Court Opinion

ID: 9918366
Source: CourtListenerOpinion
Date Created: 2024-01-12 19:00:29.534684+00
Date Added: 2024-06-11T08:02:43.126579
License: Public Domain

Case: 23-60141      Document: 00517031461          Page: 1     Date Filed: 01/12/2024

            United States Court of Appeals
                 for the Fifth Circuit                                  United States Court of Appeals
                                                                                 Fifth Circuit

                                 ____________                                  FILED
                                                                        January 12, 2024
                                   No. 23-60141                           Lyle W. Cayce
                                 ____________                                  Clerk

   Kenan Watkins, individually and on behalf of all others similarly situated,

                                                             Plaintiff—Appellant,

                                        versus

   Allstate Property & Casualty Insurance Company,

                                             Defendant—Appellee.
                   ______________________________

                   Appeal from the United States District Court
                     for the Southern District of Mississippi
                             USDC No. 3:22-CV-487
                   ______________________________

   Before Graves, Higginson, and Ho, Circuit Judges.
   James E. Graves, Jr., Circuit Judge.
          Following a car accident, Kenan Watkins (“Watkins”) filed a
   diminished value claim with his insurer, Allstate Property and Casualty
   Insurance Company (“Allstate”). Allstate denied his claim. Watkins
   subsequently filed an action in the district court seeking relief for himself and
   a putative class of Allstate insureds alleging that his automobile insurance
   policy with Allstate violated Mississippi law. The district court held that
   Allstate’s policy did not violate Mississippi law and that Watkins failed to
   state a plausible claim. Consequently, the district court granted Allstate’s
   motion to dismiss under Rule 12(b)(6). We AFFIRM.
Case: 23-60141      Document: 00517031461          Page: 2   Date Filed: 01/12/2024

                                    No. 23-60141

                                BACKGROUND
          On December 7, 2021, Kimberly Jones (“Jones”) crashed her vehicle
   into Watkins’ 2021 Chevrolet Tahoe in Baldwyn, Mississippi. Watkins’
   vehicle sustained substantial damages. Prior to the accident, Watkins had an
   insurance policy with Allstate that provided coverage for his 2021 Chevrolet
   Tahoe. Jones’ insurer, Safeway Insurance Company, paid $24,314.25 to
   Watkins for his damage claim. Watkins alleged that his car sustained an
   additional $13,545.00 in diminished value. Safeway Insurance Company
   offered the remaining $685.75 of Jones’ policy limit to Watkins. Because
   Jones’ policy limit did not cover the diminished value of Watkins’ vehicle,
   Watkins filed an uninsured motorist claim with his insurer, Allstate.
          Allstate denied Watkins’ diminished value claim, relying upon a
   provision in its policy that excludes “any decrease in the property’s value,
   however measured, resulting from the loss and/or repair or replacement.”
   Watkins then filed this action in the Southern District of Mississippi District
   Court seeking relief for himself and a putative class of Allstate insureds.
   Watkins did not dispute that his policy with Allstate excludes claims for
   diminished value. Instead, Watkins argued that Allstate’s exclusion
   provision violates the Mississippi Uninsured Motorist Statute (“UM
   Statute”).
          Specifically, Watkins alleged that Allstate’s automobile insurance
   policies “impermissibly deny insurance coverage that is required by law.”
   Watkins asserted state law claims and sought compensatory damages, extra-
   contractual damages, punitive damages, declaratory judgment, injunctive
   relief, attorneys’ fees, and other relief the court deems just and proper.
   Allstate moved for dismissal under Rule 12(b)(6), arguing that Watkins’
   claims fail as a matter of law for two reasons. First, Allstate argued that
   Watkins did not plausibly allege that Jones’ vehicle was an “uninsured motor

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                                     No. 23-60141

   vehicle” under Miss. Code Ann § 83-11-103(c). Second, Allstate argued that
   even if Jones’ vehicle was an “uninsured motor vehicle,” Allstate’s
   provision excluding diminished value is valid under Mississippi law.
          The district court addressed each issue in turn. First, the district court
   held that Watkins failed to plausibly allege that Jones’ vehicle qualified as a
   “uninsured motor vehicle.” The district court held that under Mississippi
   law,   “uninsured     motor     vehicle[s]”      include   vehicles   that   are
   “underinsured.” Miss. Code Ann. § 83-11-103(c)(iii) defines an
   “underinsured” vehicle as a “[a]n insured motor vehicle, when the liability
   insurer of such vehicle has provided limits of bodily injury for its insured
   which are less than the limits applicable to the injured person provided under
   his uninsured motorist coverage.” To determine whether a vehicle qualifies
   as uninsured, the district court explained that it “must compare the limits of
   bodily injury liability of that vehicle with the limits applicable to the injured
   person under his uninsured motorist coverage.” Because Watkins failed to
   provide the limits of bodily injury liability under Jones’ policy and the limits
   of his uninsured motorist coverage, the district court concluded that Watkins
   failed to plausibly allege that Jones’ vehicle was an “uninsured motor
   vehicle.”
          Second, the district court concluded that Allstate’s diminished value
   exclusion is valid under Mississippi law. The district court held that
   Mississippi’s Motor Vehicle Safety Responsibility Law (“MMVSRA”)
   “requires insurance companies to provide limits of liability no less than
   $25,000 for bodily injury or death to one person, $50,000 for bodily injury or
   death to two or more people, and $25,000 for injury or destruction of
   property.” Relying on the text in Mississippi’s UM statute, the district court
   observed that the statute requires that car insurance policies “pay the insured
   all sums which he shall be legally entitled to recover as damages for property
   damage,” Miss. Code Ann. § 83-11-101(2), and specifically incorporates the

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                                      No. 23-60141

   limits of the MMVSRA. Once the minimum limits of liability are met,
   insurance companies are statutorily authorized to exclude or limit coverage
   “as long as the exclusions and limitations language has been filed with and
   approved by the Commissioner of Insurance.” Miss. Code Ann § 63-15-
   43(2)(a). The district court reasoned that while insurance companies are
   required to provide coverage “for injury to or destruction of property,” this
   requirement does not include coverage for diminished value. Thus, the
   district court concluded that Allstate’s diminished value exclusion was valid
   under Mississippi law.
          Because Watkins failed to state a claim upon which relief can be
   granted, the district court granted Allstate’s motion to dismiss with
   prejudice. This appeal followed.
                            STANDARD OF REVIEW
          This Court reviews “de novo a district court’s dismissal under Rule
   12(b)(6), accepting all well-pleaded facts as true and viewing those facts in
   the light most favorable to the plaintiffs.” Warren v. Chesapeake Exploration,
   L.L.C., 759 F.3d 413, 415 (5th Cir. 2014). “A claim has facial plausibility
   when the plaintiff pleads factual content that allows the court to draw the
   reasonable inference that the defendant is liable for the misconduct alleged.”
   Doe ex rel. Magee v. Covington Cty. Sch. Dist. Ex rel. Keys, 675 F.3d 849, 854
   (5th Cir. 2012)(quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)). While
   this Court “accept[s] all well-pleaded facts as true,” this Court does not
   “accept as true conclusory allegations, unwarranted factual inferences, or
   legal conclusions.” King v. Baylor University, 46 F.4th 344, 356 (5th Cir.
   2022)(citations omitted).
          This Court also reviews issues of statutory interpretation de novo.
   United States v. Lauderdale Cty., Mississippi, 914 F.3d 960, 964 (5th Cir.
   2019)(citation omitted). Under Mississippi law, the interpretation of an

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                                      No. 23-60141

   insurance policy, like any contract, is a legal question reviewed de novo.
   Leonard v. Nationwide Mut. Ins. Co., 499 F.3d 419, 428 (5th Cir. 2007).
   Mississippi law “provide[s] for the freedom of the insurer and the insured to
   contract so long as the mandatory statutory requirements are not
   circumvented.” Dixie Ins. Co. v. State Farm Mut. Auto. Ins. Co., 614 So.2d
   918, 922 (Miss. 1992); see also Nationwide Mut. Ins. Co. v. Garriga, 636 So.2d
   658, 663 (Miss. 1994).
                                    DISCUSSION
          First, the district court correctly granted Allstate’s motion to dismiss
   because Watkins’ failed to make a plausible claim for relief under 12(b)(6).
   Watkins’ First Amended Complaint, the operative Complaint, did not
   include a factual allegation that satisfied the definition of an “uninsured
   motor vehicle” under Miss. Code Ann. § 83-11-103(c). Thus, as the district
   court concluded, Watkins did not plausibly allege that Jones’ vehicle
   qualified as an “underinsured motor vehicle” under Miss. Code Ann. § 83-
   11-103(c)(iii).
          Watkins claims that he “sufficiently pleaded that [Jones] had bodily
   injury liability insurance, but that those limits were less than the limits
   provided under his uninsured motorist coverage.” Miss. Code Ann. § 83-11-
   101(2) requires that all automobile insurance policies include “an
   endorsement or provisions undertaking to pay the insured all sums which he
   shall be legally entitled to recover as damages for property damage . . . from
   the owner or operator of an uninsured motor vehicle.” As relevant, Miss.
   Code Ann. § 83-11-103(iii) defines uninsured motor vehicle as “[a]n insured
   motor vehicle, when the liability insurer of such vehicle has provided limits
   of bodily injury liability for its insured which are less than the limits applicable
   to the injured person provided under his uninsured motorist coverage.” In
   his Complaint, Watkins alleges that “[p]ursuant to Miss. Code. Ann. § 83-

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                                           No. 23-60141

   11-101(2), Kimberly Jones was underinsured, and [that he] is entitled to
   recover from the uninsured motorist coverage provided by the Policy.”
   Watkins’ mere assertions, however, are insufficient to establish that Jones’
   vehicle qualified as an “uninsured motor vehicle.” The Complaint does not
   provide whether Jones had bodily injury liability. The district court, thus, was
   unable to determine whether Jones’ bodily injury liability was less than the
   limits applicable to Watkins under Allstate’s uninsured motorist coverage.
   Without more factual content, the district court was unable to draw a
   reasonable inference from the Complaint that Allstate is liable for the alleged
   misconduct. See Doe ex rel. Magee, 675 F.3d 849, 854 (5th Cir. 2012). The
   Complaint only alleges that Jones was underinsured, which is a legal
   conclusion. This Court, however, does not accept legal conclusions as true.
   See King, 46 F.4th 344, 356 (5th Cir. 2022). Thus, the district court correctly
   concluded that Watkins failed to make a plausible claim for relief under Rule
   12(b)(6) because a reasonable inference that Allstate was liable for
   misconduct could not be drawn from the factual content in the Complaint
   and legal conclusions alone are not accepted as true. 1
           Second, the district court correctly concluded that Allstate’s
   diminished value exclusion is valid under Mississippi law. The exclusion does
   not implicate, and therefore does not run afoul of, Mississippi’s $25,000
   minimum requirement. Furthermore, there is no legislative or judicial
   pronouncement that insurers must provide for payment of diminished value

           _____________________
           1
             Although Watkins’ motion to dismiss filings suggest he might be able to cure this
   deficiency in a motion to amend his Complaint, the district court noted that such
   amendment would be futile in light of the merits of Watkins’ second argument. Because we
   agree, as explained below, that Allstate’s exclusion was valid, the district court did not err
   in refusing to afford Watkins an opportunity to amend.

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                                     No. 23-60141

   in all issued automobile policies. Thus, Allstate’s diminished value exclusion
   does not violate public policy.
          Watkins argues that well-established Mississippi law recognizes the
   “diminished value of a vehicle from the at-fault driver” as an “element of
   damage that a plaintiff is legally entitled to recover as damages.” Watkins
   cites two cases—Potomac Ins. Co. v. Wilkinson, 57 So. 2d 158, 160 (Miss. 1952)
   and Calvert Fire Ins. Co. v. Newman, 124 So. 2d 686, 688 (Miss. 1952)—to
   support his position. However, this Court has distinguished automobile
   insurance policies akin to the policy in Wilkinson from automobile insurance
   policies that provide express limiting language regarding repair. For example,
   the automobile policy in Blakely v. State Farm Mut. Auto. Ins. Co. “explicitly
   outlined the three bases” for what could be recoverable under the “cost of
   repair or replacement.” 406 F.3d 747, 753 (5th Cir. 2005). As diminished
   value was not enumerated therein, the Blakely court adhered to a “plain
   reading of the distinct, unambiguous policy language” that “expressly
   defined the limited alternatives” for recovery and concluded that diminished
   value could not be recovered. Id. In doing so, the court did not find that the
   exclusion of recovery for diminished value violated public policy. Blakely
   controls here.
          First, Watkins does not dispute that his Allstate policy excluded
   recovery for diminished value. Watkins’ uninsured motor vehicle policy
   expressly states, “[Allstate] will not pay any damages an insured person is
   legally entitled to recover because of … any decrease in the property’s value,
   however measured, resulting from the loss and/or repair or replacement.”
   Watkins seemingly concedes that his policy does exclude recovery for
   diminished value. Thus, Watkins sole argument is that the diminished value
   exclusion in Allstate’s policy is invalid because it violates public policy.

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                                       No. 23-60141

          But Watkins’ claim that the diminished value exclusion violates public
   policy fails because Watkins has not pointed to a “pronouncement, either
   legislative or judicial, requiring that diminished value be a part of all
   automobile insurance policies.” Id. at 754. Allstate’s policy is similar to State
   Farm’s policy in Blakely, which this Court held was not void as against public
   policy. Watkins disagrees and argues that Blakely is limited to
   “comprehensive and collision coverages” and not applicable in the context
   of UM coverage. However, as the district court correctly reasoned, Blakely
   does not expressly state that its holding is only applicable to comprehensive
   and collision coverages. 2 Nor has Watkins provided any authority to support
   his narrow reading of Blakely. Furthermore, only “an affirmative expression
   of an overriding public policy by the legislature or judiciary” prompts this
   Court to rule that an insurance policy’s plain meaning does not control. Id.
   (quoting Centennial Ins. Co. v. Ryder Truck Rental, Inc., 149 F.3d 378, 382 n.
   11 (5th Cir. 1998)). Neither the legislature nor the judiciary have pronounced
   that insurers must provide for payment of diminished value in all issued
   automobile policies. Therefore, in this instance, the plain meaning of

          _____________________
          2
             The merits of Watkins’ arguments in this regard are dubious. The purpose
   of UM coverage was to provide coverage for affected individuals who were harmed
   by uninsured motorists, and give them equal, rather than greater, coverage as
   compared with a similarly situated individual who was affected by an insured
   motorist. See State Farm Mut. Auto. Ins. Co. v. Daughdrill, 474 So. 2d 1048, 1051
   (Miss. 1985) (“Its purpose is to give the same protection to the person injured by an
   uninsured motorist as he would have had if had been injured in an accident caused
   by an automobile covered by a standard liability policy.”) (quoting Rampy v. State
   Farm Mut. Auto. Ins. Co., 278 So.2d 428 (Miss.1973)) (emphasis added). Here,
   Watkins concedes that he received $25,000 for property damage, but claims that he
   is entitled to additional recovery for the diminished value of the vehicle, over and
   beyond the $25,000 MMVSRA minimum embraced by the UM statute.

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                                      No. 23-60141

   Allstate’s policy controls and Allstate’s diminished value exclusion is valid
   under Mississippi law. 3
                                   CONCLUSION
          For these reasons, we AFFIRM the district court’s grant of All-
   state’s motion to dismiss.

          _____________________
          3
            Mississippi law also provides that, subject to the MMVSRA minimum
   requirements, liability insurance “may contain exclusions and limitations on
   coverage as long as the exclusions and limitations language has been filed with and
   approved by the Commissioner of Insurance,” Miss. Code Ann. § 63-15-43(2)(a),
   and Allstate’s exclusion was so filed and approved.

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