Hardy Bros. Body Shop v. State Farm

• Citation: 848 F. Supp. 1276
• Decision Date: 30 March 1994
• Docket Number: No. 3:92-cv-368WS.,3:92-cv-368WS.
• Court: U.S. District Court — Southern District of Mississippi
• Parties: HARDY BROTHERS BODY SHOP, INC., a Mississippi Corporation, and Wayne Gressett d/b/a Wayne Gressett Body Shop, Plaintiffs, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Defendant.

848 F. Supp. 1276

HARDY BROTHERS BODY SHOP, INC., a Mississippi Corporation, and Wayne Gressett d/b/a Wayne Gressett Body Shop, Plaintiffs, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Defendant.

No. 3:92-cv-368WS.

United States District Court, S.D. Mississippi, Jackson Division.

March 30, 1994.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

James W. Nobles, Jr., Jackson, MS, for plaintiffs.

Richard D. Gamblin, Wise, Carter, Child & Caraway, Jackson, MS, for defendant.

MEMORANDUM OPINION AND ORDER

WINGATE, District Judge.

Before the court is the motion of the defendant State Farm Mutual Automobile Insurance Company (hereinafter "State Farm") for summary judgment pursuant to Rule 56(b)¹ of the Federal Rules of Civil Procedure. By its motion, State Farm avers that it is entitled to judgment on all of plaintiffs' claims by virtue of the undisputed facts and applicable law. The plaintiffs oppose the motion.

I. INTRODUCTION

At the center of this controversy is State Farm's Auto Damage Claim Policy. Before announcing this Policy, State Farm surveyed automobile repair shops in the Jackson, Mississippi, area for several years in order to obtain information concerning repairs, inspections, billing practices, and minimal equipment needs of auto repair shops. Based upon this survey, State Farm says that it then identified certain practices, procedures, and methods which would better ensure quality repairs to State Farm insured vehicles. Thereafter, beginning in August of 1991, State Farm invited local repair shops to sign a form pledging to meet certain criteria consisting of ten items deemed by State Farm to be essential for the performance of quality repairs. State Farm places the names of those repair shops which pledge to follow the criteria on a list which State Farm calls a "reference guide." In the event a vehicle owner insured by State Farm requests assistance in choosing a suitable repair shop, State Farm provides the insured vehicle owner with a copy of this reference guide. If the insured vehicle owner chooses a repair shop not listed in the reference guide, a State Farm representative advises the insured vehicle owner by telephone or in person that the repair shop chosen is not one listed in the reference guide. State Farm then sends a letter to the insured vehicle owner which confirms the conversation concerning the non-listed repair shop. The letter states, among other things, that the repair shop chosen is not listed in the reference guide and that State Farm may not be able to assist the insured vehicle owner should the repairs not meet the insured vehicle owner's expectations.

The plaintiffs, Hardy Brothers Body Shop, Inc., (hereinafter "Hardy Brothers") and Wayne Gressett Body Shop (hereinafter "Wayne Gressett") are automobile body shops doing business in Jackson, Mississippi. According to the plaintiffs, State Farm's reference guide policy conditions claim payments for covered vehicles upon an insured's agreement to use designated repair shops selected by State Farm, in violation of Miss. Code Ann. § 83-11-501 (Supp.1993);² constitutes an unfair trade practice, in violation of Miss.Code Ann. § 75-24-5(b), (c), (e) and (h);³ and amounts to a restraint of trade, in violation of Title 15 U.S.C. §§ 1 & 2. Furthermore, say plaintiffs, State Farm's giving of form letters to its insured vehicle owners constitutes libel and slander against those repair shops not appearing in the reference guide and, moreover, amounts to a tortious interference with the business and contractual relations of those shops.

This case was removed to this court from the Circuit Court for the First Judicial District of Hinds County, Mississippi, pursuant to Title 28 U.S.C. § 1441.⁴ The court's jurisdiction is predicated upon diversity of citizenship and an amount in controversy exceeding $50,000.00, 28 U.S.C. § 1332.⁵ Pursuant to Erie Railroad Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938), the applicable substantive law for this dispute is taken from the forum in which this federal court sits, the State of Mississippi. Rittenhouse v. Mabry, 832 F.2d 1380, 1382 (5th Cir.1987); DeMelo v. Toche Marine, Inc., 711 F.2d 1260, 1264 (5th Cir.1983). As stated earlier, before the court is State Farm's motion by which it moves for summary judgment under Rule 56, Federal Rules of Civil Procedure. By this motion, State Farm contends that there are no genuine issues of material fact as to any of the plaintiffs' claims and that the applicable law supports a judgment in its favor. For the reasons which follow, this court is persuaded to grant the motion.

II. PERTINENT FACTS

a. The Auto Damage Claim Policy (ADCP)

Prior to August of 1991, State Farm routinely conducted surveys of automobile body shops in the Jackson, Mississippi, metropolitan area in order to obtain information regarding their equipment, billing practices, percentage mark-up on used parts, and their hourly labor rates. State Farm claims that its purpose in accumulating this data was to determine the "prevailing competitive price" on labor and parts which State Farm would be obligated to its insureds to pay for auto repair in the event of collision or other damage and to identify practices, procedures, and methods which would assist State Farm in fulfilling its contractual obligations to its insureds.

In August of 1991, State Farm initiated in the Jackson, Mississippi, metropolitan area its Auto Damage Claim Policy ("ADCP" or "Claim Policy") as part of a nationwide program relating to the handling of vehicle property damage claims. This program, different in certain material aspects from any of State Farm's prior programs, is explained in a State Farm Claim Supervision Manual dated August 1, 1991. That manual, at "Article No. 8," contains forms for letters, surveys, and agreements to be used in implementing and effecting the ADCP policies outlined in the manual.

At the heart of the program is State Farm's "Repair Facility Criteria Survey Form" (hereinafter the "survey form") which, according to State Farm, is the result of its intensive probe into the practices, methods, and costs of the area automobile repair shops. This survey form, says State Farm, consists of ten criteria which, if agreed to by automobile shops, promise to ensure quality repairs of State Farm vehicles. The ten ADCP Repair Facility Criteria listed on the survey form are as follows:

1. The repairer agrees to follow ethical and professional business practices in its business conduct with State Farm representatives and our mutual customers.

2. The repairer agrees to perform repairs which serve to restore the damaged vehicle to a preloss condition relative to safety, function and appearance and further agrees to warrant such repairs, including refinishing, in writing, for a period of not less than one year from date of completion of repairs.

3. The repairer agrees to perform all repairs according to the itemized repair estimate or as subsequently approved by State Farm and agrees to employ repair/replacement techniques as described in the itemized repair estimate. If such repair/replacement techniques are found to be unnecessary to restore the damaged vehicle to a safe, preloss condition as described above, the repairer agrees to notify State Farm of any proposed deviation prior to repairs and to obtain approval as to the technique to be utilized and agreement as to costs to be incurred.

4. The repairer agrees to bill only for repairs when and as performed.

5. The repairer agrees that charges including, but not limited to, towing, storage, tear down and sublet repairs will follow those that are usual and customary in the market area.

6. The repairer agrees to use quality replacement non-OEM (original equipment manufacturer), used, rebuilt or reconditioned parts only if such parts meet the following criteria:

New non-original equipment manufacturer parts must have the name, mark or logo of the manufacturer affixed or ascribed so as to be visible, where practicable, after installation. There must be assurance that parts will perform for fit and finish to a level which is at least equal to the original equipment manufacturer part being replaced.

CAPA certified parts shall be deemed in compliance.

New non-original equipment manufacturer outer sheet metal parts must be backed by a written limited warranty against perforation rust-through for as long as the part is owned by the first retail user; for other new non-original equipment manufacturer parts, the warranty terms must provide protection which is not less that the vehicle owner would receive upon electing to replace with a new, original equipment part.

7. The repairer agrees to allow a representative of State Farm to inspect vehicles on the repairer's premises during normal business hours for the purpose of writing estimates and to confirm that repairs are being completed as specified on the estimate.

8. The repairer agrees that all disagreements as to repair cost, techniques, method, parts, or materials will first be brought to the attention of, and a sincere effort made by the repairer to resolve with, the local State Farm management person in charge of the claim file.

9. The repairer has the following operable equipment/capability:

a. A measuring device suitable for symmetrical or asymmetrical structural dimensions.

b. Electrical or hydraulic equipment needed to perform multiple repair pulls on frame and unibody vehicles.

c. A gas metal are welder (GMAW) which will be used in appropriate repair situations.

10. The repairer agrees that all sublet repairs will be performed in accordance with the repair facility criteria.

State Farm says it provides this form, along with a description of the ADCP, to all repair shops of which it is aware. According to State Farm, if a repair shop meets and agrees with State Farm's "repair facility criteria," that shop is listed on the "Repair Facility Reference Guide." The Jackson...