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Alpine Glass, Inc v. Illinois Farmers Insurance Company; Mid-Century Insurance Company

June 17, 2011

ALPINE GLASS, INC., APPELLEE,
v.
ILLINOIS FARMERS INSURANCE COMPANY; MID-CENTURY INSURANCE COMPANY, APPELLANTS.



Appeal from the United States District Court for the District of Minnesota.

The opinion of the court was delivered by: Wollman, Circuit Judge.

Submitted: December 16, 2010

Before WOLLMAN, BRIGHT, and COLLOTON, Circuit Judges.

Illinois Farmers Insurance Company and Mid-Century Insurance Company (collectively, Farmers) appeal from the district court's*fn1 orders dismissing Farmers's counterclaim that Alpine Glass, Inc. (Alpine), violated Minnesota's anti-incentive statute, granting summary judgment in favor of Alpine on Farmers's counterclaim for breach of contract, and denying Farmers's motion to vacate the arbitration award. We affirm.

I. Background

We begin with a summary from the district court:

This is the latest round in the seemingly endless litigation between automobile insurers and auto-glass shops in Minnesota. Auto-glass shops repair or replace the windshields of customers and bill the customers' insurers. The insurers often refuse to pay the bills and accuse the auto-glass shops of trying to gouge them by charging ridiculously high prices for simple repairs. The auto-glass shops cry foul and accuse the insurers of trying to coerce consumers to accept shoddy work from cut-rate shops. Occasional attempts by the Minnesota Legislature to address this long-running dispute seem only to trigger additional rounds of litigation.

D. Ct. Order of Feb. 26, 2010, at 1.

Under Minnesota law, an insured who has purchased auto-glass coverage may select any vendor to repair or replace auto glass. Minn. Stat. § 72A.201, subd. 6(14)-(16). The insurer is required to pay the vendor directly for auto-glass work and must pay "a competitive price that is fair and reasonable within the local industry at large." Id. (quoted language at subd. 6(14)). The vendor may not offer or give the following as an inducement to the insured to purchase its goods or services: "any rebate, gift, prize, bonus, coupon, credit, referral fee, trade-in or trade-in payment, advertising or other fee or payment, or any other tangible thing or item of monetary value." Id. § 325F.783(a)(2).

A. Factual Background

Alpine is a vendor that repairs and replaces auto glass in Minnesota. Alpine provides price quotes to its customers for auto-glass work. If the customer carries auto-glass insurance, Alpine bills the quoted amount to the customer's insurer and releases the customer from any obligation to pay the difference between the amount billed and the amount the insurer pays. In return, the customer assigns the proceeds of the insurance policy to Alpine. Between May 2003 and January 2006, Alpine performed auto-glass work for Farmers's insureds, and the insureds assigned the proceeds of their insurance policies to Alpine. Alpine billed Farmers directly for the work it had completed.

Farmers insures automobile owners in Minnesota and provides auto-glass coverage. Every policy that Farmers issued to the insureds in this case contained the MN008 endorsement, which states that the maximum amount Farmers will pay for the repair or replacement of auto glass is the "prevailing competitive price." Most of the policies also contained the E1400 endorsement, which states that Farmers's "limit of liability for loss is the amount necessary to repair or replace safety glass."

In June 2002 and in February 2005, Farmers sent blast faxes*fn2 to Alpine that listed the prices Farmers intended to pay vendors for auto-glass goods and services. Each fax stated that the pricing structure set forth in the document "supersede[d] any prior pricing agreements with Farmers." During the relevant time frame, Farmers routinely received invoices from Alpine that did not conform with Farmers's pricing structure. Rather than paying Alpine the amount listed on the invoice, Farmers remitted a lesser amount, in accordance with the prices listed in its faxes.

This lawsuit arises from the dispute between Farmers and Alpine about how much Farmers is obligated to pay Alpine for auto-glass goods and services rendered on behalf of Farmers's insureds. At issue are 1,120 short-pay claims-claims in which ...


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