Grange Indemnity Insurance Company Must Face Breach of Contract Claims

A federal judge in Ohio has refused to dismiss a class action breach of contract lawsuit against Grange Indemnity Insurance, clearing the way for the case over what constitutes actual cash value to proceed.

Judge Algenon L. Marbley of the U.S. District Court for the Southern District of Ohio, Eastern Division, ruled earlier this year that plaintiff Vicki Ostendorf can move ahead with her action against the company she had her automobile insured with. Ostendorf claims Grange was in breach of contract when it failed to include the cost of taxes, automobile tags and a title transfer in the payout it gave her after her car was totaled.

Lawyers for Grange asked the court to dismiss the lawsuit Ostendorf filed against the company in March 2019 or to force her to participate in the mandatory appraisal process required by her insurance policy in the event of a dispute over the value of a damaged vehicle.

Judge Marbley refused both requests in his January ruling.

What Is a Breach of Contract?

According to Law.com’s online legal dictionary, a breach of contract is defined as the “failing to perform any term of a contract, written or oral, without a legitimate legal excuse.” In layman’s terms, it’s the equivalent of not fulfilling a promise. For consumers, a breach of contract happens when a service provider doesn’t complete a job, a seller doesn’t deliver the items purchased or substitutes the items purchased with other items, or a customer not paying in full or paying on time for something.

Breach of contract claims are the second most common types of civil lawsuits filed in U.S. courts each year. According to the Bureau of Justice Statistics, lawsuits involving “an alleged breach of a contractual agreement” made up 33 percent of all civil cases litigated in state courts in 2005. They were second only to tort cases, which involve personal injury or property damage.

What Are the Plaintiff’s Claims Against Grange Indemnity Insurance Company?

The Grange breach of contract case began after Ostendorf’s 2001 Pontiac Grand Prix was involved an accident in May 2018. The car was insured through Grange and the damage was so extensive the vehicle was “totaled” or deemed to be a total loss. In automobile insurance terms, a vehicle is classified as a total loss when the cost to repair it is greater than the actual value of the vehicle.

Ostendorf filed a total loss insurance claim, according to court documents, and Grange determined the car was worth $1,773. Because Ostendorf’s policy carried a $100 deductible, that amount was subtracted from the estimated value and the insurance company sent the insured  $1,673.

The problem, Ostendorf says, is the insurance company did not pay her – and other policyholders in similar circumstances – the cost of sales tax on the car’s value and the cost of the necessary title and tag transfers. Those costs should be considered part of the actual cash value of the vehicle when calculating the total loss, she argues., because the whole point is to cover the full cost of replacing the vehicle.

Failing to do so “amounts to a material breach of their insurance policy contract,” Ostendorf claims in her lawsuit.

Breach of Contract Claims Survive Motion for Dismissal

In its attempts to get the case against it thrown out, Grange argued to the court that the insurance policy Ostendorf purchased did not specify the cost of taxes, tags and titles would be included in the actual cash value of her car if it were a total loss. The company’s lawyers also argued Ostendorf hadn’t suffered any damages as a result of the payout “until or unless she actually incurs such expenses by replacing her vehicle.”

In his ruling, Judge Marbley determined the term “actual cash value is at least ambiguous under the policy” and based on legal precedent, when there is ambiguity the court is required to interpret it “strictly against the insurer and liberally in favor of the insured.” As a result, he said Ostendorf has grounds enough to pursue her claims.

The judge also refused to force Ostendorf to submit to the mandatory appraisal process outlined in her insurance policy because, he said, she does not dispute the estimated value of the car itself.

The Grange Indemnity Class Action Lawsuit is Vicki Ostendorf, individually and on behalf of all others similarly situated, v. Grange Indemnity Insurance Company Case No. 2:19-cv-01147-ALM-KAJ in the U.S. District Court for the Southern District of Ohio, Eastern Division.

Join a Free Total Loss Car Accident Class Action Lawsuit Investigation

If you were insured under an auto insurance policy, experienced a total loss car accident, and were not reimbursed for sales tax and other fees by your insurance company in the last 5 years, you may qualify to join a total loss car accident class action lawsuit investigation.

Learn More