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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

                         Senior Editor
                       Nancy Doucette
                         Associate Editor
                    Elisabeth Boone, CPCU

                        Associate Editor
                       Dennis Pillsbury

                         Assistant Editor
                          Elaine Tolen

                       Editorial Assistant
                       Alice A. Roettger

                   Art Director/Photographer
                          Paul B. Riley
                           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
                                                               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
                            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
                           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
                               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
                                                           difference between what GEICO was          a substitute class representative.
                      Robert L. Bailey                     willing to pay and the actual labor        After considerable time passed and
                                                           costs she was charged.                     Wallace still had not located a desig-
                       Adam DeGraide                           In April 2007, in response to          nated class representative, the court
                    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.
                            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
                      consent agreement with the California      representative plaintiff in the class
                         Patrick Linnert                   Department of Insurance. Pursuant to       action lawsuit. GEICO argued that
                           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
                             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.
                      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,
                          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
                         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
                             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
                                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
                                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
                             The complaint also alleged breach of       continuing as a class representative.
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