State Farm has requested an Illinois district court grant partial summary judgment in a nationwide class lawsuit over alleged undervalued actual cash values (ACVs) and claim payments. If granted, part of the suit would be thrown out before trial.

The plaintiffs allege State Farm paid out 4-11% less than what was owed by applying a discount, or “typical negotiation adjustment,” to the actual cash value (ACV) of aggregated used vehicle internet prices similar to the ones involved in claims.

State Farm is accused of breach of contract, breach of covenant of good faith and fair dealing, unjust enrichment, and violations of Illinois’ Consumer Fraud and Deceptive Business Practices Act, 815 ILCS 505/2.

Earlier this month, the court denied State Farm’s request for an indefinite stay on discovery and proceedings. The request was made due to the pending appeal of a similar case against Progressive that would review the court’s certification of a class of policyholders, according to State Farm. The plaintiffs’ total loss payments were allegedly decreased by Progressive’s use of a projected-sold adjustment in the calculation of totaled vehicle ACVs.

State Farm said in its Nov. 21 motion that consumer protection laws in four states protect them from the relevant allegations made in the lawsuit:

• • Alaska and West Virginia: The insurance industry is exempt from consumer protection laws.
  • Mississippi: The consumer protection law only applies to merchandise and state courts have ruled that auto insurance isn’t merchandise.
  • Kentucky: Courts agree the state’s consumer protection law doesn’t allow class actions.

“Unjust enrichment claims must fail when a contract governs the relationships between the parties,” State Farm wrote in its motion. “All named plaintiffs entered contracts for insurance policies with State Farm, and they claim State Farm breached its duty to pay under those policies. There is no dispute that a contract governs the relationship between plaintiffs and State Farm, so summary judgment is warranted on the unjust enrichment claims.

“Summary judgment also is proper as to 23 plaintiffs’ claims that State Farm breached the covenant of good faith and fair dealing. The law governing these named plaintiffs considers a breach of the covenant of good faith and fair dealing to be a breach of contract. When an independent claim for breach of contract is raised, the separate claim for a breach of the duty of good faith and fair dealing must fail. State Farm is thus entitled to judgment on these claims for all named plaintiffs except Cervantes-White, Johnston, Roemer, and Sager.”

As for another 17 plaintiffs, State Farm says they didn’t take legal action during their contractual periods.

Lastly, State Farm claims that plaintiffs Bernadette Williams and Monica Woods must be dismissed from the suit because their claims have already been settled in prior proceedings.

“Williams cannot proceed because the settlement of her claim was presented to and approved by a bankruptcy court,” State Farm’s motion states. “Her challenges here constitute an impermissible collateral attack. And Woods sued State Farm Mutual, alleging it breached her contract. As part of a settlement for that litigation, Woods signed a release of all claims related to her loss. Accordingly, Williams and Woods must be dismissed from this action.”

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