Candelario v. GEICO Corporation
1:19-cv-03349
E.D.N.YSep 29, 2020Background:
- Plaintiffs are GEICO insureds whose vehicles were declared total losses under GEICO private passenger auto physical-damage policies.
- GEICO paid actual cash value (ACV) for total losses but refused to reimburse title-transfer and license/tag transfer fees incurred when plaintiffs purchased replacement vehicles.
- Plaintiffs allege breach of contract, arguing the Policy’s ACV definition ("replacement cost . . . less depreciation") requires reimbursement of sales tax, title, and tag fees.
- GEICO moved to partially dismiss under Rule 12(b)(6), arguing (inter alia) New York law and the Policy do not require payment of title/tag fees, and that one plaintiff’s sales-tax claim was not pleaded.
- The Court applied New York law and Regulation 64/DFS guidance incorporated into the Policy and concluded the Policy unambiguously does not require payment of license and tag fees; it dismissed those claims and denied as moot the motion regarding sales tax.
Issues:
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether ACV in the Policy includes title and tag transfer fees | ACV = "replacement cost" less depreciation; replacement necessarily includes mandatory title/tag fees | The Policy’s coverage language limits payment to "loss" of the auto; the ACV/Limit of Liability language is a ceiling, not a promise to pay ancillary replacement fees | Court: ACV as applied in the Policy does not include title/tag fees; breach claims for those fees dismissed |
| Whether Regulation 64 / DFS authority requires payment of title/tag fees | Regulation/DFS should not displace the Policy language; replacement-cost reading controls | Regulation 64 (incorporated into the Policy) requires sales tax inclusion but does not mandate title/tag fees; DFS opinions confirm no requirement to include title fees | Court: Regulation 64 is incorporated and does not require title/tag fees; sales tax may be covered but title/tag are not required |
| Whether the Policy is ambiguous regarding coverage of these fees | Policy is ambiguous because it defines ACV as "replacement cost" while coverage sections are silent | Policy’s coverage grant and Limit of Liability are clear; the limit is a ceiling and coverage language controls | Court: Policy unambiguous that tag/title fees are not reimbursable |
| Sufficiency of Plaintiff Candelario’s sales-tax breach allegation | (Plaintiff had alleged sales-tax nonpayment) | GEICO: Complaint fails to allege sales-tax nonpayment for Candelario | Court: Motion denied as moot because amended complaint does not assert a sales-tax nonpayment claim by Candelario |
Key Cases Cited
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (pleading standard: complaint must state a plausible claim)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) (plausibility pleading framework)
- LaSalle Bank Nat'l Ass'n v. Nomura Asset Cap. Corp., 424 F.3d 195 (2d Cir. 2005) (contract interpretation is a question of law when terms are unambiguous)
- Morgan Stanley Grp. Inc. v. New Eng. Ins. Co., 225 F.3d 270 (2d Cir. 2000) (initial contract interpretation is for the court)
- Sigler v. GEICO Cas. Co., 967 F.3d 658 (7th Cir. 2020) (policy Limit of Liability is a ceiling, not a promise to pay ancillary replacement costs)
- Milligan v. CCC Info. Servs. Inc., 920 F.3d 146 (2d Cir. 2019) (deference to DFS interpretations in insurance contexts)
- Trizzano v. Allstate Ins. Co., 780 N.Y.S.2d 147 (App. Div. 2004) (New York Insurance Law and DFS regulations are treated as part of the insurance contract)