Shields v. Metropolitan Property and Casualty Ins. Co.
The United States District Court for the Northern District of Mississippi denied an insurer’s motion to dismiss an insured’s complaint challenging the insurer’s practice of depreciating labor costs. The plaintiff’s home was damaged by a covered peril, and they subsequently submitted a claim with Metropolitan. After determining that the loss was covered under the subject policy, Metropolitan paid its insured actual cash value (“ACV”) for the loss, calculated by subtracting depreciation from the replacement cost value (“RCV”). The insured challenged Metropolitan’s calculation of ACV because it included depreciation for the cost of the labor to repair the damaged dwelling. The insured argued that labor is not something that loses value over time, and therefore should not be subject to depreciation. The court agreed, ruling that at the very least the plaintiff’s pleading meets the Twombly/Iqbal standard for well plead complaints and should survive a motion to dismiss. Notably, the court also denied defendant Metropolitan’s motion to deny plaintiff’s class action allegations, ruling that it was too early in the litigation process to definitively deny class certification to the plaintiff.