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N.Y. Shop Settles with Progressive; Nationwide Loses Request for Summary Judgement

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Feb. 22, 2018—Following wins before the Second Circuit Appeals Court late last year, a Syracuse, N.Y., body shop has settled a lawsuit with Progressive and seen a similar case against Nationwide receive another favorable ruling.

Nick’s Garage had sued Progressive on behalf of 26 first-party and 11 third-party customers who had assigned the collision repair facility their policy benefits. Progressive had refused to pay some of the shop’s charges—which would have left the customers on the hook for the difference—and for new OEM parts versus the alternatives permitted under the policy.

New York Northern District Court Judge Mae D’Agostino in 2015 had rejected Nick’s Garage’s argument and ruled in favor of Progressive’s request for summary judgment—only to have much of that decision overturned by the Second Circuit Court of Appeals in November 2017. The court’s thinking in that ruling in part informed a similar decision that day in Nick’s Garage’s lawsuit against Nationwide.

The appellate court determined in the Progressive case:

Insurer’s evidence depends on the proposition that evidence of rates that repair shops are willing to accept from Insurer shows the prevailing competitive rate. But that is not necessarily so. An insurer such as Progressive may command a very large volume of business.

The fact that repair shops may accept a labor rate paid by a particular insurer that may bring the shop a large volume of business does not demonstrate that the shop, or shops generally, would accept the same rate in dealing with another insurer or a customer who has only one car to be repaired. In other words, Insurer’s evidence that it pays labor rates based on its own ability to get repair shops to agree to those rates does not demonstrate that it pays what it is contractually obligated to pay—the rates that actually prevail in the market in the area where the repairs are performed. Indeed, Insurer’s Reference Guide explicitly acknowledges that Insurer does not “conduct a formal market survey of rates in most states.”

Garage countered with two types of evidence: first, that higher labor rates than those paid by Insurer were posted by other repair shops; second, that other insurers have agreed to pay Garage higher rates. The evidence of rates posted at repair shops is of debatable persuasive value because it fails to show that the posted rates are actually paid, much less that the posted rates represent the prevailing labor rates. On the other hand, the fact that other insurers—and in some instances, even Insurer itself—paid rates higher than the rate typically paid by Insurer is sufficient to support a genuine dispute as to a relevant fact.

Garage succeeds in defeating Insurer’s motion for summary judgment if its evidence supports the existence of a genuine dispute as to a material fact on that question. Especially given the illogic of Insurer’s proposition that the rate it can regularly command demonstrates the prevailing rate in the market—including rates paid by other insurers and uninsured individuals—Garage’s evidence of higher rates paid to it is sufficient to show a genuine dispute. (Bold emphasis ours; italics court’s.)

 

Nationwide

Nationwide took a different tactic following a similar appellate court ruling, arguing again for summary judgment:

Upon remand for further proceedings on this issue, if plaintiff is to avoid summary judgment now is the time for plaintiff to come forward with evidence regarding whether the amounts paid by Nationwide were sufficient or insufficient to return the vehicles to their pre-accident condition. That evidence, as this Court has previously noted, must be more than conclusory, and should address the currently undisputed record evidence that Nationwide had other shops available to do the work of returning the vehicles to their preaccident condition for the amounts and at the labor rates offered.

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