Star Windshield Repair v. Western Nat. Ins.

• Decision Date: 05 February 2008
• Docket Number: No. A07-217.,No. A07-830.,No. A07-216.,A07-216.,A07-217.,A07-830.
• Citation: 744 N.W.2d 237
• Parties: STAR WINDSHIELD REPAIR, INC., as assignee for Aaron HELGET, Petitioner, Appellant (A07-216) v. WESTERN NATIONAL INSURANCE CO., Respondent (A07-216), and The Glass Network, Claimant (A07-217), Auto Glass Express, as assignee for Kathy Heglos, claimant, Appellant (A07-217), v. Austin Mutual Insurance Company, Respondent (A07-217), and State Farm Mutual Automobile Insurance Company, petitioner, Appellant (A07-830), v. Archer Auto Glass, as Assignee of Ronald Hornberg, Respondent (A07-830).
• Court: Minnesota Court of Appeals

744 N.W.2d 237

STAR WINDSHIELD REPAIR, INC., as assignee for Aaron HELGET, Petitioner, Appellant (A07-216) v. WESTERN NATIONAL INSURANCE CO., Respondent (A07-216), and The Glass Network, Claimant (A07-217), Auto Glass Express, as assignee for Kathy Heglos, claimant, Appellant (A07-217), v. Austin Mutual Insurance Company, Respondent (A07-217), and State Farm Mutual Automobile Insurance Company, petitioner, Appellant (A07-830), v. Archer Auto Glass, as Assignee of Ronald Hornberg, Respondent (A07-830).

No. A07-216.

No. A07-217.

No. A07-830.

Court of Appeals of Minnesota.

February 5, 2008.

Charles J. Lloyd, Livgard & Rabuse, P.L.L.P., Minneapolis, MN, for appellants Star Windshield Repair and Auto Glass Express, and for respondent Archer Auto Glass.

Eric J. Magnuson, Briggs & Morgan, P.A., Minneapolis, MN; and Mark R. Bradford, Bassford Remele, Minneapolis, MN, for respondent Western National Insurance Co.

Steven R. Kluz, Mohrman & Kaardal, P.A., Minneapolis, MN, for respondent Austin Mutual Insurance Company.

Leatha G. Wolter, Jenneane L. Jansen, Meagher & Geer, P.L.L.P., Minneapolis, MN, for appellant State Farm Mutual Automobile Insurance Company.

Considered and decided by SHUMAKER, Presiding Judge; WORKE, Judge; and MUEHLBERG, Judge.^*

OPINION

SHUMAKER, Judge.

Each of these appeals is taken from a district court decision resolving a motion to vacate an arbitrator's award related to claims for insurance policy proceeds made by auto glass repair companies as purported assignees of the insured policyholders. In two of the cases, the district court vacated the arbitrators' awards, concluding that anti-assignment language in the insurance policies precluded assignment of post-loss auto-glass claims. In the third case, the district court denied the motion to vacate, concluding that the assignment of a post-loss claim was not precluded by policy language. Because plain language in each of the insurance policies precludes all assignments, we affirm the two orders vacating the arbitrators' awards and reverse the order denying the motion to vacate.¹

FACTS

The dispositive issue in each of these companion cases is whether an anti-assignment provision in a motor vehicle insurance policy is enforceable as to post-loss physical damage proceeds so as to preclude a purported assignee from asserting the right to dispute the amount of such proceeds.

Each insurer provided comprehensive insurance, which included coverage for windshield and glass damage. Western National Insurance Co. and Austin Mutual Insurance Company had identical anti-assignment provisions in their policies: "Your rights and duties under this policy may not be assigned without our written consent." State Farm Mutual Automobile Insurance Company's anti-assignment provision was expressed differently: "No change of interest in this policy is effective unless we consent in writing,"

In each case, an insured vehicle sustained windshield or glass damage and the insured policyholder contracted with a glass repair company to fix or replace, the damaged item. Each repair company's agreement contained an assignment clause by which the insured assigned to the company any claim for insurance proceeds.

The respective repair companies performed glass repair work and directly billed the applicable insurers. Each insurer paid for the repair work but in an amount less than that billed. Asserting rights as assignees under the insurance policies, the repair companies initiated arbitration proceedings, Over the insurers' objections, arbitrators held hearings and made awards exceeding the sums the insurers had paid to the repair companies.

The insurers respectively moved the district court to vacate the arbitration awards, arguing that the purported assignments were void. In the cases of Star Windshield Repair, Inc. v. W. Nat'l Ins. Co. and Auto Glass Express v. Austin Mut. Ins. Co., the district court agreed with the insurers and vacated the awards. The repair companies appealed. In the matter of State Farm Mut. Auto. Ins. Co. v. Archer Auto Glass, the district court held that the anti-assignment provision did not extend to post-loss proceeds and confirmed the award. The insurer appealed. We consolidated these appeals for decision.

ISSUE

When a policy of comprehensive motor vehicle insurance prohibits the assignment of rights, duties, or interests without the insurer's consent, does the prohibition validly extend even to the assignment of post-loss insurance proceeds?

ANALYSIS

It is undisputed that the arbitrations in these consolidated cases are governed by the Minnesota No-Fault Automobile Insurance Act. Minn.Stat. §§ 65B.41-.71 (2006). No-Fault arbitrators are "limited to deciding questions of fact, leaving the interpretation of law to the courts." Gilder v. Auto-Owners Ins. Co., 659 N.W.2d 804, 806 (Minn.App.2003) (quoting Weaver v. State Farm Ins. Cos., 609 N.W.2d 878, 881 (Minn.2000)). But no-fault arbitrators are authorized in certain cases to make legal determinations necessary to grant relief. Weaver, 609 N.W.2d at 882. Accordingly, an arbitrator's determination of a legal issue is subject to de novo review. Klinefelter v. Crum & Forster Ins. Co., 675 N.W.2d 330, 334 (Minn.App.2004).

The interpretation of a provision in an insurance policy is a legal issue. AMCO Ins. Co. v. Ashwood-Ames, 534 N.W.2d 740, 741 (Minn.App.1995), review denied (Minn. Sept. 28, 1995). In each of the consolidated cases, an arbitrator interpreted an anti-assignment clause in an insurance policy to permit the assignment of post-loss insurance proceeds. If an arbitrator errs as a matter of law in making an award, the arbitrator thereby exceeds his power and the award may be vacated. Minn.Stat. § 572.19, subd. 1(3) (2006); Weaver, 609 N.W.2d at 882.

An insurance policy is a contract to which the general rules of contract law apply, unless there are statutory provisions to the contrary. Waseca Mut. Ins. Co. v. Noska, 331 N.W.2d 917, 926 (Minn. 1983). One ubiquitous rule of contract law that applies here is that, if there is no ambiguity in policy terms, the insurance contract is to be given its plain meaning. Bobich v. Oja, 258 Minn. 287, 294, 104 N.W.2d 19, 24 (1960). The glass repair companies do not contend that the antiassignment clauses are ambiguous, nor do we find them to be so. All the clauses here plainly have broad reach, precluding any transfer of a right or interest under the respective policies. Thus, on the face of each policy, the insured may not assign the right to receive insurance proceeds or the right to litigate a dispute over the amount of proceeds claimed to be due. Despite this plain and broad prohibition, the glass repair companies argue that Minnesota law allows the assignment of post-loss property-insurance proceeds. In addressing this contention, we note at the outset that these cases do not involve liquidated sums that the respective insureds have merely directed their carriers to pay to third parties. Even under the language of these policies, such a directive to pay a fixed sum to another would be permissible. Caselaw has not always made the distinction between assigning liquidated proceeds and unliquidated proceeds. The distinction is significant because the former assignment implicates only the mechanical transfer of money, while the latter assignment carries with it the substantive right to litigate the amount of the insurance benefit the insurer is obligated to pay. In the context of the cases on appeal, the assignee of unliquidated proceeds, here the glass repair companies, would have the right to submit the claim, if it is $10,000 or less, to mandatory and binding No-Fault arbitration. Minn.Stat. § 65B.525 (2006).

The glass repair companies argue that Minnesota precedent permits a post-loss assignment of insurance proceeds despite an anti-assignment clause in the policy, and that the purpose of such a clause is not depreciated by a post-loss assignment.

Addressing the latter argument first, we note that the glass repair companies contend that the purpose of an anti-assignment clause is twofold. First, it prevents an increase in the risk of loss to the insurer without the insurer's knowledge and consent. Second, it protects the insurer from having to do business with a party it has not chosen to do business with. The companies argue that, because the loss has already occurred, there can be no increase in the risk covered by the policy, and that, by statute, insurers are required to do business with glass repair companies. See Minn.Stat. § 72A.201, subd. 6(14) (2006) (providing statutory guidelines for settlement of window-glass damage claims). Although the glass repair companies are correct in identifying at least two reasons an insurer might include an antiassignment clause in an insurance policy, when the language of the policy is unambiguous, as it is here, we are not permitted to interpret it, but rather we must give effect to the plain meaning the parties intended. See Thommes v. Milwaukee Ins. Co., 641 N.W.2d 877, 880 (Minn.2002) ("When the language of an insurance contract is unambiguous, it must be given its plain and ordinary meaning.").

That brings us to the contention that Minnesota precedent permits the type of assignment at issue here. For that proposition, the glass repair companies rely on Windey v. N. Star Farmers Mut. Ins. Co., 231 Minn. 279, 43 N.W.2d 99 (1950); Ill. Farmers Ins. Co. v. Glass Serv. Co., 683 N.W.2d 792 (Minn.2004); Reitzner v. State Farm Fire & Cas. Co. Inc., 510 N.W.2d 20 (Minn.App.1993), superseded by statute, 1994 Minn. Laws ch. 435, § 1, at 257, as recognized in Border State Bank of Greenbush v. Farmers Home Group, 620 N.W.2d 721, 723 (Minn.App.2000); and In re Estate of Sangren, 504 N.W.2d 786.

Windey involved a real estate purchase agreement that required the vendor's insurance proceeds from any property loss to be applied against the purchase price. 231 Minn. at 281, 43 N.W.2d at 100. Even though...