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Betts v. USAA General Indemnity Co.

Court of Appeals of Arkansas, Division III

May 1, 2019



          Caddell Reynolds, P.A., by: Bill G. Horton, for appellants.

          Baker Hostetler LLP, by: Rodger L. Eckelberry, pro hac vice; and Mitchell, Williams, Selig, Gates & Woodyard, P.L.L.C., by: Lyn P. Pruitt and Megan D. Hargraves, for appellee.


         In May 2016, Earl Betts and Amy Betts bought a new 2016 Jeep Wrangler from a dealership in Springdale, Arkansas. When they did so they signed a retail-installment sales contract that gave Ally Financial a secured interest in the jeep in exchange for lending them $39, 137.26. The Bettses insured the jeep through a policy with USAA General Indemnity Company (USAA). They also bought additional coverage for it through a guaranteed asset-protection (GAP) contract with the dealership.

         Not long after they had bought the jeep, the Bettses were involved in a collision that totaled the jeep. USAA paid Ally Financial $32, 273.19, and the breakdown of that sum was as follows: $30, 243 for the jeep's actual cash value; $2, 015.80 for sales tax; $10 for a title fee; $2.89 for the validation decal fee; $0.50 for the lien filing fee; and $1 for the registration fee. The GAP provider paid Ally $3, 764.26. After these payments, the Bettses still owed Ally $2, 003.65. Ally has sued the Bettses for the remaining amount, plus interest.

         After filing the insurance claim, the Bettses demanded that USAA pay the sales-tax amount, the transfer fee, the validation decal fee, and the registration fee directly to them, not to their creditor Ally. When USAA refused to do so, the Bettses sued the company in January 2017 in the Benton County Circuit Court. USAA answered the complaint. Four months later, the Bettses amended their complaint to allege that they were members of a similarly situated class of insured USAA customers or former customers. They alleged that USAA's failure to issue direct payment to the plaintiffs for the sales tax and fees violated Arkansas law.

         USAA filed a notice of removal, but the United States District Court for the Western District of Arkansas remanded the case in late June 2017. A certified copy of the federal order and docket was filed in the Benton County Circuit Court the same day.

         In October 2017, USAA filed a counterclaim against the Bettses for a declaratory judgment. USAA also filed a third-party complaint against the lienholder Ally Financial, Inc. and against the dealership that had sold the jeep to the Bettses (Everett CDJR, LLC). In addition to its declaratory-judgment request against the two third-party defendants, USAA claimed unjust enrichment. It requested that if the circuit court determined that USAA must pay the $2, 030.19 in taxes and fees directly to the plaintiffs, then the defendants should return that money to USAA. In November 2017, Ally answered the third-party complaint and filed a cross-claim against the Bettses for the deficiency balance on the installment contract. Everett also answered USAA's third-party complaint.

         In February 2018, USAA moved for summary judgment against the plaintiffs. It argued, among other things, that it had properly paid the vehicle sales tax and fees to Ally under the terms of the USAA automobile-insurance contract and Arkansas law. A flurry of responses and motions ensued. Everett said that it had assigned its contractual rights under the GAP policy to Ally, so it was not a necessary party to the litigation.

         In June 2018, the circuit court granted summary judgment to USAA. The summary-judgment order states, "USAA GIC is entitled to judgment as a matter of law on Plaintiffs' claims and on the claim for declaratory judgment set out in its [c]ounter claim against Plaintiffs; and Plaintiff's Amended Complaint against USAA GIC is dismissed, with prejudice." Incorporated in the appealed summary-judgment order is a Rule 54(b) certificate. The certificate is replicated here:

         Rule 54(b) Certificate

         With respect to the issues determined by the above judgment, the Court finds:

1. With the exception of Ally Bank's cross claim against Plaintiffs for the unpaid balance of the loan on the 2016 Jeep Wrangler, the remaining claims in this case cannot be accurately or efficiently adjudicated until USAA ...

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