IN THE SIXTH JUDICIAL CIRCUIT COURT

                                IN AND FOR PINELLAS COUNTY, FLORIDA

 

 

RAYMOND CORBETT, CLIFTON SMITH,

and NORA ALBAUGH, on behalf

of themselves and all others

similarly situated,

 

Plaintiffs,                                               Case No:    00-6729-CI-19

 

vs.                                                                  CLASS REPRESENTATION

 

ALLSTATE INSURANCE COMPANY,

and ALLSTATE INDEMNITY COMPANY,

 

 

Defendants.

_______________________________________/

 

 

                                           CLASS ACTION COMPLAINT

 

Plaintiffs, Raymond Corbett, Clifton Smith, and Nora Albaugh, on behalf of themselves and all others similarly situated, file this class action pursuant to Rule 1.220(a),(b)(2) and (b)(3), seeking monetary, declaratory, and injunctive relief for the individual Plaintiffs and the class they represent.  This suit is brought against ALLSTATE INSURANCE COMPANY and ALLSTATE INDEMNITY COMPANY (hereinafter AALLSTATE defendants@).  

                                            JURISDICTION AND VENUE

1.       This is a class action brought under Florida Rules of Civil Procedure 1.220(a), (b)(2), and (b)(3), seeking monetary, declaratory, and injunctive relief for the individual Plaintiffs and the class they represent.


2.       This Court has jurisdiction over the parties and the subject matter of this litigation. There is no federal diversity jurisdiction, as no plaintiff or class member seeks damages of $75,000 or greater, and this case is not subject to removal to federal court.

3.       Plaintiffs= action for declaratory relief is authorized by Chapter 86 of the Florida Statutes.

4.   Venue is proper in this circuit as the ALLSTATE defendants do business in Pinellas County and Plaintiff Nora Albaugh resides in Pinellas County.

                                                          PARTIES       

5.       Plaintiff Raymond Corbett is a citizen and resident of Orange County, Florida. Plaintiff Clifton Smith is a citizen and resident of Broward County, Florida. Plaintiff Nora Albaugh is a citizen and resident of Pinellas County, Florida.  At all relevant times, Plaintiffs owned policies of motor vehicle insurance through ALLSTATE INSURANCE COMPANY or ALLSTATE INDEMNITY COMPANY, renewable semi-annually.

6.       The ALLSTATE defendants are and were at all times relevant to this action Illinois corporations. ALLSTATE INSURANCE COMPANY is a wholly owned subsidiary of THE ALLSTATE CORPORATION, a Delaware company. ALLSTATE INDEMNITY COMPANY is a wholly owned subsidiary of ALLSTATE INSURANCE COMPANY. The ALLSTATE defendants are headquartered in Northbrook, Illinois.  The ALLSTATE defendants write insurance in 49 states, including Florida, and the District of Columbia.  In 1999, the ALLSTATE defendants collectively reported net written premiums in excess of $17 billion. In Florida alone, the ALLSTATE defendants collectively reported net written premiums in excess of $1.2 billion.


7.       The ALLSTATE defendants utilize a standard form of automobile insurance policy which they prepare and issue to their nationwide sales force from their home offices in Illinois.  All of the ALLSTATE defendants= policyholders have the same rights, and the ALLSTATE defendants have the same obligations under the terms of that form policy.

8.  The ALLSTATE defendants make no distinction between ALLSTATE INSURANCE COMPANY and ALLSTATE INDEMNITY COMPANY in advertising, marketing literature, or agent solicitations, but placement by the defendants of an applicant or insured into either subsidiary company directly affects the amount of premiums that will be charged for automobile insurance. ALLSTATE INSURANCE COMPANY and ALLSTATE INDEMNITY COMPANY are sometimes referred to herein collectively as AALLSTATE.@ At a minimum, for purposes of selling its policies ALLSTATE disregards its corporate formalities to confuse prospective policyholders.

                                             FACTUAL BACKGROUND

9.       This is a class action based on a scheme and common course of conduct perpetrated by ALLSTATE. The purpose of this scheme was, and is, to charge policyholders additional premiums for automobile insurance by improperly placing and maintaining policyholders in higher risk and higher premium policies, thereby breaching their contracts with policyholders and committing certain torts.

10.  During all relevant times herein, ALLSTATE has operated two companies, ALLSTATE INSURANCE COMPANY and ALLSTATE INDEMNITY COMPANY.


11.  ALLSTATE INSURANCE COMPANY issues a single type of policy to all qualifying  ALLSTATE insureds, which is a Apreferred risk policy.@ This type of policy offers ALLSTATE=s lowest insurance premiums. Not only are overall premiums charged by ALLSTATE INSURANCE COMPANY lower than those charged by ALLSTATE INDEMNITY COMPANY, but ALLSTATE INSURANCE COMPANY policyholders have available to them more discount programs allowing even lower premiums than are available to policyholders through ALLSTATE INDEMNITY COMPANY.

12.   ALLSTATE INDEMNITY COMPANY issues ALLSTATE=s Ahigher risk@ policy to all other insureds. ALLSTATE INDEMNITY policies require higher insurance premiums than those offered by ALLSTATE INSURANCE COMPANY and do not offer similar premium discounts.

13.   When a prospective or existing insured seeks ALLSTATE insurance, he or she communicates with an ALLSTATE agent or through a toll free ALLSTATE telephone number. The agents and operators are not identified as representing ALLSTATE INSURANCE COMPANY or ALLSTATE INDEMNITY COMPANY. Neither ALLSTATE INSURANCE COMPANY nor ALLSTATE INDEMNITY COMPANY have separate agent forces in the state of Florida.  In fact, all ALLSTATE agents in the state of Florida are dually licensed with both ALLSTATE INSURANCE COMPANY and ALLSTATE INDEMNITY COMPANY, but the correspondence, advertising, forms and other material utilized by licensed agents refer only to AALLSTATE.@


14.  When a prospective policyholder applies  for issuance or renewal of automobile liability insurance from ALLSTATE, the ALLSTATE agent transmits it to ALLSTATE electronically. ALLSTATE then determines, based on the information provided, whether the applicant will receive a policy from ALLSTATE INSURANCE COMPANY or ALLSTATE INDEMNITY COMPANY.

15.    The decision to place a policyholder into ALLSTATE INSURANCE COMPANY or ALLSTATE INDEMNITY COMPANY does not affect the coverage, it only affects ALLSTATE=s economic recovery and the cost of the policy to the insured. Thus, ALLSTATE has a significant economic incentive to relegate as many insureds as possible to its Aindemnity@ policies.         

16.     Upon information and belief, plaintiffs allege that all premium dollars sent in by policyholders of both ALLSTATE INSURANCE COMPANY and ALLSTATE INDEMNITY COMPANY are commingled by ALLSTATE into common accounts.

17.     ALLSTATE=s decisions concerning placement of policyholders into ALLSTATE INSURANCE COMPANY or ALLSTATE INDEMNITY COMPANY are required to be governed by the Florida statutes and ALLSTATE=s rules and manuals

18.  ALLSTATE files each year with the Florida Department of Insurance, pursuant to Florida Statutes, '627.0651(13)(a), its manuals and rules in connection with private passenger automobile insurance policies issued in the state. These rules set forth which ALLSTATE applicants and ALLSTATE insureds are eligible for policies with ALLSTATE INSURANCE COMPANY, as opposed to ALLSTATE INDEMNITY COMPANY. These rules also set forth the circumstances whereby policyholders are entitled to discounts on their premiums, or are subject to surcharges on their premiums.

19.  The ALLSTATE defendants are required by law to follow their manuals and rules and may not act arbitrarily or capriciously in their dealings with Florida policyholders.


20.  In addition to the rules and manuals filed by ALLSTATE, the Florida legislature has determined that certain practices by insurance companies in the state of Florida are unfair methods of competition or unfair or deceptive acts and practices. Included in this definition of unfair methods of competition or unfair or deceptive acts and practices is the following:

(g) Unfair discrimination -

Knowingly making or permitting any unfair discrimination between individuals of the same actuarially supportable class and essentially the same hazard, in the amount of premium, policy fees, or rates charged for any policy or contract of accident . . . in the benefits payable thereunder, in any of the terms or conditions of such contract, or in any other manner whatever. Florida Statutes, '626.9541(1)(g)(2).

21. Furthermore, Florida law provides separately that insurance rates shall not be unfairly discriminatory and shall bear a reasonable relationship to the expected loss and expense experience within categories of risk. Florida Statutes, '627.062.

22.  It is the public policy of the state of Florida that the business of insurance is a public trust in which public trust all agents and insurers must serve the best interests of their insureds.

23.  ALLSTATE has filed for each relevant year herein its manual and rules setting forth the eligibility of Florida applicants and policyholders for issuance of a policy from ALLSTATE INSURANCE COMPANY, with the lower premiums available through such subsidiary, as opposed to ALLSTATE INDEMNITY COMPANY with its higher premiums.


24.  The ALLSTATE defendants renew their policies with Florida residents on a semi-annual basis, and at the time of renewal ALLSTATE is obligated to issue a policy through ALLSTATE INSURANCE COMPANY if the insured meets the criteria in ALLSTATE=s manuals and  rules for issuance of a lower premium policy. If the ALLSTATE defendants fail to do this, they are discriminating against such insureds who are being kept in a class of higher risk insureds in a manner that is not actuarially supportable, and the defendants are treating such insureds arbitrarily and capriciously.

25.  The laws of the state of Florida are a part of every Florida contract, and the laws applicable to private passenger automobile insurers in the state, such as ALLSTATE, are a basic ingredient and provision in every Florida automobile insurance contract, including plaintiffs herein and the class they seek to represent.

26.  The written language of the form policies issued by  ALLSTATE state that calculations and adjustments of all premiums will be based on ALLSTATE=s rules filed with the state of Florida. The portion of the form policies incorporated in this complaint reads:

Any calculation or adjustment of your premium will be made using the rules, rates and forms in effect, and on file if required, for use in your state.

 

CONDUCT GIVING RISE TO CLAIMS FOR RELIEF

 

27.  Beginning in approximately 1984 and continuing through the current date, ALLSTATE engaged in a corporate scheme of increasing the amount of insurance sold through its higher risk company, ALLSTATE INDEMNITY COMPANY, relative to the amount of insurance sold through ALLSTATE INSURANCE COMPANY, its lower risk company.

28. In order to accomplish this, ALLSTATE, at all relevant times herein, engaged in a practice of placing insureds qualified to receive policies from ALLSTATE INSURANCE COMPANY into the higher risk company, ALLSTATE INDEMNITY COMPANY.


29.  ALLSTATE also continued to reissue policies to insureds in ALLSTATE INDEMNITY COMPANY year after year, in spite of the fact that they qualified for a less expensive policy issued by ALLSTATE INSURANCE COMPANY.

30.  ALLSTATE achieved its goal of increasing premium collections through shifting of policyholders to ALLSTATE INDEMNITY COMPANY by several methods, perpetrated separately or in combination. These methods include:

A. using any history of accidents by the insured or members of the insured=s family beyond the three-year period set forth in ALLSTATE INSURANCE COMPANY=s rules, which rules are mandated by state statutes, including Florida Statutes, '626.9541(1)(o), and a part of every policy of insurance in the state;

B. using any history of accidents by the insured or members of the insured=s family, even when the insured or family member was not substantially at fault, in violation of ALLSTATE INSURANCE COMPANY=s rules, which rules are mandated by state statutes, including Florida Statutes, '626.9541(1)(o), and a part of every policy of insurance in the state;

C. using the identity of a new insured=s prior insurer as grounds for placement in a higher premium policy, even where the prior insurer was a reputable and stable insurer;

D. using surcharges and removal of premium discounts to charge higher premiums within ALLSTATE INDEMNITY COMPANY, contrary to its rules, which rules are mandated by state statutes, including Florida Statutes, '626.9541(1)(o)(3)(a) and (c), and a part of every policy of insurance in the state;


E. using traffic citations and driving records beyond the terms allowed in its rules for placement of insureds into ALLSTATE INDEMNITY COMPANY, which rules are a part of every policy of insurance in the state, and keeping insureds in said company indefinitely;

F. using credit histories and credit investigations as a basis, in whole or in part, for placing and keeping insureds into ALLSTATE INDEMNITY COMPANY, and using adverse credit information indefinitely at each subsequent renewal, in spite of the fact that the passage of time had rendered the credit report Aclean,@ as defined by ALLSTATE; and

G.  failing to reissue policies through ALLSTATE INSURANCE COMPANY after ALLSTATE INDEMNITY COMPANY policyholders had qualified for lower premiums through ALLSTATE INSURANCE COMPANY.  


31.  Defendant ALLSTATE INDEMNITY COMPANY provided certain motor vehicle insurance products to plaintiffs and members of the class through issuance of policies and semi-annual renewals of said policies. In said policies, defendants were obligated to charge premiums for such policies based upon the rules filed by defendants with the state of Florida Department of Insurance (Florida DOI). These rules (including underwriting rules), filed each year with the Florida DOI by the defendants, allow the defendants to charge additional annual premiums on such policies in one of three ways: a) by issuance to an insured of a policy from ALLSTATE INDEMNITY COMPANY; b) by placing a surcharge on premiums in both ALLSTATE INSURANCE COMPANY and ALLSTATE INDEMNITY COMPANY policies; and c) by removing discounts on premiums in both ALLSTATE INSURANCE COMPANY policies and ALLSTATE INDEMNITY COMPANY policies.

32. In charging additional premiums for policies issued by ALLSTATE INDEMNITY COMPANY, ALLSTATE represented to its insureds that it was fairly discriminating between  actuarially supportable classes of high risk versus lower risk insureds. In keeping insureds in ALLSTATE INDEMNITY COMPANY who qualified at inception or on renewal for an ALLSTATE INSURANCE COMPANY policy, however, ALLSTATE and the ALLSTATE defendants were unfairly discriminating against lower risk insureds who were being kept in an actuarially unsupportable class of high risk insureds, in violation of the express and implied terms of their written insurance policies.

33.  As a result of ALLSTATE=s scheme, residents of the state of Florida who have policies issued by ALLSTATE INDEMNITY COMPANY have paid higher premiums for automobile insurance than they were obligated to pay or ALLSTATE was entitled to receive.


34. In addition, when insureds under ALLSTATE INDEMNITY COMPANY seek insurance from another company, they are stigmatized by the fact that they have been insured by ALLSTATE=s Ahigh risk@ insurer and are charged higher premiums by other insurance carriers who know that ALLSTATE INDEMNITY COMPANY supposedly insures only higher risk automobile drivers. Thus, by having been unfairly kept in the high risk ALLSTATE INDEMNITY COMPANY, such former ALLSTATE insureds are forced to pay higher premiums for automobile insurance from other automobile insurers. Current ALLSTATE INDEMNITY COMPANY insureds who qualify for lower risk policies through ALLSTATE INSURANCE COMPANY are faced with the prospect of paying higher premiums elsewhere even if they choose to drop their ALLSTATE coverage.

USE OF ACCIDENT HISTORY

35.  Florida DOI Regulation, 4-175.008, prohibits insurers in the state of Florida from using any motor vehicle accidents older than three years as a basis for charging additional premiums and further prohibits the insurers from allowing such additional premium charges to remain in effect for longer than three years.

36.     Florida Statutes, ' 627.0651, states that an insurer=s rules Ashall be filed@ with the Florida DOI for approval within the state. Furthermore, '627.0651 (13)(a) specifically requires automobile insurance carriers to file their underwriting rules for approval within the state.

37.     The ALLSTATE defendants have filed each year with the Florida DOI their rules, all of which from 1985 to the present state that the ALLSTATE defendants will charge additional premiums to policyholders who are charged with accidents or are subject to motor vehicle convictions during a policy period.

38.     The rules on file with the Florida DOI by the ALLSTATE defendants state, in conformity with the Florida regulations, as follows with regard to such additional premiums:

An accident is chargeable if it occurred within the 36 months ending on the effective date of the policy and ... it was determined that the insured was more than 50% at fault in the accident.


39.     Pursuant to its contracts with plaintiff and members of the class as defined herein, the ALLSTATE defendants are thus allowed to charge said additional premiums for a period of only three years, and only if the insured was more than 50% at fault. Any additional premiums charged beyond that time period are not allowed by law nor by the contractual terms of the motor vehicle insurance policies.

40.     In spite of these limitations on the ability of the ALLSTATE defendants to charge additional premiums to policyholders with chargeable accidents for a period of only three years, the ALLSTATE defendants have engaged in a practice of continuing such additional premium charges beyond the three-year period allowed by law and by contract. When and if the ALLSTATE defendants have eventually removed such additional premiums, they refuse, however, to refund to the policyholder the illegal and extracontractual charges which have been paid by the policyholder beyond the allowable three-year period, thereby damaging the policyholder who has lost the additional premiums paid, together with interest on these extracontractual and illegal charges.

41.   One method in which ALLSTATE circumvents the three-year limitation on premium increases based upon accidents and convictions is through the use of ALLSTATE INDEMNITY COMPANY.

42.   ALLSTATE INDEMNITY COMPANY was created by ALLSTATE in order to charge higher premiums and higher rates to classes of insureds considered to be a higher risk.

43.   For new policyholders, rather than issuing a policy through ALLSTATE INSURANCE COMPANY and placing a surcharge on premiums based upon prior accidents and convictions, ALLSTATE engages in the practice of issuing policies to new insureds through ALLSTATE INDEMNITY COMPANY, thus charging and collecting the higher premiums based on such driving history.


44.   New policyholders with such driving histories are then reissued ALLSTATE INDEMNITY COMPANY policies for several years, well beyond the three-year limitation set forth in Florida=s statutes and regulations, and in spite of such policyholders= qualification for a lower premium policy through ALLSTATE INSURANCE COMPANY.

45.  Alternatively, when an existing ALLSTATE INSURANCE COMPANY insured has a chargeable accident or traffic citation, ALLSTATE reissues a new ALLSTATE INDEMNITY COMPANY policy to such insured, thereby increasing the premiums owed by the insured due to the accident or citation.

46.   Existing policyholders with such driving histories are then reissued ALLSTATE INDEMNITY COMPANY policies for several years, well beyond the three-year limitation set forth in Florida=s statutes and regulations, and in spite of such policyholders= qualification for a lower premium policy through ALLSTATE INSURANCE COMPANY.

47.  ALLSTATE also used such driving histories in such improper manner to charge higher premiums by placing Asurcharges@ on existing policies with ALLSTATE INDEMNITY COMPANY, or by removing discounts on premiums (and thus charging higher premiums).

USE OF NOT-AT-FAULT ACCIDENTS

48.  Florida Statutes, ' 626.9541(1)(o), provides that an automobile insurer is prohibited from imposing an additional premium solely because the insured was involved in a motor vehicle accident unless the insurer=s file contains information from which the insurer in good faith determines that the insured was substantially at fault in the accident.


49. In furtherance of its scheme to charge improper higher premiums to its insureds, ALLSTATE has instituted a corporate policy, followed by its underwriters, to ignore the requirement that accidents are chargeable only if the insured is more than 50% at fault. ALLSTATE charges additional premiums regardless of the fault of the insured, in effect shifting the burden to the insured to prove to ALLSTATE that the insured was in fact 50% or less at fault for the accident sought to be charged.

ASUBSTANDARD@ OR ASTANDARD@ PRIOR INSURERS

50.  In furtherance of its scheme to charge improper higher premiums to its insureds, the ALLSTATE defendants have also engaged in the practice of using the identity of prior insurers as a grounds to place and keep insureds in ALLSTATE INDEMNITY COMPANY.

51.  ALLSTATE originally designated a group of insurers as Asubstandard@ insurers, and stated in its rules that if a proposed insured was previously insured by such Asubstandard@ insurers, the insured would have to pay the higher premiums required for a policy with ALLSTATE INDEMNITY COMPANY. The term Asubstandard insurer@ was eventually changed to Astandard insurer,@ but prior policies with the companies on this list continued to cause insureds to be placed and kept in ALLSTATE INDEMNITY COMPANY policies.

52.  The insurance companies on the list of Asubstandard,@ and later Astandard,@ insurance companies were companies whose agencies were predominantly located in African-American and Hispanic communities in Florida, and the practical effect of using this criteria in underwriting policies and placing insureds into ALLSTATE INDEMNITY COMPANY was to cause said minority groups to be assigned higher premium policies based on their race and ethnicity.


CREDIT REPORTS

53.  The ALLSTATE defendants, in furtherance of their scheme to charge higher premiums to their insureds, have used adverse results from credit checks on their insureds and proposed insureds as a basis for placing and keeping insureds in ALLSTATE INDEMNITY COMPANY.

54.  The ALLSTATE defendants have made it a company-wide practice to obtain credit reports on applicants for automobile insurance policies and to utilize such credit reports as additional grounds for placing and keeping applicants and insureds in ALLSTATE INDEMNITY COMPANY.

55.  When a person receives an adverse credit report based upon a past credit problem, after the expiration of time during which no further credit problems arise, that person=s credit report becomes Aclean.@ In spite of this, ALLSTATE and the ALLSTATE defendants continue to charge higher premiums in violation of their own rules regarding eligibility for lower premiums through lower-cost policies. In these instances, the ALLSTATE defendants continue to reissue policies through ALLSTATE INDEMNITY COMPANY and continue to charge higher premiums as a result.

TOLLING OF STATUTE OF LIMITATIONS

56.  Florida policyholders are unaware of the significant differences between premiums charged by ALLSTATE INSURANCE COMPANY and ALLSTATE INDEMNITY COMPANY and are led to believe through advertising and correspondence that their automobile insurance is with AALLSTATE,@ regardless of the individual ALLSTATE company within which they are placed by the home office.


57.   Florida policyholders in ALLSTATE INDEMNITY COMPANY are unaware of the fact that higher premiums are being charged to them simply by being placed in such ALLSTATE company and are unaware that keeping them in such company beyond the allowable three-year period violates the provisions of their insurance policies, laws, and regulations. Plaintiffs and class members did not discover these facts until 1999 and thereafter.

58. The ALLSTATE defendants, through various devices of secrecy, affirmatively and fraudulently concealed the existence of the unlawful scheme and course of conduct from plaintiffs and class members. Among other matters, the ALLSTATE defendants concealed, and continue to conceal, from their policyholders the difference in premiums charged by ALLSTATE INSURANCE COMPANY and ALLSTATE INDEMNITY COMPANY and have further concealed from Florida policyholders their decision to keep as many Floridians as possible in the Aindemnity@ company, despite ALLSTATE=s own underwriting rules.

59. The actions of the ALLSTATE defendants in charging additional premiums as set forth above, and in concealing their scheme and course of conduct from class members, continue through the date of the filing of this complaint. As a result, the running of the statute of limitations has been suspended with respect to any claims which plaintiffs or class members have brought as a result of the unlawful and fraudulent course of conduct alleged in the above paragraphs.


60.  Furthermore, the causes of action as alleged in this complaint are continuing violations of the policies of insurance, and continuing torts, in that each time the ALLSTATE defendants improperly reissued policies at renewal dates, the breaches and torts reoccurred. The conspiracy between the ALLSTATE defendants continued throughout the class period alleged herein and continues to this date.

                          THE CLAIM FOR RELIEF OF RAYMOND CORBETT

61.     As a result of ALLSTATE's practice of charging illegal and extracontractual charges, Plaintiff Raymond Corbett, like many thousands of other ALLSTATE policyholders, has sustained losses and damages.

62.     Plaintiff Raymond Corbett has been a policyholder with ALLSTATE INDEMNITY COMPANY since 1981. He was insured under ALLSTATE INDEMNITY COMPANY policy number 6 41 054314 08/23, providing bodily injury liability protection, property damage coverage, and personal injury protection coverage. His policy was a form ALLSTATE policy. 

63.  Plaintiff Corbett believed the promises of ALLSTATE that he was AIn Good Hands With Allstate,@ trusted the ALLSTATE defendants that he would be charged premiums only as allowed by law, and trusted that the ALLSTATE defendants would treat him fairly and honestly.


64.     Prior to obtaining the ALLSTATE policy, plaintiff Corbett=s wife had been in an automobile accident for which she was not at fault. Additionally, plaintiff Corbett had received a traffic citation prior to issuance of the new policy in 1981. Rather than issue him an ALLSTATE INSURANCE COMPANY policy with a surcharge, however, the policy plaintiff Corbett was issued was from ALLSTATE INDEMNITY COMPANY, which premiums are consistently higher than ALLSTATE INSURANCE COMPANY. Plaintiff Corbett was not aware of the distinction between ALLSTATE INSURANCE COMPANY and ALLSTATE INDEMNITY COMPANY, believing simply that he had insurance with AALLSTATE,@ and that he was AIn Good Hands With Allstate.@

65.     Plaintiff Corbett paid his premiums for over 17 years, well beyond the 3-year experience period set forth in the applicable ALLSTATE rules, in spite of the fact that neither he nor his wife suffered any further accidents or received any traffic citations. In 1998, plaintiff Corbett inquired of ALLSTATE as to the reason for increased premiums and was informed that a change in assigned territories necessitated an increase in his premiums, but was given no explanation as to the reason for the many years he had been charged higher premiums.

66.     As a result of these circumstances, ALLSTATE charged plaintiff Corbett higher premiums for the accident and citation which had occurred prior to 1981, well beyond the three-year period set forth in the ALLSTATE rules and in violation of his policy of insurance, by using the Aindemnity@ company as the means to charge and collect higher premiums.

THE CLAIM FOR RELIEF OF CLIFTON SMITH

67.  As a result of ALLSTATE's practice of charging extracontractual premiums, Plaintiff Clifton Smith, like many thousands of other ALLSTATE policyholders, has sustained losses and damages.

68.  Plaintiff Clifton Smith was a policyholder with ALLSTATE INDEMNITY COMPANY from 1991 to 1998, with policies providing bodily injury liability protection, property damage coverage, and personal injury protection coverage. His policy was a form ALLSTATE policy. He had previously been insured by New Alliance Insurance Company.


69.  Plaintiff Smith trusted the ALLSTATE defendants that he would be charged premiums only as allowed by law, and trusted that the ALLSTATE defendants would treat him fairly and honestly.

70.  When plaintiff Smith first became a policyholder of ALLSTATE, he was issued, without explanation, a policy through ALLSTATE INDEMNITY COMPANY, and thus was required to pay additional premiums from the inception of his policy.

71.  Plaintiff Smith had no accidents or traffic citations which would justify the continued payment of the additional premiums.

72.  In 1998, after having paid for a policy through ALLSTATE INDEMNITY COMPANY for over seven years, plaintiff Smith learned from his ALLSTATE agent that he was considered to be insured by a high risk company (i.e., ALLSTATE INDEMNITY COMPANY). When he pointed out that he had experienced no accidents or traffic citations in the interim, he was told that if he did not like it, he could Afind another insurer.@

73.  As a result of these actions, plaintiff Smith paid additional premiums to ALLSTATE in excess of that allowed by his contract, and the rules, regulations, and statutes, for a period of seven years. 

THE CLAIM FOR RELIEF OF NORA ALBAUGH

74.   As a result of ALLSTATE's practice of charging  extracontractual premiums, Plaintiff Nora Albaugh, like many thousands of other ALLSTATE policyholders, has sustained losses and damages.


75.     Plaintiff Nora Albaugh was a policyholder with ALLSTATE INSURANCE COMPANY from approximately 1985 to 1999, through a policy (policy number 041-555-743-09/22) providing bodily injury liability protection, property damage coverage, and personal injury protection coverage. Her policy was a form ALLSTATE policy.

76.  Neither plaintiff Nora Albaugh nor her husband has had a traffic citation in the past 30 or more years. In February 1992, Mrs. Albaugh lawfully parked her automobile in the parking lot at her church. At the conclusion of the church service, while the automobile was lawfully parked and Mrs. Albaugh was attempting to enter the automobile, the door was hit by another automobile resulting in repairs costing $533.93, of which Allstate paid $333.93 after payment of the Albaughs= deductible of $200.00. 

77.  By the terms of Nora Albaugh=s form policy from ALLSTATE, ALLSTATE could not increase her premiums by removing discounts because of an accident in which Nora Albaugh was not at fault or because of an accident in which Nora Albaugh=s automobile was lawfully parked.

78.  Notwithstanding that her car was lawfully parked and that she was not at fault in the accident, ALLSTATE removed Nora Albaugh=s discount at the time of her next renewal of her ALLSTATE policy. ALLSTATE advised her that the discount had been removed because of the above-described accident. As a result of its actions, ALLSTATE collected further premiums from Nora Albaugh in violation of her contract and the law.  

CLASS ALLEGATIONS

79.     Plaintiffs seek certification of a class, pursuant to Rule 1.220 of The Florida Rules of Civil Procedure, which is defined as follows:


ALL FLORIDA AUTOMOBILE INSURANCE POLICYHOLDERS CURRENTLY WITH ALLSTATE INDEMNITY COMPANY WHO, BETWEEN 1984 AND THE PRESENT, WERE ISSUED OR REISSUED AN ALLSTATE INDEMNITY COMPANY POLICY AFTER THEY HAD QUALIFIED FOR AN ALLSTATE INSURANCE COMPANY POLICY; AND  ALL FLORIDA AUTOMOBILE INSURANCE POLICYHOLDERS WITH EITHER ALLSTATE INSURANCE COMPANY OR ALLSTATE INDEMNITY COMPANY WHO, BETWEEN 1984 AND THE PRESENT, PAID ADDITIONAL PREMIUMS BECAUSE THEY WERE DENIED DISCOUNTS OR WERE SURCHARGED BASED ON ACCIDENTS THAT WERE IMPROPERLY CHARGED AGAINST THEM (hereinafter Athe class@).

To be excluded from the class are all directors, officers, agents and/or employees of THE ALLSTATE CORPORATION and the ALLSTATE defendants.  Also to be excluded from the class are all persons who have claims in excess of $75,000.00.

80.     This action is properly brought as a class action under Rule 1.220 for the following reasons:

a.       Although Plaintiffs are unaware of the exact number

of class members, because the ALLSTATE defendants  are collectively among the largest insurers of automobiles in the state of Florida, plaintiffs believe and therefore allege that members of the class number in the thousands and are so numerous that joinder of all members is impracticable.


b.       There are questions of law and fact common to this

action which predominate over any questions solely affecting individual class members.  Among the common questions of law and fact are:

(1)      whether the ALLSTATE defendants failed to comply with statutes, regulations, and the approved rules with regard to the experience period set forth in such rules and thus violated their policies of insurance with their insureds;

(2)      whether the ALLSTATE defendants charged policyholders premium increases in excess of those allowed by statutes, regulations, and the approved rules and thus violated their policies of insurance with their insureds;

(3)      whether the ALLSTATE defendants engaged in a practice of allowing continued billing of excess premiums in violation of their contracts with policyholders;

(4)      whether the ALLSTATE defendants acted to conceal from policyholders their continued use of additional premiums in violation of their contracts with policyholders;

(5)  whether the ALLSTATE defendants directed their underwriters and employees to ignore the experience period limitations set forth in statutes, regulations and approved rules;


(6)      whether the ALLSTATE defendants breached their policy contracts with policyholders by failing to notify policyholders when the three-year experience period had expired, making them eligible for lowered premiums;

(7)      whether the ALLSTATE defendants  engaged in a deliberate practice of continuing to keep insureds in ALLSTATE INDEMNITY COMPANY during renewal periods, even after insureds were eligible for lower premium policies issued by ALLSTATE INSURANCE COMPANY;

(8)      whether plaintiffs and the class members have sustained damages and the proper measure of damages;

(9)      whether plaintiffs and the class members are entitled to an award of punitive damages against the ALLSTATE defendants if the requirements of Florida Statutes are met; and

(10) whether plaintiffs and the class members are entitled to declaratory and injunctive relief or the equitable relief that is requested herein.

81.     Plaintiffs= claims are typical of the claims of other Class members which arise from common policy language in ALLSTATE's standard automobile insurance policy and from ALLSTATE rules applicable to all Florida residents.

82.     Plaintiffs will fairly and adequately protect the interests of the members of the class.  Plaintiffs have no interest antagonistic to those of other class members, and plaintiffs have retained attorneys experienced in class action and complex litigation as counsel.


83.     A class action is superior to the other available methods for the fair and efficient adjudication of this controversy for at least the following reasons:

a.       given the size of individual class members' claims and the expense of litigating those claims, few, if any, class members could afford to or would seek legal redress individually for the wrongs the ALLSTATE defendants committed against them, and absent class members have no substantial interest in individually controlling the prosecution of individual actions;

b.       when the liability of the ALLSTATE defendants has been adjudicated, claims of all class members can be administered efficiently and/or determined by the Court;

c.       this action will promote an orderly and expeditious administration and adjudication of the class claims; economies of time, effort and resources will be fostered; and uniformity of decisions will be ensured; and

d.       without a class action, the class members will continue to suffer damages, and the ALLSTATE defendants= violations of law will proceed without remedy while the ALLSTATE defendants continue to reap and retain the substantial proceeds of their wrongful conduct.

84.     Plaintiffs know of no difficulty which will be encountered in the management of this litigation which would preclude its maintenance as a class action.


85.     Plaintiffs seek preliminary and permanent injunctive and equitable relief on behalf of the entire class, on grounds generally applicable to the entire class, to enjoin and prevent the ALLSTATE defendants from charging additional premiums beyond the period of time allowed by their contracts and the statutes, regulations, and approved rules and rates, and from engaging in the other wrongful conduct alleged herein.  Plaintiffs also seek preliminary and permanent injunctive and equitable relief on behalf of the entire class, on grounds generally applicable to the entire class, requiring the ALLSTATE defendants to disgorge all of their ill-gotten gains from the failure to comply with their policies of insurance and the statutes, regulations and approved rules regarding additional premiums, and to provide full restitution to plaintiffs and class members of all monies wrongfully acquired.

                                                          COUNT I

                                                  Breach of Contract

86.     Plaintiffs repeat and reallege the allegations contained in paragraphs 1 through 85 above, as if fully set forth herein.

87.     The ALLSTATE defendants entered into standard forms of automobile insurance policies with plaintiffs and members of the class and were obligated by contract to comply with Florida law regarding the charging of additional premiums for insurance.

88.  By choosing to incorporate expressly within each policy of insurance an obligation to follow the rules, rates and forms in effect and on file for use in the state of Florida, ALLSTATE, as drafter of the policy of insurance, agreed contractually with each ALLSTATE insured to be bound by those rules, rates and forms.


89.  In addition, the ALLSTATE defendants were obligated by contract and law to avoid discriminatory practices against policyholders, and to charge premiums for insurance based upon sound actuarial practices.

90.  The ALLSTATE defendants entered into standard forms of automobile insurance policies with plaintiffs which expressly stated that the premiums charged would be determined pursuant to the ALLSTATE defendants= rules then in effect.

91.     Each policy was valid and enforceable at the time of the extracontractual additional premiums.

92.     All conditions precedent to the ALLSTATE defendants= liability under the standardized forms of automobile insurance policy have been performed, including the payment of all premiums necessary to keep the policy in effect during the times that plaintiffs and the class members are or were insured by the ALLSTATE defendants.

93.     The ALLSTATE defendants materially breached the terms of the standardized policy contract with plaintiffs and the class members by, among other things, charging policyholders additional premiums in violation of the statutes, regulations, and approved rules.

94.     As a result of the ALLSTATE defendants= material breach of policy contracts, plaintiffs and the class members have been damaged in an amount to be determined at trial.

COUNT II

Breach of Fiduciary Duty

95.  Plaintiffs repeat and reallege the allegations contained in paragraphs 1 through 85 above, as if fully set forth herein.


96.  As alleged above, it is the public policy of the state of Florida that the business of insurance is a public trust, and insurers must serve the best interests of their insureds.

97.  The ALLSTATE defendants have engaged in a uniform advertising and marketing scheme throughout Florida and the nation using the slogan AYou=re In Good Hands With Allstate.@ In fact, the standard insurance policies issued by the ALLSTATE defendants contain the same assurances. ALLSTATE regularly sends plaintiffs and members of the class letters containing the same assurances.

98.  The purpose of such advertising and correspondence by  ALLSTATE is to instill a sense of trust and confidence in applicants and insureds that ALLSTATE will indeed look out at all times for the best interests of insureds pertaining to automobile insurance.

99.  ALLSTATE knew or should have known that plaintiffs and members of the class placed this trust and confidence in them, and ALLSTATE accepted the confidence and trust reposed in them by plaintiffs and the members of the class. Additionally, plaintiffs and members of the class were existing policyholders and thus the ALLSTATE defendants were in a special relationship of trust and confidence with plaintiffs and members of the class.

100.  Plaintiffs and members of the class generally had no prior training, expertise, or knowledge concerning automobile insurance, including the various statutes, regulations, and rules applicable thereto, and relied on the trust they had placed in the ALLSTATE defendants to provide for the best interests of their insureds, who were Ain good hands.@


101.  The ALLSTATE defendants created a fiduciary relationship between themselves and plaintiffs and the members of the class pertaining to automobile insurance. As a result of this fiduciary relationship, the ALLSTATE defendants were required to do the following:

(a)      Act in a way that was beneficial to, and not detrimental to, plaintiffs and the members of the class;

 

(b)      Provide plaintiffs and the members of the class with the benefits, discounts, and premiums to which they were entitled.

 

102.    The ALLSTATE defendants, as fiduciaries, owed to plaintiffs and the members of the class a duty to refrain from self-dealing, a duty of loyalty, an overall duty not to take unfair advantage of plaintiffs and the members of the class, and a duty to act in the best interests of plaintiffs and the members of the class. 

          103.    The ALLSTATE defendants, motivated solely by unreasonable financial gain and with the knowledge of their policy makers, pursued this conduct knowing that it was unreasonably dangerous to and highly likely to cause injury to the plaintiffs and members of the class.

104.    As a result of the facts described above, the ALLSTATE defendants breached the fiduciary duties owed to plaintiffs and the members of the class.

105.    The ALLSTATE defendants= breaches resulted in direct and proximate damages to plaintiffs and the members of the class, in an amount to be determined at trial.

                                                         COUNT III

Breach of Obligation of Good Faith, Fair Dealing,

and Commercial Reasonableness

106.    Plaintiffs repeat and reallege the allegations contained in paragraphs 1 through 85 above, as if fully set forth herein.


107.  Under Florida law, all contracts, including contracts of insurance, include implied covenants of good faith, fair dealing, and commercial reasonableness.

108.    Pursuant to their policy contracts, the ALLSTATE defendants promised and agreed to charge premiums in accordance with the approved Florida rules.  In performing pursuant to the policies, the ALLSTATE defendants had an obligation to the plaintiffs and to the class members to act in good faith and engage in fair dealing.  Furthermore, the ALLSTATE defendants were and are obligated to charge commercially reasonable premiums that bear a reasonable relationship to the risks posed by groups of insureds, including class members herein who were and are being unfairly kept in a class of risks to which they do not belong.

109.  In violation of the terms of the policies and their obligation to act in good faith and deal fairly with insureds, the ALLSTATE defendants knowingly and intentionally continued to charge its policyholders additional premiums in violation of statutes, regulations, and the terms of the approved rules. In doing so, the ALLSTATE defendants breached the implied covenants of good faith, fair dealing, and commercial reasonableness.

110.    The ALLSTATE defendants engaged in these practices knowing plaintiffs and the class members would suffer financial harm, and knowing that the continued additional premiums violated statutes, regulations, and the approved rules.

111.    This conduct by the ALLSTATE defendants has harmed plaintiffs and the class members, and plaintiffs and the class members are entitled to damages in an amount to be established at trial.


112.    The ALLSTATE defendants= breach of their obligation of good faith and fair dealing was not accidental.  ­These actions as described herein were engaged in knowingly, deliberately, wantonly, willfully and maliciously, in conscious disregard of, and with reckless indifference to, plaintiffs and the class members.  The ALLSTATE defendants acted solely with a motivation to enhance their own profits.

                                                         COUNT IV

 

                    Unjust Enrichment and Imposition of a Constructive Trust

 

113.    Plaintiffs repeat and reallege the allegations contained in paragraphs 1 through 85 above as if fully set forth herein.

114.  As a result of the payment of premiums to the ALLSTATE defendants, plaintiffs have conferred a benefit on the defendants, and the ALLSTATE defendants have voluntarily accepted and retained the benefits conferred.

115     As a result of the relationship between the parties and the facts as stated above, it would be inequitable for the ALLSTATE defendants to retain these benefits, and a constructive trust should be established over the monies paid by plaintiffs and members of the class that exceeded those allowed by their contracts and the statutes, regulations, and approved rules.  Such monies are traceable to the ALLSTATE defendants who are the current possessors of such funds.

116     Despite the contractual promise to charge premiums based on the approved rules, the ALLSTATE defendants have failed and refused to refund to plaintiffs and class members the unlawful surcharges as set forth in detail in the paragraphs above.       


117     As a result, the ALLSTATE defendants will be unjustly enriched if they are allowed to retain such funds, and therefore a constructive trust should be imposed on all monies wrongfully obtained by the ALLSTATE defendants.

118     Plaintiffs and members of the class have no adequate remedy at law by virtue of this conduct as set forth above.

119     By reason of the foregoing, plaintiffs and members of the class have been damaged in an amount to be determined at trial.

COUNT V

Money Had and Received

120   Plaintiffs repeat and reallege the allegations contained in paragraphs 1 through 85 above, as if fully set forth herein.

121   The ALLSTATE defendants, by virtue of their position as regulated industries within the state of Florida, are obligated to know and follow the statutes, rules, and regulations applicable to them in order to be accorded the privilege of insuring residents of the state of Florida.

122   Residents of the state of Florida who apply for or renew their policies of insurance with the ALLSTATE defendants are not conversant with nor knowledgeable concerning the statutes, rules, and regulations applicable to motor vehicle insurers.


123  The ALLSTATE defendants have taken advantage of their superior position regarding the requirements of the statutes, rules, and regulations applicable to them in dealing with their insureds  by exacting a greater price for services rendered than is fair and reasonable, in that they have collected premiums from insureds who have been categorized improperly as high risk insureds, by being kept in ALLSTATE INDEMNITY COMPANY, after they have become entitled to the lower premiums and discounts available through ALLSTATE INSURANCE COMPANY.

124  The exaction by the ALLSTATE defendants of the unreasonable premiums for insurance is an imposition on plaintiffs and class members, giving rise to a claim for assumpsit for money received.

125   By reason of the foregoing, plaintiffs and members of the class have been damaged in an amount to be determined at trial.

COUNT VI

Civil Conspiracy

126   Plaintiffs repeat and reallege the allegations contained in paragraphs 1 through 85 above, as if fully set forth herein.

127   ALLSTATE INSURANCE COMPANY and ALLSTATE INDEMNITY COMPANY conspired with each other to perpetrate and did in fact perpetrate a breach of duty owed to ALLSTATE policyholders by conspiring to keep policyholders in ALLSTATE INDEMNITY COMPANY even though policyholders had qualified for an ALLSTATE INSURANCE COMPANY policy, as more particularly set forth in the allegations of this complaint.


128   At renewals of ALLSTATE policies, ALLSTATE INSURANCE COMPANY discouraged ALLSTATE agents in the state of Florida from requesting a transfer of an ALLSTATE insured from ALLSTATE INDEMNITY COMPANY to ALLSTATE INSURANCE COMPANY, and conspired with ALLSTATE INDEMNITY COMPANY to keep preferred risk insureds in a high risk pool of insureds, to the mutual benefit of both ALLSTATE INSURANCE COMPANY and ALLSTATE INDEMNITY COMPANY and to the detriment of ALLSTATE insureds who were owed a duty to be treated fairly and in a non-discriminatory fashion.

129   Through the conspiracy between ALLSTATE INSURANCE COMPANY and ALLSTATE INDEMNITY COMPANY, the ALLSTATE defendants engaged in unfair discrimination between similarly situated policyholders in violation of the duties owed to such policyholders.

130   As a result of the conspiracy between ALLSTATE INSURANCE COMPANY and ALLSTATE INDEMNITY COMPANY, plaintiffs and members of the class have suffered damages.

131   The ALLSTATE defendants engaged in the acts described above willfully, wantonly, maliciously and intentionally, and/or acted with reckless disregard to plaintiffs and members of the class, all of which resulted in injury to plaintiffs and members of the class. 

                                                         COUNT VII

                                        Declaratory and Injunctive Relief

132     Plaintiffs repeat and reallege the allegations contained in paragraphs 1 through 85 above, as if fully set forth herein.

133     The ALLSTATE defendants continue to charge policyholders additional premiums in violation of the policies of insurance and the statutes, regulations, and approved rules.

134     Plaintiffs, on behalf of themselves and class members, seek a judgment declaring that the ALLSTATE defendants must refund all unlawfully collected additional premiums and cease their practice of allowing such unlawful charges to continue.


135     Plaintiffs, for themselves and the class members, seek injunctive relief enjoining the ALLSTATE defendants from continuing to collect higher premiums and surcharges on premiums in excess of those allowed by the policies of insurance and the statutes and regulations requiring the ALLSTATE defendants to disgorge all ill-gotten profits realized from their failure to comply with their contracts of insurance and the statutes, regulations, and the rules, and requiring the ALLSTATE defendants to provide full restitution of all monies wrongfully acquired to plaintiffs and class members.

136     By reason of the foregoing, plaintiffs and the class members have been and continue to be irreparably harmed and are entitled to declaratory and injunctive relief as set forth above and are also entitled to attorneys= fees and all litigation costs as part of the declaratory relief they seek.

PRAYER FOR RELIEF

WHEREFORE, Plaintiffs pray for a judgment:

a.       Certifying this case as a class action pursuant to Florida Rules of Civil Procedure, Rule 1.220;

b.       Awarding plaintiffs and the class members compensatory damages, attorneys= fees, and all litigation costs;

c.       Awarding plaintiffs and the class members pre-judgment interest and post-judgment interest as provided by law;


d.       Awarding plaintiffs and the class members declaratory and injunctive relief as permitted by law or equity including the disgorgement of ill-gotten gains and restitution to plaintiffs and class members of all monies (plus interest thereon at the legal rate) acquired by means of any act or practice declared by this Court to be unlawful; and

e.       Awarding such other and further relief as may be just and proper.

                                                     JURY DEMAND

Plaintiffs demand a trial by jury on all issues that may be so tried.

 

Dated:________October, 2000                                                     

 

 

JAMES, HOYER, NEWCOMER &

      SMILJANICH, P.A.               

 

_____________________________

W. Christian Hoyer

Florida Bar No.: 162703

Terry A. Smiljanich

Florida Bar No. 145359

P. O. Box 1259

St. Petersburg, Florida 33731

(727) 823-3837

 

SMITH, MACKINNON, GREELEY, BOWDOIN,  EDWARDS, BROWNLEE, & MARKS, P.A.

Douglas Bowdoin

Florida Bar No. 310360

P. O. Box 2254

Orlando, FL  32802-2254

(407) 843-7300

 

MILBERG WEISS BERSHAD

  HYNES & LERACH LLP

John J. Stoia, Jr.

JoBeth Halper

600 West Broadway,

Suite 1800

San Diego, CA  92101

Telephone: (619) 231-1058


ARNZEN, PARRY & WENTZ, P.S.C.

Ronald R. Parry

128 East Second Street

Covington, KY   41011

Telephone: (606) 431-6100

 

BONNETT, FAIRBOURN, FRIEDMAN

  & BALINT, P.C.

Andrew S. Friedman

4041 N. Central Avenue, Suite 1100

Phoenix, AZ   85012

Telephone: (602) 274-1100

 

FINKELSTEIN & KRINSK

Howard Finkelstein

501 W. Broadway, Suite 1250

San Diego, CA 92101

Telephone (619) 238-1333

 

SEEGER WEISS, LLP

Christopher A. Seeger

One William Street

New York, NY 10004

(212) 584-0700

 

 

 

N:\IN‑ALLST\PLEADING\complaint.wpd