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Ltd. v. Nationwide Mutual Insurance Co.

Supreme Court of Vermont

June 28, 2019

Parker's Classic Auto Works, Ltd.
Nationwide Mutual Insurance Company

          On Appeal from Superior Court, Rutland Unit, Civil Division Helen M. Toor, J. (amended entry regarding motion); Samuel Hoar, Jr., J. (final judgment)

          Robert P. McClallen, Rutland, for Plaintiff-Appellant.

          Eric T. Boron and Roy A. Mura of Mura & Storm, PLLC, Buffalo, New York, for Defendant-Appellee.

          PRESENT: Reiber, C.J., Skoglund, Robinson, Eaton and Carroll, JJ.

          CARROLL, J.

         ¶ 1. Plaintiff appeals a judgment entered in favor of defendant following a trial in which a jury determined that defendant breached an insurance contract with plaintiff's assignors. The jury awarded plaintiff $41, 737.89 in damages. After the trial the superior court concluded that, as a matter of law, plaintiff could not show that his assignors were damaged by a breach of contract by defendant. We reverse this determination, vacate the judgment that was entered in favor of defendant, and remand with direction to the superior court to reinstate the jury's verdict and its award of damages.

         I. Factual and Procedural History

         ¶ 2. The following are the facts from the trial record taken in the light most favorable to plaintiff. Brueckner v. Norwich Univ., 169 Vt. 118, 122, 730 A.2d 1086, 1090 (1999) (explaining that we must view evidence in the "light most favorable to the non-moving party" on appeal of a motion for judgment as a matter of law) (quotation omitted). Plaintiff is a car repair business in Rutland. Defendant insures the vehicles of dozens of plaintiff's customers ("the insureds") who hired plaintiff to repair damage to their vehicles between 2009 and 2014. Over seventy insurance claims, which all arise under identical insurance policies, have been combined in this breach-of-contract case. For each insurance claim plaintiff repaired a car belonging to an insured, restoring it to preaccident condition, and, after receiving a post-loss assignment from an insured, [1] submitted itemized bills to defendant to recover for its services. Plaintiff then released each vehicle to its owner. In each instance, defendant paid less than what plaintiff had billed to complete the repair. The difference between the cost of repair billed by the repair shop and the amount paid by the insurance company-to whatever extent it is covered by the insurance policy-is called a short pay in the collision-repair industry. Plaintiff submitted to defendant a final invoice and a "supplemental report" itemizing each of the repairs performed.

         ¶ 3. For each claim involved in this case, although defendant did not pay a portion of what the repair shop believed was owed under the policy, defendant did pay significant sums. Defendant initially paid what its claims adjuster believed to be covered by the insurance policy after having conducted a visual inspection of the damage. Defendant generally would make at least one additional payment based on information provided by plaintiff after plaintiff disassembled the damaged vehicle in preparation to repair it. Payment to repair additional damage that is not apparent from a visual inspection of the vehicle is called a supplemental payment. After the adjuster's initial estimate was paid to plaintiff and any supplemental payments were made, there was still an outstanding balance for the repair bill on each claim involved in this case. Plaintiff believed these were covered by the insurance policy yet had been unpaid by the insurer. However, defendant maintained that these unpaid portions of the repair bill between plaintiff and each insured were not covered under the policy.

         ¶ 4. Plaintiff filed suit as the insureds' assignee to recover these purported short pays. The case proceeded to jury trial. Plaintiff offered a series of documents relating to each claim brought by each insured, which were admitted into evidence primarily by stipulation: the final invoice, a supplemental report itemizing all the work done by plaintiff and identifying charges made by plaintiff that defendant's claims adjuster did not believe were covered by the insurance policy, a separate itemized bill for painting costs incurred, plaintiff's accounting ledger for each claim, the contract between plaintiff and the insured authorizing plaintiff to repair the insured's vehicle, and the assignment of insurance claims by the insureds to plaintiff. Mr. Parker, the owner of the repair shop, testified on direct examination to his experience repairing vehicles and to the billing and repair processes employed in his shop. He compared, in some respects, the practices employed in his shop to those used by defendant's claims adjuster.

         ¶ 5. After plaintiff rested its case, defendant moved for judgment as a matter of law. See V.R.C.P. 50(a)(1). The trial court denied this motion, after which defendant presented testimony by one witness: claims adjuster Alan Douse. Mr. Douse explained the procedures that he follows to inspect damaged vehicles belonging to defendant's insureds, appraise the amount of damage to a vehicle, and issue payments to insureds based upon his estimate. After receiving instructions, the jury returned a verdict finding defendant liable for breach of the insurance policy and awarding plaintiff $41, 737.89.

         ¶ 6. Defendant filed a renewed motion for judgment as a matter of law under Vermont Rule of Civil Procedure 50(b), which the court granted. The court construed the insurance policy as requiring defendant to pay "an amount [defendant] determined was sufficient to do the repairs." It reasoned that the insureds could not have sued defendant for sums that were entirely within defendant's discretion to award. Therefore, the court explained, plaintiff could not sue defendant as the insureds' assignee. In reaching this conclusion, the court relied heavily on an out-of-state case involving an auto-glass repair shop, which sued an insurer as the insureds' assignee. Cascade Auto Glass, Inc. v. Idaho Farm Bureau Ins., 115 P.3d 751, 755 (Idaho 2005). Plaintiff appeals the trial court's order granting defendant judgment as a matter of law. II. Defendant May Not Unilaterally Determine the Value of an Insured's Claim

         ¶ 7. We review the interpretation of an insurance policy without deference. Co- operative Ins. v. Woodward, 2012 VT 22, ¶ 8, 191 Vt. 348, 45 A.3d 89. We therefore review anew the trial court's determination that under the policy the amount owed to an insured is fully within defendant's discretion to determine. An insurance policy must be "construed according to its terms and the evident intent of the parties as expressed in the policy language." Smith v. Nationwide Mut. Ins., 2003 VT 61, ¶ 11, 175 Vt. 355, 830 A.2d 108 (quotation omitted). When interpreting an insurance policy, the language is to be viewed "from the perspective of what a reasonably prudent person applying for insurance would have understood it to mean." Shriner v. Amica Mut. Ins., 2017 VT 23, ¶ 6, 204 Vt. 321, 167 A.3d 326 (quotation omitted). We resolve ambiguity in an insurance policy in favor of an insured, but we do not rewrite a policy if it happens to benefit an insurer. Id.

         ¶ 8. The claims in this case arise under defendant's Century II Collision Insurance Policy ('the policy'). Under the policy, defendant promises to pay for "direct and accidental loss of, or damage to" an insured vehicle.[2] However, this is subject to a limitation-of-liability provision mandating that "direct and accidental loss" cannot exceed "the cash value of the auto or its damaged parts at the time of loss." The calculation of "cash value" where the limitation-of-liability clause is invoked includes "consideration of fair market value, age, and condition of the property in question at the time of loss." The policy specifies that the insurer has three methods from which to choose to satisfy its obligation to an insured to pay for the "loss" or "damage": pay the insured directly, repair the vehicle, or replace the vehicle. Here it is undisputed that defendant elected to pay the insureds directly. The parties dispute how much ...

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