420 F.Supp.3d 867
W.D. Wis.2019Background
- Thompson insured a 2015 Kia Optima under a Progressive policy that pays the lesser of (a) actual cash value (ACV) minus deductible or (b) replacement cost minus deductible.
- The policy defines ACV as determined by "market value, age, and condition" at the time of loss.
- Thompson’s vehicle was totaled in a collision; Progressive paid ACV as it calculated it and did not include sales tax, title, or registration fees in that calculation.
- Thompson sued, alleging Progressive breached the policy by not reimbursing sales tax and title/registration fees on a replacement vehicle.
- Progressive moved to dismiss under Fed. R. Civ. P. 12(b)(6), arguing the policy’s ACV definition unambiguously excludes those costs.
- The court granted Progressive’s motion, holding the policy’s ACV definition and Wisconsin law do not require inclusion of sales tax or title/registration fees in ACV.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether ACV (defined as “market value, age, and condition”) includes sales tax and title/registration fees | Thompson: definition lists factors but does not exclude taxes/fees; market value can include replacement cost so taxes/fees should be recoverable | Progressive: ACV is unambiguously market value-based and market value does not include sales tax or registration fees | Court: ACV is unambiguous under the policy and Wisconsin law; sales tax and registration fees are not part of ACV; claim dismissed |
| Whether “market value” is ambiguous, permitting extrinsic evidence or construction against the drafter | Thompson: multiple permissible methods to measure market value render the term ambiguous | Progressive: Wisconsin law provides a clear three-tier market-value methodology and auto markets supply comparable-sales data making the term unambiguous | Court: term is not ambiguous for automobiles; market value is determined by comparable sales and does not require reimbursement of out-the-door costs like taxes/fees |
Key Cases Cited
- Hecker v. Deere & Co., 556 F.3d 575 (7th Cir. 2009) (pleading-stage rule: construe complaint in plaintiff’s favor)
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (pleading standard requiring plausible claims)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) (plausibility pleading standard)
- Coppins v. Allstate Indem. Co., 359 Wis.2d 179, 857 N.W.2d 896 (Wis. Ct. App. 2014) (ambiguous insurance terms may admit extrinsic evidence and be construed against drafter)
- Adams Outdoor Advertising Ltd. v. City of Madison, 294 Wis.2d 441, 717 N.W.2d 803 (Wis. 2006) (Wisconsin’s three-tier market-value methodology)
- Mills v. Foremost Ins. Co., 511 F.3d 1300 (11th Cir. 2008) (example of a policy where ACV was defined to include replacement cost)