Liberty Mutual assigned the claim to an adjuster in Liberty Mutual’s office in Plano, Texas. A Liberty Mutual appraiser inspected the vehicle at Golden Touch Auto Center and determined it to be a total loss.

At the inspection, the appraiser noted that the vehicle had not yet been released from Golden Touch Auto Center. Liberty Mutual wanted to move the vehicle from Golden Touch Auto Center to Copart, a company used by Liberty Mutual to salvage and auction total loss vehicles, but it could not do so until the owners of the car, Mr. Yackytooahnipah and Roberta L. Yackytooahnipah, released it in writing.

The day after the inspection, Golden Touch Auto Center issued a “Notice of Pending Lien Sale.” The notice reached Toyota Financial Services, the lienholder on the car.

Toyota sent a letter to the Yackytooahnipahs, acknowledging that the vehicle was in storage at Golden Touch Auto Center and stating, “We would like to know your intentions regarding this vehicle’s recovery from impound. If we do not hear from you by 4/14/17, we will take the necessary steps to protect our interests in this vehicle.”

Toyota repossessed the car on April 20, 2017.

After Toyota repossessed the car, Liberty Mutual continued to process the Yackytooahnipahs’ insurance claim. On April 25, 2017, the Yackytooahnipahs accepted Liberty Mutual’s proposed total loss settlement of $15,286.52 for the value of the vehicle. On May 1, 2017, Liberty Mutual received the completed total loss forms from the Yackytooahnipahs and notified Toyota of the total loss.

Liberty Mutual then paid out on the insurance claim to Toyota and the Yackytooahnipahs.

On May 5, 2017, Toyota sent letters to Mr. Yackytooahnipah and Liberty Mutual, acknowledging the total loss claim and providing the payoff amount.

Toyota released the vehicle to Copart on May 16, 2017. Three days later, Liberty Mutual sent a check to Toyota in the amount of $13,782.27 to cover the amount of the loan and all expenses that Toyota incurred related to the repossession. Liberty Mutual also issued a check in the amount of $4,516.75 to the Yackytooahnipahs for the value of the car that exceeded the loan.

On June 16, 2017, Liberty Mutual sent a check to the Yackytooahnipahs for $1,000 for reimbursement of their deductible.

Liberty Mutual’s checks, however, did not solve all of the Yackytooahnipahs’ problems.

Their account with Toyota continued to reflect an involuntary repossession, even after Liberty Mutual had paid off the account in full. Toyota continued to report the involuntary repossession to credit agencies from May 2017 through September 2018. In September 2018, Toyota finally removed the involuntary repossession from the Yackytooahnipahs’ account and reported the account to credit agencies as paid in full.

The Yackytooahnipahs sued Liberty Mutual, asserting claims for breach of contract and breach of the implied covenant of good faith and fair dealing.

The Yackytooahnipahs blamed Liberty Mutual for their car’s repossession. At the time of the repossession, the Yackytooahnipahs asserted, they were up-to-date with all their payments to Toyota. They claimed they had released their vehicle to Liberty Mutual in writing on March 29, 2017, and that they reminded Liberty Mutual of the written release, pending lien sale, and threat of repossession on April 14, 2017, April 19, 2017, and April 20, 2017. According to the Yackytooahnipahs, Liberty Mutual should have moved their vehicle from Golden Touch Auto Center before Toyota repossessed it.

Liberty Mutual moved for summary judgment. It argued that it had never received the Yackytooahnipahs’ written release and that, without a release, it could not move the car before the April 20, 2017 repossession. Liberty Mutual also asserted that it had fully paid the Yackytooahnipahs’ insurance claim and there was no evidence of damages.

The District Court’s Decision

The district court granted Liberty Mutual’s motion.

In its decision, the district court first found that Liberty Mutual had paid all of the benefits due under the policy. It pointed out that the Yackytooahnipahs had accepted Liberty Mutual’s proposed total loss settlement of $15,286.52 for the value of the vehicle, that Liberty Mutual paid $13,782.27 to Toyota for the amount of the loan and other expenses related to the repossession, and that Liberty Mutual paid $4,516.75 to the Yackytooahnipahs for the car’s value that exceeded the loan, plus $1,000 to reimburse them for their deductible.

The district court found no evidence that Liberty Mutual had an obligation to pay anything more under the policy, and ruled that it was entitled to summary judgment on the Yackytooahnipahs’ breach of contract claim.

The district court also rejected the Yackytooahnipahs’ claim for breach of the implied covenant of good faith and fair dealing. Although the Yackytooahnipahs asserted that they suffered harm because Toyota’s reporting of the involuntary possession lowered their credit scores from June 2017 to September 2018, the district court ruled that “a lowered credit score, by itself,” did “not constitute actual damage.”

According to the district court, the harm was the effect of that number, such as whether the Yackytooahnipahs had to pay higher interest rates or whether they were denied any extensions of credit.

It found no evidence that the Yackytooahnipahs had suffered damages as a result of their lowered credit scores, and held that Liberty Mutual was entitled to summary judgment on the basis that the Yackytooahnipahs had not suffered and would not suffer in the future any actual damages.

The case is Yackytooahnipah v. Liberty Mutual Fire Ins. Co., No.: SACV 18-00449-CJC(DFMx) (C.D. Cal. Aug. 5, 2019). Attorneys involved include: For Kelly J. Yackytooahnipah, Roberta L. Yackytooahnipah, Plaintiffs: Michael S Sutton, LEAD ATTORNEY, Gabriela Gomez Jones, Sutton and Murphy, Mission Viejo, CA. For Liberty Mutual Fire Insurance Company, Defendant: Bridget Moorhead, Selman Breitman LLP, San Diego, CA.