Breaking and associated brands will be offline for scheduled maintenance Friday Feb. 26 9 PM US EST to Saturday Feb. 27 6 AM EST. We apologize for the inconvenience.


Thank you for sharing!

Your article was successfully shared with the contacts you provided.
Click here for the full text of this decision FACTS: Terry Hamby’s car was damaged in an accident. His insurer, State Farm Mutual Auto Insurance, decided it would “total” the car instead of repair it. State Farm told Hamby it would pay him the actual cash value of the car, $25,970.75, when Hamby assigned title of the car to State Farm. Hamby initially resisted, but then he did so under protest. Hamby filed suit on behalf of himself and others similarly situated, saying State Farm breached the insurance contract by forcing insureds to transfer title to a totaled vehicle as a condition of paying the actual cash value. The trial court granted State Farm’s special exceptions. Hamby amended his petition, State Farm again filed special exceptions, and the trial court again granted them. The trial court concluded that the factual allegations in Hamby’s petition did not sufficiently allege a cause of action, and so dismissed the case. HOLDING: Affirmed. The court agrees with Hamby that the pleadings indicate that a breach of contract is the cause of action, but looking at Hamby’s auto insurance policy, determines that the facts alleged do not comprise a claim for breach of contract. The “Limit of Liability” clause allows State Farm to choose the lesser of the actual cash value, the amount necessary to repair or replace, or the amount stated in the policy’s declarations. The court rejects Hamby’s contention that the “Limit of Liability” clause does not address assigning title in exchange for benefits. Instead, the court relies on the “Payment of Loss” provision, which states, “We may pay for loss in money or repair or replace the damaged or stolen property. We may, at our expense, return any stolen property t 1. You; or 2. The address shown in this policy[.] If we return stolen property we will pay for any damage resulting from the theft. We may keep all or part of the property at an agreed or appraised value.” The court, relying on a case from Rhode Island, holds that “it is not reasonable to conclude that, because the next-to-last sentence mentions only stolen cars, the last sentence only applies to stolen cars.” The court rules as a matter of law that the provision taken as a whole, and the last sentence in particular, apply to both stolen and damaged cars. OPINION: Keyes, J.; Nuchia, Jennings and Keyes, JJ.

Want to continue reading?
Become a Free ALM Digital Reader.

Benefits of a Digital Membership:

  • Free access to 1 article* every 30 days
  • Access to the entire ALM network of websites
  • Unlimited access to the ALM suite of newsletters
  • Build custom alerts on any search topic of your choosing
  • Search by a wide range of topics

*May exclude premium content
Already have an account?


ALM Legal Publication Newsletters

Sign Up Today and Never Miss Another Story.

As part of your digital membership, you can sign up for an unlimited number of a wide range of complimentary newsletters. Visit your My Account page to make your selections. Get the timely legal news and critical analysis you cannot afford to miss. Tailored just for you. In your inbox. Every day.

Copyright © 2021 ALM Media Properties, LLC. All Rights Reserved.