United States District Court, D. New Jersey
SHERRY LEWIS and DAVID V. LEWIS, individually and on behalf of all others Plaintiffs,
GOVERNMENT EMPLOYEES INSURANCE COMPANY, Defendant.
B. KUGLER UNITED STATES DISTRICT JUDGE.
MATTER comes before the Court on Defendant
GEICO's Motion to Dismiss (Doc. No. 3) certain claims in
Plaintiffs Sherry Lewis and David Lewis's Complaint.
(Doc. No. 1). Plaintiffs filed the Complaint on behalf of
themselves and all individuals insured by GEICO in New Jersey
under a GEICO private passenger vehicle policy who received a
first-party total loss settlement or settlement offer that:
(1) did not include applicable sales tax, title fees, or
license plate fees; or (2) was based in whole or in part on
the price of comparable vehicles reduced by a
“condition” adjustment. For the reasons
articulated in this Opinion, the Motion to Dismiss (Doc. No.
3) is GRANTED.
case involves a total loss settlement between an insurer and
the insured. Sherry and David Lewis
(“Plaintiffs”) leased a 2017 Volkswagen Jetta and
purchased an insurance policy from GEICO
(“Defendant”). Compl. at ¶¶ 14, 44-45.
In the event of a collision, the policy promised payment of
the actual cash value (“ACV”), defined by the
policy as “the replacement cost of the auto or property
less depreciation or betterment.” Id. at
¶ 18. Then in January 2018, Plaintiffs had an auto
the accident, Plaintiffs submitted a claim to GEICO, which
adjusted the claim and determined the total loss.
Id. at ¶¶ 46-47. GEICO paid $17, 258 for
the total loss, which consisted of the value of the vehicle
less Plaintiffs' deductible. Id. at ¶¶
49, 57-58. GEICO determined the value of the vehicle by the
base price of the vehicle less an adjusted vehicle value.
GEICO relied upon a third-party, Certified Collateral
Corporation (“CCC”), to generate the adjusted
vehicle value. Id. at ¶ 64. CCC determined this
“adjustment” by comparing other vehicles with
similar mileage and conditions. Id. The final
adjustment, however, did not explain the basis of the
reduction. Id. at ¶ 68. Plaintiffs therefore
called the $1, 006 adjustment an arbitrary and flat reduction
to the value of comparable vehicles. Id. at ¶
highlighted additional concerns with GEICO's adjusted
claim. Specifically, Plaintiffs claim that GEICO failed to
pay the full ACV because, contrary to New Jersey law, it
never accounted for sales tax, license fees, and title fees.
Id. at ¶ 58. Plaintiffs also insisted that
GEICO pay these taxes and fees as part of the settlement.
Id. As such, Plaintiffs asserted that GEICO should
not have relied on CCC's report because it applied an
arbitrary “condition adjustment” without
explanation. Id. at ¶¶ 59, 72. The
underlying policy also did not specifically exclude the
payment of sales tax or state and local regulatory fees from
ACV. Id. at ¶ 31.
then filed a class action in this Court on April 2, 2018. The
Complaint provides four causes of action. Count I alleges a
breach of contract. Count II states a breach of the implied
covenant of good faith and fair dealing. Count III asserts a
declaratory judgment and injunctive relief. Count IV states a
violation of the New Jersey Consumer Fraud Act
(“NJCFA”). The class action further states that
these actions are a part of an ongoing, widespread, and
continuous scheme by GEICO to defraud its insureds in the
payment of benefits under their policies of insurance.
Id. at ¶ 118. GEICO misrepresents and defrauds
policy holders through its advertisements. Specifically,
GEICO's claim website states: “If your policy
covers a total loss, GEICO will: pay the actual cash value of
the vehicle (plus applicable state fees and taxes) less any
deductible.” Compl. at ¶ 29. Plaintiffs argue that
this provision shows that GEICO was aware of various state
laws mandating payment of certain taxes and fees. Thus, GEICO
deliberately withholds full payment to policy holders in the
event of a total loss.
now seeks to dismiss the complaint and provides three main
arguments. First, Defendant has moved to dismiss Counts II
and III on the grounds that they are duplicative of
Plaintiffs' Count I breach of contract claim. Second,
Defendant moves to dismiss Count IV on the ground that there
is no private right of action against an insurer under the
New Jersey Consumer Fraud Act (“NJCFA”). Third,
Defendant has moved to dismiss Plaintiffs' demand for
punitive damages on the ground that Plaintiffs'
allegations do not rise to the requisite level of
egregiousness for a finding of punitive damages.
Jersey Consumer Fraud Act provides in pertinent part:
The act, use or employment by any person of any
unconscionable commercial practice, deception, fraud, false
pretense, false promise, misrepresentation, or the knowing,
concealment, suppression, or omission of any material fact
with intent that others rely upon such concealment,
suppression or omission, in connection with the sale or
advertisement of any merchandise or real estate, or with the
subsequent performance of such person as aforesaid, whether
or not any person has in fact been misled, deceived or
damaged thereby, is declared to be an unlawful practice.
N.J. Stat. Ann. § 56:8-2. “Merchandise” is
defined as “any objects, wares, goods, commodities,
services or anything offered directly or indirectly to the
public for sale.” Id. § 56:8-1(c).
Rule of Civil Procedure 12(b)(6) allows a court to dismiss an
action for failure to state a claim upon which relief can be
granted. When evaluating a motion to dismiss, “courts
accept all factual allegations as true, construe the
complaint in the light most favorable to the plaintiff, and
determine whether, under any reasonable reading of the
complaint, the plaintiff may be entitled to relief.”
Fowler v. UPMC Shadyside,578 F.3d 203, 210 (3d Cir.
2009) (quoting Phillips v. Cty. of Allegheny, 515
F.3d 224, 233 (3d Cir. 2008)). In other words, a complaint
survives a motion to dismiss if it contains sufficient
factual matter, accepted as ...