I recently came across two new class action filings against insurance companies that may be of interest to readers of my blog.  One case involves whether it is appropriate to depreciate labor costs in estimating actual cash value.  Another case involves the application of the “made whole” doctrine, where applicable, to insurers’ handling of subrogation recoveries.

  • Adams v Cameron Mutual Insurance Company.pdf, Case No. 2:12-cv-02173-PKH (W.D. Ark., filed Aug. 1, 2012):  This case alleges that Cameron Mutual Insurance Company improperly applies depreciation to the estimated cost of labor in preparing estimates of actual cash value (ACV).  The complaint asserts that it is appropriate to depreciate materials, which diminish in value based on age and wear and tear, but not labor because that cost does not diminish in value over time.  (Complaint, ¶ 10.)  The complaint seeks to certify an Arkansas statewide class of persons whose claims were paid on an ACV basis, excluding from the class insureds who were paid on a replacement cost value (RCV) basis.  (Id., ¶ 19.)  Putting aside the issue of whether the claim being asserted in this case has merit (i.e., whether depreciation of labor is appropriate under property insurance coverage), in defending this type of case an insurer may want to consider, among other issues, the various alternative methods that courts have allowed for calculation of ACV, and the case law providing that whether there is a breach of contract depends on whether the total amount paid is sufficient to comply with the policy, without breaking things up into particular components of a claim.  It also may be significant that putative class members who have not yet made a claim on an RCV basis also may wish to do so, and that likely would provide them with a larger payment than they could recover on this issue.  (For more on this, see my July 10, 2012 blog post.) 
  • Erlich v American International Group, Inc.pdf, Index No. 652672/2012 (N.Y. Supreme Ct., N.Y. County, filed Aug. 1, 2012):  The complaint in this lawsuit alleges that AIG and one of its subsidiaries, New Hampshire Insurance Company, have failed to comply with the “made whole” doctrine as applicable in New York by retaining subrogation recoveries without making the insureds whole to the extent required by New York law.  The named plaintiffs’ claim was a property insurance claim for fire damage.  The complaint alleges that the defendants have “retain[ed] payments from third-party wrongdoers prior to making their Insureds whole.  In so doing, Insurers retains [sic] monies that Insureds are legally entitled to receive, thereby causing Insureds damages, which include but are not limited to: (i) deductible expenses; (ii) losses incurred by the Insured but exempted from policy coverage; (iii) losses incurred due to wrongful withholding (hold backs) and depreciation; and (iv) losses incurred by the Insured beyond the policy limits of the coverage of the Insured.”  (Complaint, ¶ 1.)  The proposed class is quite vaguely defined as “a class of individuals and businesses covered under insurance policies issued by NHIC, its subsidiaries and affiliates, during the class period.”  (Id., ¶ 26.)  Notably, the Pennsylvania Supreme Court recently dealt with a putative class action involving the application of the “made whole” doctrine to auto collision coverage, and held that the doctrine was not applicable to deductibles or losses above policy limits.  For more on the Pennsylvania case, see my December 29, 2011 blog post.
Tags: Depreciation, Subrogation
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Photo of Wystan Ackerman Wystan Ackerman

I am a partner at the law firm of Robinson+Cole in Hartford, Connecticut, USA.  My contact information is on the contact page of my blog.  I really enjoy receiving questions, comments, suggestions and even criticism from readers.  So please e-mail me if you…

I am a partner at the law firm of Robinson+Cole in Hartford, Connecticut, USA.  My contact information is on the contact page of my blog.  I really enjoy receiving questions, comments, suggestions and even criticism from readers.  So please e-mail me if you have something to say.  For those looking for my detailed law firm bio, click here.  If you want a more light-hearted and hopefully more interesting summary, read on:

People often ask about my unusual first name, Wystan.  It’s pronounced WISS-ten.  It’s not Winston.  There is no “n” in the middle.  It comes from my father’s favorite poet, W.H. (Wystan Hugh) Auden.  I’ve grown to like the fact that because my name is unusual people tend to remember it better, even if they don’t pronounce it right (and there is no need for anyone to use my last name because I’m always the only Wystan).

I grew up in Deep River, Connecticut, a small town on the west side of the Connecticut River in the south central part of the state.  I’ve always had strong interests in history, politics and baseball.  My heroes growing up were Abraham Lincoln and Wade Boggs (at that time the third baseman for the Boston Red Sox).  I think it was my early fascination with Lincoln that drove me to practice law.  I went to high school at The Williams School in New London, Connecticut, where I edited the school newspaper, played baseball, and was primarily responsible for the installation of a flag pole near the school entrance (it seemed like every other school had one but until my class raised the money and bought one at my urging, Williams had no flag pole).  As a high school senior, my interest in history and politics led me to score high enough on a test of those subjects to be chosen as one of Connecticut’s two delegates to the U.S. Senate Youth Program, which further solidified my interest in law and government.  One of my mentors at Williams was of the view that there were far too many lawyers and I should find something more useful to do, but if I really had to be a lawyer there was always room for one more.  I eventually decided to be that “one more.”  I went on to Bowdoin College, where I wrote for the Bowdoin Orient and majored in government, but took a lot of math classes because I found college math interesting and challenging.  I then went to Columbia Law School, where I was lucky enough to be selected as one of the minions who spent their time fastidiously cite-checking and Blue booking hundred-plus-page articles in the Columbia Law Review.  I also interned in the chambers of then-Judge Sonia Sotomayor when she was a relatively new judge on the Second Circuit, my only connection to someone who now has one-ninth of the last word on what constitutes the law of our land.  I graduated from Columbia in 2001, then worked at Skadden Arps in Boston before returning to Connecticut and joining Robinson+Cole, one of the largest Connecticut-based law firms.  At the end of 2008, I was elected a partner at Robinson+Cole.

I’ve worked on class actions since the start of my career at Skadden.  Being in the insurance capital of Hartford, we have a national insurance litigation practice and I was fortunate to have the opportunity to work on some prominent class actions arising from the 2004 hurricanes in Florida and later Hurricane Katrina, including cases involving the applicability of the flood exclusion, statutes known as valued policy laws, and various other issues.  My interest and experience in class actions gradually led me to focus on that area.

In Connecticut courts I’ve defended various kinds of class actions that go beyond insurance, including cases involving products liability, securities, financial services and consumer contracts.

My insurance class action practice usually takes me outside of Connecticut.  I’ve had the pleasure of working on cases in various federal and state courts and collaborating with great lawyers across the country.  While class actions are an increasingly large part of my practice, I don’t do exclusively class action work.  The rest of my practice involves litigating insurance coverage cases, often at the appellate level.  That also frequently takes me outside of Connecticut.  A highlight of my career thus far was working on Standard Fire Ins. Co. v. Knowles, the U.S. Supreme Court’s first Class Action Fairness Act case.  I was Counsel of Record for Standard Fire on the cert petition, and had the pleasure of working with Ted Boutrous on the merits briefing and oral argument.

I started this blog because writing is one of my favorite things to do and I enjoy following developments in class action law, writing about them and engaging in discussion with others who have an in interest in this area.  It’s a welcome break from day-to-day practice, keeps me current, broadens my network and results in some new business.

When I’m not at my desk or flying around the country trying to save insurance companies from the plaintiffs’ bar, or attending a conference on class actions or insurance litigation (for more on those, see the Seminars/Programs page of this blog), I often can be found playing or reading with my young daughter, helping my wife with her real estate and mortgage businesses, reading a book about history or politics, or watching the Boston Red Sox (I managed to find bleacher seats for Game 2 of the 2004 World Series when Curt Schilling pitched with the bloody sock).  When the weather is good I also love to take the ferry to Block Island, Rhode Island and ride a bike or walk the trails there. If you go, I highly recommend the Clay Head Trail.

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