Canadian Underwriter

Court of Appeal for Ontario rules against auto glass firm in lawsuit against The Co-operators

January 20, 2016   by Canadian Underwriter

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Resq Auto Glass Inc. has been unsuccessful in a breach of contract lawsuit against The Co-operators General Insurance Company, which agreed to pay no more than $50 each on more than 1,800 windshield repairs, the Court of Appeal for Ontario has ruled.

The dismissal of a lawsuit, against The Co-operators General Insurance Company for windshield repairs, was upheld by the Court of Appeal for Ontario

Between February 2012 to July 2014, repairs were done to windshields of 1,844 vehicles insured by Guelph, Ont.-based The Co-operators, according to a decision released in February, 2011 by the Ontario Superior Court of Justice. The Co-operators was billed $100 but had not agreed to pay more than $50 per repair. Resq went to court seeking another $50 per repair, asking for total damages of more than $200,000.

The Superior Court of Justice granted The Co-operators’ motion for summary dismissal. Court records indicate that The Co-operators documents to Resq authorizing repairs for $50 each and stipulated it would not pay more.

That ruling was upheld on appeal, in a decision released Jan. 14, 2016.

“In contrast to companies operating auto glass replacement and repair businesses out of brick and mortar locations which get business from car owners who approach them, the plaintiff does not operate out of a fixed location,” wrote Madam Justice Wailan Low of the Superior Court of Justice. “The plaintiff’s business with automobile owners is initiated through independent contractors who find cars with one or more windshield chips, identify the owners, ascertain the owners’ insurers, and place calls to the insurers to facilitate authorization by the insurers to the plaintiff to do the repair.”

Resq contended that $100 is the “market rate” – an argument that Justice Low suggested was “irrelevant” to the case.

The work orders signed by each vehicle owner included a section assigning their rights against their insurer. However, Justice Low ruled that Resq Auto Glass was not an insured and there was in fact no assignment of policies.

“The Work Order Estimate contained a section at the bottom printed in very small print that included the assignment language on which ResQ relies,” the Court of Appeal for Ontario noted. “The print on the sample document was so small the motion judge found it to be illegible and had to have it reproduced.”

Justice Low’s findings “establish that there was a contract for repair at a specified price between Co-operators and ResQ,” the Court of Appeal added in its unanimous decision. “The purported assignment of the right to receive proceeds of insurance was ineffective because, in the context of these particular transactions, the car owners had paid nothing, had no claim against Co-operators and therefore had nothing to assign.”

The judges hearing Resq’s appeal were Madam Justice Janet Simmons Mr. Justice Harry LaForme and Mr. Justice Grant Huscroft.

The insurer’s obligation “was either to indemnify its insured for what the insured paid to repair the damage to the insured’s automobile or to repair the automobile – provided the insured had purchased the coverage and provided that reimbursement was not precluded by the deductible amount,” the Court of Appeal wrote. “In this case, on being approached by an insured and ResQ, Co-operators contracted directly with ResQ to effect windshield repairs for $50 regardless of whether it had an obligation under the insurance policy to do so. Vis-à-vis the insured, the Insurer was waiving the deductible where there was one.”

The Court of Appeal rejected Resq’s argument that The Co-operators engaged in “discrimination” against the auto glass firm by agreeing to pay only $50 per repair.

“Leaving aside the question whether ResQ proved its allegations, they do not establish a cause of action in any event,” the Court of Appeal for Ontario found. “On the motion judge’s findings, Co-operators entered into individual contracts with ResQ at a price Co-operators quoted in each case. ResQ was free to accept or reject the price that was offered. ResQ failed to establish any basis for asserting Co-operators’ conduct in this regard was unlawful.”