State Farm escapes liability in Maryland lawsuit over alleged false truck accident report

A federal judge in Maryland has dismissed a lawsuit filed by a trucking business owner who claimed that State Farm Mutual Automobile Insurance Company wrongly reported him as being involved in an auto accident, resulting in insurance-related repercussions that allegedly harmed his business and reputation.

The plaintiff, William Young, who represented himself, alleged that State Farm submitted a false accident report to the National Accident Reporting Agency, operated by LexisNexis, in connection with an incident that occurred on or about January 5, 2023, in a CVS parking lot in Largo, Maryland. At the time, Young was insured by Progressive, not State Farm.

Young claimed he was not notified about the accident report until Progressive later contacted him, demanding a $2,500 payment and threatening to cancel his policy. Because Young operates a trucking business and is required to maintain insurance under Federal Motor Carrier Safety Administration (FMCSA) regulations, he alleged that the cancellation caused financial loss, reputational damage, and emotional distress.

Although Young asserted that State Farm later acknowledged the error and issued him an apology, he filed suit in the Circuit Court for Prince George’s County, Maryland, on February 15, 2024, seeking $500,000 in compensatory damages. State Farm removed the case to federal court on July 23, 2024.

Young’s third amended complaint alleged seven causes of action under Maryland law: deceptive business practices, fraud, breach of contract, intentional infliction of emotional distress, negligence, defamation, and tortious interference with business relationships. U.S. District Judge Deborah L. Boardman granted Young’s motion to file the amended complaint but simultaneously dismissed all claims with prejudice.

The court found that Young failed to allege key legal elements for each claim. For instance:

• His deceptive business practices claim under the Maryland Consumer Protection Act was dismissed because Young did not plead that he relied on a misrepresentation by State Farm — a requirement under the statute.
• The fraud claim failed under Rule 9(b)’s heightened pleading standard, as Young did not identify a false statement made to him personally or allege that State Farm intended to defraud him.
• The breach of contract claim was dismissed because Young was not in a contractual relationship with State Farm, and Maryland does not recognize a standalone claim for breach of an implied duty of good faith and fair dealing in the absence of a contract.
• The intentional infliction of emotional distress claim did not meet the legal threshold of “extreme and outrageous” conduct, and Young did not plausibly allege intent or recklessness by State Farm.
• The negligence claim was dismissed because State Farm owed no legal duty to Young, who was not their customer. The court emphasized that an “intimate nexus,” such as privity or close reliance, is required under Maryland law to support economic loss claims.
• The defamation claim lacked specificity, as Young failed to identify a particular defamatory statement or show how it exposed him to public scorn or contempt.
• Finally, the tortious interference claim failed because Young did not allege that State Farm engaged in independently wrongful or unlawful conduct, a requirement when there is no underlying contract between the parties.

Although the case stemmed from conduct by an insurance company, the court did not analyze or interpret any insurance policy language. The claims involved general tort and consumer protection theories, not coverage disputes or policy provisions.

Judge Boardman concluded that Young’s repeated attempts to amend the complaint had failed to cure the legal deficiencies, and further amendment would be futile. The dismissal with prejudice brings the case to a close.