STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY

v.

AT HOME AUTO GLASS LLC

AT HOME AUTO GLASS LLC, WILLIAM CAMP, and NICHOLAS ALEXANDER,

Defendants. /

ORDER DENYING DEFENDANTS’ MOTIONS TO DISMISS PLAINTIFFS’ AMENDED COMPLAINT

This matter is before the Court on “Defendant’s, At Home’s, Motion to Dismiss Amended Complaint” (Doc. 75), filed on February¹, 2022, “Defendant Camp’s Motion to Dismiss” (Doc. 76), filed on February¹, 2022, and “Defendant Nicholas Alexander’s Motion to Dismiss Amended Complaint” (Doc. 77), filed on February⁴, 2022. Plaintiffs, State Farm Mutual Automobile Insurance Company and State Farm Fire and Casualty Company (together, “State Farm”), filed responses in opposition to these motions on February 22 and February 25, 2022. (Docs. 80; 81; 82). Defendant At Home Auto Glass, LLC (“At Home”),¹ filed a notice

Under § 627.7288, F.S., insurance companies providing comprehensive automobile coverage must offer windshield repair coverage with no deductible. Under § 627.428, F.S., insureds or their assignees who prevail in lawsuits against insurance companies may recover attorneys’ fees. This statutory regime has resulted in thousands of low-dollar “windshield cases” being filed in County Courts throughout Florida, imposing costs on insurance companies who must not only defend thousands of these cases but pay prevailing plaintiffs’ attorney fees, even where the plaintiff recovers only a very small amount of money. The lawyers who handle these cases for plaintiffs, no doubt, favor the system because it is lucrative for them and, they would argue, it equalizes the playing field for consumers by requiring insurance companies to fully compensate insureds on windshield claims. Insurance companies contend that fraud is rampant in this area. Plaintiffs’ lawyers contend that insurance companies regularly fail to honor their contractual obligations to fully compensate consumers on windshield claims. The fact that insurance companies do not favor this system is no secret. But insurance companies have, apparently, been unable to convince the Florida Legislature to change the law. In the latest battle within a broader war, various auto insurance companies have gone on the offensive and filed cases such as this in federal courts.² The insurance companies, including State Farm in this case, allege that windshield repair companies have generated and acquired the insurance claims at issue by engaging in conduct that violates various statutory provisions.

They have asserted creative legal theories, such as State Farm’s invocation of consumer protection statutes in this case, attempting in one stroke to recover monies already paid out and to avoid paying pending claims. As discussed below, the present complaint states a claim for relief and will not be dismissed, but the Court has concerns regarding the ultimate viability of this effort. Factual Background

The factual background and legal principles relevant to this Order are discussed in more detail in the Court’s Order granting Defendants’ motions to dismiss the original complaint. That discussion is incorporated by reference. Original Complaint State Farm’s comprehensive automobile coverage pays to replace or repair its insureds’ damaged auto windshields with no deductible. At Home repairs and replaces windshields for customers that include State Farm’s insureds. At Home obtains an assignment of the customer’s right to receive payment for the repairs under the customer’s policy and submits the claim for payment to State Farm. State Farm’s original complaint alleged that $1.4 million in claims submitted by At Home for thousands of individual windshield repairs and paid by State Farm over a

The Court dismissed the original complaint without prejudice. The Court rejected State Farm’s argument that any violation of FMVRA occurring in the course of At Home’s application for licensing as a repair shop, solicitation of customers, repair work, and/or billing, necessarily violated FDUTPA, rendered the resulting claims submitted to State Farm “false” or noncompensable, or entitled State Farm to recover payments it made. The Court held that some of the conduct alleged, such as misrepresentations to customers, if proven, could be found to violate FMVRA or FHSSA, and to violate FDUTPA. But the complaint nevertheless failed to allege a FDUTPA claim because it failed to allege a basis to hold the insurance claims noncompensable, and therefore failed to allege State Farm’s payments on the claims constituted a cognizable loss for purposes of FDUTPA. State Farm’s unjust enrichment claim suffered from the same defect. State Farm sufficiently alleged that it had provided a benefit to At Home in the form of payments on claims, which were knowingly received and retained by At Home. As for whether At Home’s retention of the payments would be unjust or inequitable,

State Farm relied on broad language in State Farm Fire & Cas. Co. v. Silver Star Health & Rehab, 739 F. 3d 579, 584 (11th Cir. 2013), to the effect that a party is unjustly enriched when it retains money it was not “legally entitled to receive in the first place.” The Court, however, held that State Farm failed to allege facts showing that At Home was not “legally entitled to receive” the payments. The Court also noted that At Home had provided consideration for the payments by repairing the windshields of State Farm’s insureds, and that an unjust enrichment claim will not lie where the defendant has given adequate consideration to someone in exchange for the benefit received.³ The Court dismissed the declaratory judgment count, holding that (1) for the reasons just discussed, State Farm was not entitled to the requested declaration

State Farm’s Amended Complaint The amended complaint is very like the original, again asserting two counts under FDUTPA, a count for unjust enrichment, and a count for declaratory relief. State Farm, however, includes new allegations pointing to a Concealment or Fraud provision in an exemplar policy (the “Policy”), under which there is no coverage for persons who make knowing, false representations of material fact in submitting a claim: There is no coverage under this policy for any person who, or organization making claim or seeking payment that, has made false statements with the intent to conceal or misrepresent any material fact or circumstance in connection with any claim under this policy. State Farm alleges that the information At Home submitted to it in seeking payment on the claims at issue included false representations regarding the hours worked, fabricated miscellaneous charges, and false representations that State Farm’s insureds had seen and approved the charges. Therefore, State Farm argues, under this Policy provision, At Home was not legally entitled to receive the payments it received, and these new allegations therefore remedy the defect cited by the Court in dismissing the original complaint. Defendants once again move to dismiss. Legal Standard Federal Rule of Civil Procedure 8(a) requires that a complaint contain “a short and plain statement of the claim showing the [plaintiff] is entitled to relief.” Fed. R. Civ. P. 8(a). While Rule 8(a) does not demand “detailed factual allegations,” it does require “more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). To survive a motion to dismiss, factual allegations must be sufficient “to state a claim to relief that is plausible on its face.” Id. at 570.

When deciding a Rule 12(b)(6) motion, review is generally limited to the four corners of the complaint. Rickman v. Precisionaire, Inc., 902 F. Supp. 232, 233 (M.D. Fla. 1995). Furthermore, when reviewing a complaint for facial sufficiency, a court “must accept [a] [p]laintiff’s well pleaded facts as true, and construe the [c]omplaint in the light most favorable to the [p]laintiff.” Id. (citing Scheuer v. Rhodes, 416 U.S. 232, 236 (1974)). “[A] motion to dismiss should concern only the complaint’s legal sufficiency, and is not a procedure for resolving factual questions or addressing the merits of the case.” Am. Int’l Specialty Lines Ins. Co. v. Mosaic Fertilizer, LLC, 8:09-cv-1264-T-26TGW, 2009 WL 10671157, at *2 (M.D. Fla. Oct. 9, 2009) (Lazzara, J.). Analysis

FDUTPA

The Court agrees with State Farm that the amended complaint’s allegations regarding the Policy’s Concealment or Fraud provision, combined with its allegations of misrepresentations by At Home in seeking payment, remedy the original complaint’s failure to allege a cognizable loss under FDUTPA. The Court is not persuaded by At Home’s arguments that this provision does not apply here simply because At Home was only an assignee of benefits, rather than an insured. The provision imposes a condition on coverage not only for insureds but for any

“organization making claim or seeking payment.” State Farm’s FDUTPA claims, therefore, may proceed past the motion to dismiss stage. It remains for later proceedings to determine whether State Farm can submit evidence allowing it to recover on the FDUTPA claims. State Farm must ultimately prove not only that At Home made false statements in seeking payment for each of the many individual insurance claims at issue but made them with the intent to misrepresent or conceal a “material fact or circumstance,” and it must establish the other FDUTPA elements for each individual claim, including the existence of deceptive or unfair practices likely to harm consumers, proximate causation, and actual damages.⁴ The proper measure of State Farm’s loss or damage, if any, also remains to be addressed.

State Farm alleges that At Home performed the repairs for which it sought and received payment. At Home therefore provided consideration to State Farm’s insureds for the payments it obtained. As the Court noted in dismissing the original complaint, a defendant’s payment of adequate consideration to any person precludes a claim for unjust enrichment. See Am. Safety Ins. Serv., Inc. v. Griggs, 959 So. 2d 322, 331-32 (Fla. 5th DCA 1007).

State Farm fails to meaningfully address the problem this principle poses for its unjust enrichment claim. It tries to avoid it by arguing that Griggs does not stand for the principle and held only that the plaintiffs in that case had not conferred a direct benefit. That interpretation of Griggs is incorrect, and the principle stated by Griggs is well supported in Florida law. See, e.g., Baptista v. JP Morgan Chase Bank, N.A., 640 F. 3d 1194, 1198 n.3 (11th Cir. 2011) (“’When a defendant has given consideration to someone for the benefit conferred, a claim of unjust enrichment fails’”) (quoting Griggs, 959 So. 2d at 331-32); Commerce P’ship 8098 Ltd. P’ship v. Equity Contracting Co., 695 So. 2d 383, 388 (Fla. 4th DCA 1997) (“[A]n unjust enrichment cannot exist ‘where payment has been made for the benefit conferred.’”) (quoting Gene B. Glick Co. v. Sunshine Ready Concrete Co., 651 So. 2d 190 (Fla. 4th DCA 1995)); see also Pincus v. Am. Traffic Solutions, Inc., 986 F. 3d 1305, 1319 (11th Cir. 2021) (noting that in Baptista, “We held alternatively, in a footnote, that Baptista’s unjust enrichment claim failed as a matter of law because she received ‘adequate consideration’ for the benefit conferred upon Chase.”) (quoting Baptista, 640 F. 3d at 1198 n.3).

The Florida Supreme Court recently reaffirmed this fundamental principle in its answer to a certified question in Pincus v. Am. Traffic Solutions, Inc., 333 So. 3d 1095 (Fla. 2022), where the court rejected an unjust enrichment claim under circumstances analogous to those presented here. The defendant in Pincus operated a red-light camera system for the City of North Miami Beach, and charged violators a fee if they chose to pay by credit card. The plaintiff brought a putative class action against the defendant on a theory of unjust enrichment, arguing that various statutes prohibited the defendant from collecting the fee, and therefore it had collected payments to which it was not legally entitled. The Florida Supreme Court held that, notwithstanding any statutory prohibition, the defendant’s payment of adequate consideration – in the form of saved postage charges and convenience afforded to the customer who paid by credit card – precluded any claim for unjust enrichment. Id. at 1097. That was so because the concept of unjust enrichment only applies where the defendant retains a benefit “without paying the value thereof.” Id. Pincus plainly limits the broad language in Silver Star to the extent it might be read, as State Farm incorrectly argues, to suggest an unjust enrichment claim will lie whenever a defendant has received money it is “not legally entitled to receive.” Application of the rule stated in Pincus and Griggs seems particularly compelling here, where State Farm itself alleges that it paid At Home what State Farm unilaterally determined to be the value of the repairs At Home had provided to its insureds based on competitive rates, rather than on At Home’s billing.

Under these circumstances, it is unclear what relevance, if any, the Policy’s Concealment or Fraud provision has to an unjust enrichment claim. The ability to recover the payments in their entirety may be necessary, as State Farm argued at the hearing, to give State Farm the benefit of its bargain under the contract of insurance, but unjust enrichment is grounded on a different principle and operates independently of any contract. Nor does it appear obvious – to say the least – why justice or equity would dictate that State Farm be allowed to collect premiums from its insureds and then avoid paying anything whatsoever for repairs admittedly performed by At Home for those insureds. At the same time, State Farm argues that the Policy allowed, but did not require, State Farm to base its payment on its determination of a competitive price and suggests that if At Home had submitted accurate information State Farm would have used a different method to determine the amount of payment, which would have been lower. It might therefore be argued that At Home in performing repairs did not actually pay the “value” of the benefit it received in the form of payments. Whether such an argument could avoid the obstacle posed by Pincus and allow a more limited unjust enrichment claim is better considered on a more complete record, after further briefing on the scope of Pincus and perhaps further developments in Florida law. While the Court has doubts about the viability of State Farm’s unjust enrichment claim, given the fact-intensive nature of the inquiry into whether retention of a benefit would be unjust or inequitable, the Court will deny the motion to dismiss this claim. At Home is free to raise its arguments in a motion for summary judgment. Declaratory Judgment State Farm seeks a judgment that “all outstanding unpaid, or allegedly underpaid, claims and charges that At Home submitted, or caused to be submitted, to the State Farm Plaintiffs for comprehensive insurance coverage benefits to date and through the trial of this case are not owed.” The declaration State Farm seeks will necessarily involve a fact-intensive inquiry into each of the thousands of claims submitted by At Home. Moreover, to the extent State Farm asks the Court to examine claims it has already paid, this count appears duplicative of State Farm’s other counts. See Hinds v. Am. Sec. Ins. Co., No. 16-20780-CIV, 2016 WL 8677863, at *7 (S.D. Fla. Sept. 9, 2016) (noting that declaratory judgment actions are often dismissed where the parties’ dispute is primarily factual or other counts may provide complete relief). To the extent State Farm also asks the Court to make the same determination for the hundreds or thousands of additional claims submitted after this suit was filed and up to the date of trial, the request appears highly impractical. All that being said, as the Court has allowed State Farm’s other claims to proceed, it will deny the motions to dismiss the declaratory judgment count. It may well be, however, that the Court ultimately exercises its discretion to decline to issue a declaration. Conclusion

State Farm will be required to establish all the elements of a FDUTPA violation as well as knowing and material misrepresentations in At Home’s submissions with respect to each of the thousands of claims on which it seeks recovery. Whether State Farm can do that in any practical way in this lawsuit remains to be seen. Moreover, the same allegations made here would constitute defenses or counterclaims in each of the thousands of cases pending in County Court in which At Home has sued State Farm alleging that State Farm owes more than it has paid on windshield claims. Defendant Alexander argues that “[t]he allegation that a specific claim is void because of a violation of the policy’s fraud provision is best addressed on a claim-by-claim basis in state court,” and that State Farm is improperly attempting to “bootstrap all of these alleged fraud claims together like some class action or multidistrict litigation under the guise of a FDUTPA claim or an unjust enrichment claim.” While Alexander offers no legal authority showing State Farm’s approach is “improper,” the Court has expressed its own concerns to the parties on this same issue. At the Court’s direction, the parties have filed memoranda addressing whether the Court can or should decline to hear the case under any of the various doctrines of abstention. The Court continues to evaluate that issue, and by separate order will set a case management conference to discuss that issue as well as the nature of the proof to be offered if the case proceeds to trial. It is therefore ORDERED, ADJUDGED, and DECREED: 1. “Defendant’s, At Home’s, Motion to Dismiss Amended Complaint” (Doc. 75) is DENIED. 2. “Defendant Camp’s Motion to Dismiss” (Doc. 76) is DENIED. 3. “Defendant Nicholas Alexander’s Motion to Dismiss Amended Complaint” (Doc. 77) is DENIED. 4. Defendants are directed to file their answers to the amended complaint on or before October 14, 2022. DONE and ORDERED in Chambers, in Tampa, Florida, this 30th day of September, 2022.

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TOM BARBER

UNITED STATES DISTRICT JUDGE