Judge Vacates Glass Shop's Arbitration Award; Rules Austin Mutual's Anti-Assignment Provision Binding

Minnesota District Court Judge Heidi Schellhas overturned the award granted to The Glass Network & Auto Glass Express through arbitration earlier this year, ruling in favor of Austin Mutual Insurance Company's request for an order vacating the award, which totaled more than $400.

The dispute arose from $134.82, the difference between the invoice submitted by The Glass Network & Auto Glass Express for a replacement performed in October 2005 and the check issued by Austin Mutual for payment the following month.

The Glass Network & Auto Glass Express billed Austin Mutual directly for $508.19, which the judge ruled is in line with operating procedures for the auto glass industry in Minnesota. However, Judge Schellhas also noted in the relevant history that Minnesota state legislature was amended in 2000 to "require payment 'based on a competitive price …'"

Austin Mutual issued a check to The Glass Network & Auto Glass Express for the amount of $373.37 along with a letter stating that the check "represents a competitive price that is fair and reasonable within the local industry at large for this claim."

In late November 2005, The Glass Network & Auto Glass Express filed a petition for binding arbitration to recoup the $134.82 difference. The arbitration efforts came down to a matter of linguistics.

At issue was the anti-assignment language in Austin Mutual insurance policy. According to court documents, the Austin Mutual policy states, "your rights and duties under this policy may not be assigned without our written consent" (original emphasis). When the windshield replacement work was performed, the customer signed The Glass Network & Auto Glass Express invoice, which included the verbiage:

REPLACEMENT HAS BEEN MADE TO MY SATISFACTION AND I HEREBY ASSIGN SUCH PROCEEDS AS MAY BE REQUIRED TO SATISFY ALL AMOUNTS DUE AND OWING TO THE ABOVE NAMED COMPANY FOR SAID INSTALLATION. IF FOR ANY REAOSN THE INSURANCE COMPANY DOES NOT PAY FOR THESE REPAIRS/REPLACEMENTS, THE ABOVE SIGNED AGREES TO PAY FOR SAID REPAIRS/REPLACEMENTS.

In March 2006, the arbitrator awarded The Glass Network & Auto Glass Express the $134.82 plus interest and reimbursement for the filing fee. An additional $300 in arbitrator compensation was levied against Austin Mutual.

It is to this award that Austin Mutual requested an Order to Vacate, and Judge Schellhas agreed, noting that the insurer's "direct payment to Auto Glass was statutorily required and was accompanied by a letter expressly denying consent to [the consumer's] assignment," thus it "did not voluntarily or intentionally abandon its right to enforce the anti-assignment provisions in the insurance policy," and that "the arbitrator exceeded his power by making an award to the claimants, who had no contractual privity with Austin Mutual and no standing to bring the action, where assignment was expressly prohibited by the insurance policy."