Conn. Supreme Court Rules in Favor of Glass Shops on Issue of Unilateral Contracts; Question of Fair and Reasonable Pricing Returned to Trial Court
August 19, 2009

The Connecticut Supreme Court recently ruled in favor of two auto glass businesses, Auto Glass Express Inc. and Ed Steben Glass Co. Inc. in a case filed against Hanover Insurance Co. The court ruled that, when the plaintiffs were sent pricing letters by Safelite Glass Corp., Hanover's third-party glass claims administrator, unilateral contracts were not agreed upon-and no agreement to submit to this pricing structure was made on the part of the glass shops.

The ruling, which was part of an appeal by the plaintiffs, overturns a prior decision by a Connecticut trial court on the same issue. (CLICK HERE for related story.)

In the original case, the plaintiffs presented letters sent by Safelite periodically, during the years 2000 through 2003, informing the shops of Hanover's "pricing standards" for auto glass work. The letters noted they were sent "in order to 'facilitate timely payment of invoices and avoid misunderstandings,'" according to the court's decision, released this week.

The letters also noted, "Bills that are accurate and are not more than this pricing structure will be paid promptly as submitted."

While Hanover argued in the case that by doing the work, after reading the letters, shops were agreeing to the pricing structure presented, the Connecticut Supreme Court ruled that "[plaintiffs'] performance of glass repairs did not constitute acceptance of the terms of the pricing letters."

"We agree with the trial court's finding that the pricing letters conveyed to the plaintiffs offers that invited acceptance through performance," writes the court. "We disagree, however, that the performance of glass repairs, without more, constituted acceptance of the terms set forth in the pricing letters."

The court notes that in the area of unilateral contracts, "whether a contractual commitment has been undertaken is ultimately a question of the intention of the parties."

In order to determine the intent of the parties involved, the court looked to the pricing letters sent by Safelite on behalf of Hanover.

"According to the plain language of the pricing letters, the only exchange proposed by defendant is its promise to pay bills timely in exchange for the submission of bills that do not exceed its proposed pricing structure," writes the court.

The opinion continues, "Moreover, nothing in the language of the pricing letters, either expressly or implied, suggests that the mere performance of glass repairs on automobiles insured by the defendant was sufficient to bind the plaintiffs to the defendant's prices. The pricing letters also do not indicate how the defendant intended to address invoices that did not conform to its pricing standards … Thus, we agree with the Appellate Court's observation that '[t]he [pricing] letters, therefore, do not evidence an intention on the part of the defendant not to pay a greater amount, but rather an intention not to pay a greater amount 'promptly.'"

The court also says that "in order for unilateral contracts to have been formed, the plaintiffs would have been required to accept the prices stated in those letters by submitting invoices that conformed to those prices."

In the original case, the plaintiffs also claimed that the defendant was breaching the terms of its insurance policies, the proceeds of which they allege were assigned to the them by the insureds, "by refusing to pay the amounts stated in the plaintiffs' invoices."

This claim was remanded by the Connecticut Supreme Court to the trial court for further investigation and review. The trial court also is to decide "whether the plaintiffs' invoices were reasonable in the marketplace."

The glass shops were represented by AGRR columnist Chuck Lloyd of Livgard and Lloyd, and the Richard Preston of the Law Offices of Richard Preston. Charlene M. Russo of Charlene Russo Law Office served as counsel for Hanover Insurance.

CLICK HERE for a statement from the Independent Glass Association regarding the case.

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