Class Action Alleging Auto Insurer Breached Insurance Contract by Failing to Pay for Seatbelt Inspections Following Accidents Properly Dismissed Fifth Circuit Holds
Plaintiffs filed a class action lawsuit against their automobile insurance carrier alleging that it was “contractually obligated to provide an extensive seatbelts inspection” following auto accidents. Sonnier v. State Farm Mut. Auto. Ins. Co., 509 F. 3d 673, 2007 WL 4260892, *1 (5th Cir. 2007). The class action complaint does not challenge State Farm’s payment of repair costs as estimated by the body shops that inspect the insured vehicles after accidents; rather, it alleged that the manufacturer and a trade group recommend inspecting seatbelts and their locking mechanisms following any accident. Id. The class action further alleged that if “a body shop deems such an inspection unnecessary and does not list it on the estimate, then State Farm will not cover the cost of the seatbelt inspection.” Id. However, plaintiffs “refused to allege that there is in fact anything wrong with the seatbelt (or even that there seemed to be something wrong).” Id., at *3 n.2. Defense attorneys moved to dismiss the class action for failure to state a claim, noting that plaintiffs “do not allege that their seatbelts were harmed in any way during or after the collisions”; the district court granted the motion because “based on the contractual agreement to repair, if there is no complaint of a failure, there is nothing to repair.” Id., at *1. The Fifth Circuit affirmed.
The Circuit Court summarized plaintiffs’ theory on appeal as “arguing that the term ‘cost of repair’ necessarily includes the cost of the seatbelts inspection because in order to repair something, one must first inspect to determine what is in need of repair.” Sonnier, at *1. The Court disagreed. Interpreting the policy language under Louisiana law, the Fifth Circuit found unambiguous that State Farm’s contractual obligations were limited to loss or damage, and that the cost of repair or replacement was, under the facts of this case, based on “an estimate written based upon the prevailing competitive price.” Id., at *2. The Circuit Court concisely explained its rationale for rejecting plaintiffs’ theory as follows: “State Farm is obligated to pay for loss or damage to [plaintiffs’] vehicles based upon a written estimate. In creating estimates, body shops conduct an inspection, list the items in need of repair, and determine the amount State Farm owes ‘based upon the prevailing competitive price.’ [Plaintiffs’] argument that an estimate must necessarily include an extensive seatbelts inspection finds no support in the policy language. There is no policy language describing State Farm’s duty to conduct or pay for automobile inspections. State Farm’s duty is to pay for loss or damage to Appellants’ vehicles, measured by the cost of repair. That obligation was fulfilled in this case, and [plaintiffs] do not further identify anything broken that needs to be fixed.” Id.
The Fifth Circuit was unmoved by the fact that the vehicle manufacturers and a trade group recommended such inspection, as those recommendation could not affect the language of the contract between the parties. Sonnier, at *3. The Circuit Court held, “We are solely guided by the policy language before us, which requires State Farm to pay Appellants for loss to property based upon the cost of repair. There is no indication that State Farm failed to honor this contractual obligation.” Id. Accordingly, the class action complaint failed to state a claim for breach of contract, and the district court properly granted the defense motion to dismiss, id.