IN THE DISTRICT COURT OF POTAWATOMIE COUNTY
STATE OF OKLAHOMA
Randy Wallace and Tara Wallace,
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Plaintiffs, } }
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v. }
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Permanent General Assurance Corporation; }
The General Automobile Insurance Services, Inc.; }
and Audatex North America, Inc., }
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Defendants. }
Case No. CJ-2020-73
PETITION
The Plaintiffs, Randy Wallace, and Tara Wallace, through their counsel, The West Law Firm, state as follows for their cause of action against Defendants, Permanent General Assurance Corporation ("PGAC"), The General Automobile Insurance Services, Inc. ("The General"), and Audatex North America, Inc. ("Audatex"):
1. Plaintiff, Randy Wallace, is the father of Tara Wallace and is domiciled in Pottawatomie County, Oklahoma.
2. Plaintiff, Tara Wallace, is of the age of majority and domiciled in Pottawatomie County, Oklahoma.
3. Defendant PGAC is an insurance company and at all times relevant herein doing business in the State of Oklahoma.
4. Defendant The General is a California corporation doing business in Oklahoma. The General is an insurance agency that conducts business like an insurer and third-party administrator in Oklahoma.
5. Defendant Audatex is a Delaware corporation.
6. Upon information and belief, The General utilizes Audatex’s computer program “Autosource” to provide total loss automobile valuations.
7. This Court has jurisdiction over this subject matter.
8. The venue is proper in this county according to 12 O.S. §137, which permits an action against a foreign corporation or insurer may be brought where the cause of action or part thereof arose, or where the Plaintiff resides, or where such company has an agent. The General has an agent, ABC Insurance Agency, located in Pottawatomie County, which is where the Plaintiffs purchased their insurance.
9. The Plaintiffs purchased a policy of insurance from PGAC, Policy No. OK-2571044 from PGAC’s agent, ABC Insurance Agency in Shawnee, Oklahoma.
10. The Plaintiffs are insureds under the policy issued by PGAC, where it agreed to provide collision and/or comprehensive coverage for losses resulting from damage to the vehicle. Collision and/or comprehensive coverage is additional coverage not required by Oklahoma law, which requires the policyholder to pay additional premiums.
11. The Plaintiffs’ 2016 Ford Focus was involved in an automobile collision on September 18, 2018, and was a total loss.
12. The Plaintiffs’ insurance policy was in full force and effect on September 18, 2018.
13. The relevant policy language in PGAC policy states:
PART IV – PHYSICAL DAMAGE COVERAGE
Insuring Agreement - Collision
Subject to the limits of liability, if you buy Collision Coverage from us on this policy for a covered auto, we will pay for direct loss to:
1. That covered auto; or
2. A temporary substitute auto;
if that loss is caused by an accident resulting from a collision.
1. “Collision” means the auto:
b. Collided with, or was hit by, a vehicle or other object;
Limits of Liability
1. For a loss covered under this Part IV, we will not pay more than our Limit of Liability which is the lesser of:
a. The actual cash value, at the time of loss, of the damaged or stolen auto, or its parts if the loss is limited to parts;
14. The PGAC policy defines “Actual Cash Value” as:
2. “Actual cash value” means, at the time of the accident or loss, the fair market value of the stolen or damaged property. The fair market value is affected by:
a. The age, mileage and physical condition of the property; and
b. Depreciation and prior damage; which may reduce value.
15. The Plaintiffs made a claim with Defendants PGAC and The General shortly after the collision resulting in Claim No. PA0002378110.
16. The General, at all material times herein, was acting sufficiently like an insurer because they controlled the claims process; investigation; benefit determinations; is contractually obligated to administer the policy; and receives payment from PGAC in return for administering policies and claims on their behalf. These actions by The General establish a special relationship between The General and Plaintiff.
17. Oklahoma statutes and insurance code provide the standards for evaluating and paying total loss automobile claims. For first-party claims, the Insurer must follow a set of guidelines that helps it determine the actual cash value using comparable vehicles in the local market area. The payment of a total loss claim is determined as listed in the current National Auto Dealers Association ("NADA") guidebook or other similar guidebook or the actual cash value,
whichever is greater. See 36 O.S. §1250.1 et seq; 47 O.S. §1111. Plaintiffs are not explicitly relying upon the referenced statutes as a private right of action.
18. Defendants PGAC and The General used the Autosource program to calculate the value of total loss vehicles in Oklahoma, including Plaintiffs’ 2016 Ford Focus. The Autosource program consistently undervalues the total loss amount due to policyholders by failing to use "comparable vehicles" as required by the Oklahoma Insurance Code, and by failing to determine the actual cash value as determined by the fair market value as contained in the relevant policy language and applicable law.
19. During the relevant time herein, PGAC has violated its contract with the Plaintiffs and Oklahoma law by determining the value of comparable vehicles using deductions for what it refers to as “typical negotiation.” The typical negotiation price provided by the Autosource program purports to account for the difference between the advertised price and its “negotiated” selling price. The negotiated sales price is invariably lower, which aligns with the Autosource explanation:
"The selling price may be substantially less than the asking price. In the case of this 2016 Ford Focus, the difference between the asking price and selling price is generally 7%. This selling price adjustment has been applied to the typical price."
Thus, PGAC is not providing their insureds with the “actual cash value” of comparable vehicles, they are automatically assuming credit for a speculative lower negotiated sold price that their insured must then go out and secure for themselves. The use of a projected sales price to adjust total loss claims downwards violates the policy and applicable Oklahoma law in that the Actual Cash Value of the policy, which is defined as “fair market value,” was not provided to Plaintiff in violation of the policy and Oklahoma law.
20. Thus, the Autosource total loss valuation service automatically deducted over 7% off the advertised price of their supposed “comparable vehicles” which reduces the Plaintiffs’ recovery under the policy. The 7% reduction to the price of the five (5) “comparable vehicles” resulted in savings to PGAC of $727.00; $672.00; $699.00; $699.00; and $700.00.
21. The Autosource program also purports to use comparable vehicles based upon the odometer, equipment, and condition. These adjustments are vague and not sufficiently explained to the insured. For example, Autosource states:
“Autosource located 32, 2016 Ford Focus vehicles which were used to determine the typical vehicle price. Adjustments have been made to the comparable vehicles for value differences in vehicle description as indicated in the “Veh Adj” field. The sum of the 32 comparable vehicles is $376,481 for an average price of $11,965.”
The Autosource program, however, did not make any condition adjustments to the five (5) comparable vehicles listed in its valuation report. None of the five (5) comparable vehicles listed in the report contained a “Veh Adj” field with differences.
22. Moreover, PGAC, The General, and Audatex did not inspect the condition of any of the five (5) comparable vehicles listed in the Autosource report.
23. For example, PGAC, The General, and Audatex misrepresented to Plaintiffs that comparable vehicle number 1 in the Autosource report it prepared had 43,519 miles when it had 60,612 on August 16, 2018, according to a CarFax report. Also, that same vehicle had previously been in a collision.
24. The Autosource report, however, did make a condition adjustment deduction of $1,805 to Plaintiffs’ car, and $250 deduction for mileage.
25. These negative condition adjustments were neither explained in the Autosource valuation nor in any written correspondence from The General or PGAC.
26. The intent and effect of the Autosource valuation is to intentionally obscure the valuation procedure and mislead the Plaintiffs concerning the quality of the evaluation. Particularly, but not limited to, its use of the typical negotiation deduction, use of non-comparable vehicles, failure to make any deductions from comparable vehicles, only make deductions to the Plaintiffs' car, and intentionally vague adjustments, inducing Plaintiffs to rely on the information.
27. The Autosource total loss valuation wrongfully valued the Plaintiffs' vehicle at approximately $9,091. The same Autosource report, however, readily acknowledges: "The sum of the 32 comparable vehicles is $376,481 for an average price of $11,975."
28. The Autosource total loss valuation wrongfully undervalued the Plaintiffs' vehicle by approximately $2,844.
COUNT I: Breach of the Duty of Good Faith & Fair Dealing Against PGAC and The General
29. Plaintiffs incorporate herein by reference the allegations of the proceeding paragraphs of this Petition.
30. Defendants PGAC and The General have a duty to deal fairly and in good faith all of their insureds.
31. The Plaintiffs made due demand on the Defendants for payment of the policy benefits and met all conditions precedent for payment of those benefits.
32. Defendants owed a duty to Plaintiffs, to deal fairly and in good faith. Defendants have breached their duty to the Plaintiffs. The actions alleged herein violate the Defendants' duty of good faith and fair dealing with the Plaintiffs.
33. Upon information and belief, Plaintiffs allege that it is the corporate goal of the Defendants to increase their profits by reducing, delaying, or avoiding the full and fair payment of claims.
34. In its handling of Plaintiffs' claims, and as a matter of standard business practice in handling like claims, Defendants breached their duty to deal fairly and act in good faith towards the Plaintiffs by:
a. Failing and refusing to pay the benefits due under said policy;
b. Failing to timely and adequately investigate the Plaintiffs' claim;
c. Failing to adopt and implement reasonable standards for the prompt investigation and handling of claims arising under such policies;
d. Knowingly misrepresenting that the Autosource service was using "comparable vehicles" in their evaluations;
e. Knowingly misrepresenting to Plaintiffs that the "typical negotiation" price was a valid deduction under the policy;
f. Knowingly misrepresenting to the Plaintiffs that their vehicle had condition adjustment deductions based upon wear determinations, and misrepresenting to Plaintiffs that none of the five (5) comparable vehicles it selected had no condition adjustment issues or deductions resulting in an underpayment of their claim;
g. Refusing to honor claims in some instances by knowingly misconstruing and misapplying standard insurance principles;
h. Failing to construe the facts to applicable Oklahoma law reasonably;
i. Knowingly misconstruing and misapplying provisions of the policy;
j. Not attempting in good faith to effectuate a prompt, fair, and equitable settlement of claims;
k. Failing to properly investigate and evaluate any investigation that was performed, including but not limited to, intentionally disregarding the undisputed facts concerning the claim;
l. Forcing Plaintiffs to retain counsel to secure benefits Defendants knew were payable;
m. Unreasonably delaying and denying policy benefits, all in violation of the covenant of good faith and fair dealing and resulting in a financial benefit to the Defendant.
n. Withholding payment of benefits knowing that claims for those benefits were valid;
35. Defendants knowingly utilized the Autosource service because Autosource valuations were less than NADA and other standard guidebooks.
36. Defendants’ bad faith motivation was to save total loss claim dollars at the expense of its insureds. Instead of properly investigating and paying the Plaintiffs’ total loss claim, PGAC contracted with The General and utilized its Autosource valuations for the wrongful and bad faith purpose of intentionally and improperly reducing total loss payments to Plaintiffs and other PGAC insureds.
37. The Defendants’ conduct in “low balling” and failing to negotiate the Plaintiffs’ claim and improper negative adjustments via the Autosource program constitute bad faith under Oklahoma law.
38. As a direct and proximate result of Defendants’ breach of the implied covenant of good faith and fair dealing, the Plaintiffs have suffered damage.
39. The Defendants' conduct was intentional, willful, malicious, and committed in utter reckless disregard of the Plaintiffs’ rights and is sufficiently egregious to warrant the imposition of punitive damages.
COUNT II: Fraud/Constructive Fraud/Negligent Misrepresentation
40. The Plaintiffs adopt and re-plead paragraphs 1-39, above, and further alleges as follows:
41. Defendants PGAC and The General utilize a computer program known as Autosource to evaluate and adjust total loss claims in Oklahoma.
42. The Autosource computer program uses a set of reference values that results in outcome-oriented, unreasonably low evaluations of total loss claims.
43. PGAC and The General represented to Plaintiffs, its first-party insureds, either directly or indirectly through their agents, that it uses "comparable vehicles" to determine the value of the total loss vehicle. Instead, PGAC and The General utilize the Autosource service to select "comparable vehicles" in a manner that allows them to reduce the calculated value they pay for total loss claims. Moreover, none of the "comparable vehicles" utilized in its report were sold, only listed for sale. By affirmatively representing to Plaintiffs that they were using "comparable vehicles" when Defendants knew or should have known such representation was false, they and their agents misrepresented essential facts in determining the value of the total loss vehicle.
44. PGAC and The General represented to Plaintiffs that the five (5) vehicles it selected in the Autosource valuation were comparable to their 2016 Ford Focus, but PGAC and The General did not inspect those five (5) so-called comparable vehicles and did not know their actual condition.
45. PGAC and The General falsely represented to Plaintiffs that the Autosource evaluation represents fair and reasonable evaluations of total loss claims when they know or should know otherwise.
46. PGAC and The General intentionally and knowingly made false statements to the Plaintiffs about the value of their car compared to the vehicles it utilized in the Autosource valuation to induce them to accept a reduced amount on their insurance claim.
47. Defendants PGAC and The General suppressed and concealed from Plaintiffs the material facts that Defendants improperly delegated the calculation of total loss valuations to Autosource.
48. Defendants PGAC and The General failed to investigate and confirm the validity of the Autosource methodology. Furthermore, PGAC and The General utilized Autosource valuations to underpay the Plaintiffs’ total loss claims improperly.
49. Defendants’ suppression, concealment, and/or failure to disclose these material facts caused detriment to the Plaintiffs. If PGAC had revealed the facts, the Plaintiffs would not have purchased the policy.
50. The systematic, company-wide use of the Autosource service to justify unreasonably low evaluations of total loss claims has resulted in wrongful profits generated by PGAC and The General. PGAC and The General encourage their employees to make payments on total loss claims they either know or should know are less than the fair and reasonable value of those claims.
51. PGAC and The General’s use of the Autosource service to justify their unreasonably low evaluation of the Plaintiff’s claim constitutes fraud/constructive fraud/deceit.
52. PGAC and The General’s conduct, through their use of the Autosource program, has resulted in damages for fraud/constructive fraud/negligent misrepresentation to the Plaintiffs.
COUNT IV: Tortious Interference with Contract as to The General and Audatex
53. The Plaintiffs adopt and re-plead paragraphs 1-52, above, and further allege:
54. The Plaintiffs had a contractual relationship with PGAC. The policy obligated PGAC to investigate the value of Plaintiffs’ claim in a timely and proper manner. The policy also requires PGAC to properly value and pay the Plaintiffs’ total loss claim.
55. The General and Audatex, at all times relevant, knew that PGAC entered into such insurance policies with its insureds, like Plaintiffs. The General and Audatex further understood that the policies obligated PGAC to properly value and pay total loss claims. The General and
Audatex prepared the valuation report, which specifically identified Plaintiffs and their 2016 Ford Focus.
56. The General and Audatex had actual knowledge that PGAC used the Autosource service to adjust the total loss claims of PGAC insureds. The General and Audatex also had actual knowledge that the substantial majority of total loss claims settled on the initial Autosource valuation.
57. The General and Audatex knew that their Autosource service undervalued the total loss claims of PGAC insureds.
58. The General and Audatex knew PGAC insured the Plaintiffs. The General and Audatex also knew of the Plaintiffs' total loss claim, as evidenced by the Autosource valuation prepared by Audatex, which expressly identifies the Plaintiffs' and their 2016 Ford Focus, and the PGAC claim.
59. The General and Audatex wrongfully interfered with PGAC's contractual obligations to Plaintiffs by knowingly selling to PGAC a statistically invalid and arbitrary Autosource product to enable PGAC to underpay the claims of total loss insureds, like Plaintiffs.
60. The Plaintiffs' Autosource valuation directly and proximately caused PGAC to improperly adjust and properly pay the full value of the Plaintiffs' total loss claim.
61. The breaches by PGAC were caused by The General and Audatex’s unjustified, and intentional interference with Plaintiffs’ contractual rights under the policy, including the following: (a) failing to value Plaintiffs’ total loss properly; (b) using arbitrary and statistically invalid methodology to value Plaintiffs’ total loss claim; (c) causing PGAC to fail to pay the proper amount owed to the Plaintiffs.
62. The tortious interference with Plaintiffs’ contractual relationship with PGAC by The General and Audatex was unlawful and was not justified, reasonable, or excusable. The wrongful motive of The General and Audatex was to obtain improper gains in the form of payments by PGAC for statistically invalid Autosource valuation.
63. Under Oklahoma law, a software provider may be liable for tortious interference with an insurance contract between the insurer and the insured, where the software provider sells software that undervalues the insured’s claim. Tullius v. Metropolitan Property and Casualty Insurance Company, 2010 WL 3259837 (W.D. Okla., Aug. 17, 2010)
64. The Plaintiffs sustained damages as a proximate result of The General and Audatex’s improper Autosource valuation and resulting tortious interference with the contractual relationship between PGAC and the Plaintiffs. The Plaintiffs are, therefore, entitled to recover compensatory and punitive damages, as well as any other such losses, costs, or attorneys’ fees to which they are entitled under Oklahoma law.
COUNT V: Unjust Enrichment
65. The Plaintiffs adopt and re-pleads paragraph 1-64, above, and further allege:
66. As a direct result of PGAC’s actions described herein, Defendants received unjust financial and material gains to the detriment of the Plaintiffs because their total loss claim was unfairly adjusted with the Autosource service.
67. PGAC collected insurance premiums from the Plaintiffs to pay collision and comprehensive coverage claims for loss or damage of their insured vehicles at all relevant times.
68. PGAC has been unjustly enriched by wrongfully and fraudulently withholding payment of the full, fair value of Plaintiffs’ total loss claim. It would be inequitable and unjust for PGAC to retain such ill-gotten gains.
69. The unjust enrichment of PGAC by payment of less than the full value of the Plaintiffs' claim through the use of the Autosource valuation method caused actual economic damages to the Plaintiffs.
70. As a result of PGAC's unlawful and tortious conduct described herein, PGAC was enriched at the expense of the Plaintiffs.
WHEREFORE, premises considered, Plaintiffs respectfully request this Court enter a judgment in favor of the Plaintiffs and against the Defendants in an amount not to exceed $60,000.00, together with all costs and any other relief which this Court may deem appropriate.
Respectfully submitted,
THE WEST LAW FIRM
[signature]
TERRY W. WEST, OBA NO. 9496
BRADLEY C. WEST, OBA NO. 13476
J. SHAWN SPENCER, OBA NO. 18840
124 W. Highland – P.O. Box 698
Shawnee, Oklahoma 74802-0698
(405) 275-0040 – Phone
(405) 275-0052 – Fax
terry(atthewestlawfirm.com
brad(atthewestlawfirm.com
shawn(atthewestlawfirm.com
Counsel for Plaintiffs
Attorney Lien Claimed
