Court OKs Florida Car Accident Claim against Auto Lender – Walters v. Flag Credit Union

In Florida car accident cases, much of the finger pointing is inevitably directed at the drivers involved. But there is a wide range of third parties who may also be liable in the event of a crash, including passengers, auto manufacturers and insurance companies. Liability may even extend to a car finance company, as the U.S. District Court for the Northern District of Florida recently noted in Walters v. Flag Credit Union.

The case stemmed from a Florida car accident in which Mr. Walters’ vehicle was totaled. Walters had purchased the vehicle with a loan from Flag Credit Union. He also entered a guaranteed asset protection (GAP) contract, providing that the credit union would forgive any of the outstanding loan – in excess of any insurance recovery – in the event that the car was stolen or totaled. In turn, Flag purchased an insurance contract from CUMIS Insurance Society to protect itself from any amounts that might eventually be due to Walters. The CUMIS contract included a provision indicating that it didn’t cover salvage vehicles.

Although the amount Walters owed Flag exceeded the amount of his insurance recovery, the company declined to cancel the outstanding balance. That’s because CUMIS told the company that the re-insurance contract didn’t cover Flag’s vehicle because it was a salvage car. In other words, Flag tried to apply the salvage provision from the CUMIS contract to the separate GAP agreement with Walters, even though the GAP agreement itself didn’t include any language related to salvage vehicles.

Walters sued Flag, alleging that the company engaged in the unauthorized provision of insurance by entering into the GAP contract with him and engaged in a deceptive business practice by representing to him that he would be covered by the contract in the event of a crash or theft.

Dismissing the insurance-related claims, the District Court said Flag acted within its legal bounds in entering the GAP contract with Walters. “As a financial institution, Flag was authorized to provide GAP coverage, that is, “a loan, lease, or retail installment contract term…under which a creditor agrees to waive a customer’s liability for payment of some or all of the amount by which the debt exceeds the value of the collateral,” the Court said, citing Section 520.02(7), Florida Statutes. “The assertion that Flag could not provide GAP coverage without being an authorized insurer is plainly wrong.”

The Court declined to also dismiss the deceptive business claim, however, finding that it was unclear whether Walters could prove this claim based on the pleadings. Indeed, the Court said Walters’ allegation that the company sold him the car while representing that he would be covered by the GAP agreement under circumstances like those surrounding this case was exactly the kind of claim that the Florida Deceptive and Unfair Trade Practices Act was intended to address.

As this case makes clear, it is important for a person involved in an accident to seek the counsel of an experienced attorney in order to consider all avenues of potential legal recovery for any personal or property damages. If you or a loved one has been injured in a car accident, contact the South Florida car accident attorneys at Anidjar & Levine. We represent clients throughout the region, including in Ft. Lauderdale, Hialeah and Coral Springs. Call us toll-free at 800-747-3733 or fill out and submit an online Contact Us form to schedule a free consultation.

Related blog posts:

Single Car Accidents and Third-Party Liability – O’Malley v. Ranger Construction Industries

Settlements, Ambiguity and Costs and Fees in Florida Car Accident Cases – Alamo Financing v. Mazoff

Court Defends Right to Lawyer in Florida Car Accident Cases – Howard v. Palmer