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Date: 07-03-2023

Case Style:

Paula Gulick v. State Farm Mutual Automobile Insurance Company

Case Number: 21-CV-02573

Judge: Toby Crouse

Court: United States District Court for the District of Kansas (Wyandotte County)

Plaintiff's Attorney:

Click Here For The Best Kansas City Insurance Lawyer Directory

Defendant's Attorney: Peter W. Herzog , III

Description: Kansas City, Kansas insurance law lawyers represented Plaintiff who sued defendant on a bad faith breach of contract theory.

Plaintiff Paula Gulick filed this suit as a putative class action on behalf of herself and other customers alleging breach of contract and seeking a declaratory judgment against Defendant State Farm Mutual Automobile Insurance Company. Doc. 3. State Farm moves to dismiss for failure to state a claim. Doc. 16. For the following reasons, State Farm's motion to dismiss is denied.



To survive a motion to dismiss for failure to state a claim, a complaint need only contain “a short and plain statement of the claim showing that the pleader is entitled to relief” from each named defendant. Fed.R.Civ.P. 8(a); Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). The Tenth Circuit has summarized two “working principles” that underlie this standard. Kan. Penn Gaming, LLC v. Collins, 656 F.3d 1210, 1214 (10th Cir. 2011); see also Ashcroft v. Iqbal, 556 U.S. 662, 67879 (2009). First, the Court ignores legal conclusions, labels, and any formulaic recitation of the elements of the cause of action. Kan. Penn Gaming, 656 F.3d at 1214. Second, the Court accepts as true all remaining allegations and logical inferences and asks whether the claimant has alleged facts that make his or her claim plausible. Id.

A claim need not be probable to be considered plausible. Iqbal, 556 U.S. at 678. But the facts viewed in the light most favorable to the claimant must move the claim from merely conceivable to actually plausible. Id. at 678-80. The “mere metaphysical possibility that some plaintiff could prove some set of facts in support of the pleaded claims is insufficient; the complaint must give the court reason to believe that this plaintiff has a reasonable likelihood of mustering factual support for these claims.” Ridge at Red Hawk, L.L.C. v. Schneider, 493 F.3d 1174, 1177 (10th Cir. 2007).

Plausibility is context specific. The requisite showing depends on the claims alleged, and the inquiry usually starts with determining what the plaintiff must prove at trial. See Comcast Corp. v. Nat'l Assoc. of Afr. Am.-Owned Media, 140 S.Ct. 1009, 1014 (2020). The nature and complexity of the claims define what plaintiffs must plead. Cf. Robbins v. Oklahoma, 519 F.3d 1242, 1248-49 (10th Cir. 2008) (comparing the factual allegations required to show a plausible personal injury claim versus a plausible constitutional violation).

In the alternative to a Rule 12(b)(6) challenge, a party may request a more definite statement under Rule 12(e). 5C Wright & Miller, Federal Practice and Procedure § 1376 (3d ed. 2023). “A party may move for a more definite statement of a pleading to which a responsive pleading is allowed but which is so vague or ambiguous that the party cannot reasonably prepare a response.” Fed.R.Civ.P. 12(e). The movant “must point out the defects complained of and the details desired.” Id. Motions under this rule are proper “only in cases where the movant cannot reasonably be required to frame an answer or other responsive pleading,” not in cases where the pleading merely lacks detail. Fed.R.Civ.P. 12(e) advisory committee's note (1946 amend.).


This is an insurance dispute stemming from damage to Gulick's vehicle that State Farm insured. It concerns the appropriate calculation of the value of Gulick's totaled vehicle.

Gulick and her husband purchased an automobile insurance policy from State Farm. Doc. 3 at ¶ 8. The relevant policy provision concerning loss settlement provides as follows:[1]

We have the right to choose to settle with you or the owner of the covered vehicle in one of the following ways: (a) Pay the cost to repair the covered vehicle minus any applicable deductible.... (b) Pay the actual cash value of the covered vehicle minus any applicable deductible. (1) The owner of the covered vehicle and we must agree upon the actual cash value of the covered vehicle.

Doc. 17-1 at 20 (emphasis added).[2] If the parties disagree over the actual cash value, the policy defines a purely voluntary appraisal process that cannot take place unless both parties agree to it. Id. The policy does not define the term “actual cash value.”

Gulick filed a property damage claim regarding her insured vehicle, and in May 2021, State Farm deemed the vehicle a total loss. Doc. 3 at ¶¶ 10-12. State Farm elected to pay Gulick the actual cash value of the vehicle. Id. at ¶ 13. State Farm followed a routine “total loss settlement process” in which it obtained a “Market-Driven Valuation” report from an outside vendor, Audatex. Id. at ¶¶ 14-15. Audatex's report collected the prices of four comparable vehicles advertised for sale online within a relevant market area. Id. at ¶ 18; Doc. 3-1 at 6. Audatex then reduced each comparable vehicle's asking price by a “typical negotiation adjustment.” Doc. 3 at ¶ 18; Doc. 3-1 at 7. The report for Gulick's vehicle determined that the “Total Condition Adjusted Market Value” was $16,816. Doc. 3-1 at 4. This figure was $882.75 less than it would have been had the typical negotiation adjustment not been applied. Doc. 3 at ¶ 25. State Farm adopted the report's market value figure as Gulick's total loss claim and paid her that amount. Id. at ¶¶ 16-17.

Gulick's Amended Complaint, filed on behalf of herself and all those similarly situated, contends that this methodology violates the parties' agreement. Doc. 3 at ¶ 24. Gulick alleges that State Farm's reliance on Audatex's figure breached its obligation to pay the vehicle's actual cash value. Id. at ¶ 36. Essential to that claim, Gulick alleges that State Farm was required to consider her vehicle's fair market value when determining the actual cash value. Id. at ¶ 35. Gulick then alleges that the nearly five percent deduction flowing from the negotiation adjustment did not accurately reflect the fair market value of her vehicle because negotiation adjustments “do not accurately reflect market realities” and are “contrary to customary automobile dealer practices and inventory management.” Id. at ¶¶ 18, 20. She reasons that “a negotiated price discount would be highly atypical” because used cars are priced “to market to reflect the intense competition” arising from increased price transparency on the internet. Id. at ¶ 20. She further identifies each of the comparable vehicle prices in Audatex's report as taken from online listings. Id. at ¶ 20; Doc. 3-1 at 6. So, because the adjusted total fell below fair market value, Gulick alleges that State Farm breached its promise to pay the actual cash value. Doc. 3 at ¶ 25; see also id. at ¶¶ 22-23 (recognizing that a competitor of Audatex's does not use this adjustment and that State Farm does not utilize it in other states).

Based on this conduct, Gulick brings two claims. First, she alleges that State Farm breached the insurance contract by using the typical negotiation adjustment to pay her an amount below the actual cash value of her vehicle. Doc. 3 at ¶¶ 35-39. Second, Gulick seeks a declaratory judgment against State Farm to clarify the parties' rights and liabilities under the insurance contract Id. at ¶ 41.

State Farm moves to dismiss both claims for failure to state a claim. Doc. 16. It argues that Gulick failed to identify a provision of the policy that was plausibly breached. Doc. 17 at 6. Alternatively, State Farm seeks an order requiring Gulick to amend her complaint with a more definite statement as to what provision was breached and how. Id. at 8. As to the declaratory judgment claim, State Farm argues the claim is superfluous in light of Gulick's breach of contract count. Id. at 9. State Farm also asserts that Gulick lacks Article III standing to bring a declaratory judgment claim because the injury (the lesser insurance


payout) would be remedied through the breach of contract claim, and that the likelihood of future injury from a total loss of her vehicle is too remote to confer standing. Id. at 9-11.
Gulick v. State Farm Mut. Auto. Ins. Co. (D. Kan. 2023)

Outcome: "For the above reasons, State Farm's Motion to Dismiss, Doc. 16, is DENIED.

It is so ordered." Gulick v. State Farm Mut. Auto. Ins. Co. (D. Kan. 2023)

07/05/2023 29 INITIAL ORDER REGARDING PLANNING AND SCHEDULING: Scheduling Conference set for 8/17/2023 at 10:00 AM by telephone before Magistrate Judge Gwynne E. Birzer. Participants shall dial into the conference call at 888-363-4749, enter access code 9686294#, and follow the prompts to join the call. Rule 26 Initial Disclosures and Proposed Scheduling Order due 8/10/2023. Signed by Magistrate Judge Gwynne E. Birzer on 7/5/2023. (ala) (Entered: 07/05/2023)

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