BREWER v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY

IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF NORTH CAROLINA
CRAIG BREWER, individually and
on behalf of all similarly situated
persons,
)
)
)
)
Plaintiff, 	)
)
v. 	) 	1:25-CV-904
)
STATE FARM MUTUAL
AUTOMOBILE INSURANCE
COMPANY,
)
)
)
)
Defendant. 	)
MEMORANDUM OPINION AND ORDER
Catherine C. Eagles, Chief District Judge.
Craig Brewer alleges that State Farm Mutual Automobile Insurance breached its
insurance contract with him and violated North Carolina law when it did not pay him the
pre-accident actual cash value of his totaled car. Mr. Brewer has brought his claims on
behalf of himself and, as to his unfair trade practice claims, on behalf of a putative class.
State Farm moves to dismiss for lack of subject matter jurisdiction and failure to state a
claim upon which relief may be granted. In the alternative, State Farm seeks to strike the
class allegations from the complaint, compel an appraisal of Mr. Brewer’s vehicle, and
stay this case until the appraisal is completed.
The plain language of the insurance policy permits either party to request an
appraisal when there is a dispute over the actual cash value of a totaled car, so State
Farm’s motion to compel appraisal will be granted. But Mr. Brewer has alleged sufficient
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facts to establish standing and to state plausible claims, class certification is better
assessed on a more developed factual record, and there is no reason litigation cannot
continue during the appraisal process, so State Farm’s motion will otherwise be denied.
I. 	Alleged Facts and Claims
Mr. Brewer alleges that in April 2023, his car was damaged in a traffic accident.
Doc. 1 at p. 5 ¶ 21. He filed a claim under his car insurance policy with State Farm, and
State Farm deemed the car a total loss. Id. at p. 6 ¶¶ 22–24. Under his policy, State Farm
had to pay Mr. Brewer the full pre-accident actual cash value of his car. Id. at p. 5 ¶ 18;
Doc. 11-2 at 15.1
To determine the actual cash value of Mr. Brewer’s car, State Farm used a third-
party data platform, CCC One, to generate a report assessing the retail cost of comparable
cars in Mr. Brewer’s area. Doc. 1 at p. 2 ¶ 3, pp. 4–5 ¶¶ 13–15, p. 6 ¶¶ 24–26, pp. 26–44.
As customized by State Farm, id. at p. 5 ¶ 16, the CCC One platform located sales
listings for comparable cars and then applied a “condition adjustment” to the cars’ retail
price based on an assumption of “Average Private condition.” Id. at p. 8 ¶ 38, p. 35.
Application of that adjustment reduced the value of the comparable cars by $3,328. Id. at
p. 8 ¶ 40. As a result, State Farm applied a $3,328 deduction to the value of Mr. Brewer’s
car, id. at p. 9 ¶ 42, and underpaid his claim. Id. at p. 9 ¶ 45.
1 Mr. Brewer did not attach a copy of his insurance policy to the complaint, but State Farm
included a copy with its motion to dismiss. Mr. Brewer has not challenged its authenticity.
Since the terms of the policy are integral to the complaint, they can properly be considered at this
stage. Philips v. Pitt Cnty. Mem’l Hosp., 572 F.3d 176, 180 (4th Cir. 2009) (noting that courts
may consider documents attached to the motion to dismiss if “they are integral to the complaint
and authentic.”).
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Mr. Brewer also alleges that all State Farm automobile insurance policies require
State Farm to pay insureds the actual cash value of totaled cars, id. at p. 5 ¶ 18, that State
Farm uses the CCC One reports to apply the condition adjustment in a systemic way to
all claims related to vehicles that are a total loss, id. at p. 10 ¶¶ 48–49, p. 11 ¶ 55, and that
the valuation methodology used is arbitrary and results in a systemic undervaluation of
4% to 9% across the claims of State Farm insureds in North Carolina. Id. at p.12 ¶ 60.2
He identifies numerous provisions in applicable regulations that he contends prohibit this
approach. See, e.g., id. at p. 7 ¶¶ 30–34. He also contends that State Farm does not
comply with applicable disclosure regulations governing how such adjustments must be
shared with its insureds. See, e.g., id. at pp. 7–8 ¶ 35.
Based on these allegations, Mr. Brewer has brought a breach of contract claim on
an individual basis, id. at pp. 21–23 ¶¶ 93–106, and two claims for unfair and deceptive
trade practices under N.C. Gen. Stat. § 75-1.1 on behalf of a proposed class. Id. at pp.
18–21 ¶¶ 81–92. He is seeking money damages, attorneys’ fees and costs, and a
declaratory judgment. Id. at p. 24 ¶¶ 3–6.
II. 	Motion to Dismiss
State Farm has moved to dismiss Mr. Brewer’s claims for lack of subject matter
jurisdiction under Federal Rule of Civil Procedure 12(b)(1). It also moves to dismiss his
claims for failure to state a claim upon which relief can be granted under Rule 12(b)(6).
2 In other words, and perhaps somewhat oversimplified, State Farm begins with actual sales
prices of other comparable used cars and then deducts an additional amount from those
comparable vehicles because they are used, thus discounting twice for the used condition of the
comparable cars.
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A. Lack of Standing
State Farm contends that this Court is without subject matter jurisdiction. It
asserts that Mr. Brewer lacks standing to sue because he did not dispute State Farm’s
valuation of his car through a contractual appraisal process.
The United States Constitution limits federal courts to deciding “cases” or
“controversies.” U.S. Const. art. III, § 2; see also TransUnion LLC v. Ramirez, 594 U.S.
413, 422–23 (2021). This limitation requires, in part, that plaintiffs establish their
standing to sue. See California v. Texas, 593 U.S. 659, 668–69 (2021). Standing under
Article III has three elements: a “plaintiff must have (1) suffered an injury in fact, (2) that
is fairly traceable to the challenged conduct of the defendant, and (3) that is likely to be
redressed by a favorable judicial decision.” Spokeo, Inc. v. Robins, 578 U.S. 330, 338
(2016); see also TransUnion, 594 U.S. at 423; Disability Rts. S.C. v. McMaster, 24 F.4th
893, 899 (4th Cir. 2022).
The terms of Mr. Brewer’s policy required State Farm to pay the pre-accident
actual cash value of his car if it was deemed a total loss. Doc. 11-2 at 15. He alleges that
State Farm paid him $3,328 less than the actual cash value and that State Farm did not
pay him the correct amount because it used an illegal valuation methodology. Doc. 1 at
pp. 18–23 ¶¶ 81–106. “That sort of pocketbook injury is a prototypical form of injury in
fact.” Collins v. Yellen, 594 U.S. 220, 243 (2021) (cleaned up).
State Farm asserts that Mr. Brewer does not have an injury because he has not
gone through the appraisal process required in the policy. The appraisal provision states
that if the parties do not:
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agree on the amount of loss, either may demand an appraisal of the loss. In
this event, each party will select a competent appraiser. The two appraisers
will select an umpire. 	The appraisers will state separately the actual cash
value and the amount of loss. 	If they fail to agree, they will submit their
differences to the umpire. A decision agreed to by any two will be binding.
Doc. 11-2 at 15. The policy further provides that “[n]o legal action may be brought
against [State Farm] until there has been full compliance with all the terms of this
policy.” Id. at 16. State Farm contends that the appraisal provision is a mandatory
precondition to suit and unless Mr. Brewer’s car is appraised for less than the value he
alleges, he cannot establish any concrete harm arising from State Farm’s alleged breach
of contract or unfair and deceptive trade practices.
State Farm’s argument is unpersuasive. The policy’s appraisal provision is not
mandatory; it explicitly provides that either party “may demand an appraisal.” Id. at 15.
“May” indicates a permissive condition. See, e.g., Silver v. Halifax Cnty. Bd. of
Comm’rs, 371 N.C. 855, 863–64, 821 S.E.2d 755, 761 (2018). Since the plain language
of the appraisal provision is permissive, appraisal is not a precondition to filing suit. See
Cato Corp. v. Zurich Am. Ins. Co., 386 N.C. 667, 672, 909 S.E.2d 144, 148 (2024)
(“When interpreting a contract for insurance, the plain language and ordinary meaning of
the policy control unless the contract specifically defines terms or the context suggests
otherwise.” (cleaned up)).
Patel v. Scottsdale Insurance Co., relied upon by State Farm, is distinguishable.
221 N.C. App. 476, 728 S.E.2d 394 (2012). The policy at issue in Patel required
payment for a covered loss only once the parties reached an agreement about the value of
the loss or an appraisal was completed. Id. at 482–84. Here, State Farm has pointed to
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nothing in Mr. Brewer’s policy placing such a condition on payment. State Farm had a
contractual duty to pay actual cash value before the appraisal, not just after.3
Mr. Brewer has alleged sufficient facts to establish standing at the motion to
dismiss stage.
B. Failure to State a Claim
State Farm also contends that Mr. Brewer has not alleged sufficient facts to state a
claim for breach of contract or for unfair trade practices. “To survive a motion to
dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state a
claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)
(quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). Legal conclusions “must
be supported by factual allegations” that amount to more than “unadorned, the-defendant-
unlawfully-harmed-me accusation[s].” Id. A plaintiff is not required to prove her case in
the complaint, see, e.g., Robertson v. Sea Pines Real Est. Cos., 679 F.3d 278, 291 (4th
Cir. 2012); Scott v. City of Durham, 20-CV-558, 2021 WL 3856168, at *2 (M.D.N.C.
Aug. 27, 2021), but the complaint’s allegations should “allow the court to draw a
reasonable inference that the defendant is liable for the misconduct alleged.” Int’l
Refugee Assistance Project v. Trump, 961 F.3d 635, 648 (4th Cir. 2020) (cleaned up).
3 State Farm also contends that if the appraisal process results in Mr. Brewer receiving what
he alleges to be the full pre-accident actual cash value of his car, then he will no longer have
standing to bring his Chapter 75 claim. First, the possibility of future mootness is irrelevant to
standing, since “standing is established by the facts alleged in the complaint.” Netro v. Greater
Balt. Med. Ctr., Inc., 891 F.3d 522, 526 (4th Cir. 2018). Second, this assumes that payment of
that amount would moot both the breach of contract claim and the Chapter 75 claims, which may
or not be so. See id. (noting that payment of an outstanding contractual obligation does not moot
a claim when double damages remain available). This mootness argument is speculative and
premature.
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All of Mr. Brewer’s claims clear the plausibility bar.
1. 	Breach of Contract
Mr. Brewer alleges that his insurance policy required State Farm to pay him the
actual cash value of his pre-accident car and that State Farm did not do that. Doc. 1 at pp.
21–23 ¶¶ 93–106. The policy requires State Farm to pay that amount, even before an
appraisal. See supra at 4–6. Mr. Brewer alleges that State Farm did not pay him that
actual cash value because it uses a valuation process that deducts an amount attributable
to the used condition of the car twice. This plausibly alleges a claim for breach of
contract. See Atl. Coast Mech., Inc. v. Arcadis, Geraghty & Miller of N.C., Inc., 175 N.C.
App. 339, 348, 623 S.E.2d 334, 341 (2006) (stating the elements of breach of contract).
State Farm contends that its contract with Mr. Brewer did not specify any
particular valuation method, so its reliance on the CCC One report to determine actual
cash value could not constitute breach. But State Farm acknowledges that the policy
required it to pay Mr. Brewer the pre-accident actual cash value of his car, and this
argument is little more than a disagreement over what the actual cash value is. That sort
of garden variety factual dispute cannot be resolved at the motion to dismiss stage. See
Andrew v. Clark, 561 F.3d 261, 267 (4th Cir. 2009). Mr. Brewer has stated a plausible
claim for breach of contract.
2. 	Unfair and Deceptive Trade Practices
Mr. Brewer alleges that State Farm’s valuation methodology violates North
Carolina insurance regulations and that its use of that methodology constitutes an unfair
and deceptive trade practice both per se and as a violation of the state’s public policy.
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Doc. 1 at pp. 18–21 ¶¶ 81–92. State Farm contends that these claims are breach of
contract claims in disguise and that, in any event, its alleged actions are not cognizable
violations of N.C. Gen. Stat. § 75-1.1.
State Farm is correct that a mere breach of contract does not constitute an unfair
trade practice under Chapter 75. See, e.g., Broussard v. Meineke Discount Muffler Shops,
Inc., 155 F.3d 331, 347 (4th Cir. 1998) (collecting cases). But Mr. Brewer claims that
State Farm’s acts are well more than a breach of contract; he contends they are illegal.
See Doc. 1 at p. 19 ¶ 83, p. 20 ¶ 90.
Taking the factual allegations of the complaint as true, it is plausible that State
Farm is committing an unfair trade practice by systemically underpaying claims. Mr.
Brewer identifies a number of potential problems with the alleged double-deduction used
by State Farm and a number of ways State Farm’s practices violate applicable insurance
regulations.4 See id. at pp. 6–11 ¶¶ 28–54.
4 11 N.C. Admin. Code § 4.0418 provides the procedures insurance companies must follow
when settling total loss motor vehicle claims. It requires that “[w]hen a motor vehicle is
damaged in an amount which . . . equals or exceeds 75 percent of the pre-accident actual cash
value . . . an insurance company shall designate the motor vehicle as a ‘total loss’ and pay the
claimant the pre-accident value.” § 4.0418(c). If the parties are unable to agree on the pre-
accident value, insurers are only permitted to estimate it using “published regional average
values of substantially similar motor vehicles” and either the “retail cost of two or more
substantially similar motor vehicles in the local market area when substantially similar motor
vehicles are available or were available within 90 days of the accident to consumers in the local
market area” or “quotations obtained from two or more licensed motor vehicle dealers located
within the local market area.” § 4.0418(d). If the insurer adjusts the offer to account for
“condition, options, equipment, and mileage, less the cost of unrepaired damage that pre-existed
the accident,” § 4.0418(e), it must provide the insured with “a written statement listing” those
items “and the source of these values,” if requested. § 4.0418(i). Amont other things, Mr.
Brewer alleges that State Farm essentially deducted twice for the same condition in calculating
actual cash value, that the “condition” deduction could only be applied to the insured car, not the
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Violations of North Carolina administrative rules can constitute violations of § 75-
1.1. Walker v. Fleetwood Homes of N.C., Inc., 362 N.C. 63, 70–71, 653 S.E.2d 393, 398–
99 (2007) (explaining that “a regulatory violation may offend § 75-1.1.” (cleaned up));
see generally Noel Allen, 1 North Carolina Unfair Business Practice § 3.08 (Matthew
Bender 2025).
The regulation at issue here, 11 N.C. Admin. Code § 4.0418, was promulgated
under N.C. Gen. Stat. § 58-53-65, which authorizes the insurance commissioner to define
additional unfair and deceptive insurance practices, tending to indicate that a violation is
or can be an unfair trade practice. The regulation itself also provides that the state
insurance commissioner “shall consider as prima facie violative of G.S. 58-63-15(11) the
failure by an insurance company to adhere to the procedures” set forth in the rule. 11
N.C. Admin. Code § 4.0418(a). Violations under that statute have been held to be unfair
and deceptive trade practices. See, e.g., Gray v. N.C. Ins. Underwriting Ass’n, 352 N.C.
61, 71, 529 S.E.2d 676, 683 (2000) (finding a per se violation); Durham Wood Fired
Pizza Co. v. Cincinnati Ins. Co., No. 25-CV-492, 2025 WL 3485571, at *3 (M.D.N.C.
Dec. 4, 2025) (same).
With that context in mind, it is plausible that violations of 11 N.C. Admin. Code §
4.0418 may constitute unfair and deceptive trade practices, depending on the evidence.
Whether State Farm’s valuation methodology violated North Carolina regulations
and statutes involves questions of fact, see First Union Nat. Bank v. Brown, 166 N.C.
comparable cars, and that it did not disclose this double-counting or disallowed deduction to
insureds as required.
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App. 519, 533, 603 S.E.2d 808, 818 (2004), that cannot be decided at the motion to
dismiss stage. Once the facts are clearer, the Court will be in a better position to evaluate
whether State Farm’s actions constitute a per se unfair trade practice, an unfair trade
practice in light of all the circumstances, or no violation at all. See Walker, 362 N.C. at
70–71; see also Country Vintner of N.C., LLC v. E & J Gallo Winery, Inc., 461 F. App’x.
302, 305 (4th Cir. 2012) (noting that “the violation of a North Carolina regulatory statute
governing business activities may constitute an unfair or deceptive trade practice as a
matter of law or may be evidence of an unfair or deceptive trade practice, even if it is not
a per se violation of the UDTPA.” (cleaned up)).
Whether per se or otherwise, violations of those insurance regulations may well be
unfair and deceptive trade practices under N.C. Gen. Stat. § 75-1.1. So accepting Mr.
Brewer’s well pled allegations as true, he has sufficiently stated his UDTPA claims.
3. 	Declaratory Judgment
In the complaint, Mr. Brewer seeks various forms of relief, including “an order
declaring State Farm violated North Carolina law by reducing the retail cost of
comparable vehicles in the calculation of the total loss claims of the Plaintiff and
proposed class.” Doc. 1 at p. 24 ¶ 6. State Farm contends that the request for declaratory
relief should be dismissed because it is inadequately pled and duplicative.
A declaratory judgment is not a cause of action; it “is simply the remedial
procedural vehicle by which a court can declare the rights of the parties as to an
underlying legal dispute over which jurisdiction is otherwise proper.” ACA Fin. Guar.
Corp. v. City of Buena Vista, 298 F. Supp. 3d 834, 843 (W.D. Va. 2018). So “a motion to
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dismiss is rarely appropriate in a declaratory judgment action.” Brown-Thomas v. Hynie,
412 F. Supp. 3d 600, 606 (D.S.C. 2019) (cleaned up). Without a developed record, it
cannot be said with certainty that a declaratory judgment will serve no purpose for Mr.
Brewer or a putative class beyond the other relief sought. State Farm’s motion will be
denied.
III. 	Motion to Strike
State Farm’s motion to strike class allegations will be denied. “[I]n deciding
whether to deny class certification at the pleading stage—a district court may consider
only the face of the complaint and ask whether its allegations make a prima facie
showing that satisfies Rule 23(a) and (b)’s requirements.” Oliver v. Navy Fed. Credit
Union, __ F.4th __, 2026 WL 346144, at *4 (4th Cir. Feb. 9, 2026). And “district courts
retain substantial discretion about whether to entertain requests to decide class
certification at the pleading stage in the first place.” Id. at *5 n.3. Freeman v.
Progressive Direct Insurance Co. may make class certification challenging for the
plaintiffs, but this case is not identical to Freeman. 149 F.4th 461 (4th Cir. 2025).
At this stage State Farm has not demonstrated that the “class action allegations
show non-compliance with Rule 23 as a matter of law.” Oliver, 2026 WL 346144, at *5
(cleaned up). There are enough differences between the claims asserted in Freeman and
those asserted here to follow the usual path.
IV. 	Motion to Compel Appraisal
State Farm’s motion in the alternative to compel appraisal will be granted. Mr.
Brewer contends that State Farm breached their contract when it did not pay the actual
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cash value of his totaled car as required by the policy. Doc. 1 at p. 23 ¶¶ 104–05. The
same policy allows either party the option to “demand an appraisal” when the parties do
not agree on the amount of the loss. Doc. 11-2 at 15. State Farm has demanded an
appraisal, and it is entitled to one in connection with Mr. Brewer’s individual breach of
contract claim. Assuming without deciding that the appraisal will ultimately resolve his
breach of contract claim, his Chapter 75 claims will go forward. See supra at note 3. So
there is no good reason to stay the action while the appraisal is obtained.
It is ORDERED that:
1. 	The defendant’s motion to dismiss or stay, Doc. 10, is DENIED.
2. 	The defendant’s motion in the alternative to compel an appraisal, Doc. 10, is
GRANTED and the plaintiff SHALL promptly cooperate with State Farm’s
appraisal demand.
3. 	The defendant SHALL file an answer within the time provided by the Rules of
Civil Procedure and the matter is referred to the Magistrate Judge for an initial
pretrial conference.
This the 25th day of February, 2026.
__________________________________
UNITED STATES DISTRICT JUDGE
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