Plaintiff Japonica Roberts, a State Farm policyholder, received the award from a state court jury in Chatham County, Ga., after the carrier refused to cover $4,297 in repair costs above its initial estimate and $1,125 in rental car costs. The repair costs include not-included procedures, including work Roberts’ attorney, Eugene Brooks, said was necessary under the paint manufacturer’s warranty, parts costs and a towing fee.
The original case centered on State Farm’s “prevailing prices” statement in Roberts’ policy.
Those “prevailing prices,” Brooks wrote in his appellate brief, were defined by State Farm as “ … prices charged by a majority of the repair market in the area where the covered vehicle is to be repaired as determined by a survey made by [State Farm].
“To better understand State Farm’s definition of “competitive” practices, State Farm’s referral contract program must be understood,” Brooks wrote further. “State Farm’s had a contract program with certain shops in its market area. These shops agreed to limit their repair costs in exchange for placement on a State Farm referral list. State Farm had financial leverage over these shops and if they charged for repair procedures that State Farm did not think were ‘competitive,’ then State Farm could remove them from the referral list. … State Farm based its ‘competitive’ cost judgement on the repair procedures that a State Farm referral shop would charge. Any charges greater than a referral shop charge was ‘not competitive’ and so, unreasonable.”
A collision center estimated the cost of the repair to be $9,589.60. However, State Farm estimated the repair to cost $5,045.29, and a State Farm agent sent a standard letter to Roberts stating that State Farm would pay her repair costs based on a State Farm estimate and stating that she would be responsible for any balance, according to the brief.
The ensuing disagreement resulted in Roberts’ bringing a case against State Farm, for which she was awarded compensation by the jury. Roberts was awarded more than $5,500 for State Farm’s breach of contract, plus the maximum insurance bad-faith penalty of $5,000 and more than $30,000 in attorney’s fees, according to Brooks.
That case was appealed by State Farm, and the Georgia Appeals Court upheld the decision for the plaintiff. The Georgia Supreme Court’s refusal to hear the case clears the way for Roberts to receive the compensatory award.
“The evidence showed that State Farm applied a different method of determining its payment obligations than those described in the policy,” Brooks said in a release announcing the victory. “State Farm applied an internal method based on its determination of what was a ‘competitive’ rate based on a survey that was not described in the policy. Under Georgia law, any ambiguity in the policy written by State Farm had to be interpreted in favor of our client, the policyholder.”