Arkansas Supreme Court: Class Action Suit Against Insurer Can Proceed

The Arkansas Supreme Court has affirmed a lower court order certifying class action status in a case involving an insurer’s depreciation practices in property claims against “actual cash value” homeowners policies.

In Farmers Union Mutual Insurance Company v. Randall and Heather Robertson, the state high court found no merit in the insurer’s arguments for reversing the order granting class action status.

The case stems from tornado damage to the Robertsons’ property in Atkins, Ark., on Feb. 5, 2008. The Robertsons initially alleged that Farmers Union improperly “paid their personal-property claim and had illegally depreciated the labor portion of their real property claim,” according to court documents.

The complaint was later amended without mention of the personal property claim “and filed a class-action complaint on behalf of themselves and similarly situated Arkansans, alleging that Appellant [Farmers Union] had a common practice of depreciating the cost of labor when adjusting real-property damage.”

The suit requested judgment for the insurer’s “failure to timely and properly pay an insurance claim.”

Farmers Union asserted that the Robertson’s claims do not meet the requirements of class action status because they are not “typical of the proposed class or that they are adequate class representatives.” According to the insurer, the Robertsons “failed to satisfy the typicality requirement because they have a claim for damage to personal property that the class members do not.”

The Court rejected that argument, explaining that while the Robertson’s initial claim included personal-property damage, the “amended complaints did not raise a claim for personal-property damage. This court has stated with approval the ‘widely recognized doctrine that an amended complaint, unless it adopts and incorporates the original complaint, supersedes the original complaint.'”

The high court ultimately agreed with the lower court’s finding that “the resolution of the common predominating issues throughout Appellees’ and the class members’ claims ‘in one consolidated class action is superior to litigating hundreds or thousands of individual lawsuits on the same common issues.'”

Source: Arkansas Supreme Court