Ameriprise Captive Insurance Company v. Audatex North America

Background

Ameriprise brought a single breach-of-contract action against Audatex. The claim concerns an October 2011 agreement under which Audatex provided software and services, including the Autosource vehicle-valuation tool, to IDS. Ameriprise alleged that Audatex agreed to defend and indemnify covered claims and to maintain specified insurance.

The underlying Zuern litigation alleged that IDS used improper adjustments to reduce insureds’ total-loss vehicle valuations and claim payments. The allegations concerned Audatex’s valuation system and its “Typical Negotiation Adjustment,” which generally reduced vehicle values by approximately 6 to 7 percent. IDS and Ameriprise allegedly paid approximately $2,500,000 to defend and resolve that litigation. Audatex declined IDS’s demands for indemnification and did not provide proof of the insurance coverage requested by Ameriprise.

This Court previously dismissed the case. The Second Circuit vacated that judgment and remanded. It held that Ameriprise had adequately alleged a causal relationship between the Zuern claims and its use of Audatex’s valuation tool, but it expressly did not decide whether the contract’s indemnification provision required Audatex to indemnify Ameriprise in light of the provision’s exclusion for “Ameriprise Content.”

Audatex’s second motion to dismiss

Audatex again moved to dismiss under Federal Rule of Civil Procedure 12(b)(6), which tests whether a complaint alleges enough facts to state a legally plausible claim. Audatex argued that the “Ameriprise Content” exclusion applied because Ameriprise supplied information about customers and vehicles, instructed Audatex about valuation data, revised some valuation-report fields, and provided the final valuations to its customers.

Ameriprise argued that the contract listed separate, alternative bases for indemnification and that the exclusion modified only the reference to “Content.” It also argued that the exclusion applied only when a claim arose from a problem with Ameriprise-supplied content itself.

Court’s analysis

The court first held that Audatex’s second Rule 12(b)(6) motion was properly before it. The court also held that the Second Circuit’s remand permitted consideration of the “Ameriprise Content” issue because the appellate court had expressly left that question unresolved.

The court concluded that Ameriprise plausibly alleged that the Zuern claims arose from Audatex’s system and services. It then considered whether those claims also resulted from or arose out of “Ameriprise Content,” which the agreement defined as content or data created, produced, developed, or otherwise owned by Ameriprise or its affiliates, along with content or data obtained from third-party providers.

The court rejected Audatex’s arguments. It explained that Ameriprise’s instructions to Audatex were distinct from “content or data” under the agreement. It also held that information about customers, vehicles, and geographic locations did not trigger the exclusion because Audatex had not shown a causal connection between that information and the allegedly unlawful downward valuation adjustment at the center of the Zuern claims. Applying the exclusion whenever Ameriprise supplied any input would effectively consume the broad indemnification promise.

The court further held that valuation-report revisions and the final valuations Ameriprise offered to customers did not trigger the exclusion. The revisions were not properly before the court on a motion to dismiss, and the pleadings did not connect those revisions or final valuations to the Zuern claims. At this stage, the court accepted the allegation that Ameriprise ordinarily offered claim amounts equivalent to Audatex’s valuations.

Other contractual theories and disposition

The court held that the remand concerned only Ameriprise’s claim under Section 20.1.1, which addresses claims arising from Audatex’s system, services, content, work product, or their use. The court therefore did not reopen Ameriprise’s alternative theory under Section 20.1.2 or its theory that Audatex failed to obtain required insurance. The court noted that the insurance theory had previously been dismissed for failure to adequately plead breach or damages and had not been raised on appeal.

The court found that Ameriprise plausibly alleged that the “Ameriprise Content” exclusion did not apply. It therefore denied Audatex’s motion to dismiss the Section 20.1.1 breach-of-contract claim. The conclusion states: “Defendant’s motion to dismiss the Complaint is DENIED.” The ruling allows the relevant claim to proceed but does not finally determine Audatex’s ultimate indemnification obligation.