Diminished Value Class Action Suit Filed in Washington

On August 20, 2014, a Washington automobile insurer filed a notice of removal of a purported class action lawsuit from the superior court in Pierce County to the federal district court in Tacoma.  The case is captioned Johnston v. United Services Auto. Ass’n (Complaint).  The lawsuit was filed by a Washington policyholder filed suit on behalf of a purported class seeking payment for diminished value insurance benefits under their automobile insurance policies.  In the complaint, the policyholder alleges that the underinsured motorist (UIM) property damage section of the applicable policies provided that the insurance company would pay for all damages which the insured is legally entitled to recover.  Citing Moeller v. Farmers Ins. Co. of Wash., 173 Wn.2d 264, 267 P.3d 998 (2011), the purported class alleges that they are entitled to diminished value damages under the UIM property damage section because they were not excluded under the terms of the insurance contract.  The purported class also alleges that unlike in the UIM coverage section, the insurance company expressly excluded coverage for diminished value damages in the comprehensive and collision coverage sections.

The complaint asserts that the probable diminished value loss for each member of the class will be approximately $1,460.  It also estimates that the total damages that will be sought on behalf of the class will at most be $3,979,960.  In addition to the breach of contract claim, the class asserts a claim for violation of the Insurance Fair Conduct Act (IFCA).

The class of policyholders allege that there is insufficient basis for federal jurisdiction under the Class Action Fairness Act (CAFA).  In the notice of removal, however, the insurance company contends there is sufficient basis for removal.  In support of removing the action, the insurance company states that there is diversity of citizenship between the parties, there are at least 100 putative class members, and that the amount in controversy exceeds $5,000,000.  In order to reach the amount of damages threshold, the insurance company includes the potential damages recoverable under the IFCA, along with the class’s claim for attorney fees.  According to the insurance company, when those damages are included the threshold under the CAFA is satisfied.

We will provide further updates on this case as they become available.  The attorneys of Maloney Lauersdorf Reiner regularly advise clients involved in diminished value insurance coverage disputes.  Please contact us with any questions about this case or any other matter you see addressed on the MLR Insurance Coverage Blog.

This Post Has One Comment

  1. Larry Bailey

    If this case goes forth and if plaintiffs get what they want then it will not bode well for carriers writing Auto in Washington. Carriers have a right to be very concerned. Thanks for posting.

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