We’ve written about class actions filed against State Farm and other carriers alleging systematic undervaluation of damaged vehicles. For example, see Eleventh Circuit Highlights Abuse of Discretion Standard in Upholding Denial of Certification of a “Depreciation” Class Against State Farm (August 31, 2022). In a recent such case Cudd v State Farm Mut. Car. Ins. Co.No. 4:21-CV-217 (CDL), 2022 WL 16541166 (MD Ga. Oct. 28, 2022), Middle District of Georgia Judge Clay Land dismissed alleged class claims against State Farm based on class representative’s failure to comply with any “assessment process” required by the policy if the insured disputes State Farm’s initial calculation of the “actual cash value” of the covered vehicle.
State Farm insured Jarrett Cudd under a standard auto insurance policy that provided for payment of the “actual cash value” of a vehicle when an insured vehicle was declared a total loss. The policy stated that the insured and State Farm “‘must agree on actual cash value'” and that “‘[i]f there is disagreement about the actual present value. . . , then the disagreement will be resolved through a review upon written request of either party.” 2022 WL 16541166, at *1 (citation omitted). In the review process, each party selected a valuer who would then select a third valuer. ID card. A written appraisal “signed by any two appraisers” that includes “an explanation of how they arrived at their appraisal” would be binding on both the insured and State Farm. ID card. (quote omitted). Finally, the policy stated that legal action “‘may not be brought against'” State Farm until after “all provisions of this policy have been fully complied with.” ID card. (citations omitted).
After State Farm declared Cudd’s vehicle a total loss, the State Farm seller provided an initial assessment of the vehicle’s “actual cash value.” Cudd then filed a class action “without notifying State Farm that he disagreed with State Farm’s calculation of the actual cash value of his vehicle, without any attempt to reach agreement on the actual cash value and without giving State Farm the ability to request an appraisal.” ID card. at 2 o’clock. State Farm even asked Cudd after he filed suit to “continue the review process on the policy, but Cudd refused.” ID card.
Judge Land framed the issue as “whether providing State Farm with a meaningful opportunity to invoke the review process before filing a lawsuit is a condition precedent to filing this action.” ID card. Review of Georgia’s Statutes and Authorities in Relation to Contractual Conditions Precedent, the Cudd The court easily concluded that compliance with the review process was a condition precedent to taking legal action. See ID. at *2-3. Thus, the district court dismissed the class action complaint without prejudice to re-filing, after Cudd complied with the review process. See ID. at *3 (“Because the assessment provision clearly applies and because Cudd State Farm has never been given an opportunity to invoke those provisions, its claim is premature and must be dismissed.”).