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                                                                      INSURANCE-RELATED COURT CASES
                             © Rough Notes Co., 2010
            AUGUST 2010 • VOLUME 153, No. 8                                  Digested from case reports published in Westlaw,
                             Staff                                                  West Publishing Co., St. Paul, MN
                        Editor in Chief


                                                                      COURT DECISIONS
                      Thomas A. McCoy
                   tmccoy@roughnotes.com

                         Senior Editor
                       Nancy Doucette
                   nancyd@roughnotes.com
                         Associate Editor
                    Elisabeth Boone, CPCU
                      elis.boone@att.net

                        Associate Editor
                       Dennis Pillsbury
                   dennisp@roughnotes.com

                         Assistant Editor
                          Elaine Tolen
                    elainet@roughnotes.com

                       Editorial Assistant
                       Alice A. Roettger

                   Art Director/Photographer
                          Paul B. Riley
                   pbriley@roughnotes.com                  Is reimbursement a                             In October 2007, GEICO sent
                                                           bar to class action?                       Wallace a check for $387.56. The cover
                        Graphic Designer                                                              letter accompanying the check stated:
                         Linda A. Lange
                    llange@roughnotes.com
                                                               On March 5, 2007, Carolyn              “This payment is being made in
                                                           Wallace’s car was damaged in an            accordance with the [consent order].”
               Production/Advertising Coordinator          automobile accident. Wallace obtained      GEICO then argued that Wallace’s
                        Georgianna Quinn                   an estimate of the repair costs and        class action lawsuit could not proceed
                   gquinn@roughnotes.com                   presented it to her insurer, GEICO.        because she had already obtained relief.
                           Tricia Cutter                   GEICO informed her that it would not           Wallace refused to accept the
                    triciac@roughnotes.com                 pay the full amount because the            check and argued that the lawsuit
                         Circulation                       hourly charge for labor was in excess      should be allowed to proceed. The
                       Michelle Mason                      of what GEICO considered to be the         trial court found that Wallace did
                     rnc@roughnotes.com                    prevailing rate. Wallace went ahead        not have standing to serve as
                                                           with the repairs. In addition to her       the class representative because
                    Contributing Editors
                                                           $500 deductible, she was forced to pay     GEICO had paid her for her injury;
                          Scott Addis                      an additional cost of $387.56, the         however, it allowed her time to locate
                   saddis@theaddisgroup.com
                                                           difference between what GEICO was          a substitute class representative.
                      Robert L. Bailey                     willing to pay and the actual labor        After considerable time passed and
                   bobbailey1@comcast.net
                                                           costs she was charged.                     Wallace still had not located a desig-
                       Adam DeGraide                           In April 2007, in response to          nated class representative, the court
                adegraide@astonishresults.com              various complaints alleging that           stayed the action pending her appeal of
                      Kevin P. Hennosy                     GEICO had refused to reimburse labor       its order striking the class allegations.
                   hennosy@sbcglobal.net                   rates that it considered to be above the       On appeal, Wallace argued that
                   Emily Huling, CIC, CMC                  prevailing rate, GEICO entered into a      she should be able to act as the
                 emily@sellingstrategies.com               consent agreement with the California      representative plaintiff in the class
                         Patrick Linnert                   Department of Insurance. Pursuant to       action lawsuit. GEICO argued that
                    patrick@marshberry.com                 that agreement, GEICO agreed, among        she was no longer a member of the
                   John Edward Love, CPCU                  other things, to conduct an internal       class she sought to represent because
                     jlove@techassure.com                  audit, and to reimburse any parties        her injuries had been remedied by its
                  Donald S. Malecki, CPCU                  who had complained that they had           tender of payment of $387.56.
                don.malecki@mdnconsults.com                paid incremental repair costs resulting        The Court of Appeal, Fourth
                Michael J. Moody, MBA, ARM                 from the difference in the labor rate      District, Division 1, California,
                 michaelm@roughnotes.com                   charged by a repair shop and the           acknowledged the general rule that
                      Sean Neumayer                        amount paid by GEICO. Wallace had          the named plaintiff in a class action
                 sneumayer@omniagroup.com                  not filed a complaint, so she was not      must be a member of the class he
                         Kim Paterson                      one of the parties to be reimbursed        purports to represent. The court then
                    kpaterson@cim-co.com                   under the consent agreement.               noted, however, that where a
             Curtis M. Pearsall, CPCU, AIAF, CPIA              In August 2007, Wallace filed a        defendant in a class action has forced
                      cmp53@verizon.net                    proposed class action complaint against    a settlement on the representative
                        Roger Sitkins                      GEICO alleging that GEICO’s refusal        plaintiff after the lawsuit is filed, the
                      roger@sitkins.com                    to pay the full cost of her repairs        receipt of relief does not, of itself,
                        Len Strazewski                     violated the California Insurance Code.    prevent the class plaintiff from
                     lenstrazewski@cs.com                  The complaint also alleged breach of       continuing as a class representative.
  
								
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