In Re GEICO General Insurance Company
- Haywood Gilliam
- 4:19-cv-03768
- U.S. District Court · Northern District of California
- 5
In Munoz v. GEICO, Judge Gilliam denied GEICO’s motion to compel appraisal because the dispute involved policy coverage, not loss value.
The ruling affected the plaintiffs and GEICO by keeping their policy dispute out of the appraisal process; the order did not decide whether GEICO breached the policies or whether the plaintiffs were entitled to additional payments.
What happened
In Martisha Ann Munoz, et al. v. GEICO General Insurance Company, the plaintiffs claimed GEICO breached their automobile insurance policies after accidents left their vehicles total losses. They alleged GEICO failed to pay sales tax for a leased vehicle and paid only part of the required regulatory fees.
GEICO asked the court to require an appraisal, arguing that the dispute concerned the amount of the losses. The plaintiffs said they did not challenge GEICO’s vehicle valuations; instead, they challenged how the policy applied to sales tax and regulatory fees.
The court ruled that these were policy-coverage questions that appraisers could not decide and denied GEICO’s motion to compel appraisal. Judge Gilliam did not reach the plaintiffs’ separate argument that GEICO demanded appraisal too late.
The detailed version
- In Re GEICO General Insurance Company · No. 4:19-cv-03768
- Haywood Gilliam
- Dec. 2, 2019
Background
The plaintiffs filed breach-of-contract claims against GEICO on behalf of themselves and a proposed class. They had private passenger automobile insurance policies providing comprehensive and collision coverage. Martisha Ann Munoz leased a vehicle that became a total loss after a February 24, 2017 accident. Plaintiff Ventrice-Pearson owned a vehicle that became a total loss after a November 14, 2018 accident. GEICO sent both plaintiffs letters determining the vehicles’ base values.
The plaintiffs alleged that GEICO failed to pay the full actual cash value required by the policies. Their claims concerned two issues: whether GEICO had to pay sales tax for a leased total-loss vehicle in the same way it paid sales tax for owned or financed vehicles, and whether GEICO had to pay the full amount of state regulatory fees rather than a prorated amount.
Motion and legal standard
GEICO moved to compel appraisal and to dismiss or stay the case. The policy allowed either GEICO or an insured to demand an appraisal when they disagreed about the “amount of loss.” An appraisal is a process in which selected appraisers determine the value of the loss, with an umpire resolving disagreements between them.
The court explained that California law treats an insurance-policy appraisal provision as an enforceable arbitration clause. Before compelling appraisal, the court must determine whether the agreement covers the dispute. Under California law, appraisers determine the amount of physical damage but do not interpret the insurance contract or decide coverage questions.
Analysis
The court agreed with the plaintiffs that the dispute was about coverage, not the amount of loss. The plaintiffs did not challenge the values GEICO assigned to their vehicles or the way GEICO calculated the sales tax and state fees. They challenged GEICO’s decisions not to pay sales tax for Munoz’s leased vehicle and not to pay the full state fees. Those questions required interpreting the policy, which was outside the appraisers’ limited role.
The court distinguished GEICO’s cited cases because those cases involved disagreements about the underlying value of a loss or the method used to calculate that value. The court also declined to follow a Florida case that GEICO cited because it applied Florida law, while California law limits appraisers to factual determinations about the amount of damage.
Ruling
The court DENIED GEICO’s motion to compel appraisal. Because it denied the motion on the ground that the dispute was not covered by the appraisal provision, it did not decide the plaintiffs’ argument that GEICO failed to demand appraisal within 60 days after proof of loss was filed. The order was signed by Judge Haywood S. Gilliam, Jr.
Read the full 5-page opinion on CourtListener, the free public archive maintained by the Free Law Project.