Minnesota Court of Appeals Rules in Favor of Non-Assignment Clause Applying to Glass Shops

A Minnesota Court of Appeals has affirmed the idea that, in Minnesota, a "non-assignment" clause in an insurance policy protects insurers from having to deal directly with auto glass shops, in a consolidated case involving Star Windshield Repair vs. Western National Insurance Co., The Glass Network and Auto Glass Express vs. Austin Mutual Insurance Co. and State Farm Mutual Automobile Insurance Co. vs. Archer Auto Glass. (CLICK HERE for related story involving Star Windshield Repair.)

All three cases had been argued previously in District Court and while in the first two, the District Courts had concluded that anti-assignment language in the insurance policies precluded assignment of post-loss auto-glass claims, in the third the court concluded that the assignment of a post-loss claim was not precluded by policy language and that glass shops could seek payment directly from insurers. The latter of these was reversed with today's decision.

In each case, an insured's vehicle's glass was damaged and he/she contacted a glass shop to fix or replace the glass. Each repair company's agreement contained an assignment clause by which the insured assigned to the company any claim for insurance proceeds. Each glass shop billed the involved insurers directly, but in an amount less than was billed. After arbitrators ruled in favor of the glass shops, the insurers took the issue to district court.

In the cases of Star Windshield Repair vs. W. National Insurance Co. and Auto Glass Express vs. Austin Mutual Insurance Co., the district courts ruled that the assignments were void. In the case of State Farm Mutual Auto Insurance Co. vs. Archer Auto Glass, the district court ruled that the anti-assignment provision did not extend to post-loss proceeds. Both glass shops in the former cases and the insurer in the latter appealed, and the Court of Appeals consolidated all three before reaching today's decision.

Chuck Lloyd of Livgard & Rabuse P.L.L.P., who represented the glass shops in all three cases, was not available for comment this afternoon.

CLICK HERE for full text of decision.

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