Huey v. Allstate Vehicle and Property Insurance Company
MEMORANDUM OPINION re 43 Order on Motion to Dismiss, Order on Motion to Dismiss for Failure to State a Claim. Signed by Senior Judge Glen H. Davidson on 9/8/2020. (tab)
Case: 4:19-cv-00153-GHD-JMV Doc #: 44 Filed: 09/08/20 1 of 8 PageID #: 841
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF MISSISSIPPI
FILLISA HUEY, INDIVIDUALLY AND
ON BEHALF OF ALL OTHERS
CIVIL ACTION NO. 4:19-CV-00153-GHD-JMV
ALLSTATE VEHICLE AND PROPERTY
OPINION DENYING MOTION TO DISMISS AND LIFTING STAY OF PROCEEDINGS
Presently before the Court in this putative class action insmance dispute is the Defendant's
Amended Motion to Dismiss pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure
[15, 30]. Upon due consideration and as set forth below, the Court finds that the motion should be
denied. Further, the Court shall lift the stay of proceedings that was entered in this matter on
January 29, 2020 [27, 29].
Factual and Procedural Background 1
The Plaintiff, Fillisa Huey, maintains a residence in Cleveland, Mississippi.
Amended Class Action Complaint, Doc. No. 14, at 1]. Huey insured the residence under a
Homeowners Policy, No. 810268968, written by the Defendant Allstate Vehicle and Propetiy
Insurance Company, and paid the requisite annual premiums for the coverage. [!d. at 2). The
policy provides, inter alia, that payment for covered loss may be for "Actual Cash Value,"
("ACV"), which may include a deduction for depreciation of certain costs. [!d. at 3).
In February 2017, while insured under the policy, Plaintiffs residence suffered direct
On a Rule 12(b)(6) motion to dismiss, the Court accepts all well-pleaded facts in the complaint as true and
views those facts in the light most favorable to the Plaintiff. Randall D. Wolcott, MD., P.A. v. Sebelius, 635 F.3d
757, 763 (5th Cir. 2011 ).
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physical damage by a covered named peril. [Id.] The Plaintiff immediately notified the Defendant
of the loss and made a claim under the insurance policy. [/d.] The Defendant inspected the
Plaintiff's residence and determined that the loss was covered under the insurance policy. [/d.]
On February 16, 2017, the Defendant notified the Plaintiff that the payment she was
receiving was the ACV as calculated by Defendant. [!d. at 3-4]. In calculating the Plaintiff's ACV
payment, the Defendant deducted depreciation from the replacement cost value (RCV). 2 [Id.] The
Plaintiff alleges that Defendant's method of calculating the ACV resulted in a payment amount
that is lower than the amount Plaintiff should have received under the Policy. [/d. at 4]. The
Plaintiff argues that Defendant, in calculating the ACV, depreciated costs associated with labor;
the Plaintiff asserts that labor should not be depreciated because it does not depreciate in value
over time and because the policy language is ambiguous regarding the depreciation oflabor costs.
[!d. at 4-5]. Based on Defendant's alleged practice of depreciating labor costs, the Plaintiff avers
that her ACV payment was less than the amount she was entitled to receive under the policy, and
that the Defendant thus breached its obligations under the policy.
The Plaintiff filed her Complaint in this matter on October 11,2019 [!];she then filed an
Amended Complaint on January 3, 2020 . In the Amended Complaint, the Plaintiff alleges
that the Defendant breached its contractual duty to pay Plaintiff and members of the proposed class
the true ACV of their claims by wrongfully depreciating labor costs (Count I); the Plaintiff also
seeks a declaratory judgment decreeing that the policy, as written, prohibits the Defendant from
depreciating labor costs when calculating losses and ACV (Count II). Pursuant to Federal Rule of
Civil Procedure 12(b)(6), the Defendant now moves to dismiss Plaintiff's entire complaint.
The Defendant calculated that the Replacement Cost Value of the Plaintiffs property was $164,202.86; it
reduced the value by $31,471.42 for depreciation. [!d. at 4].
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Rule 12(b)(6) Motion to Dismiss Standat·d
When deciding a Rule 12(b)(6) motion to dismiss, the Court is limited to the allegations
set forth in the complaint and any documents attached to the complaint. Walker v. Webco Indus.,
Inc., 562 F. App'x 215,216-17 (5th Cir. 2014) (citing Kennedy v. Chase Manhattan Bank USA,
NA, 369 F.3d 833, 839 (5th Cir. 2004)).
"[A plaintiffs] complaint therefore 'must contain
sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face."'
Phillips v. City of Da!Tas, Tex., 781 F.3d 772, 775-76 (5th Cir. 2015) (quoting Ashcroft v. Iqbal,
556 U.S. 662, 678, 129 S. Ct. 1937, 173 L. Ed. 2d 868 (2009)).
A claim is facially plausible when the pleaded factual content "allows the court to draw the
reasonable inference that the defendant is liable for the misconduct alleged." Iqbal, 556 U.S. at
678, 129 S. Ct. 1937 (citing Bell At!. Cm]J. v. Twombly, 550 U.S. 544, 556, 127 S. Ct. 1955, 167
L. Ed. 2d 929 (2007)). "[P]laintiffs must allege facts that support the elements of the cause of
action in order to make out a valid claim." Webb v. Morella, 522 F. App'x 238, 241 (5th Cir.
2013) (quoting City ofClinton, Ark. v. Pilgrim's Pride Corp., 632 F.3d 148, 152-53 (5th Cir. 2010)
(internal quotation marks omitted)). "[C]onclusmy allegations or legal conclusions masquerading
as factual conclusions will not suffice to prevent a motion to dismiss." !d. (quoting FernandezMontes v. Allied Pilots Ass'n, 987 F.2d 278, 284 (5th Cir. 1993) (internal quotation marks
omitted)). "Dismissal is appropriate when the plaintiff has not alleged 'enough facts to state a
claim to relief that is plausible on its face' and has failed to 'raise a right to relief above the
speculative level."' Emesowum v. Houston Police Dep't, 561 F. App'x 372,372 (5th Cir. 2014)
(quoting Twombly, 550 U.S. at 555, 570, 127 S. Ct. 1955).
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A. Claim fot· Breach of Contract (Count I)
The Plaintiff asserts that the Defendant breached the parties' contract of insurance by
depreciating the value of labor in determining the amount of the Plaintiffs ACV payment under
the policy. [Doc. 14, at 4]. Assuming the facts in the complaint are true and construing them in
the light most favorable to the Plaintiff, the Court finds that the Plaintiff has sufficiently pled a
breach of contract claim.
"Mississippi treats insurance policies as contracts, which 'are to be enforced according to
their provisions."' State Farm Mut. Auto. Ins. Co. v. LogistiCare Solutions, LLC., 751 F.3d 684,
688 (5th Cir. 2014) (quoting Noxubee Cnty. Sch. Dist. v. United Nat'! Ins. Co., 883 So.2d 1159,
1166 (Miss. 2004)).
A contract "must be interpreted as written" only if it is "clear and
unambiguous." State Farm Mut. Auto. Ins. Co. v. LogistiCare Solutions, LLC., 751 F. 3d 684,688
(5th Cir. 2014) (quoting US. Fid & Guar. Co. of Miss. v. Marlin, 998 So.2d 956, 963 (Miss.
2008)). Ambiguity exists when the "policy language is susceptible of two or more reasonable
interpretations." Miss. Farm Bureau Cas. Ins. v. Brill, 826 So.2d 1261, 1265 (Miss. 2002). "Under
Mississippi law, ambiguous and unclear policy language must be resolved in favor of the nondrafting party-the insured." Noxubee Cty. Sch. Dist. v. United Nat. Ins. Co., 883 So.2d 1159,
1165 (Miss. 2004) (citing Harrison v. Allstate Ins. Co., 662 So.2d 1092, 1094 (Miss. 1995)). In
reviewing policy terms, the "terms used in the insurance policy should be understood in their plain,
The asserted basis for federal jurisdiction in this matter is 28 U.S.C. § 1332(d), known as the Class Action
Fairness Act ("CAFA"). [Doc. 14, at 2]. Because CAFA is based on diversity jurisdiction, courts apply the substantive
law of the forum state. Audler v. CBC In nov is, Inc., 519 F.3d 239, 248 (5th Cir. 2008). Under Mississippi law, a
breach of contract claim requires a showing of "(l) 'the existence of a valid and binding contract,' and (2) a showing
'that the defendant has broken, or breached it." Maness v. K & A Enle!prises of Mississippi, LLC., No. 2017-CA00 173-SCT, 2018 WL 774010, at *8 (Miss. Feb. 8, 2018)(citing Bus. Commc 'ns, Inc. v. Banks, 90 So. 3d 1221, 1224
(Miss. 20 12)).
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ordinary, and popular sense rather than in a philosophical or scientific sense." Blackledge v.
Omega Ins. Co., 740 So.2d 295,298 (Miss. 1999). "[A] policy should be drafted to accommodate
the average person who will give its terms a general reading. An insurance policy should be strictly
construed against the insurer, and the insurer has the burden of phrasing the terms in clear
language." Conner v. Am. Pub. Life Ins. Co., 448 F.Supp.2d 762,766 (N.D. Miss. 2006) (quoting
Burton v. Choctaw County, 730 So.2d I, 9 (Miss. 1997)).
In the case sub judice, as is the case in several other cases pending in various Mississippi
federal courts against several different insurers, the terms "depreciation" and "actual cash value"
are at issue. The Plaintiff argues that the terms are ambiguous because the policy fails to specify
that labor costs may be depreciated when calculating ACV; the Defendant argues that the policy
terms are unambiguous because, in Mississippi, "actual cash value" is "generally understood to
mean 'replacement cost less depreciation,"' and Mississippi state courts have yet to specifically
interpret ACV to prohibit labor cost depreciation.
Both the Fifth Circuit Court of Appeals, in affirming a decision issued by another district
court in this state, and this Court in a previous decision, have held, however, in cases with policies
of insurance that contain language substantially similar to the one at issue here, that the term
"actual cash value," as it relates to the depreciation of labor costs, is ambiguous and thus is
construed against the drafter of the policy, the insurer. 4 Mitchell v. State Farm Fire & Cas. Co.,
345 F. Supp. 3d 847,853 (N.D. Miss. 2018), aff'd954 F.3d 700 (5th Cir. 2020) (affirming district
Several courts outside of Mississippi have dealt with similar ACV questions. State courts in Minnesota,
Oklahoma, Nebraska, and Florida have found that the term "ACV" allows an insurer to depreciate labor costs. Wilcox
v. State Farm Fire & Cas. Co., 874 N.W.2d 780 (Minn. 20 16); Redcom v. State Farm Fire & Cas. Co., 55 P.3d I 017,
1021 (Okla. 2002); Hemtv. Am. Family Mut. Ins. Co., 295 Neb. 859, 894 N.W.2d 179, 190 (2017); Goflv. State Farm
Florida Ins. Co., 999 So.2d 684, 689 (Fla. Dis!. Ct. App. 2008). Other courts, however, in the states of Arkansas,
Missouri, and Kentucky have found in the opposite. Adams v. Cameron Mut. Ins. Co., No.2: 12-cv-02173-PKH, 2013
WL 1876660 (W.D. Ark. 2013); Riggins v. Am. Family Mut. Ins. Co., 106 F.Supp.3d 1039 (W.D. Mo. 2015); Brown
v. Travelers Cas. Ins. Co. of Am., No. 15-50,2016 WL 1644342 (E.D. Ky. Apr. 25, 2016).
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was ambiguous and thus, under Mississippi law, must be interpreted in favor of the insured in
relation to the depreciation oflabor); Titan Exteriors, Inc. v. Certain Underwriters at Lloyd's, 297
F. Supp. 3d 628 (N.D. Miss. 2018) (this Court holding that undefined term "actual cash value" is
ambiguous and thus the ambiguity must be resolved in favor of the insured). Accordingly, the
Court finds, as it did in Titan Exteriors and as the Fifth Circuit affirmed in Mitchell, that the term
"actual cash value" in the subject policy is ambiguous and can be interpreted to either include or
exclude labor cost depreciation; the Court thus resolves that ambiguity in favor of the Plaintiff, as
Mississippi law directs. Noxubee Cty. Sch. Dis!., 883 So.2d at 1165.
As for the Plaintiffs specific allegations, in Count I of the Complaint, the Plaintiff sets
forth several specific allegations regarding the Defendant's payment of ACV, including that labor
costs were depreciated in her claim, that the policy does not permit the depreciation of labor costs,
that she was thus underpaid on her ACV claim, and that the Defendant has therefore breached its
obligations under the policy. [Doc. 14, at 3-5]. Given that the Court has found, as it has previously
held and as the Fifth Circuit recently held, that the term Actual Cash Value is ambiguous in relation
to the depreciation of labor costs in the policy, the Co uti finds that the Plaintiff has stated a viable
claim for breach of contract. Accordingly, the Court finds that, when viewed in the light most
favorable to the Plaintiff, the facts alleged in the Complaint regarding the breach of contract claim
against the Defendant are sufficiently pled to survive the Defendant's Rule 12(b)(6) motion to
dismiss. The Defendant's motion to dismiss Count I of the Complaint for breach of contract shall
therefore be denied.
B. Claim fo1· Declaratory Relief (Count II)
Pursuant to the Declaratory Judgment Act, this court "may declare the rights and other
legal relations of any interested party seeking such declaration." 28 U.S.C § 2201. In Count II of
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the Complaint, the Plaintiff seeks a declaration that the subject insurance policy prohibits the
Defendant from depreciating labor costs in adjusting losses when calculating ACV.
Defendant argues that declaratory relief is not proper because the Plaintiff primarily seeks
monetary damages in this matter.
The Court finds that, while the Plaintiff does seek monetary relief in relation to her claim
for breach of contract, the request for declaratory relief is broader and is thus appropriate, at this
juncture, because it seeks a declaration from the Court that the Defendant's practice of depreciating
labor costs in calculating ACV payments is itself unlawful on an ongoing basis. Other district
courts within the Fifth Circuit have ruled likewise in similar situations. See, e.g., Verde Minerals
v. Koerner, No. 2:16-CV-199, 2017 WL 7052205, at *5 (S.D. Tex. Aug. 14, 2017) (allowing
claims to proceed for both breach of covenant and for declaratory relief when continuing duty at
issue); Trammell Crow Residential Co. v. Virginia Surety Co., 643 F. Supp. 2d 844, 856 n.15 (N.D.
Tex. 2008). In addition, Rule 57 of the Federal Rules of Civil Procedure provides that "[t]he
existence of another adequate remedy does not preclude a declaratmy judgment that is otherwise
appropriate." Fed. R. Civ. P. 57. Accordingly, the Court finds that Count II of the Complaint,
which seeks a declaratory judgment that is otherwise appropriate, should not be dismissed at the
For the above-stated reasons, the Court finds that the Plaintiff has pled sufficient facts,
accepted as true, to state a claim for relief for breach of contract that is plausible on its face; in
addition, the Court finds that the Plaintiffs claim for declaratory relief is appropriate at the present
juncture. Accordingly, the Defendant's Amended Motion to Dismiss pursuant to Rule 12(b)(6)
[15, 30] shall be denied. Further, the Court shall lift the stay of proceedings that was entered in
Case: 4:19-cv-00153-GHD-JMV Doc #: 44 Filed: 09/08/20 8 of 8 PageID #: 848
this cause on January 29,2020 [27, 29].
An order in acc~nce with this opinion shall issue this day.
d; of September, 2020.
SENIOR U.S. DISTRICT JUDGE
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