Opinion
CIVIL ACTION NO. 3:22-CV-487-KHJ-MTP
2023-03-06
Kenan WATKINS, individually and on behalf of all others similarly situated, Plaintiff v. ALLSTATE PROPERTY AND CASUALTY INSURANCE COMPANY, Defendant
Ronald E. Stutzman, Jr., The Stutzman Law Firm, PLLC, Flowood, MS, S. Craig Panter, Panter Law Firm, PLLC, Madison, MS, for Plaintiff. George Clanton Gunn, IV, Butler Snow LLP, Ridgeland, MS, for Defendant.
Ronald E. Stutzman, Jr., The Stutzman Law Firm, PLLC, Flowood, MS, S. Craig Panter, Panter Law Firm, PLLC, Madison, MS, for Plaintiff. George Clanton Gunn, IV, Butler Snow LLP, Ridgeland, MS, for Defendant. ORDER Kristi H. Johnson, UNITED STATES DISTRICT JUDGE
Before the Court is Defendant Allstate Property and Casualty Insurance Company's ("Allstate") [9] Motion to Dismiss. For the following reasons, the Court grants the motion.
I. Background
On December 7, 2021, Kimberly Jones crashed into Plaintiff Kenan Watkins's Chevrolet Tahoe. First Am. Compl. [6] ¶¶ 6-7. Watkins's Tahoe sustained substantial damages. Id. ¶ 8. Jones's insurance company paid Watkins $24,314.25 for his property damage claim, but Watkins alleges his car sustained an additional $13,454 in damages from diminished value. Id. ¶¶ 10-11. Jones's policy limits were insufficient to cover Watkins's diminished value claim, however. Id. ¶ 13. So, Watkins filed an uninsured-motorist claim with Allstate to cover those losses. Id. ¶ 18. Allstate denied the claim, citing a provision in the policy excluding from coverage "any decrease in the property's value, however measured, resulting from the loss and/or repair or replacement." Id.
Watkins contends that exclusion violates the Mississippi Uninsured Motorist Statute ("UM statute") by narrowing the coverage provided by the statute. Id. ¶¶ 19-21. Based on that theory, Watkins alleges several state-law claims and seeks injunctive and declaratory relief. Id. ¶¶ 37-71. He also asserts those claims as class allegations. Id. ¶¶ 24-36. Allstate now moves to dismiss Watkins's Complaint.
II. Class Allegations
Although Watkins's Complaint raises class allegations, neither party has sought class certification pursuant to Rule 23(c)(1). But the Court need not address certification before ruling on Allstate's Motion to Dismiss.
A court should address class certification at "an early practicable time." Fed. R. Civ. P. 23(c)(1)(A). "The word 'practicable' imports some leeway in determining the timing of such a decision." Danny B. ex rel. Elliott v. Raimondo, 784 F.3d 825, 837 (1st Cir. 2015). Thus, "[i]t is well within a district court judge's discretion to dispose of a motion to dismiss before acting on class certification." Lawson v. FMR LLC, 554 F. Supp. 3d 186, 192 (D. Mass. 2021); see also Pharo v. Smith, 621 F.2d 656, 663-64 (5th Cir. 1980), on reh'g aff'd in part, remanded in part on other grounds (affirming summary judgment for defendant even though no ruling had been made as to class certification); E.B. v. Landry, No. 19-862, 2020 WL 6439503, at *2 (M.D. La. June 30, 2020) (finding that the plaintiffs' Motion to Certify was premature because the court had not ruled on pending motions to dismiss).
A court should consider two factors when deciding whether to rule on a dispositive motion before addressing class certification. Lawson, 554 F. Supp. 3d at 192-93 (citing Wright v. Schock, 742 F.2d 541, 544 (9th Cir. 1984)). First, "whether an early resolution on the merits 'protect[s] both the parties and the court from needless and costly further litigation.' " Id. (quoting Wright, 742 F.2d at 544). "[A]nd second, whether the ruling would prejudice any of the parties." Id.
Here, both factors are met. First, because Watkins's claims fail as a matter of law, the costly and timely determination of class certification—for both the Court and the parties—is avoided. See id. at 193 (citing Foti v. NCO Fin. Sys., Inc., 424 F. Supp. 2d 643, 647 n.2 (S.D.N.Y. 2006)). Second, there is no unfair prejudice to Watkins because, even if the class were certified, his claims would still fail as a matter of law, and there is no unfair prejudice to Allstate because it has "effectively consented to this approach by filing the motion to dismiss . . . without requesting class certification." See id. (citing Rodriguez v. Banco Cent., 790 F.2d 172, 175 (1st Cir. 1986)).
See infra Part IV.
III. Standard
"To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.' " Witherspoon v. Waybourn, No. 21-10407, 2022 WL 2188530, at *1 (5th Cir. June 17, 2022) (per curiam) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009)). The facts must be viewed "in the light most favorable to the plaintiff"; however, the Court need not "strain to find inferences favorable to plaintiffs nor accept conclusory allegations, unwarranted deductions, or legal conclusions." Id. (internal quotations and citations omitted). "While legal conclusions can provide the framework of a complaint, they must be supported by factual allegations." Ashcroft, 556 U.S. at 679, 129 S.Ct. 1937. Mere "formulaic recitations of the elements" of a cause of action will not suffice. Id. at 681, 129 S.Ct. 1937 (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)).
IV. Analysis
Allstate argues Watkins's claims fail as a matter of law for two reasons. First, Allstate argues Watkins did not adequately allege that Jones's vehicle was an "uninsured motor vehicle" under Miss. Code Ann. § 83-1-103(c). [10] at 4-7. Second, even if Jones's vehicle were an uninsured motorist vehicle, Allstate argues its diminished-value exclusion is valid under Mississippi law. Id. at 7-11.
Both arguments are issues of first impression. Accordingly, the Court must make an "Erie guess." See Boatner v. Atlanta Speciality Ins. Co., 115 F.3d 1248, 1251 (5th Cir. 1997) (citing Erie R.R. Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938)). The Court is "not permitted to do merely what [it] think[s] best; [it] must do that which [it] think[s] the Mississippi Supreme Court would deem best." Id. (quotation omitted). The Court addresses each issue in turn.
A. Whether Jones's vehicle was an "uninsured motor vehicle"
Allstate argues Watkins fails to adequately allege that Jones's vehicle is an uninsured motor vehicle because Jones's vehicle does not satisfy the definition of an underinsured vehicle under Miss. Code Ann. § 83-11-103(c)(iii). It contends that provision only "includes the concept of an underinsured motor vehicle . . . with respect to 'limits of bodily injury,' " and Watkins failed to satisfy that definition because he only brings claims for property damage and "neither the Complaint nor the First Amended Complaint reference Jones's limits of bodily injury liability." Id. at 5-7; [14] at 2.
Allstate is correct. Mississippi law requires insurers to include in their policies "an endorsement or provisions undertaking to pay the insured all sums which he shall be legally entitled to recover as damages for property damage . . . from the owner or operator of an uninsured motor vehicle . . . ." Miss. Code Ann. § 83-11-101(2) (emphasis added). Accordingly, before the statute applies, a "tortfeasor's automobile must be an 'uninsured motor vehicle' as defined in the statute." Cossitt v. Federated Guar. Mut. Ins. Co., 541 So. 2d 436, 439 (Miss. 1989) (quotation omitted). An uninsured motor vehicle includes the concept of an "underinsured" vehicle, which is "[a]n insured motor vehicle, when the liability insurer of such vehicle has provided limits of bodily injury liability for its insured which are less than the limits applicable to the injured person provided under his uninsured motorist coverage." Miss. Code Ann. § 83-11-103(c)(iii) (emphasis added); see Cossitt, 541 So. 2d at 442. Thus, to determine whether a vehicle qualifies as uninsured under Miss. Code Ann. § 83-11-103(c)(iii), a court must compare the "limits of bodily injury liability" of that vehicle with the "limits applicable to the injured person under his uninsured motorist coverage."
The Court can make no such comparison because Watkins failed to provide (1) the limits of bodily injury liability under Jones's policy and (2) the bodily injury limits applicable to himself under his uninsured motorist coverage in his Complaint. So Watkins has not pled "sufficient factual matter . . . to state a claim to relief that is plausible on its face." See Witherspoon, 2022 WL 2188530, at *1.
Allowing Watkins to amend his Complaint to properly allege that Jones's vehicle is underinsured would cure this deficiency. Normally the Court would allow it. See Fed. R. Civ. P. 15(a)(2) (stating that a court "should freely give leave [to amend a pleading] when justice so requires"). For the reasons discussed below, however, such an amendment would be futile. See Stripling v. Jordan Prod. Co., LLC., 234 F.3d 863, 872-73 (5th Cir. 2000) (holding that an amendment is futile if "the amended complaint would fail to state a claim upon which relief could be granted").
In response to Allstate's motion, Watkins provides an affidavit, Jones's insurance policy, and his Allstate policy to show that Jones's vehicle qualifies as an uninsured motor vehicle. See [11-1]. But even though "a court may . . . consider documents attached to either a motion to dismiss or an opposition to that motion . . . [it] need not do so." Brackens v. Stericycle, Inc., 829 F. App'x 17, 23 (5th Cir. 2020) (per curiam) (citation omitted). The Court declines to consider the documents because even if Watkins adequately alleges that Jones's vehicle qualifies as an uninsured motor vehicle, his claim still fails because Allstate's diminished-value exclusion is valid under Mississippi law.
B. Diminished Value Exclusion
Allstate next argues that Watkins's claims fail because its "policy clearly met the statutory requirements" and "neither [the UM statute or the Mississippi Motor Vehicle Safety Responsibility Act ("MMVSRA")] requires coverage for diminished value." [10] at 10. Consequently, its diminished value exclusion is valid under Miss. Code Ann. § 63-15-43(2)(a). Id. Watkins counters that "diminished value . . . is an element of damage that a plaintiff is 'legally entitled to recover,' " and therefore, Allstate's exclusion runs afoul of Mississippi's UM statute. [12] at 8-9.
Mississippi's UM statute requires car insurance policies to include provisions "to pay the insured all sums which he shall be legally entitled to recover as damages for property damage . . . from the owner or operator of an uninsured motor vehicle within limits which shall be no less than those set forth in the Mississippi Motor Vehicle Safety Responsibility Law . . . ." Miss. Code Ann. § 83-11-101(2) (emphasis added). "Mississippi's UM Act therefore incorporates by reference the limitations found in the [MMVSRA]." Boatner, 115 F.3d at 1251. The MMVSRA requires insurance companies to provide "limits of liability no less than" $25,000 for bodily injury or death to one person, $50,000 for bodily injury or death to two or more people, and $25,000 for "injury to or destruction of property." Miss. Code Ann. § 63-15-43(2)(b). Once those minimums have been met, the MMVSRA allows insurance companies to include "exclusions and limitations on coverage as long as the exclusions and limitations language has been filed with and approved by the Commissioner of Insurance." Id. § 63-15-43(2)(a).
Allstate's diminished-value exclusion is valid because diminished value is not included as part of the minimum requirement of $25,000 for "injury to or destruction of property" that insurance companies must provide under Miss. Code Ann. § 63-15-43(2)(b). Watkins cites two Mississippi cases to argue that "diminished value . . . is an element of damage that a plaintiff is legally entitled to recover as damage." [12] at 8 (citing Calvert Fire Ins. Co. v. Newman, 240 Miss. 10, 124 So. 2d 686, 688 (1960); Potomac Ins. Co. v. Wilkinson, 213 Miss. 520,57 So. 2d 158, 160 (1952)). Although Watkins is correct that "the Mississippi Supreme Court initially recognized the concept of diminished value in Wilkinson," that case—as well as the other Mississippi cases allowing recovery for diminished value—involved insurance contracts that did not include "an explicit limiting definition of 'repair,' 'replace,' or 'cost of repair or replacement.' " Blakely v. State Farm Mut. Auto. Ins. Co., 406 F.3d 747, 752 (5th Cir. 2005).
See also Scott v. Transp. Indem. Co., 513 So. 2d 889, 894 (Miss. 1987) (recognizing the concept of diminished value as a measure of damages); Motors Ins. Corp. v. Smith, 218 Miss. 268, 67 So. 2d 294, 297 (1953) (same).
In Blakely, the appellants sued State Farm for refusing to reimburse them for the diminished value of their vehicles under their standard insurance policies. Id. at 749-50. They argued State Farm's policy did not unambiguously exclude recovery for diminished value, and even if it did, the exclusion was void because it violated public policy. Id. at 751-54. The Court rejected both arguments. Id. at 753-54. First, "based on [the] plain reading of the distinct, unambiguous . . . language" of State Farm's policy, the Court concluded that the appellants' policies did not allow for recovery of diminished value. Id. at 753. Second, finding "no pronouncement by Mississippi, either legislative or judicial, requiring that diminished value be a part of all automobile insurance policies," the Court determined that the appellants' argument that the policy was "void as against public policy or due to unconscionability lack[ed] merit." Id. at 754. Thus, the Court upheld State Farm's diminished value exclusion.
Here, Watkins's policy unambiguously excludes recovery for diminished value, and Watkins does not argue otherwise. Watkins's UM policy endorsement states "[Allstate] will not pay any damages an insured person is legally entitled to recover because of . . . any decrease in the property's value, however measured, resulting from the loss and/or repair or replacement." [9-2] at 2-3; see also [1] ¶ 18 (recognizing Allstate's exclusion in the Complaint); [12] (making no arguments about the language of Allstate's policy). Instead, Watkins sole argument is that the provision is "void and against public policy." [1] ¶ 2; [12] 8-13. But that argument lacks merit because Watkins does not point to any statute or caselaw interpreting the MMVSRA or Mississippi's UM statute to require coverage for diminished value, and the Court can find no such authority either. See Blakely, 406 F.3d at 754.
Watkins tries to distinguish Blakely from his case because the policies in Blakely were outside the context of UM coverage. [12] at 12. He argues that "[w]hat Mississippi law might permit with respect to comprehensive or collision coverage has no bearing on what Section 83-11-101(2) requires in UM coverage." Id. That is wrong. As stated above, "Mississippi's UM Act . . . incorporates by reference the limitations found in the [MMVSRA]." Boatner, 115 F.3d at 1251. That includes the provision allowing insurance companies to include "exclusions and limitations on coverage as long as the exclusions and limitations language has been filed with and approved by the Commissioner of Insurance." Id. § 63-15-43(2)(a). There is no reason that insurance companies should be allowed to exclude damages from diminished value in their primary policies but not in their UM policies.
Because Watkins did not adequately allege that Jones's vehicle was an "uninsured motor vehicle" as defined by Miss. Code Ann. § 83-1-103(c) and because Allstate's diminished-value exclusion is valid under Mississippi law, Watkins has failed to state a claim upon which relief can be granted.
V. Conclusion
The Court has considered all arguments. Those not addressed would not have changed the outcome. For the reasons stated, Defendant's [9] Motion to Dismiss is GRANTED. Watkins's claims are DISMISSED WITH PREJUDICE.
SO ORDERED AND ADJUDGED this the 6th day of March, 2023.