Newark, NJ — Drivers suing two insurance companies over alleged lowball payouts for totaled vehicles can expand their case after a federal judge ruled Sunday that new claims may proceed, even as earlier legal arguments face setbacks.
U.S. Magistrate Judge Stacey D. Adams granted plaintiffs’ request to file a third amended complaint in Jones v. Palisades Insurance Company, a proposed class action that accuses Palisades Insurance Company and High Point Property and Casualty Insurance Company of systematically undervaluing vehicles declared total losses.
The April 27 order allows the plaintiffs—four drivers from Pennsylvania, New York, and New Jersey—to adjust their legal strategy following a shift in the law that could block class certification under their original claims.
Court allows shift after legal change
The central issue before the court was whether plaintiffs should be permitted to introduce new or previously omitted claims after an intervening change in law weakened their ability to proceed as a class.
Judge Adams answered yes.
“The Court answers this question in the affirmative,” the order states, clearing the way for plaintiffs to reshape their case rather than see it stall on procedural grounds.
The ruling does not decide whether the insurers acted improperly. Instead, it keeps the broader class action alive by allowing new legal theories to be added.
Dispute centers on vehicle valuation method
At the heart of the lawsuit is how insurers calculate the “actual cash value” (ACV) of vehicles deemed total losses.
Plaintiffs allege the companies relied on a third-party vendor, Mitchell International Inc., which applies a “projected sold adjustment” (PSA). That adjustment reduces a vehicle’s value based on the assumption that buyers typically negotiate prices down from listed amounts.
The plaintiffs argue this practice artificially lowers payouts.
They claim the adjustment “violates appraisal standards” and does not reflect how the used car market actually operates, leading to systematically reduced compensation for policyholders.
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Key Points
• Federal judge allows new claims in lawsuit against Palisades and High Point
• Plaintiffs allege insurers undervalued totaled vehicles using pricing adjustments
• Case continues despite legal changes affecting class certification
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Insurers cite regulatory approval
The insurance companies have pushed back, arguing that the valuation software used by Mitchell has been approved by regulators in multiple states, including New Jersey, Pennsylvania, and New York.
They also contend that policyholders had the option to challenge valuations through an appraisal process but failed to do so.
Those defenses remain unresolved and will likely play a central role as the case moves forward under the revised complaint.
Case has expanded since 2022 filing
The lawsuit began in August 2022 when plaintiff Kiera Jones filed the initial complaint against Palisades.
It has since grown to include additional plaintiffs and a second insurer, High Point. The case now represents a proposed class of drivers who allege they were underpaid after their vehicles were declared total losses.
The original claims included breach of contract, breach of the covenant of good faith and fair dealing, and a request for declaratory judgment. The newly permitted amendment may introduce additional claims tailored to address recent legal developments affecting class actions.
What happens next
The judge’s decision keeps the litigation moving at a time when many class actions face dismissal after shifts in legal standards.
By allowing the amendment, the court preserved the plaintiffs’ ability to pursue relief on behalf of a broader group—at least for now.
The case will proceed with the revised complaint, and the court has not yet ruled on the merits of the allegations or whether the case will ultimately be certified as a class action.