Court of Appeals Rules that Non-Assignment Clause Protects Insurers
from Dealing Directly with Glass Shops
The State of Minnesota's Court of Appeals recently ruled that a
"non-assignment" clause in an insurance policy protects insurers
from having to deal directly with auto glass shops, in a case filed
by Auto Owners Insurance Co. against Star Windshield Repair Inc.
The case originated when Star Windshield billed Auto Owners for
repair work done for its insureds, and Auto Owners sent a payment
to Star for less than the amount billed. Star Windshield attempted
to initiate arbitration with the Lansing, Mich.-based insurer, and
in response, Auto Owners filed a declaratory-judgment action "seeking
a declaration that the non-assignment clause in its insurance contract
prevented the customers from assigning the payment to Star Windshield,"
according to court documents. The decision to rule in favor of Auto
Owners was made on January 8.
However, Chuck Lloyd of Livgard and Rabuse, who represented Star
Windshield in the case, says the case is far from over.
"We're going to ask the Minnesota Supreme Court to review the case,"
Lloyd says, noting that the most recent decision conflicts with
a prior decision by the Minnesota Supreme Court and another decision
by the Minnesota Court of Appeals.
Likewise, Lloyd notes that the anti-assignment clause is designed
to protect the insurer from insuring someone it has chosen not to
insure-not to prevent it from handling post-loss payments
directly with the provider of service.
"That's the thing the Minnesota Court of Appeals completely missed
in all of this," he says.
He adds, "This whole notion that the anti-assignment clause is
designed to protect the insurers from doing business with those
that they don't want to do business withthat's true in the
underwriting area, but not in the negotiation of claims."
Lloyd cites Gopher Oil Company v. American Hardware Mutual Insurance
Company (1999), a previous Minnesota Court of Appeals Case,
along with Windey v. N. Star Farmers Mutual Insurance Co.
(1950), an earlier Minnesota Supreme Court ruling, as evidence for
the caseand what the non-assignment clause means.
"[The court] claims that Auto Owners didn't want to do business
with us [Star Windshield Repair], but they clearly did," he says.
Lloyd currently is involved in a similar case right now in the
Federal Court of Appeals, Farmers Insurance vs. Alpine Glass, and
in this case, he says Farmer's glass claims administrator, Safelite,
has contacted Alpine directly.
"That's a far cry from, 'we don't want to do business with the
glass companies," Lloyd says.
He also mentions that the Minnesota Court of Appeals will soon
hear a similar case, in which he also is involved, on the same question.
"This is a hopping issue right now," Lloyd says.
Lloyd says his request for the Supreme Court to hear this case
will be filed within 30 days of the Appeals Court's decision, which
was made on January 8, and the Minnesota Supreme Court likely will
decide whether to accept it within six to eight weeks.
William Moeller of Blethen, Gage & Krause PLLP, who represented
Auto Owners, says he believes he also has a strong case.
"I think at this point it's a very strong opinion of the court
of appeals in support of the enforcement of the non-assignment clauses,"
HERE for the full text of the Minnesota Court of Appeals' decision.
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