Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-3_23-cv-08584/USCOURTS-azd-3_23-cv-08584-1/pdf.json

Nature of Suit Code: 110
Nature of Suit: Insurance
Cause of Action: 28:1331 Fed. Question: Breach of Contract

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WO

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

Brendan Dahl,

Plaintiff,

v. 

American Bankers Insurance Company of 

Florida,

Defendant.

No. CV-23-08584-PCT-DLR

ORDER 

Before the Court is Defendant American Bankers Insurance Company of Florida’s 

motion to deny class certification. (Doc. 14.) The motion is fully briefed, and the Court 

heard oral arguments from the parties on December 10, 2024. For the following reasons, 

the Court denies the motion.

I. Background1

This dispute arises from actual cash value (“ACV”) payments American Bankers, 

an insurer, made to Plaintiff Brendan Dahl, an insured, and a putative class of similarly 

situated insureds to compensate for losses to property covered by their policies. Dahl 

alleges that American Bankers calculated its ACV payments to him and the putative class 

members using a “replacement cost less depreciation” (“RCLD”) methodology.2(Doc. 11 

1 This background is derived from the First Amended Complaint (“FAC”), which 

the Court accepts as true for the purposes of this motion.

2 American Bankers uses a commercially available software called Xactimate to 

estimate the ACV. (Doc. 11 ¶ 46.) Xactimate software exclusively uses the RCLD 

methodology to calculate the ACV of property damage. (Id. ¶ 48.)

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¶ 43.) When American Bankers calculated those ACV benefits, it “withheld costs for both 

materials and future repair labor . . . as depreciation.” (Id. ¶ 53.) Dahl alleges that, in so 

doing, American Bankers breached the policy by paying him less than he was entitled to 

receive. (Id. ¶ 61.)

Dahl’s policy, which he maintains is “materially identical” to the policies of the 

putative class members, contains an appraisal provision. It provides that “[i]f settlement 

cannot be agreed to, then both [the insured] and [American Bankers] have the right to select 

a competent appraiser within 20 days from the date of disagreement.” (Doc. 8-1 at 6). The 

policy also contains a no-action provision that states that no action shall apply against 

American Bankers unless “[t]here has been full compliance with all the terms of this 

policy[.]” (Id. at 18.) American Bankers attempted to invoke its right to appraisal after Dahl 

filed suit. (Doc. 11 ¶ 68.) Dahl alleges that the invocation was untimely and American 

Bankers therefore lost its right to appraisal as to his claim.3(Id. ¶ 70.) Dahl does not include 

any class-wide allegation about the appraisal provision’s applicability other than his 

allegation on behalf of the class that all “conditions precedent to coverage had occurred or 

been performed.” (Id. ¶ 33.)

American Bankers filed a motion to dismiss the case for failure to state a claim (Doc. 

13) contemporaneously with the motion at issue here. The Court denied the motion to 

dismiss. (Doc. 32.) It found that Dahl has plausibly stated a claim for breach of contract 

because, in Walker v. Auto-Owners Insurance Co., 517 P.3d 617 (Ariz. 2022), the Arizona 

Supreme Court held that an insurer may not depreciate the cost of future repair labor when 

determining ACV using the RCLD methodology. (Id. at 3–4.)

II. Legal Standard

“[D]ismissal of class allegations at the pleading stage should be done 

3 No party directs the Court to any language in the policy that defines “date of 

disagreement,” but the parties seem to agree that, at least as to individual claims, it is the 

date that the insured notifies American Bankers that it does not agree with American 

Bankers’s valuation of the loss. Thus, American Bankers asserts that the policy contains 

an implicit requirement that the insured notify American Bankers of its dispute. Here, the 

FAC’s allegations state that American Bankers executed a waiver of service on January 8, 

2024 (Doc. 7) and attempted to invoke the appraisal provision more than 20 days later, on 

February 14, 2024 (Doc. 11 ¶ 70).

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rarely . . . [T]he better course is to deny such a motion because the shape and form of a 

class action evolves only through the process of discovery.” In re Wal-Mart Stores, Inc. 

Wage & Hour Litig., 505 F. Supp. 2d 609, 615 (N.D. Cal. 2007) (quotations and citation 

omitted). Still, American Bankers’s preemptive motion to deny class certification is 

procedurally permissible. Vinole v. Countrywide Home Loans, Inc., 571 F.3d 935, 939 (9th 

Cir. 2009); Lawson v. Grubhub, Inc., 13 F.4th 908, 913 (9th Cir. 2021) (“Rule 23 allows a 

preemptive motion by a defendant to deny class certification.”).4 At the pleadings stage, 

such a motion is considered the functional equivalent of a motion to strike class allegations. 

Bates v. Bankers Life and Cas. Co., 848 F.3d 1236, 1238 (9th Cir. 2017). 

The burden varies based on the motion’s timing . . . When a 

motion to deny class certification is brought early in a case—

before discovery is substantially complete—a Rule 

12(b)(6)-type standard is employed, so the defendant must 

demonstrate that it would be impossible for the plaintiff to 

certify a class based on the allegations set forth in the 

complaint. 

Otto v. Abbott Lab’ys, Inc., No. 5:12-CV-01411-SVW-DTB, 2015 WL 12776591, at *2 

(C.D. Cal. Jan. 28, 2015) (citation omitted). 

III. Analysis

American Bankers asserts that the dispute here is one of valuation, falling squarely 

within the policy’s appraisal provision, and when a putative class includes a significant 

number of members who have agreed to appraise their claims, certification should be 

denied. (Docs. 14 at 1–2; 26 at 3.) Dahl responds that the appraisal provision is inapplicable 

to the putative class members’ claims because this is not a valuation dispute but rather a 

legal question that the Court, not an appraiser, must decide. (Doc. 18 at 3.) This is a close 

question. At the pleadings stage, the Court cannot say it will be impossible for Dahl to

demonstrate that the appraisal provision does not apply to the class members’ disputes. 

In Lawson ̧ the Ninth Circuit held that a putative class cannot be certified when that 

class includes a significant number of members who have agreed to arbitrate their claims. 

13 F.4th 908, 913 (9th Cir. 221). “In Arizona, appraisal provisions are analogous to 

4 The Court has considered the supplemental authorities submitted by the parties 

(Docs. 27 & 29) and cases cited to the Court during oral argument.

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arbitration provisions and are governed by arbitration principles.” Casitas Del Sol Condo. 

Owners Ass’n v. State Farm Fire & Cas. Co., No. CV-22-00685-PHX-DGC, 2022 WL 

3082528, at *2 (D. Ariz. Aug. 2, 2022). Courts are limited in their power to refuse to 

compel appraisal. Id. Thus, it follows that a putative class cannot be certified where a 

significant number of members are required to submit their disputes to an appraiser. 

But the question remains whether this dispute is one for appraisal. This question 

hinges on whether the dispute is one about valuation or one about coverage. In Enger v. 

Allstate Insurance Co., 407 F. App’x 191 (9th Cir. 2010), an unpublished decision from 

the Ninth Circuit, dismissal of the plaintiff’s suit against her insurer was appropriate

because the plaintiff failed to submit the claim to appraisal after her insurer invoked the 

provision. 407 F. App’x at 192–93. The appraisal provision stated that, if the parties to the 

insurance contract failed to agree on the ACV of the loss, either party could invoke the 

provision. See id. at 193. The appraisal provision applied even though the insurer allegedly 

used an improper valuation method in its adjustment because the policy made “no 

exception where the source of the dispute is the valuation method used.” Id.

The appraisal provision in Dahl’s insurance policy is like the provision in Enger. It 

provides that if “settlement cannot be agreed to, then both you and we have the right to 

select a competent and disinterested appraiser within 20 days from the date of 

disagreement.” (Doc. 8-1 at 6.) Further, no action may be brought against American 

Bankers unless “[t]here has been full compliance with all the terms of this policy.” (Id. at 

18.) It makes no exception for a dispute about the valuation method used, and inclusion of 

future repair labor in depreciation conceivably could be considered part of the valuation 

method. Enger can thus be read to include disputes like those of the putative class.

Still, Enger is not binding, and other courts have cut differently. See, e.g., Munoz v. 

GEICO Gen. Ins. Co., No. 19-cv-03768, 2019 WL 6465297, at *2 (N.D. Cal. Dec. 2, 2019); 

Hawkinson Tread Tire Serv. Co. v. Ind. Lumbermens Mut. Ins. Co., 245 S.W.2d 24, 28 

(Mo. 1951); Ostendorf v. Grange Indem. Ins. Co., No. 2:19-CV-1147, 2020 WL 134169, 

at *4 (S.D. Ohio Jan. 13, 2020). In Munoz, the issue was whether the insurance company 

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was “obligated by the terms of its Policy to pay [the] undisputed [sales tax] amount to 

leased insureds just as it pays that amount to owned- or financed-vehicle insureds.” 2019 

WL 6465297, at *2 (citation omitted). The court found that dispute was not appropriate for 

appraisal because it presented coverage issues. Id. Valuation disputes (like the one in

Enger) deal with the underlying value of the damage, while coverage disputes concern

what the policy means. Id. Because the dispute dealt with whether a “categor[y] of cost[] 

fell within the policies’ terms,” it was a coverage question outside the scope of appraisal. 

Id. at *3.

Dahl does not allege that his or any putative class member’s property damage claim 

was undervalued. Rather, construing the allegations in the light most favorable to Dahl, the

FAC alleges that a category of cost—future repair labor—falls within the policy’s 

coverage, but he and the class were not compensated for that cost. Thus, American Bankers 

breached the terms of the policy. The Court is not convinced that this disagreement is a 

“valuation dispute” or that it must, as a matter of law, compel appraisal as to each of the 

putative class members’ claims should the class be certified. 

The Court acknowledges that Arizona (and some other states where putative class 

members reside) have strong policies in favor of alternative dispute resolution, and 

ambiguities should be resolved in favor of appraisal. Meineke v. Twin City Fire Ins. Co., 

892 P.2d 1365, 1369–70 (Ariz. Ct. App. 1994); New Peublo Constructors, Inc. v. Lake 

Patagonia Recreation Ass’n, 467 P.2d 88, 91 (Ariz Ct. App. 1970). But that policy does 

not warrant a finding from this Court that all putative class members are barred from suit 

until they submit their claims for appraisal, particularly when the identities of these class 

members and the substance of their claims are yet uncertain.

What’s more, the FAC alleges claims on behalf of putative class members in eight 

other states with differing law and policy. As another court observed, “exactly when an 

issue is one for an appraiser to determine versus the court is not entirely clear cut” and 

requires a “dispute-by-dispute analysis.” Norman v. Standard Fire Ins. Co., No. 22-CV2199, 2023 WL 6018919, at *6 (C.D. Ill. May 15, 2023). It is at least possible that the 

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putative class could be made up of only those insureds with claims that would fall outside 

their appraisal provisions based on the language of those provisions and applicable state 

law. Discovery is necessary to help the Court determine the propriety of a class action in 

this case. Therefore, it would be inappropriate to grant American Bankers’s preemptive 

motion to deny class certification. See Kamm v. Cal. City Dev. Co., 509 F.2d 205, 210 (9th 

Cir. 1975) (noting denial of discovery where discovery is necessary to determine propriety 

of class action is an abuse of discretion).

IT IS ORDERED that American Bankers’ motion to deny class certification (Doc. 

14) is DENIED.

Dated this 13th day of December, 2024.

Douglas L. Rayes

Senior United States District Judge

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