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State Farm used-car suit scrapped

November 22, 2010

The Illinois Supreme Court on Nov. 17 blocked a class-action lawsuit pushed by a Louisiana man who said he had been wronged by State Farm Insurance Co. in his 1999 purchase of a used car. 

In dismissing the Madison County case, the court did not rule on the merits of Christopher Gridley’s claims against one of the nation’s largest insurers but said it should be heard in Louisiana, where the allegations originated.

 

But the decision’s true impact on consumers appears minimal. State Farm, based in Bloomington, entered into a $40 million settlement this year with 49 states, including Illinois, to pay 30,000 drivers nationally who unknowingly bought repaired and mistitled vehicles that State Farm had previously deemed total losses. 

Gridley’s beef against State Farm involved his purchase of a used 1998 Volvo from a Louisiana auction house.

 

When Gridley became involved in a crash, he learned that his car had had a previous collision under its prior owner, had been declared a total loss by State Farm, had unrepaired damage from the earlier crash, and yet carried a clean title when he bought it, suggesting a crash-free history.

 

Gridley alleged that State Farm defrauded him by not obtaining a "salvage" title, as Louisiana state law required when vehicles are totaled, after settling a crash claim involving the vehicle’s prior owner.

 

Because the case originated in Louisiana, State Farm argued it should not be heard in Madison County, dubbed a "judicial hellhole" by business groups that have advocated caps on lawsuit awards. A judge there disagreed but was overruled by the state’s high court.

 

Gridley’s Belleville, Ill., lawyer, John Hoffman, said his client intends to refile his lawsuit in Louisiana but acknowledged the company’s settlement with the states has undercut efforts to draw in others with similar claims against the company.

 

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