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Insurer Obtains Summary Judgment in Body Shop Litigation

The Western District of Pennsylvania recently granted an insurer’s motion for summary judgment and dismissed claims for breach of contract, bad faith, and unjust enrichment brought by the assignee of claims from insureds and third-party claimants. The Court found that the insurer had paid for repairs pursuant to the auto policies it issued. The Court further held that a disagreement over the insurer’s repair estimates and the need for supplemental estimates does not establish bad faith. See Professional, Inc. v. Progressive Cas. Ins. Co, 2021 WL 4267497 (W.D. Pa. Sept. 20, 2021).

In Professional, the Plaintiff, an automotive repair shop, alleged that the defendant insurer failed to reimburse Plaintiff for the full cost of making repairs to automobiles that were covered by insurance policies issued by the insurer, which included repairing automobiles of customers who held a policy with the insurer (“Insureds”) and customers who did not hold a policy with the insurer but were owners of automobiles damaged by a liable person who did hold a policy with the insurer (“Third Party Claimants”). Plaintiff alleged that it suffered over $700,000 in damages, which represents unpaid balances, “delay time costs,” and administrative costs. Plaintiff further asserted that it obtained assignments from the Insureds and Third Party Claimants that allowed Plaintiff to seek damages from the insurer under the insurer’s contractual obligations to the Insureds and Third Party Claimants. The insurer filed a motion for summary judgment to dismiss Plaintiff’s breach of contract, bad faith, and unjust enrichment claims, which the Court granted.

As an initial matter, the Court held that Plaintiff could not maintain its claims against the insurer because different underwriting entities had issued the policies under which the assigned claims arose. The Court further held that, even if the appropriate underwriting entities were named in the lawsuit, Plaintiff’s claims still would not survive summary judgment. For the first-party breach of contract claim, the Court noted that the insurer was responsible under the auto policy for paying the cost of the prevailing competitive labor rates and the cost of repair or replacement parts and equipment, as reasonably determined by the insurer. Because Plaintiff had not challenged the reasonableness of the insurer’s assessment of the costs of labor and repairs (other than reiterate that it is less than what Plaintiff charges), or otherwise show that it was not compensated pursuant to the auto policy, the Court held that Plaintiff could not maintain its breach of contract claim. The Court held that Plaintiff also failed to prove any contractual entitlement to its administrative costs and delay times costs. For the third-party breach of contract claim, the Court held that Plaintiff did not provide evidence supporting an applicable statute or policy that allowed it to maintain a contract claim on behalf of the Third Party Claimants.

As to the bad faith claim, the Court held that the assignments did not expressly convey to Plaintiff the ability to maintain a bad faith claim against the insurer. Even if they did, the Court held that Plaintiff failed to produce sufficient evidence to maintain bad faith claims against the insurer.

Lastly, the Court dismissed Plaintiff’s unjust enrichment claim after finding that Plaintiff could not maintain an unjust enrichment claim on the Assignors’ behalf because there is an enforceable contract between the parties. Additionally, the Court held that Plaintiff could not maintain a claim for unjust enrichment on its own behalf because Plaintiff had not shown that any repairs were done at the insurer’s request, that the insurer had any duty to repair the vehicles according to Plaintiff’s recommendation, or that repairing the vehicles according to Plaintiff’s recommendation saved the insurer from expense or loss.