A Dallas County plaintiff alleging USAA is unlawfully telling the state it has paid claims for those involved in certain auto accidents before claimants have received or cashed any checks should not be allowed to pursue the lawsuit as a class action, the insurer told the Texas Supreme Court during oral arguments Wednesday.
Sunny Letot, whose vintage 1983 Mercedes Benz 300SD was declared a total loss after a USAA insured driver rear-ended her, alleges USAA’s uniform practice of declaring vehicles as salvage — which under state law renders the vehicle unsellable and undrivable — unlawfully deprived her of the use of her car for two years while she fought the unilateral determination.
Letot, who did get USAA to file a correction report with the Texas Department of Transportation, alleges there are “untold” numbers of other motorists entitled to damages for being stripped of their property rights. But USAA told the court that in 15 years it has only filed 10 correction reports, and that after reviewing hundreds of claims Letot appears to be the only claimant who has ever rejected USAA’s payment or contested its determination that a vehicle is a total loss.
The Texas Supreme Court has been asked to decide whether the Dallas County district judge who certified the class action — and the Fifth Court of Appeals panel that affirmed that ruling — got it wrong.
“This case should never have been certified for class treatment,” said Rachel Ekery, of Alexander Dubose Jefferson who is representing USAA.
Letot’s “is the quintessential case that class actions exist to address,” retorted Anne Johnson, of Tillotson Johnson & Patton who represents Letot.
Letot had carefully restored her vintage Mercedes “at great personal expense” and received offers up to $16,500 to purchase the car before the January 2009 wreck.
USAA assessed the value of the Mercedes at $2,568. The insurance company determined repair costs exceeded the vehicle’s cash value and declared it a total loss.
Letot disputed USAA’s determination, but the insurance company mailed Letot a check anyway on Jan. 21, 2009. The next day, USAA filed a report with the Texas Department of Transportation, representing that the vehicle was rendered salvage, or a total loss, and that the insurance agency had paid the claim.
Letot returned the check and has argued USAA misrepresented to the state that it had paid the claim. She continued to fight USAA’s determination that the car was salvage.
USAA said in a December 2010 correction report filed with the state that it incorrectly determined the Mercedes was a salvage vehicle.
Letot ultimately disassembled the car and sold the parts. She filed the lawsuit in January 2013. Discovery in the case revealed USAA routinely files the salvage reports with the state immediately after issuing checks, without confirmation the claimants would accept the checks. USAA files up to 100 such reports weekly.
Letot’s lawyer argued to justices that USAA’s practice illegally strips people of their property rights because the owner retained reports notify the state that a vehicle can no longer operate on public roads or be sold, or the owner could be subjected to criminal penalties.
“Ms. Letot lost the right to use or sell her car even though USAA later withdrew that report,” Johnson said. “Her injury occurred the minute that false report was submitted to the state.
There’s an “untold number of victims,” Johnson argued, and whether people accepted the checks “has nothing to do with liability.”
“If they’ve accepted the check, they may not be able to get salvage vehicle damages, but they can still get loss-of-use damages,” Johnson said.
The proposed class would include claimants for whom USAA filed — within three days of mailing a check — a state report representing USAA made a payment on a total loss vehicle. The class members would be allowed to seek injunctive relief and damages.
Letot alone does not have standing to sue USAA for converting her property, Ekery argued. And her theory for certifying a class of claimants falls short of requirements for class action, Ekery said.
Justice Evan Young questioned whether USAA’s correction report stating it was incorrect to declare the Mercedes salvage provided Letot standing. Ekery declined to concede Letot had standing. But even if she does, Ekery said, her case is “a uniquely individualized issue” and, therefore, doesn’t meet the prerequisite for a class action that there be questions of law or fact are common to the class.
Most people are happy to receive an insurance company’s check, Justice Jimmy Blacklock contended. He questioned Letot’s lawyer on how the case presents common law or fact questions. He also asked whether Letot has claims or defenses that are typical of the proposed class, another prerequisite for certification.
Loss-of-use damages are available for a claimant the moment USAA files an owner retained report, Johnson responded.
“The minute that that report is filed with the false representation in it, you’ve been deprived of your property rights,” Johnson said. “The second that happens.”
Blacklock again pressed Johnson on whether Letot’s claim is typical of proposed class action members. Most people are “delighted” to get a check for the value of the car, Blacklock said.
“I still can’t see how those people could possibly be represented,” he said.
Blacklock’s concern speaks to the case merits but is not a basis for denying class certification, Johnson responded.
Letot has an individual insurance code and a Deceptive Trade Practices Act claim pending in the trial court, Ekery reiterated to justices.
“This is a case of an atypical, uncommon claim brought by a single individual,” Ekery said. “It never should have been certified for aggregate treatment.”
USAA is also represented by Wallace B. Jefferson and Marcy Hogan Greer of Alexander Dubose & Jefferson and Robert T. Owen and Levon G. Hovnatanian of Martin, Disiere, Jefferson & Wisdom.
Letot is also represented by Jeffrey M. Tillotson, J. Austen Irrobali and Stephani A. Michel of Tillotson Johnson & Patton.
The case number is 22-0238.