United States District Court, W.D. Washington, Tacoma
CAMERON LUNDQUIST, an individual, on behalf of himself and all others similarly situated, Plaintiff,
FIRST NATIONAL INSURANCE COMPANY OF AMERICA, a New Hampshire Corporation, Defendant.
ORDER ON MOTION TO DISMISS PLAINTIFF'S COMPLAINT
THIS ORDER VACATED BY MINUTE ORDER (DKT. 29)
J. BRYAN, UNITED STATES DISTRICT JUDGE
matter comes before the Court on the Defendant First National
Insurance Company of America's (“First
National”) Motion to Dismiss Plaintiff's Complaint
pursuant to Fed.R.Civ.P. 12 (b)(6). Dkt. 25. Oral argument
has been requested, but is unnecessary to decide the motion.
The Court has considered the pleadings filed in support of
and in opposition to the motion and the file herein.
putative class action, the Plaintiff asserts that First
National's practice of using unexplained and unjustified
condition adjustments to comparable vehicles when valuing a
total loss claim for a vehicle, violates the Washington
Administrative Code (“WAC”), and so constitutes:
(1) breach of contract, (2) breach of the implied covenant of
good faith and fair dealing, and (3) violation of
Washington's Consumer Protection Act, RCW 19.86., et
seq. (“CPA”). Dkt. 1. First National now
moves for dismissal of the complaint for failure to state a
claim under Fed.R.Civ.P. 12 (b)(6). Dkt. 25. For the reasons
provided below, the motion (Dkt. 25) should be denied.
FACTS AND PROCEDURAL HISTORY
ruling on a Rule 12 (b)(6) motion to dismiss, “courts
must consider the complaint in its entirety, as well as other
sources, . . . in particular, documents incorporated into the
complaint by reference, and matters of which a court may take
judicial notice.” Tellabs, Inc. v. Makor Issues
& Rights, Ltd., 551 U.S. 308, 322 (2007).
Accordingly, the following facts are taken from the
Complaint, or from documents referenced therein, the
authenticity of which is not in dispute.
2017, Plaintiff Cameron Lundquist owned a 1998 Dodge Ram 2500
Quad Cab that was in an accident that was so severe that the
truck was considered a total loss. Dkt. 1, at 6. At the time,
Plaintiff had a vehicle insurance contract with First
National, which provided that First National's limit of
liability for a total loss was lowest of either the
“actual cash value” or the amount necessary to
repair or replace the vehicle. Dkt. 25-4, at 22. (Parties do
not dispute that the “actual cash value” was the
lower than the cost of repair or replacement.) The insurance
contract further provided that “[a]n adjustment for
depreciation and physical condition may be made based upon
the physical condition and wear and tear of the property . .
. at the time of the loss.” Dkt. 25-4, at 22.
to the Complaint, “[t]o calculate its offer and
payment” on a total loss, First National obtains a
Market Valuation Report (“report”) “from a
third-party company called CCC Information Services, Inc.
(“CCC”).” Dkt. 1, at 5. The Complaint
alleges that “First National instructs CCC as to what
specific data to include in the report as the basis for the
valuation, including whether to include condition adjustments
to comparable vehicles.” Id., at 6.
“These reports purport to contain values for comparable
used vehicles recently sold or for sale in the geographic
area of the insured.” Id., at 5. The report
also calculates a “purported valuation for the loss
vehicle.” Id., at 5-6. The Complaint asserts
that while the reports reduce the estimated value of the
comparable vehicles for “condition adjustments, ”
the reports fail to “itemize or explain” the
basis for these adjustments. Id., at 6. Further, the
Complaint alleges that “even though each comparable
vehicle has unique characteristics, the reports reduce the
value of multiple comparable vehicles by the same amount . .
. without any itemization or explanation for the amount,
” thereby artificially reducing the valuation of the
loss vehicle. Id., at 6.
Plaintiff made a claim for the total loss of his truck, First
National obtained a report from CCC, and based an offer of
settlement of $18, 406.12 on the valuation report. Dkt. 1, at
6. Plaintiff accepted the offer. Id.
“Comparable Vehicles” portion of the report lists
three comparable trucks: 1998 Dodge Ram 2500 Quad Cab with
127, 664 miles, a 1999 Dodge Ram 2500 Quad Cab with 130, 017
miles, and a 1999 Dodge Ram 3500 Quad Cab with 201, 150
miles; each listed for sale with car dealers. Dkt. 25-2, at
9-10. This section of the report contains a line
“Condition, ” that reduces the value of all three
comparable vehicles by $936. Dkt. 25-2, at 9-10. This line
includes a footnote that provides: “[t]he Condition
Adjustment sets that comparable vehicle to Normal Wear
condition which the loss vehicle is also compared to in the
Vehicle Condition Section.” Dkt. 25-2, at 10. The
“Vehicle Condition” portion of the report lists
the following conditions: seats, carpets, dashboard,
headliner, sheet metal, trim, paint, glass, engine,
transmission, front tires, and rear tires. Dkt. 25-2, at 8.
Plaintiff's truck was given an upward adjustment as being
in “dealer ready” condition for the dashboard and
engine (in the amount of $51 each, for a total of $102) and
was listed as “normal wear” for the other
conditions. Id. A note on the side of this page
First National Insurance Company of America uses condition
inspection guidelines to determine the condition of key
components of the loss vehicle prior to the loss. The
guidelines describe physical characteristics for these key
components, for the condition selected based upon age.
Inspection Notes reflect observations from the appraiser
regarding the loss vehicle's condition.
CCC makes dollar adjustments that reflect the impact the
reported condition has on the value of the loss vehicle as
compared to Normal Wear condition. These dollar adjustments
are based upon interviews with dealerships across the United
Id. The Complaint alleges that by reducing the
comparable vehicles by $936, without regard to any of the
individual characteristics of those comparable vehicles (and
without any explanation), First National's settlement
offer was arbitrary, unjustified, and resulted in an
underpayment to Plaintiff. Dkt. 1, at 6-7. The Complaint
maintains that First National is violating provisions of the
Washington Administrative Code (“WAC”) which
regulate the “Methods and Standards of Practice for
Settlement of Total Loss Vehicle Claims, ” WAC
284-30-391. Id. Based on alleged violations of the
WAC, specifically WAC 284-30-391 (4)(b) and (5)(d), the
Complaint makes claims for breach of contract, breach of the
duty of good faith and fair dealing, and for violation of the
CPA. Id. The Complaint seeks damages, declaratory
and injunctive relief. Id.
pending motion to dismiss, First National argues that it
complied with all applicable provisions of WAC, particularly
WAC 284-30-391 (4)(b) and (5)(d). Dkt. 25. It asserts that
Subsection (4)(b) does not impose any disclosure obligation
and Subsection (5)(b) does not apply to comparable vehicles.
Id. It argues that even if subsection (4)(b) did
require disclosure and subsection (5)(d) did apply to
condition adjustments made to comparable vehicles, First
National fully complied with the regulations. Id.
First National asserts all Plaintiff's claims rise and
fall on its compliance with WAC 284-30-391, and so, the
Complaint should be dismissed. Id.
opposes the motion, and argues that WAC 284-30-391 prohibits
un-itemized and unexplained condition adjustments, whether to
the loss vehicle or a comparable vehicle. Dkt. 26. He points
out that the valuation of the loss vehicle is found by
averaging the actual cash values of the comparable vehicles.
Id. Accordingly, whether an insurer makes a
condition adjustment to the loss vehicle or a comparable
vehicle, the adjustment results in an “addition or
deduction from the actual cash value” and so must be
explained and itemized under Subsection 5 (d). Id.
Plaintiff asserts that First National did not do so here.
Id. Plaintiff also argues that Subsection (4)(b)
requires that when an insurer relies on comparable vehicles
listed for sale, as it has here, the ...