Glasner v. American Economy Insurance Company

UNITED STATES DISTRICT COURT

DISTRICT OF MASSACHUSETTS

__________________________________________

)

)

JEFFREY GLASNER, DWIGHT SEEELEY, )

PAMELA SEELEY, ARIJ ALI, and )

MALINA ALI, individually and on behalf )

of all others similarly situated, )

)

Plaintiffs, )

)

v. )

) Case No. 21-cv-11047-DJC

)

AMERICAN ECONOMY INSURANCE )

COMPANY, LIBERTY MUTUAL )

PERSONAL INSURANCE COMPANY, )

and SAFECO INSURANCE COMPANY )

OF INDIANA, )

)

Defendants. )

__________________________________________)

MEMORANDUM AND ORDER

CASPER, J. March 8, 2024

I. Introduction

Plaintiffs Jeffrey Glasner, Dwight Seeley, Pamela Seeley, Arij Ali and Malina Ali

(collectively, “Plaintiffs”), individually and on behalf of all others similarly situated, filed this

lawsuit against Defendants American Economy Insurance Company (“AEIC”), Liberty Mutual

Personal Insurance Company (“LMPICO”) and Safeco Insurance Company of Indiana (“Safeco

Indiana”) (collectively, “Defendants”), alleging breach of contract (Count I) and seeking

declaratory judgment and relief (Count II). D. 4. Defendants have moved to dismiss the first

amended complaint (“FAC”) for lack of standing under Fed. R. Civ. P. 12(b)(1) and, alternatively,

to strike class allegations under Fed. R. Civ. P. 12(f). D. 63. Plaintiffs have moved for leave to

file a proposed second amended complaint (“PSAC”) to add Thomas Larsen (“Larsen”), as trustee

of The Larsen Family Revocable Trust, as an additional named class representative under Federal

Rule of Civil Procedure 15(a)(2), or alternatively, to have him intervene under Fed. R. Civ. P. 24.

D. 70.

For the reasons stated below, the Court DENIES Defendants’ 12(b)(1) motion to dismiss

the FAC or, alternatively, to strike Plaintiffs’ class allegations. D. 63. The Court ALLOWS

Plaintiffs’ motion for leave to file the PSAC and DENIES the portion of that motion that sought

to intervene as moot. D. 70.

II. Standards of Review

A. Rule 12(b)(1) Motion to Dismiss for Lack of Standing

When confronted with a Rule 12(b)(1) motion, “the district court must construe the

complaint liberally, treating all well-pleaded facts as true and indulging all reasonable inferences

in favor of the plaintiff.” Aversa v. United States, 99 F.3d 1200, 1209–10 (1st Cir. 1996) (citing

Murphy v. United States, 45 F.3d 520, 522 (1st Cir. 1995), cert. denied, 515 U.S. 144 (1995)).

The Court may widen its gaze, however, and look beyond the pleadings to determine subject

matter jurisdiction. Martínez-Rivera v. Commonwealth of Puerto Rico, 812 F.3d 69, 74 (1st Cir.

2016) (citing cases for the proposition that the court can “rely on facts outside of the pleadings” to

decide a Rule 12(b)(1) motion). “[T]he party invoking the jurisdiction of a federal court carries

the burden of proving its existence.” Murphy, 45 F.3d at 522 (quoting Taber Partners, I v. Merit

Builders, Inc., 987 F.2d 57, 60 (1st Cir. 1993)).

Standing is a jurisdictional issue, see P.R. Tel. Co. v. T-Mobile P.R. LLC, 678 F.3d 49, 57

(1st Cir. 2012), and, accordingly, challenges to standing are properly considered under Rule

12(b)(1). See Kolancian v. Snowden, 532 F. Supp. 2d 260, 261 (D. Mass. 2008).

B. Rule 15(a)(2) Motion for Leave to Amend

Under Fed. R. Civ. P. 15(a)(2), “leave to amend is to be ‘freely give[n] when justice so

requires’ . . . unless the amendment ‘would be futile, or reward, inter alia, undue or intended

delay.’” Steir v. Girl Scouts of the USA, 383 F.3d 7, 12 (1st Cir. 2004) (first quoting Fed. R. Civ.

P. 15(a)(2); and then quoting Resol. Tr. Corp. v. Gold, 30 F.3d 251, 253 (1st Cir. 1994)). Rule

15(a)’s “liberal amendment policy . . . does not mean that leave will be granted in all cases.”

Acosta-Mestre v. Hilton Int’l of P.R., 156 F.3d 49, 51 (1st Cir. 1998) (internal quotation marks

and citation omitted). “[I]f the proposed amendment would be futile because, as thus amended,

the complaint still fails to state a claim, the district court acts within its discretion in denying the

motion to amend.” Bos. & Me. Corp. v. Town of Hampton, 987 F.2d 855, 868 (1st Cir. 1993),

overruled on other grounds by Educadores, Puertorriqueños en Acción v. Hernández, 377 F.3d 61

(1st Cir. 2004).

III. Factual Background

The following facts are alleged in Plaintiffs’ FAC, D. 4, and are taken as true for the

purposes of considering Defendants’ motion to dismiss.

Glasner is a citizen and resident of Arizona and owns a residence in Scottsdale, Arizona.

Id. ¶ 8. At all relevant times, AEIC insured Glasner’s residence for direct physical loss to buildings

and other structures located on the insured premises, except as specifically excluded or limited by

the insurance policy. Id. ¶¶ 21–23. On or about August 20, 2020, a storm caused “accidental

direct physical loss” to Glasner’s residence. Id. ¶ 24. Glasner notified AEIC of the damage and

submitted a claim against his insurance policy. Id. ¶ 26. AEIC determined that the loss was

covered. Id. ¶ 27.

Dwight and Pamela Seeley are married, citizens and residents of Ohio, and own a residence

in Dublin, Ohio. Id. ¶ 9. At all relevant times, Safeco Indiana insured the Seeleys’ residence for

direct physical loss to buildings and other structures located on the insured premises, except as

specifically excluded or limited by the insurance policy. Id. ¶¶ 30–32. On or about July 12, 2020,

a storm caused “accidental direct physical loss” to the Seeleys’ residence. Id. ¶ 33. The Seeleys

notified Safeco Indiana of the damage and submitted a claim against their insurance policy. Id.

¶ 35.

Arij and Malina Ali are married, citizens and residents of Illinois, and own a residence in

Hanover Park, Illinois. Id. ¶ 10. At all relevant times, LMPICO insured the Alis’ residence for

direct physical loss to buildings and other structures located on the insured premises, except as

specifically excluded or limited by the insurance policy. Id. ¶¶ 38–40. On or about July 28, 2020,

wind caused “accidental direct physical loss” to Alis’ residence. Id. ¶ 41. The Alis notified

LMPICO of the damage and submitted a claim against their insurance policy. Id. ¶ 43. LMPICO

determined that the loss was covered. Id. ¶ 44.

As alleged, Defendants were required to pay the actual cash value (“ACV”) of the property

damaged as part of the Plaintiffs’ losses, as opposed to the replacement cost value (“RCV”) of

same. Id. ¶ 1. Whereas ACV payments are made prospectively, i.e., prior to the policyholder

undertaking repairs to damaged buildings and structures, RCV payments are made retrospectively,

after repairs have been completed. Id. ¶ 2. Plaintiffs assert that Defendants calculated ACV under

the “replacement cost less depreciation” (“RCLD”) methodology, allowing Defendants to

calculate the full amount of labor and materials necessary to repair or replace the property and to

then deduct from that amount depreciation. See id. ¶ 3.

To calculate Plaintiffs’ ACV payments, Defendants used Xactimate®, a computer software

program designed to assist insurers with RCLD calculations. Id. ¶¶ 49, 54. Xactimate® generates

price estimates based on a series of inputs, including the dimensions of the damaged property, the

damaged portion of the damaged property, and other objective criteria like the age or condition of

the roofing, siding or other damaged building materials. Id. ¶¶ 50, 56–57. Xactimate® breaks

down each step of the repair process into separate “line items”; the insurance adjuster then checks

or unchecks boxes associated with these line items to account for, and ultimately deduct,

depreciation. Id. ¶¶ 58–59. As alleged, some of these checkboxes, such as “Depreciate Material,”

“Depreciate Removal,” and “Depreciate Overhead and Profit,” are “labor items,” i.e., costs

associated with any labor necessary to repair the damaged property. Id. ¶ 59. There are also two

checkboxes corresponding to labor items for steep and high roofs, one for labor costs associated

with the removal of old roofing materials and the other associated with installation costs. Id. ¶ 60.

Plaintiffs allege that Defendants used these checkboxes to withhold labor costs from their

ACV payments. Id. ¶ 55, 61. This so-called “labor depreciation” thus resulted in smaller ACV

payments.1 See id. ¶ 63. Accordingly, Plaintiffs assert Defendants’ labor depreciation practices

have resulted in the underpayment of ACV claims (and breaches of contracts) injuring the residents

of twelve states, including Plaintiffs’ homes states of Arizona, Ohio and Illinois, as well as nine

other states: Connecticut, Kentucky, Maryland, Mississippi, Tennessee, Utah, Vermont, Virginia

and Wisconsin. Id. ¶ 74.

1 Glasner and the Seeleys’ insurance policies do not define ACV so as to permit labor

depreciation, but the FAC’s allegations as to the Alis do not specifically indicate whether their

policy defined ACV in this manner. D. 4 ¶¶ 29, 37; see id. ¶¶ 38–45.

IV. Procedural History

On June 24, 2021, Glasner, individually and on behalf of all others similarly situated, filed

a complaint against AEIC. D. 1. On July 2, 2021, the other Plaintiffs joined Glasner, again

individually and on behalf of all others similarly situated, in filing the operative FAC against

Defendants. D. 4. Defendants moved to dismiss the FAC as to the class claims for lack of standing

under Fed. R. Civ. P. 12(b)(1) or, in the alternative, to strike class allegations under Rule 12(f).

D. 63. Plaintiffs subsequently moved for leave to file the PSAC to add Thomas Larsen (“Larsen”),

as trustee of The Larsen Family Revocable Trust, as an additional named class representative under

Fed. R. Civ. P. 15(a)(2), or, alternatively, have him intervene under Rule 24. D. 70.2 This Court

heard the parties on the pending motions and took the matters under advisement. D. 99.

V. Discussion

A. Defendants’ Rule 12(b)(1) Motion to Dismiss for Lack of Standing

Defendants argue, under Rule 12(b)(1), that the FAC should be dismissed as to all claims

arising in the nine states where Plaintiffs do not reside and were not injured, including Connecticut,

Kentucky, Maryland, Mississippi, Tennessee, Utah, Vermont, Virginia and Wisconsin. D. 64 at

10–18. Defendants contend that Plaintiffs lack standing as to these claims under Article III of the

United States Constitution. Id. Plaintiffs maintain that all elements of Article III standing have

been met, D. 68 at 8–9, and argue that federal circuit courts, including the First Circuit, have held

that multistate class claims are not precluded by Article III of the United States Constitution, that

2 This case was initially in another session of this Court, where oral argument was held on

October 11, 2023. D. 95. On December 15, 2023, the matter was re-assigned to this session.

D. 96. This Court set a date for oral argument on December 19, 2023, D. 97, and held the hearing

on January 31, 2024. D. 99.

resolution of the predominant legal issue will be the same in each state and that the relevant state

laws are substantively the same. Id. at 9–20.

“The federal courts are required to determine whether Article III jurisdiction exists prior to

proceeding to the merits of the case.” United Seniors Ass’n, Inc. v. Philip Morris USA, 500 F.3d

19, 23 (1st Cir. 2007). Under Article III, “[a]n actual case or controversy exists when the party

seeking to invoke the court’s jurisdiction (normally, the plaintiff) has a ‘personal stake in the

outcome’ of the claim asserted.” Pagán v. Calderón, 448 F.3d 16, 27 (1st Cir. 2006) (quoting

Baker v. Carr, 369 U.S. 186, 204 (1962)). To satisfy the personal stake requirement, three elements

must be met: “[1] a would-be plaintiff must demonstrate a concrete and particularized injury in

fact, [2] a causal connection that permits tracing the claimed injury to the defendant’s actions, and

[3] a likelihood that prevailing in the action will afford some redress for the injury.” Me. People’s

All. & Nat. Res. Def. Council v. Mallinckrodt, Inc., 471 F.3d 277, 283 (1st Cir. 2006) (citing Lujan

v. Defs. of Wildlife, 504 U.S. 555, 560–61 (1992)); see Katz v. Pershing, LLC, 672 F.3d 64, 71–

72 (1st Cir. 2012).

“That a suit may be a class action . . . adds nothing to the question of standing, for even

named plaintiffs who represent a class ‘must allege and show that they personally have been

injured, not that injury has been suffered by other, unidentified members of the class to which they

belong.’” Spokeo, Inc. v. Robins, 578 U.S. 330, 338 n.6 (2016) (quoting Simon v. E. Ky. Welfare

Rts. Org., 426 U.S. 26, 40 n.20 (1976)). “However, the question whether allegations of personal

injury are sufficient to satisfy the constitutional requirements ‘is not so clear cut with respect to

putative class representatives in class action disputes.’” In re Lantus Direct Purchaser Antitrust

Litig., 512 F. Supp. 3d 106, 120 (D. Mass. 2020) (quoting In re Nexium (Esomeprazole) Antitrust

Litig., 968 F. Supp. 2d 367, 403–04 (D. Mass. 2013)).

In In re Asacol Antitrust Litigation, 907 F.3d 42, 48 (1st Cir. 2018), the First Circuit

clarified how putative class representatives may establish standing to bring claims on behalf of

class members whose claims arise under the laws of states within which no named plaintiff resides

or suffers injury. There, the named plaintiffs filed a class action alleging violations of consumer

protection and antitrust laws of twenty-five states and the District of Columbia, id. at 44–45; they

did not reside in twenty-two of these states, but other class members did. Id. at 48.

The First Circuit first explained that the analysis of Article III standing cannot be collapsed

into Rule 23 considerations. Id. The court noted that it has trained its “Article III focus in class

actions on ‘the incentives of the named plaintiffs to adequately litigate issues of importance to

them.’” Id. at 48–49 (quoting Plumbers’ Union Loc. No. 12 Pension Fund v. Nomura Asset

Acceptance Corp., 632 F.3d 762, 770 (1st Cir. 2011)). “This focus is in many respects simply an

application to aggregate litigation of the basic Article III requirement that a plaintiff possess ‘such

a personal stake in the outcome of the controversy as to assure . . . concrete adverseness.’” Id.

(quoting Baker, 369 U.S. at 204). The First Circuit noted that the “pertinent question” is not

whether there are differences between the claims of the class members and the claims of the class

representatives, but instead whether “the differences that do exist” are “the type that leave the class

representatives with an insufficient personal stake in the adjudication of the class members’

claims.” Id. at 49. Accordingly, a court must examine whether “the claims of the named plaintiffs

parallel those of the putative class members in the sense that, assuming a proper class is certified,

success on the claim under one state’s law will more or less dictate success under another state’s

law.” Id.

Applying these principles, the First Circuit held that the class representatives had Article

III standing to assert out-of-state claims. Id. The First Circuit emphasized that the parties agreed

that the plaintiffs’ liability theories as to monopolization were limited to a construction of state

antitrust laws that paralleled the federal Sherman Antitrust Act and that, “[u]nder those parallel

laws,” all plaintiffs had a “substantial and shared interest in proving that the higher price was the

result of unlawful monopolizing conduct that is redressable by an award of damages.” Id. Because

the relevant laws were “materially the same,” the First Circuit concluded that any minor

differences had “no relevant bearing on the personal stake of the named plaintiffs in litigating the

case to secure such judgments.” Id.

Here, the parties dispute whether the laws of Arizona, Ohio and Illinois, where the class

representatives’ claims arose, and the laws of the nine states where their claims did not arise—

Connecticut, Kentucky, Maryland, Mississippi, Tennessee, Utah, Vermont, Virginia and

Wisconsin—are sufficiently parallel to establish Article III standing. Plaintiffs assert that under

the laws of Arizona, Illinois, Kentucky, Mississippi, Ohio and Tennessee, labor depreciation is a

breach of contract where there is no provision in an insurance policy that expressly permits the

practice when calculating ACV payments pursuant to the RCLD methodology. D. 68 at 10–11;

see D. 68-8 at 2; D. 68-13 at 2. Plaintiffs also note that Connecticut and Vermont prohibit labor

depreciation pursuant to statutory or regulatory law and point to public statements in which

Virginia’s Bureau of Insurance takes the position that labor is not an appreciable item. D. 68 at

10–11. Plaintiffs appear to concede that Maryland, Utah and Wisconsin have yet to address the

issue but insist that they will advance similar legal arguments on behalf of policyholders in these

states. Id.

Defendants acknowledge that there is support for Plaintiffs’ assertion that, as in Plaintiffs’

home states of Arizona, Illinois and Ohio, labor depreciation may support a breach of contract

claim under the laws of Kentucky, Mississippi and Tennessee. D. 69 at 4–5. Consistent with

Plaintiffs’ position, Defendants add that Maryland, Utah and Wisconsin do not prohibit labor

depreciation. Id. at 4. Defendants, however, disagree with Plaintiffs’ characterization of the laws

of Connecticut, Vermont and Virginia. Id. at 4–5.

Given that there exists some legal authority prohibiting labor depreciation in Kentucky,

Mississippi and Tennessee, and the proffered support for this position, Plaintiffs have

demonstrated that their interests in proving that Defendants impermissibly depreciated labor costs

from ACV payments are sufficiently aligned with the interests of these unnamed plaintiffs to

establish Article III standing. See Hicks v. State Farm Fire & Cas. Co., 751 F. App’x 703, 708–

10 (6th Cir. 2018) (holding that, under Kentucky law, an insurance policy that did not define ACV

depreciation to include labor was ambiguous as to same and, thus, had to be construed in the

insured’s favor); Mitchell v. State Farm Fire & Cas. Co., 954 F.3d 700, 705–07 (5th Cir. 2020)

(concluding that, under Mississippi law, “Actual Cash Value” was ambiguous as to labor

depreciation and, thus, ambiguity had to be resolved in favor of the insured); Lammert v. Auto-

Owners (Mut.) Ins. Co., 572 S.W.3d 170, 179 (Tenn. 2019) (explaining that, in Tennessee, “labor

may not be depreciated when the insurance company calculates the actual cash value of a property

using the replacement cost less depreciation method”).

As to the remaining states of Connecticut, Maryland, Utah, Vermont, Virginia and

Wisconsin, the parties seem to agree, at least, that courts have not conclusively addressed whether

depreciation of labor costs is unambiguously permitted where there is no provision in an insurance

policy that expressly permits the practice. See D. 68 at 10–11; D. 69 at 4–5. Even if courts in

these states have not considered this narrow issue, however, Defendants cannot deny that “breach

of contract” is a legal claim in each state and that the elements of these “parallel laws” are

“materially the same.” See Asacol, 907 F.3d at 49; Meyers v. Livingston, Adler, Pulda,

Meiklejohn & Kelly, P.C., 87 A.3d 534, 540 (Conn. 2014) (noting that the “elements of a breach

of contract claim are the formation of an agreement, performance by one party, breach of the

agreement by the other party, and damages”); Taylor v. NationsBank, N.A., 776 A.2d 645, 651

(Md. 2001) (holding that “[t]o prevail in an action for breach of contract, a plaintiff must prove

that the defendant owed the plaintiff a contractual obligation and that the defendant breached that

obligation”)3; Am. West Bank Members, L.C. v. State, 342 P.3d 224, 230–31 (Utah 2014)

(explaining that “[t]he elements of a prima facie case for breach of contract are (1) a contract, (2)

performance by the party seeking recovery, (3) breach of the contract by the other party, and (4)

damages”); Ianelli v. U.S. Bank, 996 A.2d 722, 728 (Vt. 2010) (reasoning that a breach of contract

requires proof of an agreement, a breach of that agreement and damages); Navar, Inc. v. Fed. Bus.

Council, 784 S.E.2d 296, 299 (Va. 2016) (noting that “the elements of a breach of contract action

are (1) a legally enforceable obligation of a defendant to a plaintiff; (2) the defendant’s violation

or breach of that obligation; and (3) injury or damage to the plaintiff caused by the breach of

obligation”); Pagoudis v. Keidl, 988 N.W.2d 606, 612 (Wis. 2023) (recognizing that “[t]he

elements of any breach of contract claim are (1) the existence of a contract between the plaintiff

and the defendant; (2) breach of that contract; and (3) damages”).

These states, Connecticut, Maryland, Utah, Vermont, Virginia and Wisconsin, also

recognize the general principle that ambiguities in an insurance policy should be construed against

the insurer. See Conn. Ins. Guar. Ass’n v. Fontaine, 900 A.2d 18, 24 (Conn. 2006) (noting that

3 The Court of Appeals of Maryland has noted that “[i]t is not necessary that the plaintiff

prove damages resulting from the breach, for it is well settled that where a breach of contract

occurs, one may recover nominal damages even though he has failed to prove actual damages.”

Taylor, 365 Md. at 175. This deviation does not undermine the inclusion of the claims of class

members from Maryland on Article III grounds, however, because “the named plaintiffs certainly

have a substantial stake in proving” the remaining, parallel elements of their breach of contract

claims, see Asacol, 907 F.3d at 50, which would sustain a breach of contract claim in Maryland.

“our interpretation of ambiguous policy language in favor of coverage under the doctrine of contra

proferentem has become near axiomatic in insurance coverage disputes”); Sullins v. Allstate Ins.

Co., 667 A.2d 617, 619 (Md. 1995) (recognizing that “if no extrinsic evidence or parol evidence

is introduced, or if the ambiguity remains after consideration of the extrinsic or parol evidence . . .

, it will be construed against the insurer as the drafter of the policy”)4; Utah Farm Bureau Ins. Co.

v. Crook, 980 P.2d 685, 687 (Utah 1999) (holding that “[a]mbiguities are construed against the

drafter—the insurance company—and in favor of coverage”); Chamberlain v. Metro Prop. & Cas.

Ins. Co., 756 A.2d 1246, 1248 (Vt. 2000) (noting that “[a]ny ambiguity in an insurance contract

must be construed in favor of the insured”); Va. Farm Bureau Mut. Ins. Co. v. Williams, 677

S.E.2d 299, 302 (Va. 2009) (holding that “if disputed policy language is ambiguous and can be

understood to have more than one meaning, we construe the language in favor of coverage and

against the insurer”); Hirschhorn v. Auto-Owners Ins. Co., 809 N.W.2d 529, 535 (Wis. 2012)

(explaining that “ambiguities are construed against the insurer, the drafter of the policy”).5

4 Although “Maryland does not follow the rule, adopted in many jurisdictions, that an

insurance policy is to be construed most strongly against the insurer,” the Court of Appeals of

Maryland has emphasized that, absent extrinsic evidence resolving the ambiguity, such ambiguity

is resolved against the insurer as “the drafter” of the policy, Sullins, 667 A.2d at 619; here,

Plaintiffs allege that “Defendants drafted the insurance policies at issue,” so this distinction is

immaterial here. See D. 4 ¶ 89.

5 Defendants argue that the laws of Connecticut, Kentucky, Maryland, Mississippi,

Tennessee, Utah, Vermont, Virginia and Wisconsin are materially different, citing federal district

courts in other circuits that have concluded same. D. 64 at 14–18 (citing Brown v. Auto-Owners

Ins. Co., No. 1:21-cv-02597, 2022 WL 2442548 (N.D. Ill. June 1, 2022); Rivers of Life Int’l

Ministries v. GuideOne Ins. Co., No. 1:22-cv-01114-STA-jay, 2022 WL 17261845 (W.D. Tenn.

Nov. 18, 2022)). However, in Brown, the court did not analyze the relevant state laws through the

First Circuit’s framework set forth in Asacol, which is binding on this Court. Although the court

in Rivers of Life International Ministries cited Asacol, the decision does not include an in-depth

multistate analysis explaining why the relevant laws are too materially different for plaintiffs to

establish Article III standing and instead relied upon Brown to support that proposition.

Defendants’ citation to Hospital Authority of Metropolitan Government of Nashville and Davidson

County, Tennessee v. Momenta Pharmaceuticals, Inc., 333 F.R.D. 390, 414 (M.D. Tenn. 2019),

see D. 64 at 13, 15–16, 18, is similarly unavailing; there, the Court applied Asacol and held that

Given this uniformity in the law as to the claims raised by the putative class, the named

Plaintiffs’ incentives are sufficiently aligned with the interests of the unnamed class members to

establish Article III standing. See Asacol, 907 F.3d at 48–49. Accordingly, dismissal of the FAC

under Rule 12(b)(1) is not warranted.6

B. Plaintiffs’ Rule 15(a)(2) Motion to Amend

Plaintiffs have moved for leave to file the PSAC under Rule 15(a)(2), proposing to add

Thomas Larsen, as trustee of The Larsen Family Revocable Trust, as an additional named class

representative. D. 70. The PSAC alleges that Larsen is a resident of Arizona, that he owns a

residence in Mesa, Arizona and that at all relevant times LMPICO insured his residence for “direct

physical loss to the buildings and other structures located on the insured premises, except as

specifically excluded or limited” by the insurance policy. D. 71-1 ¶¶ 11, 48–50. The PSAC further

asserts that Larsen’s residence suffered damage, that LMPICO determined the loss was covered

by the policy and that, after Larsen made a claim, LMPICO calculated its ACV payment obligation

to Larsen pursuant to the RCLD methodology. Id. ¶¶ 51, 53–55.

plaintiffs had standing to bring claims given similarities in the state statutes underlying their

claims.

6 Defendants argue, alternatively, that the Court should strike Plaintiffs’ class allegations

as to these nine state claims under Rule 12(f). D. 64 at 18–20. “Motions to strike under Rule 12(f)

are generally disfavored,” U.S. Sec. & Exch. Comm’n v. Nothern, 400 F. Supp. 2d 362, 364 (D.

Mass. 2005), and rarely granted absent a showing of prejudice to the moving party. See Ross–

Simons of Warwick, Inc. v. Baccarat, Inc., 182 F.R.D. 386, 398 (D.R.I. 1998). A court should

“‘delet[e] the complaint’s class allegations’ when ‘it is obvious from the pleadings that the

proceeding cannot possibly move forward on a classwide basis.’” Camey v. Force Factor, LLC,

No. CV 14-14717-RWZ, 2016 WL 10998440, at *2 (D. Mass. May 16, 2016) (quoting Manning

v. Bos. Med. Ctr. Corp., 725 F.3d 34, 59 (1st Cir. 2013)). However, in light of the Court’s ruling

that Plaintiffs’ claims may proceed on a classwide basis, and the commonality of breach of contract

claims as discussed above, the Court denies Defendants’ request to strike Plaintiffs’ class

allegations.

Defendants oppose Plaintiffs’ motion for leave to amend the FAC, arguing that the

proposed amendment would be futile. D. 75. Defendants assert that, because Larsen submitted

an RCV claim, not an ACV claim, and received payment for the amount actually spent to complete

repairs, “any alleged ACV underpayment is moot as a matter of law” and the proposed amendment

is, therefore, futile. Id. at 6. Plaintiffs do not deny that that Larsen received an RCV payment but

instead argue that his claim is actionable because he is entitled to prejudgment interest for the

period of withholding. D. 83 at 5. As alleged in the PSAC, “policyholders who have been

subsequently repaid for initially withheld labor still have incurred damages, at the least, in the form

of the lost ‘time value’ of money during the period of withholding, i.e., interest on the amounts

improperly withheld, for the time-period of withholding.” D. 71-1 ¶ 80.

Disputes over prejudgment interest—which is recoverable in Arizona, see, e.g., Ariz. Rev.

Stat. Ann. § 44-1201—are actionable in the class action context. See, e.g., Merrill Tenant Council

v. U.S. Dep’t of Hous. & Urb. Dev., 638 F.2d 1086, 1095 (7th Cir. 1981) (permitting class action

to proceed where plaintiffs sought damages in the amount of interest on rental security deposits);

In re MF Glob. Holdings Ltd. Inv. Litig., 1 Civ. 7866(VM), 2015 WL 4610874, at *8–9 (S.D.N.Y.

July 20, 2015) (certifying class seeking prejudgment interest and lost opportunity cost where

“Proposed Class members already received 100 percent of their unpaid net equity claims as part

of a prior settlement”); Arnold v. State Farm Fire & Cas. Co., 2:17-cv-00148-TFM-C, 2020 WL

6879271, at *6–7 (S.D. Ala. Nov. 23, 2020) (certifying labor depreciation class notwithstanding

the named plaintiff’s “status as an ‘interest only’ claimant,” which was “common throughout the

class”). Accordingly, Larsen’s breach of contract claim and his declaratory judgment claim (to

declare Plaintiffs’ reading of the contract proper) is not “moot” as a result of any subsequent RCV

payment. Discerning no other grounds for denial, Plaintiffs’ motion to amend is allowed.

VI. Conclusion

For these reasons, the Court DENIES Defendants’ 12(b)(1) motion to dismiss the FAC and

DENIES Defendants’ Rule 12(f) motion, alternatively, to strike Plaintiffs’ class allegations. D. 63.

The Court ALLOWS Plaintiffs’ motion for leave to file the PSAC and DENIES the portion of that

motion that sought to intervene. D. 70. Accordingly, Plaintiffs may file the second amended

complaint consistent with this ruling (i.e., adding Larsen, as trustee of The Larsen Family

Revocable Trust, as an additional named class representative).

So Ordered.

/s Denise J. Casper

United States District Judge