Written by Gary Reinhardt, Esq.
Glass Companies are battling insurers throughout the country claiming that the insurers’ glass claim programs amount to improper “steering.” One particularly active group filed a petition titled “National Right to Fair Trade Petition.” This petition argues that insurers’ glass programs may violate antitrust laws. In order to be ready for such claims, the insurer needs to act consistently and adhere to its insurance policy.
A recent skirmish between a glass repair company and insurers resulted in an early win for the insurers. In Clear Vision Windshield Repair, LLC, as assignee of Star Davis v. Elephant Insurance Company (numerous companion cases accompanied this ruling involving Erie Insurance and First Liberty), the Henrico Circuit Court granted the insurers’ demurrer and dismissed Clear Vision’s cases, with prejudice.
Clear Vision alleged that it performed windshield chip repair on windshields of each insured. Clear Vision attempted to gain an assignment of insurance benefits from each insured. As part of its contract for services, Clear Vision sought this assignment of insurance policy benefits and agreed not to pursue the insured personally for the cost of its services (costs were also disputed but the Court never reached that issue). All of this took place, including the alleged repairs, prior to the claim being reported to the insurer. Neither the insured nor Clear Vision obtained consent from the insurer for this attempted assignment.
The insurers refused Clear Vision’s demand for payment under the policy. In response, Clear Vision sued each insurer in General District Court seeking not only $150 per insured for chip repair(s) but also bad faith double damages, costs and $5000 in attorney’s fees per case filed, pursuant to Va. Code Ann. §8.01-66.1 and §38.2-209. Included in its pleadings were allegations of “steering” by the insurers and violations of the Unfair Claims Practices Act.
The insurers demurred to the Bill of Particulars, asserting that the assignment relied upon by Clear Vision was invalid. The insurers relied upon the policy language stating, “Your rights and duties under this policy may not be assigned without our written consent” and other policy conditions. In the alternative, the insurers argued that if the assignment was valid; Clear Vision was not a proper party to assert bad faith claims under the statutes it relied upon. Neither bad faith statute listed an assignee as a proper party to obtain bad faith damages.
Clear Vision and the insurers submitted extensive briefs on the topic and the General District Court allowed extended oral argument by all parties. The General District Court issued a written opinion, holding that “without the written consent of Defendant, the assignments in these cases were invalid and unenforceable . . . and these cases are dismissed.” Because the Court found the assignments invalid, it did not address Clear Vision’s bad faith argument.
Clear Vision appealed to the Circuit Court. The insurers again responded to the plaintiff’s filing with a demurrer. Even longer briefs were filed and the Court heard oral argument. At the conclusion of argument, the Honorable Gary A. Hicks ruled from the bench, granting the insurers demurrers and dismissing the cases, with prejudice. Judge Hicks agreed with the lower court that Clear Vision’s attempted assignments were invalid because of the failure to obtain permission from the insurer for the assignment. The Court also mentioned that he did not believe Clear Vision had standing to sue for bad faith, either.
Although Clear Vision appealed the Henrico Circuit Court ruling, it recently withdrew its appeals. Clear Vision also non-suited cases still pending in Hanover General District Court.
Many coverage issues arose and were asserted, including a failure to display damaged property and the insured’s conduct with Clear Vision prevented an opportunity to inspect the damage. Ultimately, the Court focused on the policy language and Virginia’s long-standing right to limit contractual assignment. The insurance contract prevents an assignment without permission and that policy language was clear and unambiguous. Without permission, the insurance benefits could not be, and were not assigned to, Clear Vision, so Clear Vision was not a proper party to make claim for benefits or file suit.