In a case in which TCJL participated as amicus curiae, the Texas Supreme Court has reversed a Dallas Court of Appeals decision affirming a trial court order certifying a class action against USAA under Rule 42, TRCP.
The case, USAA Casualty Insurance Company v. Sunny Letot, Individually and On Behalf Of All Others Similarly Situated (No. 22-0238; May 24, 2024), arose from a 2009 collision between Letot and USAA’s insured that, according to USAA’s adjuster, damaged Letot’s 1983 Mercedes. USAA’s adjuster determined that while the value of the vehicle was $2728, the cost of repair came to $8859. USAA declared the vehicle a “total loss” and tendered checks totaling $2738.02 to Letot. Letot objected to the vehicle valuation. Her lawyer returned the checks and demanded that USAA pay $10,700 in damages. USAA declined to do so.
As its standard practice when totaling a vehicle, within 3 days of tendering payment of Letot’s claim, USAA filed an owner retained report with TXDOT pursuant to 43 TAC § 217.83(c), which prescribes a procedure by which an owner of a salvage or non-repairable vehicle retains the vehicle. Under § 217.83(a), a vehicle is deemed salvage or non-repairable if the cost of repairs exceeds the market value of the vehicle. Market value is determined from publications commonly recognized by the automotive or insurance industries to establish values, or, if the entity determining the value is an insurance company, by any other procedure recognized by the insurance industry, including market surveys, that is applied in a uniform manner. Similarly, cost of repairs must be determined using a manual of repair costs or other instrument generally recognized and used in the automotive repair industry, or an estimate of actual cost of the repair parts and labor costs by using hourly rate and time allocations that are reasonable and commonly assessed in the repair industry in the community in which the repairs are performed.
From what we can tell from the recital of facts in the opinion, USAA followed this procedure, declared the vehicle unsalvageable, and sent Letot a check. Since USAA did not acquire ownership or possession of the vehicle (in which case USAA would have to apply for a non-repairable or salvage vehicle title), it filed an owner retained report as required by § 217.83(c). This subsection provides that when an insurance company pays a claim on a non-repairable or salvage vehicle and does not acquire ownership, the company shall submit to TXDOT before the 31st day after the date of the payment of the claim, a report stating that the company has paid a claim and has not acquired ownership or possession of the vehicle. When it receives the report, TXDOT places a notation on the vehicle record to prevent registration and transfer of ownership prior to the issuance of a salvage or non-repairable vehicle title. Letot did not dispute that USAA followed the statutory procedure but objected to the process itself.
Letot filed suit seeking damages and injunctive relief, alleging that USAA (1) failed to notify her that it filed owner retained reports subsequent to paying claims for non-repairable or salvage vehicles, (2) failed to notify her of the consequences that an owner retained report would have on her title, (3) improperly filed an owner retained report before Letot had accepted payment of the claim, and (4) illegally converted her title in the vehicle by filing the report. Letot further sought class certification for all similarly situated vehicle owners for which USAA had filed owner retained reports within 3 days of paying claims. The trial court certified the class on the basis of a common issue of whether “USAA’s uniform practice of filing Owner Retained Reports prior to paying claims improperly meant it improperly and intentionally asserted rights in Letot’s property.”
USAA appealed the certification order. The court of appeals affirmed, but nowhere in the court of appeals’ opinion was there any discussion of what was “improper” about USAA’s conduct in the first place or what “rights in Letot’s property” USAA asserted. The court of appeals focused solely on the propriety of USAA’s “uniform practice” of filing owner retained reports on totaled vehicles as justifying class certification, brushing aside USAA’s argument that at best each conversion claim should be tried individually because in every case except Letot’s nobody has ever complained about it. USAA sought review.
In an opinion by Justice Young, SCOTX reversed. First, the Court held that because Letot, the class representative, did not have standing to bring her own claim for injunctive relief, she could not assert that claim on behalf of the class. Here Letot failed to show that her past experience in colliding with a USAA insured “increase[d] the likelihood of her being hit again by a USAA insured, much less in the imminent future.” But even if she could have shown that a whole crowd of USAA insureds was lining up to run into her next vintage vehicle (she had already cannibalized the vehicle at issue in this case and sold it for parts) the minute she took it out of the garage, “she would [still] have to show that the damage would lead USAA to deem that car a total loss rather than one that could be repaired.” Not only that, but “USAA would then have to authorize payment to Letot” and “within three days of approving that payment, USAA would have to alert TxDOT about her car’s salvage status via a Report.” In short, since there was no way Letot could show that the same thing was going to keep happening to her if USAA were allowed to keep using the statutory process it uses for everyone, she could not satisfy the requirements for an injunction. The trial court erred in certifying the class as to that claim.
The Court then turned to the class claim for damages. First, the Court determined that Letot had standing to pursue her damages claim as an individual, though it expressed no opinion as to the merits of her claim (we wondered about that as well). Turning to whether class certification was proper, however, the Court said no because Letot failed to carry her burden to show that the proposed class satisfied Rule 42’s predominance and typicality requirements. As to predominance, the question was “whether common or individual issues will be the object of most of the efforts of the litigants and the courts” (citation omitted). Here the Court easily determined that “[i]ndividual issues would almost surely overwhelm the common issue of whether USAA exercised dominion and control over class members’ property when it filed Reports concerning their vehicles.” The standing issues alone, the Court noted, would overwhelm the common issues since many, if not most, of the putative class members either didn’t object to the statutory process USAA followed or wanted it to go faster than it did. With such a “clear and substantial variation . . . among the class regarding standing,” there is no chance of satisfying the predominance requirement from the outset.
As to typicality, the Court ruled that Letot’s claim for damages “does not have the same essential characteristics as the claims of other class members. She is at least atypical, and perhaps even unique, in having objected to the claims process or having declined to cash the checks that USAA had sent.” The Court further observed that USAA requested a correction from TxDOT in her individual case, something no other class members even asked for. “Such a bespoke fact pattern may make Letot a compelling plaintiff in her own case,” Justice Young wrote. “But her unique characteristics cannot reasonably be the basis for a jury to award actual or exemplary damages to make other findings on behalf of an entire class, whose experiences differ starkly from Letot’s.”
SCOTX remanded to the trial court to try Letot’s individual claim. As we have stated previously in our reporting on this case and in the amicus brief we filed with SCOTX, we have never fully understood what is actually going on in this litigation. This case has been going on since 2009. For those of you who are math challenged, that’s 15 years. The total damages in dispute in Letot’s case are (or at least were) around $8,000. The vehicle no longer exists, having been cannibalized for parts by other owners of old Mercedes. The plaintiff’s most recent amended petition—the seventh of a series—added a claim for injunctive relief, which had never been requested before and which SCOTX had to dump first. Obviously, if Letot had prevailed and class certification had held up, there would have been a fat settlement and an attorney’s fee windfall at the end of the line. But what were the real chances of that ever happening? Letot is the only claimant who complained about USAA’s process, which, as we have droned on about ad nauseam, the Legislature prescribed and USAA followed in her case and everybody else’s. Letot’s allegations about the process—that USAA filed an owner’s retained report and sent her checks too fast and without telling her first—simply don’t point to anything USAA did wrong. In any event, this thing dragging on for 15 years is simply beyond the pale.
