Marcelletti v. GEICO General Insurance Company

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF NEW YORK
JOHN MARCELLETTI, on behalf of himself
and all others similarly situated,
DECISION AND ORDER
Plaintiff,
v. 	6:23-CV-06211 EAW CDH
GEICO GENERAL INSURANCE COMPANY,
Defendant.
INTRODUCTION
Plaintiff John Marcelletti (“Plaintiff”) brings this putative class action suit
against defendant GEICO General Insurance Company (“Defendant” or “GEICO”),
asserting a claim for breach of contract based on Defendant’s failure to pay sales tax
as part of the “Actual Cash Value” or “ACV” for total loss vehicles. (Dkt. 1).
Defendant has filed a “conditional” motion to compel appraisal of Plaintiff’s
total loss vehicle and stay this case pending the result of the appraisal. (Dkt. 39). For
the reasons discussed below, Defendant’s motion is denied.1
BACKGROUND
Plaintiff was involved in an accident while driving a leased vehicle that was
insured under a policy issued by GEICO. (Dkt. 1 at ¶¶ 19-21). Plaintiff subsequently
1 	The defendant in the related action Shiloah v. GEICO Indemnity Company,
No. 6:24-cv-6447 (“Shiloah”), filed a similar motion. The Court resolved the motion to
compel appraisal in Shiloah in a separate Decision and Order. See Shiloah, Dkt. 45
(W.D.N.Y. Apr. 11, 2025) (“Shiloah Decision”). Familiarity with the Shiloah Decision
is assumed for purposes of the instant Decision and Order.
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filed a claim, and his vehicle was determined to be a total loss. (Id. at ¶ 21). Plaintiff
alleges that GEICO’s payment of ACV—defined in his policy as “the replacement cost
of the auto or property less depreciation or betterment”—to settle his claim did not
include sales tax. (Id. at ¶¶ 17, 24-25).2 Plaintiff asserts that GEICO breached its
policy with Plaintiff and other members of the putative class by failing to pay sales
tax as part of the ACV for total loss vehicles. (Id. at ¶ 30-32).
Plaintiff’s policy with GEICO contains an appraisal provision (“Appraisal
Provision”) that reads:
If we and the insured do not agree on the amount of loss, either may
within 60 days after proof of loss is filed, demand an appraisal of the
loss. In that event, we and the insured will each select a competent
appraiser. The appraisers will select a competent and disinterested
umpire. The appraisers will state separately the actual cash value
and the amount of the loss. If they fail to agree, they will submit the
dispute to the umpire. An award in writing of any two will determine
the amount of loss. We and the insured will each pay his chosen
appraiser and will bear equally the other expenses of the appraisal and
umpire.
We will not waive our rights by any of our acts relating to appraisal.
(Dkt. 40-1 at 20) (bold and italics in original and denoting defined terms in the policy).
Defendant “conditionally” moves to compel appraisal of Plaintiff’s total loss vehicle
pursuant to the Appraisal Provision and stay this case pending the result of the
appraisal. (Dkt. 39).
2 	Separately, Defendant has filed a motion for leave to amend its answer and
assert a counterclaim (Dkt. 41), in which Defendant alleges that GEICO did, in fact,
pay Plaintiff “in the amount of $150.75 . . . to reimburse Plaintiff for the portion of
the sales tax he claims he had paid on his leases agreement attributable to the time
remaining on his lease agreement after the date of his total loss[.]” (See Dkt. 42-1 at
22). That motion will be decided in due course.
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Plaintiff filed his claim with GEICO on or about September 27, 2019, and
GEICO issued payment to Plaintiff’s leaseholder to settle Plaintiff’s claim on or about
October 11, 2019. (Dkt. 42-1 at 21). However, Defendant’s position is that it is not too
late to demand an appraisal. In fact, according to Defendant, its demand for appraisal
is too early, hence its styling the instant motion as “conditional.” (See Dkt. 40 at 5
(“GEICO moved to dismiss Plaintiff’s Complaint because, as a matter of law, Planitiff
[sic] is not entitled to recover any sales tax for the total loss of his leased vehicle, but
this Court declined to address that legal issue in ruling upon GEICO’s Motion.
Because this issue is now outstanding, Appraisal of Plaintiff’s loss vehicle is currently
premature.”)).
Like the defendant in Shiloah, Defendant argues that a dispute over the
amount of loss is the required precondition that gives rise to a party’s right to demand
appraisal 	under 	the 	Appraisal 	Provision 	and 	triggers 	the 	concomitant 	60-day
deadline. (See Dkt. 40 at 6). But unlike the defendant in Shiloah, who argued that a
dispute over the amount of loss first arose when the plaintiff filed her complaint (See
Shiloah Decision at 2-3), Defendant puts forth a different theory. Here, Defendant
asserts that a dispute over the amount of loss will only arise for the first time when
the Court resolves the underlying legal question of whether Plaintiff and other
members of the putative class are entitled to payment of sales tax. (Dkt. 40 at 10).
Therefore, in Defendant’s view, its right to demand appraisal is not yet ripe and the
60-day deadline has yet to start running. (Id.).
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Defendant acknowledges that the “Court will not revisit this legal question [of
whether Plaintiff and other class members are entitled to sales tax] until the issue is
presented 	in 	dispositive 	motion 	briefing.” 	(Id.).3 	Nevertheless, 	Defendant 	says
“GEICO is placed between the proverbial rock and hard place” because it is
“precluded from pursuing its contractual right to demand [appraisal] . . . and [] forced
to participate in the litigation of this case until the Court resolves the legal question,”
at which time “GEICO risks this Court concluding GEICO waived its right to
Appraisal by actively participating in the litigation of this case, which GEICO has no
choice but to do.” (Id.). Defendant “therefore files this conditional motion . . . to
explicitly preserve its right to demand Appraisal.” (Id. at 10-11).
Plaintiff 	contends 	that 	the 	Court 	should 	deny 	Defendant’s 	motion 	on
procedural and substantive grounds. Procedurally, Plaintiff says that the Court
should deny Defendant’s motion because it concedes that appraisal is not yet ripe.
(Dkt. 46 at 6, 12-14). Substantively, Plaintiff argues, among other things, that
Defendant’s demand for appraisal is untimely. (Id. at 7, 14-19). According to Plaintiff,
the 60-day deadline to demand appraisal started running when Plaintiff submitted
“proof of loss,” an undefined term in the policy that he argues “refers to the evidence
that the policyholder submits to GEICO to establish that the insured vehicle for
which an insurance claim has been made was actually lost or damaged.” (Id. at 14-
3 	Dispositive motions are not currently pending in this case and are not due until
75 days after the parties make Rule 26(a)(2) disclosures for any rebuttal experts, the
deadline for which is 13 months after the Court enters an order on Plaintiff’s motion
for class certification. (See Dkt. 70 at 3; Dkt. 113). Simply put, the Court’s resolution
of any future dispositive motions is not imminent.
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15). According to Plaintiff, “[s]ince GEICO needed ‘proof of loss’ before it determined
the amount of the loss and issued payment, at the very latest, ‘proof of loss’ must have
been filed on or about October 11, 2019,” when GEICO issued a $17,115.00 payment
to Plaintiff’s leasing company in settlement of his claim. (Id. at 15). Therefore, in
Plaintiff’s view, Defendant’s right to demand to demand appraisal expired 60 days
later, on or about December 10, 2019. (Id.).
After the instant motion had been briefed (see Dkt 40; Dkt. 46; Dkt. 63), the
Court of Appeals for the Second Circuit issued a summary order in Milligan v. GEICO
General Insurance Company, No. 22-2950, 2025 WL 799276 (2d Cir. Mar. 13, 2025)
(“Milligan”), which resolved appeals from two district court orders denying a GEICO-
affiliated entity’s invocation of the right to appraisal in separate putative class
actions involving the same policy terms and Appraisal Provision at issue here. See
Milligan, 2025 WL 799276, at *1. Plaintiff thereafter filed a notice of supplemental
authority in this case and in Shiloah, noting that the Second Circuit in Milligan had
endorsed his interpretation of the Appraisal Provision and, accordingly, found the
Milligan defendants’ demands for appraisal to be untimely. (Dkt. 114 at 1-2; see also
Shiloah Decision at 4). The defendant in Shiloah filed a response to the notice of
supplemental authority, which the Court also considers here to the extent it is
applicable. (See Shiloah Decision at 4).4
4 	In both cases, the defendants claim that the plaintiffs did not file proof of loss.
However, in Shiloah, the defendant provided extrinsic evidence in the form of a
declaration by a GEICO employee stating that the plaintiff did not submit proof of
loss. (See Shiloah Decision at 8). Here, Defendant includes a declaration from the
same 	GEICO 	employee, 	but 	the 	declaration 	does 	not 	say 	anything 	regarding
Plaintiff’s filing proof of loss. (See Dkt. 40-1 at 47-48).
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DISCUSSION
I. 	Scope of Magistrate Judge Authority
The Second Circuit has concluded that the Appraisal Provision at issue here
“constitutes arbitration for the purpose of the [Federal Arbitration Act].” Milligan v.
CCC Info. Servs. Inc., 920 F.3d 146, 152 (2d Cir. 2019); see also Chick v. GEICO Gen.
Ins. Co., No. 24-CV-01124 (JMA) (AYS), 2024 WL 3303266, at *3 n.3 (E.D.N.Y. July
2, 2024) (“A motion for appraisal constitutes a motion to compel arbitration.”).
“District courts in this Circuit regularly have concluded that a motion to compel
arbitration and stay litigation pending arbitration is non-dispositive and therefore
within 	a 	Magistrate 	Judge’s 	purview 	to 	decide 	without 	issuing 	a 	report 	and
recommendation pursuant to 28 U.S.C. § 626(b)(1)(B) and Fed. R. Civ. P. 72(b).” Puig
v. City of N.Y., 733 F. Supp. 3d 218, No. 23-CV-08674, 2024 WL 2007829, at *1 n.1
(S.D.N.Y. May 7, 2024) (quoting McCants v. Team Elec., Inc., No. 19-CV-095656
(AJN) (RWL), 2021 WL 653122, at *1 n.1 (S.D.N.Y. Feb. 19, 2021)); see also Chen-
Oster v. Goldman, Sachs & Co., 449 F. Supp. 3d 216, 227 (S.D.N.Y. 2020) (collecting
cases), objections overruled, No. 10-CV-6950, 2021 WL 4199912 (S.D.N.Y. Sept. 15,
2021). Accordingly, my resolution of this motion is set forth in a Decision and Order.
II. 	Legal Standard
Courts deciding motions to compel arbitration “apply a standard similar to that
applicable for a motion for summary judgment,” in that they “consider[] all relevant,
admissible evidence submitted by the parties and contained in pleadings, depositions,
answers to interrogatories, and admissions on file, together with affidavits” and
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“draw[] all reasonable inferences in favor of the non-moving party.” Meyer v. Uber
Techs., Inc., 868 F.3d 66, 74 (2d Cir. 2017) (quotations and original alterations
omitted). If the Court concludes that an agreement to arbitrate exists, “it should then
consider whether the dispute falls within the scope of the arbitration agreement.” Id.
(citation omitted). The Court applies New York law in interpreting the Appraisal
Provision, including the necessary timing for exercising the right to appraisal. See
Amerex Grp., Inc. v. Lexington Ins. Co., 678 F.3d 193, 199 (2d Cir. 2012).
III. 	Milligan is Dispositive of Defendant’s Motion
In its Shiloah Decision, the Court discussed the Second Circuit’s summary
order in Milligan and explained why it was dispositive of the defendant’s motion to
compel appraisal. (Shiloah Decision at 6-12). The Court incorporates by reference
that discussion and concludes that it applies with equal force to the instant motion.
Plaintiff’s filing of proof of loss was the unambiguous triggering event for the 60-day
deadline to demand appraisal. See Milligan, 2025 WL 799276, at *4. And because the
“latest possible proof of loss date” was on or about October 11, 2019, when GEICO
issued payment on Plaintiff’s claim, Defendant’s right to demand appraisal expired
more than five years ago. Id. at *5.
Defendant has not set forth any reason for the Court to find that this matter
is distinguishable from Shiloah or that Milligan is not controlling. To the contrary,
Defendant relies upon variations of the arguments that the Court found meritless in
Shiloah. While failing to explain what constitutes proof of loss under the Appraisal
Provision, Defendant argues that Plaintiff did not provide GEICO with “a ‘sworn’
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proof of loss, the actual form of the proof of loss required by the Policy to which he
agreed.” (Dkt. 63 at 5 n.1). But this Court may not rewrite a contract provision that
the Second Circuit concluded was unambiguous. See Krumme v. WestPoint Stevens
Inc., 238 F.3d 133, 139 (2d Cir. 2000). Milligan concluded that the Appraisal
Provision does not contemplate any specific form of proof of loss and instead only
requires “the ordinary meaning ascribed to the term ‘proof of loss’ as ‘[a]n insured's
formal statement or documentation of loss required by an insurer before it will
determine its liability under the policy.’” See Milligan, 2025 WL 799276, at *5
(quoting Black’s Law Dictionary (12th ed. 2024)). That conclusion is fully applicable
here.
Defendant also goes a step further than the defendant in Shiloah and asserts
that not only did Plaintiff not file proof of loss, “GEICO and tens of thousands of New
York insureds resolve total loss claims without proofs of loss and have done so for
many years.” (Dkt. 63 at 5 n.1). But this assertion (to the extent it means anything
when Defendant cannot explain what constitutes proof of loss under the relevant
policies) cannot survive the Second Circuit’s decision in Milligan. Milligan makes
clear that by issuing payment, GEICO was accepting whatever documentation had
been submitted by its insureds as the contractually required proof of loss.
In sum, because Plaintiff filed proof of loss on or before October 11, 2019, any
future demand for appraisal by Defendant will be untimely, and its motion to compel
appraisal must be denied.
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IV. 	Defendant’s Motion is Procedurally Defective
Based on the foregoing, Defendant’s “conditional” motion must be denied
because any future demand for appraisal will be untimely. But even if that were not
the case, the Court also finds that this motion must be denied because Defendant’s
demand for appraisal is not yet ripe under the legal theory it asserts in connection
with its motion (that is, that it will only become entitled to demand appraisal if and
when the Court rules in favor of Plaintiff on a hypothetical future dispositive motion).
“A claim is not ripe if it depends upon ‘contingent future events that may not
occur as anticipated, or indeed may not occur at all.’” Nat’l Org. for Marriage, Inc. v.
Walsh, 714 F.3d 682, 687 (2d Cir. 2013) (quoting Thomas v. Union Carbide Agr.
Prods. Co., 473 U.S. 568, 580-81 (1985)). Defendant’s theory is that its demand for
appraisal will only become ripe when the Court rules on the underlying legal question
of whether Plaintiff and other class members are entitled to payment of sales tax.
(Dkt. 40 at 5). Under this theory, this motion is contingent on the distant resolution
of not-yet-pending dispositive motions, which, as Plaintiff correctly points out, may
ultimately be resolved in Defendant’s favor, thereby mooting the need for appraisal.
(See Dkt. 46 at 13).
While there is no per se rule against conditional motions, the contingencies
underlying Defendant’s “conditional” request to compel appraisal are too remote to
warrant granting relief in Defendant’s favor. See generally Kemper Indep. Ins. Co. v.
Haughey, No. 20-CV-5945 (JMF), 2021 WL 134565, at *2 (S.D.N.Y. Jan. 14, 2021)
(explaining that federal courts do not “render[] advisory opinions with regard to
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events in dispute that have not matured to a point sufficiently concrete to demand
immediate 	adjudication 	and 	thus 	that 	may 	never 	materialize 	as 	actual
controversies.”) (citation omitted).
The Court also rejects Defendant’s alternative request to “at the very least,
hold GEICO’s Conditional Motion in abeyance until it rules upon the legal question”
(Dkt. 63 at 4), pursuant to the Court’s “broad discretion in managing its docket.”
Atkins v. Walmart, Inc., No. 22-1192, 2023 WL 3361807, at *1 (2d Cir. May 11, 2023).
Because Milligan conclusively establishes that any demand for appraisal would be
untimely, the Court declines to delay its ruling on the instant motion.
CONCLUSION
For the reasons set forth above, Defendant’s motion to compel appraisal (Dkt.
39) is denied. Because the Court’s decision is based on timeliness and procedural
grounds, it need not and does not reach any of the other issues raised by the parties
in their motion papers.
SO ORDERED.
________________________________
COLLEEN D. HOLLAND
United States Magistrate Judge
Dated: 	Rochester, New York
April 11, 2025
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