USAA Class Action Settlement Reached Over Sales Tax Compensation

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A settlement has reportedly been reached in a class action lawsuit over the United Services Automobile Association’s practice of compensating policyholders with totaled cars for the sales tax associated with purchasing a replacement vehicle instead of determining tax based on the totaled vehicle’s value.

The plaintiffs argued USAA breached its agreement to policyholders by failing to include in payments for total loss vehicles an amount for sales tax based on the amount of sales tax that would be imposed for the purchase of a comparable vehicle.

“Defendants’ practice and procedure was to pay sales tax when incurred, reimbursing their members (policyholders) for sales tax paid in purchasing a replacement vehicle, which Defendant asserted was appropriate under the language of their insurance policies and [applicable Florida law],” the court documents state.

Plaintiff Chantal Bastian filed the class action lawsuit against Garrison Property and Casualty Insurance Co. and three other USAA-affiliated automobile insurance companies in 2013. She alleges she reported to Garrison that a tree fell on her covered vehicle, and her vehicle was determined to be a total loss.

Bastian received a letter from Garrison breaking down the payments it would provide, and included a market valuation report with information about how it reached its decision. According to the USAA class action lawsuit, the report included a calculation for the sales tax on a vehicle that was comparable to the totaled car. However, Bastian says she purchased a replacement vehicle that was less expensive than the totaled car and received tax compensation based on the value of the cheaper car.

On Tuesday, the parties asked a Florida federal judge to preliminarily approve the USAA class action settlement.

“The parties have reached a settlement agreement for the purpose of providing to members of a settlement class who make a claim 108% of the actual damages alleged in the litigation (actual damages and 8% to account for claims of prejudgment interest),” the motion seeking preliminary approval of the USAA class action settlement states.

According to the parties, they reached the proposed USAA class action settlement agreement after more than three years of “hotly-contested litigation.” They participated in a day-long mediation session in August 2016 and followed up with lengthy negotiations in order to reach an agreement about how to resolve the litigation.

USAA has reportedly changed its practice in Florida and now include in its payments for total loss vehicles the amount for sales tax based on the sales tax that would be due upon the purchase of a comparable replacement vehicle.

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The plaintiffs are represented by Christopher B. Hall of Hall & Lampros LLP and Tracy L. Markham of Avolio & Hanlon PC.

The USAA Sales Tax Compensation Class Action Lawsuit is Bastian, et al. v. United Services Automobile Association, et al., Case No. 3:13-cv-01454, in the U.S. District Court for the Middle District of Florida, Jacksonville Division.

UPDATE: The Florida USAA Auto Sales Tax Class Action Settlement is now open. Click here to file a claim.