Referral of Claims to its SIU Is Not Bad Faith

Post 5487

In WIZ Collision, LLC, on behalf of itself and as assignee of Jawara Small, Chester Street LLC, and Aziz Brooks v. GEICO Corporation, No. 25-cv-4201 (KAM)(JAM), United States District Court, E.D. New York (August 28, 2026) Wiz Collision, a New York City auto-body shop, regularly repaired vehicles and submitted insurance claims for customers. It alleged that GEICO repeatedly approved claims and repairs, then referred certain claims to its Special Investigations Unit, stopped issuing payments, and delayed resolution despite ultimately finding no fraud.

Wiz Collision sued on its own behalf and as purported assignee of three customers, asserting contract, good-faith, consumer-protection, and injunctive claims. GEICO removed the case and moved to dismiss under Rule 12(b)(6).

LAW

Under Rule 12(b)(6), a complaint must plead facts supporting a facially plausible claim. Article III standing requires a concrete injury, causation, and redressability.

An assignee may sue only if the assignment transfers title or ownership of the claim, not merely authority to sue or collect.

Under New York law, an implied-covenant claim requires a contract between the parties and distinct supporting facts; duplicative claims may be dismissed. A General Business Law § 349 claim requires consumer-oriented conduct, a materially misleading act or practice, and resulting injury. Dismissal with prejudice is appropriate when pleading defects are incurable.

DISCUSSION

The court dismissed Counts One through Four because the customers’ repair authorizations and directions to pay did not transfer ownership or title to their claims; at most, they conferred authority resembling a power of attorney. Count Five failed because it duplicated the customer-based contract allegations and because Wiz Collision did not plead any contract or privity with GEICO. Count Six failed because the dispute concerned a limited business-specific claims process rather than conduct directed at consumers generally, and GEICO’s conduct was not plausibly deceptive: GEICO investigated the claims and released payments when no fraud was found. Count Seven had already been voluntarily withdrawn.

A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.

When deciding a motion to dismiss, a court must accept the allegations in the complaint as true, but conclusory statements, “threadbare recitals the parties’ submissions, the Court found, on August 28, 2025, that GEICO, the of the elements of a cause of action,” and legal conclusions will not suffice.

ANALYSIS

The decision turns on the legal relationship between the repair shop, its customers, and the insurer. Wiz Collision’s allegations of delay and business harm could not substitute for a valid transfer of claim ownership or a direct contract with GEICO. The ruling also distinguishes a targeted commercial dispute from the broader public-facing deception required by § 349. Because these deficiencies concerned standing and the absence of contractual privity — not merely missing factual detail—the court viewed amendment as futile.

Wiz Collision fails to allege that it is in privity of contract with GEICO. Under New York law, a plaintiff must allege four elements to state a breach of contract claim: “(i) the formation of a contract between the parties; (ii) performance by the plaintiff; (iii) failure of defendant to perform; and (iv) damages.”

CONCLUSION

Wiz Collision does not even allege that similar customers submitting claims through other third parties are experiencing similar issues. Indeed, Wiz Collision’s complaint alleges that this is an issue specific only to Wiz Collision because of a GEICO employee’s alleged animus towards Wiz Collision.

The Court was thus far from persuaded that the alleged conduct affects the public-at-large.

The court granted GEICO’s motion and dismissed all seven counts with prejudice. Judgment was directed for GEICO, and the case was closed.

ZALMA OPINION

It is not a viable cause of action for a body shop to sue GEICO on the ground that GEICO employees don’t like the body shop when the allegations is limited to claims that GEICO’s refusal to pay for claims sent to Wiz by a suspect entity while it pays for claims presented directly by people insured by GEICO.

(c) 2026 Barry Zalma & ClaimSchool, Inc.

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