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
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
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