Star Windshield v. Western Nat. Ins., No. A07-216.

• Decision Date: 16 July 2009
• Docket Number: No. A07-830.,No. A07-217.,No. A07-972.,No. A07-216.
• Citation: 768 N.W.2d 346
• Parties: STAR WINDSHIELD REPAIR, INC., as assignee for Aaron Helget, Appellant, v. WESTERN NATIONAL INSURANCE CO., Respondent, and The Glass Network, Claimant, Auto Glass Express, as assignee for Kathy Heglos, claimant, Appellant, v. Austin Mutual Insurance Company, Respondent, and Archer Auto Glass, as Assignee of Ronald Hornberg, Appellant, v. State Farm Mutual Automobile Insurance Company, Respondent, and Auto Owners Insurance Co., Respondent, v. Star Windshield Repair, Inc., as Intended Assignee of A & E Construction Supply, Inc., et al., Appellant.
• Court: Minnesota Supreme Court

768 N.W.2d 346

STAR WINDSHIELD REPAIR, INC., as assignee for Aaron Helget, Appellant, v. WESTERN NATIONAL INSURANCE CO., Respondent, and The Glass Network, Claimant, Auto Glass Express, as assignee for Kathy Heglos, claimant, Appellant, v. Austin Mutual Insurance Company, Respondent, and Archer Auto Glass, as Assignee of Ronald Hornberg, Appellant, v. State Farm Mutual Automobile Insurance Company, Respondent, and Auto Owners Insurance Co., Respondent, v. Star Windshield Repair, Inc., as Intended Assignee of A & E Construction Supply, Inc., et al., Appellant.

No. A07-216.

No. A07-217.

No. A07-830.

No. A07-972.

Supreme Court of Minnesota.

July 16, 2009.

Charles J. Lloyd, Joshua P. Brotemarkle, Livgard & Rabuse, P.L.L.P., Minneapolis, MN, for appellants.

Diane B. Bratvold, Jonathan P. Schmidt, Briggs and Morgan, P.A., Minneapolis, MN, for respondent Western National Insurance Company.

Steven R. Kluz, Stoel Rives LLP, Minneapolis, MN, for respondent Austin Mutual Insurance Company.

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

William A. Moeller, Beth A. Serrill, Blethen, Gage & Krause, PLLP, Mankato, MN, for respondent Auto Owners Insurance Company.

Dale O. Thornsjo, Stacey A. Molde, Johnson & Condon, P.A., Minneapolis, MN, for amici curiae The Insurance Federation of Minnesota and The Property Casualty Insurers Association of America.

Leny K. Wallen-Friedman, Paul M. Floyd, Wallen-Friedman & Floyd, P.A., Minneapolis, MN, for amicus curiae Progressive Insurance Company.

OPINION

PAGE, Justice.

The issues in this appeal arise from four district court cases between auto glass vendors and insurance companies. The appellants are Star Windshield Repair, Inc., The Glass Network and Auto Glass Express (AGE), and Archer Auto Glass (collectively, the "auto glass vendors"). The respondents are Western National Insurance Company, Auto Owners Insurance Company, Austin Mutual Insurance Company, and State Farm Mutual Automobile Insurance Company (collectively, the "insurers"). Two separate panels of the Minnesota Court of Appeals, ruling in favor of the insurers, held that the presence of an auto insurance policy's anti-assignment clause precludes policyholders from assigning the right to post-loss proceeds in auto glass repair claims. Auto Owners Ins. Co. v. Star Windshield Repair, Inc., 743 N.W.2d 329, 331 (Minn.App.2008); Star Windshield Repair, Inc. v. W. Nat'l Ins. Co., 744 N.W.2d 237, 238 (Minn.App. 2008). We granted the auto glass vendors' petitions for review on the validity of post-loss assignments of insurance proceeds, and we consolidated the cases for oral argument and decision. We reverse the court of appeals' decisions and remand to the district court in each of the four cases for further proceedings consistent with this opinion.

The facts underlying each of the cases are substantially the same. In each case, an insured vehicle incurred windshield damage, and an auto glass vendor repaired the windshield. The insured policyholder assigned his or her claim for insurance proceeds to the auto glass vendor, which then billed the respective insurer directly. Each insurance policy contained an anti-assignment clause.¹ In each case, the insurer paid the auto glass vendor less than the amount billed,² and each of the auto glass vendors subsequently petitioned for arbitration.

In three of the cases, the arbitrators made an award in the auto glass vendors' favor. In two of those cases, the district court vacated the arbitrators' award, while in the third case, the award was affirmed.³ After consolidating the cases, the court of appeals agreed with the two district courts that vacated the arbitration award, holding that the anti-assignment clauses in the respective insurance policies prohibit assignment of the policies as well as the loss proceeds. Western National, 744 N.W.2d at 241.

In the fourth district court case, the district court issued an injunction precluding arbitration.⁴ The court of appeals affirmed the district court's grant of summary judgment, concluding "that a nonassignment clause can limit the assignment of postloss insurance proceeds, such as the amount due for the windshields in this case." Auto Owners, 743 N.W.2d at 337.

The issues raised in these cases require that we interpret language from automobile insurance policies. The interpretation of an insurance policy is a question of law as applied to the facts presented. See Meister v. W. Nat'l Mut. Ins. Co., 479 N.W.2d 372, 376 (Minn.1992). When there are no disputed material facts, we independently review a lower court's interpretation of the insurance policy. Id. In addition, an insurance policy is subject to the statutory law of the state. See Bobich v. Oja, 258 Minn. 287, 294, 104 N.W.2d 19, 24 (1960). The Minnesota Legislature has enacted a comprehensive scheme covering automobile insurance. Thus, we begin our analysis with a review of legislation relating to auto glass repair.

The legislature enacted the Minnesota No-Fault Automobile Insurance Act "to speed the administration of justice, [and] to ease the burden of litigation." Minn. Stat. § 65B.42(4) (2008). The No-Fault Act requires the submission of all claims "$10,000 or less . . . for no-fault benefits or comprehensive or collision damage coverage" to binding arbitration. Minn.Stat. § 65B.525, subd. 1 (2008); Minn. No-Fault Arbitration R. 6 (2008). Under Minn.Stat. § 65B.134 (2008), any auto insurance policy offering comprehensive coverage "must provide at the option of the insured complete coverage for repair or replacement of all damaged safety glass without regard to any deductible or minimum amount." (Emphasis added.) Thus, we have stated that repairs for auto glass damage fall "under the umbrella of `comprehensive coverage.'" Ill. Farmers Ins. Co. v. Glass Serv. Co., 683 N.W.2d 792, 798 (Minn. 2004). Without considering the effect of anti-assignment clauses in auto insurance policies, we have held that claims for insurance proceeds by auto glass vendors "are subject to no-fault arbitration after assignment." Id. at 805.

Further, the legislature has paid particular attention to the relationship between insurers and auto glass vendors. Under Minnesota's Unfair Claims Settlement Practice Act (UCSPA),⁵ Minn.Stat. §§ 72A.17-.32 (2008), an automobile insurer must, with respect to auto glass repairs, "provide payment to the insured's chosen vendor based on a competitive price that is fair and reasonable within the local industry at large." Minn.Stat. § 72A.201, subd. 6(14). Failure to do so is an unfair settlement practice. Id. Section 72A.201, subdivision 6, also prohibits insurers from inducing a policyholder to choose a particular auto glass vendor. Id., subd. 6(15)-(16). Therefore, under the UCSPA, the insured is free to choose any auto glass vendor, and the insurer must pay that vendor a competitive price. At the same time, an anti-incentive statute prohibits auto glass vendors from enticing policyholders with items of monetary value if their services are actually paid for by an insurer. Minn.Stat. § 325F.783(a) (2008).

The insurers contend that the auto insurance policies preclude the insured from assigning the right to post-loss proceeds. In particular, the insurers argue that their policies' anti-assignment clauses prohibit auto glass vendors from arbitrating the amount of disputed claims because the clauses preclude the assignment of rights, duties, and interests in the policies. Instead, the insurers claim that the policyholders themselves must be a party to any arbitration.

The insurers contend that their interpretation of the anti-assignment clauses is supported by our decision in Travertine Corp. v. Lexington-Silverwood, 683 N.W.2d 267 (Minn.2004). In Travertine, we held that an "anti-assignment clause is a valid and enforceable term" that precludes the assignment of a right to payment under a contract. Id. at 269, 274. But the contract at issue in Travertine was a management contract rather than an insurance policy. Id. at 269. While we have stated that insurance policies follow general principles of contract law unless there are statutory laws to the contrary, Bobich, 258 Minn. at 294, 104 N.W.2d at 24, we conclude our analysis in Travertine is not helpful in resolving the issues presented because the statutory framework regarding auto glass insurance, as laid out above, makes the insurance policies at issue sufficiently different from management contracts. See Alpine Glass, Inc. v. Ill Farmers Ins. Co., No. 06-CV-1148, 2006 WL 3486996, at *12-13 (D.Minn.2006) (recognizing the unique framework of auto glass insurance); see also Life Rehab Servs., Inc. v. Allied Prop. & Cas. Ins. Co., No. 05-CV-1279, 2007 WL 2247606, at *1 (D.Minn.2007) (distinguishing auto glass insurance from other insurance policies).

Because the legislature has spoken so extensively on auto glass insurance policies, we need not address today the broader question of whether anti-assignment clauses in insurance policies are, as a rule, enforceable.⁶ Rather, our discussion is limited to the question of whether anti-assignment clauses in automobile insurance policies can be read to bar post-loss assignments of proceeds for auto glass repair claims or the right of auto glass vendors to arbitrate disputes with insurers over those proceeds. The statutory framework requires insurers, upon the request of the insured, to extend comprehensive coverage to cover auto glass repairs. Minn.Stat. § 65B.134. When an insured makes a claim for auto glass that has been repaired, the framework requires the insurers to make a direct payment to the insured's chosen auto glass vendor. Minn. Stat. § 72A.201, subd. 6(14). The insurer must pay a competitive price. Id. The framework also requires the arbitration of disputes about that competitive price. Minn.Stat. § 65B.525, subd. 1. This is...