Case Closed: Federal Court Dismisses New
York Shop Owner's Case Against Insurers, TPAs
September 13, 2012
by Penny Stacey, email@example.com
The U.S. District Court for the Southern District of New York has
dismissed a case filed by a New York auto glass shop owner against
a number of insurers and two third-party administrators alleging
failure to pay assigned claims, delay in payment, fraud, deceptive
acts, restraint of trade, unfair business practices and tortious
interference. The suit was filed
in May 2011 by David Harner, the owner of Auto Glass of Westchester
Windshield Doctor in Westchester, N.Y.
The insurers and third-party administrators, respectively, named
in the case, had filed two separate motions
to dismiss, leading to the recent 26-page order granting the
In response to Harner's allegations that the insurers have "fail[ed]
to pay assigned insurance claims," U.S. judge Cathy Seibel
points out that she believes the insureds did assign their rights
to Harner. However, she says the claim "fails because the insurer
defendants are not plausibly obligated under their contracts with
the insureds to pay the insureds whatever amount plaintiff chooses
to charge for the repair of the insureds' automobile glass."
"Thus, [Harner], standing in the shoes of the insureds as an
assignee, may not now recover from the insurer defendants what the
insureds cannot," writes Seibel.
The judge also addresses Harner's allegations regarding fraud or
intentional misrepresentation, in which he identified insurer statements
"to the effect that certain of their insureds are fully covered
for automobile glass repair."
There is no inconsistency between the statements at
issue-to the effect that the insured has full glass coverage-and
the practice of not paying the repair shop's invoice if it exceeds
reasonable commercial limits or is not submitted in accordance with
reasonable administrative requirements," writes Seibel. "Plaintiff
has not alleged that any insured was unable to get cost-free automobile
glass service, and thus there is nothing plausibly false in the
In Harner's allegations regarding deceptive acts or practices in
the conduct of business, Harner had alleged that the insurers in
question delayed or refused payment of claims or paid less than
the full amount claimed, after telling the insureds that they had
full glass coverage; that the TPAs had made representations to insureds
that they had the authority to adjust auto glass claims, investigate,
review and process claims, "despite not being licensed by New
York as independent adjusters;" and that statements had been
made to insureds "informing [them] that the insurer defendants
would not fully reimburse for the plaintiff's services, leading
the insured to not use Harner's auto glass shop.
In response, the judge writes, "
the court is not able
to discern any plausibly materially misleading acts on the part
of defendants. The statements made to insureds that caused them
not to use the plaintiff's repair shops were not plausibly false.
The true statements informed the insureds of the economic ramifications
of having plaintiff perform repairs that, quite reasonably, led
the insureds to take their business elsewhere."
Harner also had alleged restraint of trade practices and unfair
trade practices among the TPA defendants in violation of both New
York and federal anti-trust laws, and that "he was not able
to charge his customary rate because the relationship among the
defendants and plaintiff's competitors has resulted in a lower market
rate for the services [he] offers. However, Seibel suggests that
Harner's "decline in profits is simply due to the fact that
he charges higher prices than his competitors, and his potential
customers choose not to pay more than what their insurance companies
The complaint's final cause of action regarding tortious interference
alleged that the TPAs named in the case told insureds who planned
on using Harner's shop that they would not be fully covered for
his services, "which caused the insureds to use shops other
In response, Seibel writes, "Indeed, I would expect a conscientious
consumer to contact his or her insurance company or its representatives
to inquire whether services that the insured plans to purchase are
covered under his or her insurance policy. Plaintiff contends in
conclusory fashion that these communications are tortious, but provides
no facts that make his claims conceivable, much less plausible."
The judge adds that she is not granting Harner leave to amend the
complaint, "because such amendment would be futile."
"Plaintiff has already had the chance to amend, knowing full
well what defendants' arguments would be, and knowing that chance
would be his last," adds Seibel.
Among the insurers named in the original case were Allstate, GEICO,
Hanover, Travelers and others, along with their TPAs, Safelite and
LYNX Services. In addition, Safelite parent Belron US and LYNX parent
company Pittsburgh Glass Works (PGW) were named in the original
This story is an original story by AGRR™ magazine/glassBYTEs.com™. Subscribe to AGRR™ Magazine.
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