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Greenberger v. GEICO General Insurance Co.

July 15, 2008

STEVEN GREENBERGER, ON BEHALF OF HIMSELF AND ALL OTHERS SIMILARLY SITUATED, PLAINTIFF,
v.
GEICO GENERAL INSURANCE COMPANY, GOVERNMENT EMPLOYEES INSURANCE COMPANY, GEICO INDEMNITY INSURANCE COMPANY, AND GEICO CASUALTY COMPANY DEFENDANTS.



The opinion of the court was delivered by: Judge Blanche M. Manning

MEMORANDUM AND ORDER

Plaintiff Steven Greenberger sued defendant GEICO and several affiliated companies, alleging that the check GEICO gave him to repair damage to his car was inadequate. The court previously dismissed from Greenberger's complaint claims for consumer fraud (Count I) and unjust enrichment (Count IV). What remains are claims for breach of contract (Count II) and common law fraud (Count III), on which GEICO now seeks summary judgment.

BACKGROUND

The following facts are culled from the parties' Rule 56.1 submissions and are agreed except where noted. On July 4, 2002, Greenberger was involved in a collision that damaged his car. Greenberger notified his insurer, GEICO, which sent an adjuster to his home the following day to inspect the damage. The adjuster inspected Greenberger's vehicle, prepared an estimate, and cut Greenberger a check for the amount of the estimate less $500, the amount of Greenberger's deductible. Greenberger cashed the check but did not get his vehicle repaired.

Later that year, someone approached Greenberger about buying the vehicle from him. Greenberger allowed the person to take the vehicle to obtain an estimate to have the car repaired. The resulting estimate was $1,200 higher than the estimate that GEICO's adjuster had prepared. Greenberger ultimately decided not to sell the car and instead, in December 2002, donated it to charity for which he obtained a tax deduction.

Two-and-a-half years later Greenberger sued GEICO in state court, which GEICO later removed to federal court. In the counts that remain in the current complaint (the second amended), Greenberger alleges that (1) GEICO breached the insurance policy by paying his claim based upon an estimate that (a) omitted repairs required under industry standards established by the Inter-Industry Conference on Auto Collision Repair ("I-CAR") and the National Institute for Automotive Service Excellence ("ASE"), and (b) calculated labor costs at below-market rates; and (2) GEICO committed fraud by selling him an insurance policy without disclosing that the software it uses to prepare estimates intentionally omits repairs necessary to return cars to their pre-loss condition.

GEICO has moved for summary judgment on both the breach of contract and common law fraud counts. GEICO contends that it is entitled to summary judgment on the breach of contract claim because (1) Greenberger's policy did not require GEICO to pay claims based upon what repairs industry standards required or based upon market labor rates, and (2) Greenberger failed to fulfill his obligations under the insurance policy and is therefore prohibited by the policy from suing GEICO for its alleged breaches. GEICO contends that it is entitled to summary judgment on the common law fraud claim because Greenberger has no evidence of reliance, an element necessary to establish a claim of fraud.

ANALYSIS

Summary Judgment Standard

Summary judgment is proper when the "pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue of any material fact." Fed. R. Civ. P. 56(c). The court construes all the facts and the reasonable inferences drawn from those facts in favor of the non-movant. See Warren v. Solo Cup Co., 516 F.3d 627, 629 (7th Cir. 2008). The nonmoving party, however, may not merely rest upon the allegations or details in his pleadings, but instead, must set forth specific facts showing that there is a genuine issue for trial. See Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986).

Choice of Law

The parties have not explicitly addressed what state's law applies. But they have cited to Illinois law throughout their briefs, so the court will apply Illinois law as well.

Breach of Contract (Count II)

The court now turns to the first of GEICO's two arguments in favor of summary judgment on Greenberger's breach of contract claim. GEICO argues that nothing in Greenberger's insurance policy required GEICO to prepare estimates and pay claims in accordance with industry standards set by I-CAR and ASE, or to calculate labor costs based upon market rates. Indeed, based upon the court's careful ...


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