West Virginia Attorney General, Darrell v. McGraw, Jr., filed a Complaint on December 15, 2011 against Liberty Mutual Insurance Company and one of its direct repair program ("DRP") network shops seeking injunctive relief and restitution for consumers. After a six month investigation, the WV AG sued the insurer for instituting a practice and the shop for agreeing to and complying with the practice that required all of the shops in its DRP network (known as "Total Liberty Care") to write every estimate and to repair every vehicle, irrespective of the age of the vehicle, with salvage yard parts in violation of the West Virginia Automotive Crash Parts Act ("ACPA"), W. Va. Code § 46A-6B-3.
An ambiguity in the ACPA was resolved by judicial interpretation in 1998 in the case filed by the West Virginia Automotive Dismantlers and Recyclers Association, West Virginia Insurance Federation Inc., and State Farm Mutual Automobile Insurance Company against the State seeking a declaration that used parts were "genuine crash parts" under the ACPA and that they could be included in estimates and on consumer vehicles without informing the consumer and obtaining the consumer's express consent for their use. In that action, the Judge found there was an ambiguity in the ACPA due to the provision that an insurer was prohibited from requiring the use of aftermarket parts (imitation crash parts) in the repair of vehicles three years old or newer without the consumer's express consent, but that the motor vehicle repairer was required to repair these vehicles with "genuine crash parts sufficient to maintain the manufacturer's warranty for fit, finish, structural integrity, corrosion resistance, dent resistance and crash performance. . ." unless the consumer consented to the use of other parts. Accordingly, the court found that there are two types of "genuine crash parts". New original equipment manufacture ("OEM") parts that carry and maintain the manufacturer's warranty and used parts which do not. With that determination, the court ruled that used parts could not be included in the repair of a 3 year old or younger vehicle without the consumer's express consent and resolved the case in favor of the State of West Virginia.
For all motor vehicles requiring repair by motor vehicle body shops in the year of their manufacture or in the two succeeding years thereafter, motor vehicle body shops must use genuine crash parts sufficient to maintain the manufacturer's warranty for fit, finish, structural integrity, corrosion resistance, dent resistance and crash performance unless the motor vehicle owner consents in writing at the time of the repair to the use of aftermarket crash parts. No insurance company may require the use of aftermarket crash parts when negotiating repairs of the motor vehicle with any repairer for a period of three years, the year the motor vehicle was manufactured and the two succeeding years thereafter, unless the motor vehicle owner consents in writing at the time of the repair to the use of aftermarket crash parts.
Shortly before the scheduled hearing on the State's demand for an injunction, defendants removed the case to federal court on the basis of federal question involving the Magnuson-Moss Warranty Act. The WV AG's office has already filed a motion to remand the case to WV state court on the basis that this case entirely involves state law issues and that there is no federal question. Defendants have also filed a motion to dismiss the lawsuit where it currently pends in the United States District Court for the Southern District of West Virginia as Case Number 2:12-CV-0046.
UPDATE: Federal District Chief Judge Joseph R. Goodwin issued his order granting the WV AG's motion and remanding the case to West Virginia State Court. Following standard protocols, the case will be reinstated in the Kanawha County, WV, Circuit Court as case number 11-C-2231 (the original case number) and will be heard by Judge King.
STATE COURT PROCEEDINGS UPDATE: Judge Charles King granted the WV AG's motion for a temporary restraining order against both Defendants. Both Liberty Mutual and Greg Chandler's Frame & Body are precluded from writing estimates expecting the use of and repairing vehicles 3 years old or newer with salvage parts without first notifying the consumer and obtaining the consumer's express consent for the salvage parts use. The WV AG will likely file a motion for summary judgment to secure the permanent enjoinder of Liberty Mutual's mandate to its DRP shops that salvage parts be used in the estimate preparation and repair of all vehicles irrespective of age and without notice and consent by the consumer.