Judge says insurance case over sales tax can go forward as class-action lawsuit

Shelly Burklund sued Farm Bureau Property & Casualty Insurance Company last year on behalf of herself and other “similarly situated insureds who suffered damages due to Farm Bureau’s refusal to pay ACV (Actual Cash Value) Sales Tax and Regulatory Fees for total-loss vehicles.”

On Jan. 19, 2020, Burklund’s 2011 Acura RDX sustained damage in a crash, prompting her to file a claim with her insurance company.

Farm Bureau determined the cost to repair the damage exceeded the value of the vehicle and deemed it a total loss, making the company contractually obligated to pay the actual cash value of the totaled car, Burklund’s attorney, Shane Mecham, said.

But when it came to paying Burklund, Farm Bureau removed $951 in sales tax from the adjusted value of $13,118 when making payment.

Mecham alleges it was a breach of its contract with Burklund. 

“To put insureds back into their pre-loss position after a total loss, defendant is required to pay the full ACV of the vehicle prior to the loss,” he wrote in the complaint.

Mecham said that includes sales tax and all regulatory fees imposed by the State of Nebraska, such as registration, title and license plate fees because all would need to be replaced.

On Aug. 2, Lancaster County District Judge Kevin McManaman had a hearing on Mecham’s motion to certify it a class-action lawsuit, allowing them to seek money for others who have been in a similar position.

In a recent decision, the judge concluded that the requirements have been satisfied. Over 6,700 people suffered a total loss and received payments from Farm Bureau during the period at issue.

Farm Bureau’s attorneys opposed class certification, saying the policy holders had different policies, some chose to keep their total-loss vehicle and some involved leased vehicle, which are fundamentally different.

But McManaman rejected their arguments.

“The record before the court shows that all members of the putative class had the same coverage under Farm Bureau’s form policy, suffered a total loss, filed a claim with Farm Bureau, and received total-loss payments, which did not include ACV Sales Tax or Regulatory Fees,” he wrote.

The judge said the amount of each member’s recovery can be ascertained by a mere mathematical computation.