Thereafter, the insureds sued on behalf of themselves and all others similarly situated, alleging that GEICO had failed to pay the actual cash value for their total loss claims.

In particular, the insureds argued that GEICO had breached the policy provision stating that GEICO "will pay for collision loss to the owned auto or non-owned auto for the amount of each loss less the applicable deductible" by failing to pay sales tax owed where the total-loss vehicle was leased, and by only paying a prorated amount of the regulatory fees to all total-loss insureds instead of the full amount.

GEICO moved to compel appraisal and dismiss or stay the case.

The GEICO Policy

The GEICO policy provided:

If [GEICO] and the insured do not agree on the amount of loss, either may, within 60 days after proof of loss is filed, demand an appraisal of the loss. In that event, we and the insured will each select a competent appraiser. The appraisers will select a competent and disinterested umpire. The appraisers will state separately the actual cash value and the amount of the loss. If they fail to agree, they will submit the dispute to the umpire. An award in writing of any two will determine the amount of loss. We and the insured will each pay his chosen appraiser and will bear equally the other expenses of the appraisal and umpire.

[GEICO] will not waive our rights by any of our acts relating to appraisal.

The policy defined "loss" as "direct and accidental loss of or damage to" the insured auto and defined "actual cash value" as "the replacement cost of the auto or property less depreciation and betterment."

The District Court's Decision

The district court denied GEICO's motion.

In its decision, the district court agreed with the insureds that the parties' disputes did not involve the amount of their loss but, rather, involved coverage issues.

The district court reasoned that the insureds did not dispute the amount of damage quoted by GEICO but that the policy covered sales tax for leased vehicles just as for owned vehicles, and covered the full amount of state regulatory fees instead of a prorated sum.

According to the district court, if it were to grant GEICO's motion, the appraisers would be asked to answer coverage questions, "a task not part of their limited role."

The district court reasoned that although the insureds sought to recover money GEICO did not pay them, they did not dispute the value attributed to any aspect of the loss. In fact, the district court added, the insureds acknowledged that GEICO had properly calculated the sales tax on Ms. Munoz's claim and the state fees imposed on vehicle transactions. The insureds only contested GEICO's decisions to withhold sales tax for Ms. Munoz's leased vehicle and each insured's full state fees, both issues, the district court said, "of policy interpretation."

The case is Munoz v. GEICO General Ins. Co., No. 19-cv-03768-HSG (N.D. Cal. Dec. 2, 2019). Attorneys involved include: For Martisha Ann Munoz, on behalf of herself and all others similarly situated, Cindy Ventrice-Pearson, on behalf of herself and all others similarly situated, Plaintiffs: Annick Marie Persinger, LEAD ATTORNEY, Tycko & Zavareei LLP, Oakland, CA; Edmund Alonso Normand, Jacob Lawrence Phillips, LEAD ATTORNEYS, Normand PLLC, Orlando, FL; Andrew John Shamis, PRO HAC VICE, Shamis and Gentile, P.A., Miami, FL; Scott Adam Edelsberg, PRO HAC VICE, Edelsberg Law, Aventura, FL. For GEICO General Insurance Company, Defendant: Alexander Phillip Fuchs, Kymberly Kochis, LEAD ATTORNEYS, PRO HAC VICE, Eversheds Sutherland (US) LLP, New York, NY; Ian Scott Shelton, LEAD ATTORNEY, Eversheds Sutherland (US) LLP, Sacramento, CA; Joseph Robert Ashby, Sergenian Ashby LLP, Los Angeles, CA. For Poonam Subbaiah, Intervenor: Joshua Adam Fields, LEAD ATTORNEY, Kirtland and Packard LLP, Redondo Beach, CA.

Insurance Coverage Law Center Comment

It is worth noting that a Florida court recently reached a different conclusion in a factually similar case, McGowen v. First Acceptance Ins. Co., Inc., No. 8:19-cv-1101-T-24CPT (M.D. Fla. Aug. 14, 2019), and granted the insurer's motion to compel appraisal.

The district court in McGowen addressed nearly identical disputes – whether the insurer improperly excluded sales tax and tag and title fees – and an identical policy appraisal provision concerning the "amount of loss." The McGowen plaintiff similarly argued that the case presented a coverage issue, but the district court found the issue to be appropriate for appraisal.

Notably, the court in McGowen relied on Florida law.