Williams et al v. GoAuto Insurance Company et al

Filing 125

RULING AND ORDER granting 109 Motion for Summary Judgment; denying 110 Motion for Partial Summary Judgment. Plaintiffs' claims against Defendants will be dismissed with prejudice. Judgment shall issue separately. Signed by Judge Brian A. Jackson on 9/25/2024. (EDC)

UNITED STATES DISTRICT COUKT
MIDDLE DISTRICT OF LOUISIANA
KIMBERLY WILLIAMS, ET AL. CIVIL ACTION
VERSUS
GOAUTO INSURANCE COMPANY,
ETAL. NO. 21-00092-BAJ-SDJ

RULING AND ORDER
This is a potential class action lawsuit. Named Plaintiffs Kimberly Williams,
Nicholas Jenkins, and Felita Wright challenge whether Defendant GoAuto Insurance
Company's procedure for cancelling policies complies with Louisiana Revised Statute
9:3550, which governs the cancellation due to non-payment of financed automobile
insurance policies. Now before the Court are Defendants GoAuto Insurance Company
(GoAuto), GoAuto Management Services, LLC, Auto Premium Assistance Company,

LLC (APAC), GoAuto, LLC, Go Card, LLC and Health Reform Insurance, LLC's
IVIotion for Summary Judgment (Doc. 109) and Plaintiffs' IVtotion for Partial
Summary Judgment on the Deficiencies in GoAuto's Cancellation
Procedures (Doc. 110) (hereinafter "the Motions"). Both Motions are opposed.
(Docs. Ill, 112). The parties have not litigated class certification. Instead, the dueling
summary judgment motions before the Court were filed pursuant to a limited
scheduling order intended to resolve the major legal issues prior to possible class
certification. (Doc. 88). For the reasons that follow, Defendants' IVEotion will be

granted and this case will be dismissed with prejudice.

I. BACKGROUND
a. Summary Judgment Evidence

The following facts are drawn from Defendants' Statement of Material Facts
Supporting Summary Judgment (Doc. 109-32, hereinafter "GoAuto SOF"), Plaintiffs'
Response to Defendants Statement of IVIaterial Facts (Doc. 112-1, hereinafter

"Plaintiffs' Response SOF"), Plaintiffs' Statement of Undisputed Material Facts In
Support of Plaintiffs' Motion for Partial Summary Judgment (Doc. 110-2, hereinafter
"Plaintiffs SOF"), GoAuto's Response to Statement of Undisputed Material Facts
Filed in Support of Plaintiffs Motion for Partial Summary Judgment (Doc. 113,
hereinafter GoAuto Response), the memoranda supporting and opposing the Motions,
and the record evidence submitted in support of these pleadings.

Plaintiffs Williams and Wright are former GoAuto insureds whose policies
were cancelled for non-payment. (Doc. 109-1 at 3). Williams obtained a six-month

automobile insurance policy from GoAuto in JVIarch 2018. (GoAuto SOF ^ 1). Wright
obtained multiple GoAuto policies between 2011 and 2016. (Id. ^ 23). Plaintiff
Jenkins is a third-party claimant who was involved in a collision with a GoAuto
insured driver in September 2020. (Id. ^ 33, 37).
Each policy in question, including Williams', Wright's, and that of the driver
involved in the accident with Jenkins, was financed through an agreement between
the policyholder and APAC, an insurance premium finance company, which operates
as a separate entity from GoAuto, but which maintains its principal office at an

address in Baton Rouge, Louisiana, at an office shared with GoAuto. (Doc. 109-1 at

3). Under the agreements, APAC immediately paid GoAuto in full for the cost of the
policy, and the insured agreed to make monthly payments to APAC. (GoAuto SOF ^
3). The agreements also authorized APAC to cancel the policy if any payments were

unpaid. (Id. ^ 5).
Each insured in question failed to timely pay a monthly payment on one or
more policies. (Id. ^ 6, 23, 35). After failing to pay, the insureds received notice that
if no payment was received, their policies would be canceled at 12:01 a.m. on the tenth
business day after the monthly installment due date. (See id. ^ 7, 26, 35). Because
the required payment was not made on any of the policies here, APAC requested
cancellation. {Id. ^ 8).

The parties generally do not dispute the procedure followed by APAC and
GoAuto to cancel the policies in question. Instead, the question asked by the parties'
Motions is whether the undisputed procedure violates Louisiana law. But for a slight
modification made around 2016 or 2017, the cancellation procedure for non-payment

is as follows:
When no payment on the policy is received within ten days of the due date,
APAC communicates an electronic request to GoAuto to cancel policies for
nonpayment. (Id. ^ 9). APAC also sends an email to GoAuto with a Request for
Cancellation. (Id. ^ 10). As an example, the email sent on March 23, 2018, requesting

cancellation of Williams' policy read:

Please cancel the policies for the policy holders listed in the attached
letters, which consists of 54 pages, due to non-payment of the monthly
installment due under their Premium Finance agreement.

APAC certifies that:
(1) The Premium Finance Agreement contains a valid power of attorney.

(2) The Premium Finance Agreement is in default and the default has
not been timely cured.

(3) Upon default, a Ten Day Notice of Cancellation was sent to the
insured. Copies of the notices are enclosed and the affidavit proof of
mailing is available upon request.

(4) Copies of the Ten Day Notice of Cancellation were sent to all persons
shown by the Premium Finance Agreement to have an interest in any
loss which may occur there under.
Sincerely,
Auto Premium Assistance Company, LLC
(Id.).
Later the next morning, a paper copy of the email is printed out and signed by

Angela Pittman, APAC's operations director. (Id. H 11). That request is then delivered
to Michelle Wells, a GMS employee assigned to GoAuto, who stamps the paper copy
"Received" and stores it in a filing cabinet in a room accessible to both GoAuto and

APAC (Id. *i 12). Recall that the two companies occupy the same building. (Doc. 1091 at 3).
Before 2016, the procedure differed only in that the paper copy signed by
Pittman was delivered to GoAuto by placing it in APAC and GoAuto's shared filing
cabinet directly. (Id. ^ 28).

b. Procedural History

Williams and Jenkins filed a class action lawsuit against GoAuto and the other
Defendants in the Nineteenth Judicial District Court for the Parish of East Baton
Rouge, Louisiana, on January 5, 2021. (Doc. 1-2). GoAuto, LLC removed the action to

this Court asserting federal jurisdiction under the Class Action Fairness Act, 28
U.S.C. § 1332(d), alleging that there was minimal diversity between the parties and
the amount in controversy exceeded $5 million. (Doc. 1 at 4). Williams and Jenkins

initially sought to remand the case but moved to withdraw their Motion to Remand
after a period of jurisdictional discovery. (Doc. 79). Soon after, the Court ordered

limited discovery and set deadlines for the filing of dispositive motions on the central
legal issue—whether the cancellation procedure is legal. (Doc. 88). Wright was added

as a Plaintiff in a Second Superseding and Amending Complaint on November 16,
2023. The Motions for summary judgment and partial summary judgment followed.

A hearing on the Motions was held on April 1, 2024. (Doc. 122).
Plaintiffs seek no recovery of damages for GoAuto's alleged violation of the
state law regulating the cancellation procedure. (See Plaintiffs' Response SOF ^ 22).
Instead, they seek "recovery of any mandatory reinstatement and administrative fees

pursuant to La. R.S. 32:863(A)(3) and (D)(5)," (id.), and bad faith penalties for alleged
violations of La. R.S. 22:1973, which imposes penalties for misrepresentations by
insurers, and La. R.S. 22:1892, which requires insurers to make a written offer to
settle a claim within a certain amount of time. (Doc. 112 at 17). The theory goes that

because GoAuto's cancellation procedure was ineffective, no policy was ever actually
canceled. Any subsequent communication to an insured from GoAuto regarding a
cancelation was therefore a misrepresentation because the policy was not canceled.
Any failure by GoAuto to make a written offer of settlement on a claim made under
an ineffectually canceled policy was a further violation. (Id.).

II. LAW AND ANALYSIS
a. Standard

Federal Rule of Civil Procedure 56(a) provides that the Court may grant
summary judgment only if the movant shows that there is no genuine dispute as to
any material fact and the movant is entitled to judgment as a matter of law." Fed. R.
Civ. P. 56(a). If the movant bears its burden, the nonmoving party "must do more
than simply show that there is some metaphysical doubt as to the material facts."
Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986). "Where
the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party, there is no 'genuine issue for trial.'" Id. at 587. Stated differently, "[i]f
the party with the burden of proof cannot produce any summary judgment evidence
on an essential element of [their] claim, summary judgment is required." Geiserman

v. MacDonald, 893 F.2d 787, 793 (5th Cir. 1990).

b. Discussion
The parties' dispute centers on the construction of a single section of the
Louisiana statute that governs the cancelation procedure for financed auto insurance
policies. In relevant part, the section provides as follows:
G. Insurance contracts may be canceled upon default as follows:
(1) When a premium finance agreement contains a power of
attorney enabling the insurance premium finance company to cancel
any insurance contract, or contracts, or endorsements listed in the
agreement, the insurance contract, or contracts, or endorsements shall

not be canceled by the insurance premium finance company unless such
cancellation is effectuated in accordance with this Subsection.
(2) Upon default of the insurance premium finance agreement by
the debtor, the premium finance company shall mail or send an
electronic notice of cancellation to the insured, at his last known mailing
or electronic address as shown on the records of the insurance premium
finance company . . . .

(3)(a) Ten days after notice of cancellation has been mailed to the
insured, if the default has not been cured, the insurance premium
finance company may thereafter effect cancellation of such
insurance contract, or contracts, or endorsements by sending to the
insurer, by depositing in the mail or with a private carrier, or

via electronic mail, within five business days after the date of
cancellation ... a copy of the notice of cancellation together with

a statement certifying that:
(i) The premium finance agreement contains a valid power of

attorney as provided in Paragraph (1) of this Subsection.
(ii) The premium finance agreement is in default and the default
has not been timely cured.

(iii) Upon default, a notice of cancellation was sent to the insured
as provided in Paragraph (2) of this Subsection, specifying the date of
sending by the premium finance company to the insured.

(iv) Copies of the notice of cancellation were sent to all persons
shown by the premium finance agreement to have an interest in any loss
which may occur thereunder, specifying the names and addresses of any
governmental agencies, holders of a security interest in the insured
property, or third parties to whom the insurance premium finance
company has sent notice of cancellation.

(b)(i) Upon receipt of such notice of cancellation and statement
from the premium finance company, the insurer shall consider that
cancellation of the insurance contract or contracts has been requested
by the insured but without requiring the return of the insurance
contract or contracts and the insurer may proceed to cancel such
contract or contracts as provided in R.S. 22:885. The effective date of

cancellation shall be as of 12:01 a.m. on the tenth day after the
date of sending of the notice of cancellation as shown in said
statement furnished to the insurer by the premium finance company.

La. R.S. § 9:3550(G) (emphasis added to highlight the language of the statute at issue
here).

Plaintiffs argue that GoAuto's procedure is deficient because: (1) GoAuto never
"receives" a cancellation request from APAC; (2) GoAuto never receives a cancellation
request by mail, private carrier, or electronic mail; and (3) GoAuto cancels the policies
automatically before APAC makes a request for cancellation. (See Doc. 112 at 6). The
Court will address each argument in turn.
First, Plaintiffs argue that because GoAuto never "review[s]" or takes "any
affirmative action" on the cancellation requests, it cannot be considered to have
"received" the requests at all. (Doc. 112). This argument is dead in the water.
The statute states merely that GoAuto, "[ujpon receipt of such notice of
cancellation, "may proceed to cancel such contract or contracts." La. R.S. §

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9:3550(G)(3)(b)(i) (emphasis added). "When the plain language of a statute is
unambiguous and does not lead to an absurd result, [the Court's] inquiry begins and
ends with the plain meaning of that language." Texas Brine Co., L.L.C. v. Am. Arb.

Ass'n, Inc., 955 F.3d 482, 486 (5th Cir. 2020) (quotations omitted). Black's Law
Dictionary defines receive as "to come into possession of or get from some outside
source. (12th ed. 2024). Under the plain language of the statute and considering
either the pre-2016 or post-2016 process, GoAuto "receives" the cancellation requests
because it "come [s] into possession" of them from the APAC employee, who either
delivers the requests personally to a GoAuto employee or leaves the requests in a file

cabinet belonging to GoAuto. Plaintiffs provides no authority for the proposition that
the Court should read into the statute additional requirements that GoAuto must
also "[see], touchQ, reviewQ, or considerQ" the notices. (Doc. 112 at 7). Under the
ordinary meaning of "receive," GoAuto's procedure satisfies the statute.

Second, Plaintiffs argue that APAC s method of hand delivering the notices of
cancellation does not comply with the statute because hand delivery by an employee
does not count as delivery by "mail, private carrier, or electronic mail"—the only
methods allowed by the statute. (Doc. 112 at 10). The Court disagrees.
The statute provides that GoAuto may "effect cancellation of such insurance
contract, or contracts, or endorsements by sending [the notices of cancellation] to the
insurer, by depositing in the mail or with a private carrier, or via electronic mail." La.

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R.S. § 9:3550(G)(3)(a).1 Plaintiffs argue that when a GMS employee walks the
documents over to GoAuto, the statute is not satisfied. (See Doc. 112 at 10). Although

the Court agrees that this method of sending does not constitute sending by mail or
electronic mail, the Court finds that this method of sending is encompassed by the
phrase "private carrier."

Although the Louisiana Supreme Court has yet to weigh in on the issue, the
U.S. Court of Appeals for the Fifth Circuit2 has defined a private carrier as "one who,

without making it a vocation, or holding himself out to the public as ready to act for
all who desire his services, undertakes, by special agreement in a particular instance
only, to transport property from one place to another either gratuitously or for hire."
Huntley v. Bayer MaterialScience, L.L.C., 452 F. App'x 453, 457 (5th Cir. 2011)

(quoting Lone Star Steel Co. v. McGee, 380 F.2d 640, 645 (5th Cir. 1967)); see also

1 GoAuto argues that this language allows for four methods of delivery: sending, sending by
mail, sending by private carrier, and sending by electronic mail. (Doc. Ill at 8). The Court

finds that the latter three listed methods of sending modify and restrict the ways that GoAuto
can send the notices. If the legislature intended for delivery to be completed by mere
"sending" to the insurer, it would not have included the superfluous additional language

describing methods of sending. See Colvin v. Louisiana Patients Comp. Fund Oversight Bd.,
2006-1104, p. 6 (La. 1/17/07), 947 So. 2d 15, 19-20 ("[C]ourts are bound, if possible, to give
effect to all parts of a statute and to construe no sentence, clause or word as meaningless and
surplusage if a construction giving force to, and preserving, all words can legitimately be
found."). In other words, under the Court's reading of the statute, GoAuto's options for
sending are limited to mail, private carrier, or electronic mail.
2 Louisiana courts consistently turn to federal precedent absent guidance from the state's
higher courts. See London v. Associated Pipe Line Contractors, No. 3:14-CV-471, 2015 WL

545978, at *6 (W.D. La. Feb. 10, 2015) (citing examples); Williams v. Conoco, Inc., 860 F.2d
1306, 1307 (5th Cir. 1988) (Louisiana courts, however, will look to the interpretation of
similar federal statutes ... as authority in interpreting Louisiana statutes.") (citing

additional examples).

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Portier v. Thrifty Way Pharmacy, 476 So. 2d 1132, 1139-40 (La. Ct. App.), rev'd in

part, 479 So. 2d 916 (La. 1985), and writ denied, 479 So. 2d 924 (La. 1985) (citing
identical definition). In other words, a private carrier can be anyone who agrees to
transport property from one place to another so long as they do not hold themselves
out as providing the delivery services for the public. Numerous courts around the
country have defined the term in similarly broad strokes. Thompson v. Heineman,

289 Neb. 798, 834 (2015) (defining private carrier as "one that, without being in the
business of transporting for others or holding itself out to the public as willing to do
so, undertakes only by special agreement to transport property, either gratuitously
or for a consideration"); Corn. Ins. Co. v. Ultimate Livery Serv., Inc., 452 Mass. 639,

641 (2008) ("A 'private carrier is one who holds himself out as ready to furnish
transportation for hire only to those with whom he chooses to deal in accordance with
such contracts as he makes with them."); Mclntyre v. Harrison, 157 S.E. 499, 508 (Ga.
1931) ("A 'private carrier' is one who, without being engaged in the business of
carrying as a public employment, undertakes to deliver goods in a particular case for
hire or reward.").

Here, the APAC employee who delivers the notices of cancellation neatly fits
the definition of private carrier. She is not in the vocation of delivering goods nor
does she "hold [her]self out to the public as ready" to deliver goods for anyone. See
Huntley, 452 F. App'x at 457. Instead, she "undertakes" for her employer to "transport
property," in this case the notices of cancellation, "from one place to another." Id. For

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this reason, the Court finds that the delivery of the notices of cancellation is done by
"private carrier," as required by § 9:3550(G)(3)(a).
Third and finally, Plaintiff argues that the cancellations are ineffective
because the cancellations "are set to take place automatically within [GoAuto's]
system at 12:01 am on the morning of cancellation." (Doc. 112 at 14). The Court
disagrees.

Recall that upon failure to pay a monthly premium, the insured is sent a notice
that he or she has nine days to make payment. Under the statute, so long as a valid
request for cancellation is sent to the insurer within five days after that grace period
has expired, "[t]he effective date of cancellation shall be as of 12:01 a.m. on the tenth
day after the date of sending of the notice of cancellation." La. R.S.

9:3550(G)(3)(b)(i). As Defendants convincingly argue, there is "nothing in § 9:3550
that dictates how an insurer must document in its own records that it has cancelled

a policy." (Doc. 115 at 4). Plaintiffs protest that they take issue with the timing of the
cancellation because GoAuto proceed[s] to cancel a policy without receiving a request

to do so." (Doc. 112 at 15). But as Defendants point out, "while Plaintiffs might well
be correct that anything GoAuto did to mark the policies as cancelled in its own
computer system was legally ineffective until GoAuto received the email and/or the
hand delivery, GoAuto was plainly entitled to treat the policies as canceled upon
receipt of the required documents. (Doc. 115 at 4). Sure enough, there is nothing in
the statute about how GoAuto chooses to record the policies as cancelled, and as

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mentioned, the statute itself requires that the effective date of cancellation be 12:01
a.m. on the day after the grace period ends.
More importantly, perhaps, Plaintiffs' argument on this point lacks any
principle. Nothing would change from the insured's perspective ifGoAutos computer

marked the policies as cancelled immediately after the grace period or after receiving
the requests for cancellation via hand delivery. So long as GoAuto followed the proper
procedure, the policy would be cancelled effective 12:01 a.m. on the tenth day after

the date of sending of the notice of cancellation." La. R.S. § 9:3550(G)(3)(b)(i). To
illustrate, if an insured got into an accident after the grace period expired but before
the requests for cancellation were delivered to GoAuto, as long as GoAuto followed
the proper cancellation procedure, which the Court here finds that it does, the

effective time of cancellation is immediately following the grace period. In other
words, the insured's post-grace-period accident would not be covered regardless of
whether the accident occurred before the notices of cancellation were delivered or not.
For these reasons, the Court finds that GoAuto complies with the statute when
its system marks the policies as cancelled at 12:01 a.m. on the day after the grace
period ends.
In sum, the Court finds that GoAuto s cancellation procedure complies with the
statute because the request for cancellation is delivered to GoAuto by a "private
carrier," and the request is "received" by GoAuto. Additionally, because under the
statute the cancellation will be effective at 12:01 a.m. on the day after the grace period

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ends, it is irrelevant that GoAuto's system marks the policies as cancelled before the
notices of cancellation are received.3

III. CONCLUSION
IT IS ORDERED that the Defendants' Motion for Summary Judgment
(Doc. 109) be and is hereby GRANTED, and Plaintiffs' Motion for Partial
Summary Judgment on the Deficiencies in GoAuto's Cancellation
Procedures (Doc. 110) be and is hereby DENIED. Plaintiffs' claims against
Defendants will be dismissed with prejudice.
Judgment shall issue separately.
Baton Rouge, Louisiana, this ^-^J day of September, 2024

JUDGE BRIAN A. J^itSON
UNITED STATES Dfl^RICT COURT
MIDDLE DISTRICT OF LOUISIANA

3 Because the Court finds that GoAuto's cancellation procedure complies with the statute for
the above-stated reasons, and therefore summary judgment is appropriate, the Court does

not reach GoAuto's argument that Plaintiffs are not entitled to bad faith penalties under La.
R.S. § 22:1973 and § 22:1892, (see Doc. 109-1 at 19), or that GoAuto is entitled to immunity
under La. R.S. § 9:3550(G)(3)(c), (see id. at 25). Nor does the Court reach Plaintiffs' argument
that GoAuto's cancellation procedure is ineffective because the automatically generated

email sent from APAC to GoAuto with the requests for cancellation is not "certified" under
the statute. (See Doc. 112 at 8).

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