631 F.Supp.3d 202
D. Del.2022Background
- Williams purchased an auto policy with a $2,000 deductible and suffered a total loss in an October 30, 2020 accident. Progressive declared the vehicle a total loss and paid nothing after its valuation and Williams’s deductible.
- Progressive used a Mitchell Vehicle Valuation Report to compute actual cash value, applying a "projected sold adjustment" (~10.3%) to three comparable vehicles. That produced a base value of $2,521.42; after condition and other adjustments, the market value was $1,531.96.
- Williams alleges the projected sold adjustment improperly depressed the base value by about $488, which would have produced an award of roughly $20 after deducting her $2,000 deductible.
- She sued Progressive under the Delaware Consumer Fraud Act (DCFA), for breach of contract, breach of the covenant of good faith and fair dealing, and sought declaratory relief. Progressive moved to dismiss.
- The court dismissed the DCFA claim and the declaratory-judgment claim (finding no pleaded sale-time deception and no standing for prospective relief), but denied dismissal of the breach-of-contract and implied-covenant claims, allowing them to proceed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether DCFA claim is pleadable for insurer's claims-handling method | Williams: Mitchell's projected sold adjustment is deceptive and misrepresents market value; constitutes consumer fraud | Progressive: DCFA requires deception in connection with sale/advertisement of merchandise (the policy); no allegations of sale-time misrepresentation; alternative Rule 9(b) defects | Dismissed — plaintiff failed to allege deception/omission in connection with sale of the policy as required by DCFA precedents |
| Breach of contract for alleged undervaluation | Williams: Policy requires payment of "actual cash value" (market value, age, condition); applying projected sold adjustment produced an artificially low market value and breached the contract | Progressive: Policy sets limits and permits use of third-party valuation systems; plaintiff hasn’t alleged specific amount paid or a value range showing a wrong payment | Allowed to proceed — court finds allegations that projected sold adjustment depressed market value plausibly state breach at this stage |
| Breach of the covenant of good faith and fair dealing | Williams: Even if discretionary, insurer must exercise valuation discretion reasonably; using an arbitrary adjustment breaches implied duty | Progressive: Claim is duplicative or seeks to impose duties the contract addresses expressly | Allowed to proceed — court permits the implied-covenant claim as an alternative theory tied to contract discretion |
| Declaratory relief seeking a rule against use of projected sold adjustments | Williams: Seeks declaration that using such adjustments breaches the Policy | Progressive: Relief is retrospective (challenging past conduct), plaintiff lacks standing for prospective relief and claim duplicates contract remedies | Dismissed — plaintiff lacks standing for forward-looking relief and the request is duplicative of contract claims |
Key Cases Cited
- Smith v. S. Farm Bureau Cas. Ins. Co., 18 F.4th 976 (8th Cir. 2021) (reversed dismissal of breach-of-contract claim where insurer's use of projected-sold adjustment allegedly produced an artificially low valuation)
- Johnson v. GEICO Cas. Co., 516 F. Supp. 2d 351 (D. Del. 2007) (permitting DCFA claim to proceed where insureds alleged inducement to purchase policies by misrepresentations)
- Homsey v. Vigilant Ins. Co., 496 F. Supp. 2d 433 (D. Del. 2007) (denying dismissal of DCFA claim where insurer’s post-sale claim handling allegedly conflicted with sale representations)
- Price v. State Farm Mut. Auto. Ins. Co., 77 A.3d 272 (Del. 2013) (affirming that DCFA protects consumers deceived while purchasing insurance and generally does not apply to post-sale claim handling)
- VLIW Tech., LLC v. Hewlett-Packard Co., 840 A.2d 606 (Del. 2003) (elements required for breach of contract under Delaware law)
- Stephenson v. Capano Dev., Inc., 462 A.2d 1069 (Del. 1983) (treatment of negligent misrepresentation under Delaware Consumer Fraud Act)
- Dunlap v. State Farm Fire & Cas. Co., 878 A.2d 434 (Del. 2005) (contract interpretation and limits on implied covenant claims)
- Adarand Constructors, Inc. v. Pena, 515 U.S. 200 (1995) (standing principles cited for distinguishing retrospective and prospective relief)
- Friends of the Earth, Inc. v. Laidlaw Env't Servs., 528 U.S. 167 (2000) (standing principles referenced for prospective-relief requirements)