GEICO Total Loss Sales Tax Class Action Wins Summary Judgment

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Last week, a Florida federal judge granted summary judgment in favor of a plaintiff who accused GEICO General Insurance Company of failing to pay state and local sales tax and title transfer fees in the settlement of total loss claims on leased vehicles.

Plaintiff Kerry Roth had a leased vehicle insured by GEICO’s private passenger auto policy. In June 2016, the vehicle was damaged in an accident and Roth filed a claim with GEICO, which determined the vehicle to be a total loss, according to the GEICO class action lawsuit.

GEICO paid for the value of Roth’s total loss leased vehicle but failed to pay sales tax damages and title transfer fee damages that Roth says she was entitled to receive according to her GEICO insurance policy.

Roth initially filed the GEICO class action lawsuit on Aug. 30, 2016 in Florida state court. It was removed to Florida federal court later that year, and was partially dismissed on Jan. 24, 2017.

Roth’s amended GEICO class action lawsuit includes a breach of contract claim against the insurance company. She claims GEICO fails to include sales tax or title transfer fees in its actual cash value payments to insureds in settlement of total loss claims, in violation of the insurer’s policy language.

The GEICO class action lawsuit was granted Class certification on May 4, 2018. Roth and GEICO each moved for summary judgment.

Roth argued that GEICO violated the terms of its own policy and well-settled Florida law by failing to pay all costs necessary to replace a total loss vehicle.

GEICO argued in its motion for summary judgment that its policy and Florida law are clear that neither sales tax or title transfer fees are covered and that Roth therefore cannot prove breach of contract or damages.

U.S. District Judge William P. Dimitrouleas on Thursday issued an order granting Roth’s motion for summary judgment and denying GEICO’s motion. He found that, under Florida law, any ambiguities in an insurance policy should be interpreted in favor of the insured.

GEICO’s policy reportedly does not inform insureds that leased values will be valued differently than owned vehicles.

“Rather, the Policy provides notice of just the opposite: the Policy defines owned, financed, and leased vehicles to all be considered ‘owned autos’ under the Policy,” Judge Dimitrouleas says in his order. “There are no separate provisions in the Policy that apply to owned vehicles only, financed vehicles only, or leased vehicles only.”

The judge agreed with Roth’s assertion that sales tax and title transfer fees are mandatory fees imposed by Florida law on the replacement of all vehicles, and points to case law in the state that holds insurers must pay all costs associated with the replacement or repair of the damaged property.

“Sales tax and title transfer fees are mandatory parts of the replacement cost under the GEICO Policy for Plaintiff Roth’s (and the class members’) leased total loss vehicle and therefore are components of ‘actual cash value’ under the Policy,” Judge Dimitrouleas concluded in his order.

“Accordingly, GEICO’s failure to pay leased vehicle total loss insureds sales tax in the amounts of 6% of the value of the vehicle (plus any local taxes) and title transfer fees in the amount of $75.25 constitutes a breach of contract.”

Roth is represented by Edmund A. Normand and Jacob Phillips of Normand PLLC, Christopher J. Lynch of Christopher J. Lynch PA, Bradley W. Pratt of Pratt Clay LLC, Tracy L. Markham of Avolio & Hanlon PC and Andrew Lampros of Hall & Lampros LLP.

The GEICO Class Action Lawsuit is Kerry Roth v. GEICO General Insurance Co., Case No. 0:16-cv-62942, in the U.S. District Court for the Southern District of Florida.

UPDATE: March 2019, a website has been established informing GEICO total loss class action lawsuit Class Members of their rights. Learn more here.