Marsha Moffit; Dennis Bradford; Emily Butler; Martin Davis v. State Farm Mutual Automobile Insurance Company

United States Court of Appeals
For the Eighth Circuit
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No. 20-1044
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Marsha Moffit; Dennis Bradford; Emily Butler; Martin Davis
lllllllllllllllllllllPlaintiffs - Appellants
v.
State Farm Mutual Automobile Insurance Company
lllllllllllllllllllllDefendant - Appellee
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Appeal from United States District Court
for the Eastern District of Arkansas - Batesville
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Submitted: January 14, 2021
Filed: September 10, 2021
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Before COLLOTON, WOLLMAN, and SHEPHERD, Circuit Judges.
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WOLLMAN, Circuit Judge.
During the time that Marsha Moffit, Dennis Bradford, Emily Butler, and Martin
Davis (Vehicle Owners) were insured by State Farm Mutual Automobile Insurance
Company (State Farm), State Farm used a computer-generated vehicle valuation
report to determine cash settlement amounts for the Vehicle Owners’ automobiles’
total losses. The Vehicle Owners filed suit in Arkansas state court on behalf of

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themselves and those similarly situated. They alleged that State Farm had violated
Arkansas Insurance Rule 43, which governs loss settlements, and had thereby
committed fraud in the inducement, had breached their contracts, had acted in bad
faith, and had engaged in an unconscionable, false, or deceptive act or practice in
violation of the Arkansas Deceptive Trade Practices Act (ADTPA),
Ark. Code § 4-88-107(a)(10).
After removing the case to federal district court1 under the Class Action
Fairness Act, State Farm moved to dismiss for failure to state a claim. See Fed. R.
Civ. P. 12(b)(6). It argued that the Arkansas law, pursuant to which Rule 43 was
promulgated does not provide a private right of action for a violation of its
provisions. See Ark. Code § 23-66-202(b). The district court agreed and dismissed
the claims, determining that because existing precedent makes clear that Rule 43
duties run to Arkansas, not to the insured, there can be no private right of action for
violations of the Rule. See Design Pros. Ins. Co. v. Chi. Ins. Co., 454 F.3d 906,
911–12 (8th Cir. 2006) (“[W]hile the [Act authorizing Rule 43] gives the state
authority to establish rules of conduct and to punish offenders, it provides no private
right of action to insureds for violations of the Act or of regulations promulgated
under the Act’s authority.” (citing Ark. Code § 23-66-202)).
After reviewing de novo, Dalton v. NPC Int’l, Inc., 932 F.3d 693, 695 (8th Cir.
2019) (standard of review), and without in any manner expressing any disagreement
with the district court’s analysis and conclusion, we rest our affirmance on different
grounds. See Phipps v. FDIC, 417 F.3d 1006, 1010 (8th Cir. 2005) (“We may affirm
the district court’s dismissal on any basis supported by the record.” (citing In re K-tel
Int’l, Inc. Sec. Litig., 300 F.3d 881, 889 (8th Cir. 2002))).
1The Honorable D.P. Marshall Jr., Chief Judge, United States District Court for
the Eastern District of Arkansas.
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As promulgated by the Arkansas Insurance Commissioner, Section 10 of Rule
43 states that “[w]hen the insurance policy provides for the adjustment and settlement
of first party automobile total losses on the basis of actual cash value or replacement
with another of like kind and quality,” the insurer must follow one of three settlement
methods. Ark. Ins. Rule 43 § 10(a). The first method entails the providing of a
replacement automobile. See id. § 10(a)(1). The second method entails the paying
of a cash settlement for the automobile’s actual cost, as determined by either the “cost
of a comparable automobile in the local market area” or the cost as calculated by
quotations from two or more local dealers. Id. § 10(a)(2). The final method is as
follows:
When a first party automobile total loss is settled on a basis which
deviates from the [first two] methods . . . , the deviation must be
supported by documentation giving particulars of the automobile’s
condition. Any deductions from such cost, including deduction for
salvage, must be measurable, discernible, itemized and specified as to
dollar amount and shall be appropriate in amount. The basis for such
settlement shall be fully explained to the first party claimant.
Id. § 10(a)(3).
State Farm paid cash for the Vehicle Owners’ total losses on the basis of
computer-generated valuation reports, and so it argues that the claims were properly
settled pursuant to Section 10(a)(3) of Rule 43. The Vehicle Owners argue that State
Farm was required to justify why it did not use the cash settlement method prescribed
by Section 10(a)(2) of Rule 43. Section 10(a)(3) does not require insurers to justify
their deviation from the methods prescribed in Section 10(a)(2), however. Rather, the
Rule requires only that insurers thoroughly document any value deductions when they
deviate from Sections 10(a)(1) and (2). State Farm’s valuation reports, which are
attached to the Vehicle Owners’ complaint, clearly set forth the itemized deductions
and additions in compliance with Section 10(a)(3). See Miller v. Redwood
-3-

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Toxicology Lab., Inc., 688 F.3d 928, 931 n.3 (8th Cir. 2012) (noting that we may
consider in the motion to dismiss context “exhibits attached to the complaint whose
authenticity is unquestioned”). The reports likewise fully explained the basis for the
final settlement amounts. State Farm’s settlement practice thus complied with
Section 10(a)(3) of Rule 43.
The Vehicle Owners’ claims rely in their entirety on allegations that State Farm
failed to comply with Rule 43’s settlement procedures. Because we conclude that
these allegations demonstrate no such error, the Vehicle Owners have failed to state
any claim.
The judgment is affirmed.
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