas Civil Justice League submitted an amicus curiae brief supporting USAA’s position and expressing its disagreement with the Fifth District Court of Appeals affirmation of the class certification, stating in part, “If the court of appeals had conducted at least a cursory analysis of the legal basis for USAA’s standard procedure, … it would have found that USAA followed the law precisely as the Legislature wrote it and the Texas Department of Motor Vehicles administers it.”
Anne M. Johnson of Tillotson Johnson & Patton, arguing for Letot and the class, said this case is the “quintessential case that class actions exist to address.”
USAA admitted that it has a uniform, companywide practice of engaging in illegal conduct; admits it treats everyone the same; its illegal practice stripped the plaintiff of valuable property rights, and still engages in the practice, Johnson said.
Johnson said the interpretation USAA wants the court to adopt is that Letot and the class do not have standing.
“All of these arguments have been heavily litigated over the course of ten years,” Johnson said, noting also that Letot twice overcame USAA motions for summary judgment.
The way USAA claims the statute works is that the trigger for criminal liability and the deprivation of property rights is the filing of the Owner Retained Report, she said.
“There’s not textual evidentiary basis for the interpretation of this statute that it is just unilateral notice,” Johnson said.
Blacklock took note of Ekery’s argument that Letot’s situation is atypical because, Ekery said, Letot was the only person in 15 years that had objected to the salvage vehicle determination. Blacklock reasoned that most owners who not want to deal with a severely damaged vehicle and would be happy to simply accept the insurance check.
“It’s hard for me to see how those people are comparable to the unique situation that your client has where she doesn’t want the check,” Blacklock said.
Johnson said there are two kinds of damages in this case. Acknowledging the some potential plaintiffs would not object to a salvage determination, Johnson said every affected vehicle owner of a collision involving a USAA insured car still suffers to some degree the “loss of use.”