2015 ONSC 883

COURT FILE NO.: CV-12-457796

DATE: 201502011

ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

RESQ AUTO GLASS INC.

Plaintiff

– and –

CO-OPERATORS GENERAL INSURANCE COMPANY

Defendant

H. Richard Bennett, for the Plaintiff

Derek V. Abreu, for the Defendant

HEARD: October 24 and November 3, 2014

Low J.

[1] This is a motion for summary judgment and a cross motion for summary dismissal.

[2] The claim is for damages for breach of contract. It arises from the plaintiff’s windshield repairs to 1,844 automobiles owned by insureds of the defendant (the Insurer). The repairs were done over a period from February 2012 to July 2014 under separate contracts. The plaintiff makes the claim in bulk, however, and seeks damages of $208,359.57.

[3] In each case, the Insurer authorized the repair to be done at a stipulated rate of $50. The plaintiff did the repair. In 109 cases, the plaintiff invoiced the Insurer $50 for the repair. In the balance of cases, the plaintiff invoiced $100. The Insurer paid $50 in accordance with the amount it authorized. The plaintiff seeks to be paid an extra $50 for each repair.

[4] The plaintiff claims breach of contract, a declaration that it is an insured of the Insurer as a result of assignments by the defendant’s insureds, and other relief. The plaintiff claims that it has a right to be paid $100 for each of the repairs.

[5] I agree with the parties that this is an appropriate case for disposition on a paper record. The material facts are uncontested and the issues turn on the legal significance of a small number of documents.

[6] The Insurer insures, among other things, automobiles. The text of its policy is not in dispute. If an insured chooses to purchase first party coverage for loss of or damage to his car, it is available under Section 7 of the policy. Section 7 provides:

7.1.1 Coverage for Loss of or Damage to Your Automobile

We agree to pay for direct and accidental loss of, or damage to, a described automobile and its equipment caused by a peril such as fire, theft, or collision if the automobile is insured against these perils.

By direct loss of damage we mean loss or damage resulting directly from a peril for which coverage has been purchased.

This Section applies only to the extent that a claim for damage to an automobile and its equipment would not be covered by Section 6, Direct Compensation – Property Damage Coverage of a motor vehicle liability policy.

Section 7 is not mandatory coverage under the statute. Section 6 of the policy deals with direct property damage coverage where an accident has occurred involving another vehicle. Degree of fault is a factor in the extent of reimbursement. Section 6 coverage is also not mandatory under the statute. There is no evidence as to whether all, some or none of the insureds whose cars the plaintiff repaired were covered for loss or damage under either or both sections.

[7] The plaintiff is in the business of repairing windshield chips on automobiles. In contrast to companies operating auto glass replacement and repair businesses out of brick and mortar locations which get business from car owners who approach them, the plaintiff does not operate out of a fixed location, but rather trolls areas where cars may be found with their owners (for example car washes and garages), identifies chips on windshields, and approaches the car owners offering its services. It operates from tents.

[8] It is the plaintiff’s position, accepted by the Insurer, that four documents are representative of the transactions among the plaintiff, the Insurer and the car owner in respect of which the plaintiff has brought action. The documents are:

1. a document on the letterhead of the Insurer authorizing the plaintiff to repair a windshield for a stipulated amount;

2. a document titled “Work Order Estimate” generated by the plaintiff and which is signed by the owner of the car;

3. A document titled “Claims Processing Rules for ResQ Auto Glass, LLC Independent Contractor Sale Persons”; and

4. an invoice issued by the plaintiff to the Insurer in relation to the authorization and the Work Order Estimate.

[9] A set of four specimen documents were put in evidence. They are in relation to windshield repairs to a Jeep Wrangler owned by Taylor Milburn showing a date of loss of February 28/2012. The date of the Work Order Estimate and of the Authorization are also February 28, 2012. The invoice is dated April 4, 2012

[10] The plaintiff’s business with automobile owners is initiated through independent contractors who find cars with one or more windshield chips, identify the owners, ascertain the owners’ insurers, and place calls to the insurers to facilitate authorization by the insurers to the plaintiff to do the repair.

[11] Upon being contacted by the plaintiff, the Insurer asks to speak to the car owner and verifies that the owner was one of its insureds for the period of time when the chip or chips are said to have occurred. (The Work Order Estimate of Taylor Milburn shows the date of loss as the same date as the date of the work order. The inference may therefore be drawn that the representation as to date of loss to the Insurer is the same. Although there is good reason to doubt the veracity of the representation, the Insurer does not appear to have taken issue with the date of loss and it is therefore not an issue here.)

[12] The Insurer then issues its document to the plaintiff authorizing it to effect the repair at a stipulated price. I will refer to this document as the “Authorization”; it is # 1 of the four documents listed in paragraph 8 above. The Authorization notes the name of the owner of the car, the VIN, the year and make of the car, the policy number, a claim number, a description of the repair as “Windshield Repair”, and the amount for the repair. Oddly, the upper left portion of the document reads:

Bill To:

Resq Auto Glass

P O Box 9558, Stn A

Toronto, ON, M5W2K3

The stipulated price is $50 and, at the end of the price section, it shows $56.50 as a “Balance Due”.

[13] Since the Insurer is not in the business of doing repairs for and does not seek payment from the plaintiff Resq Auto Glas, I infer that the particulars reproduced in the foregoing paragraph are drafting errors. Read literally, they make no sense in the context of the relationship of the three parties involved – the Insurer, the insured, and the plaintiff.

[14] It is common ground that the Authorization document was intended as and was understood to be the authorization from the Insurer to the plaintiff to proceed to do the repair at a price of $50 plus tax.

[15] There is large print notice at the bottom of the Authorization:

ATTENTION PLEASE READ NOTES BELOW BEFORE SENDING YOUR INVOICES

1)PLEASE FAX YOUR INVOICES TO FAX NUMBER ON TOP OF PAGE INSTEAD OF MAILING THEM.WE ARE MAKING AN EFFORT ON GOING PAPERLESS.

(If you have more then [sic] one invoice, please fax them separately)

2. CLAIM NUMBER or QUOTE NUMBER IS REQUIRED ON YOUR INVOICE WHEN SENDING FOR PAYMENT, AN ACTUAL COPY OF THE QUOTE IS NOT NECESSARY

3)THIS QUOTATION IS ONLY VALID FOR 60 DAYS FROM THE DATE ISSUE [sic].

4. PLEASE DO NOT SUBMIT YOUR INVOICE IF JOB HAS NOT BEEN COMPLETED

5. THE CO-OPERATORS WILL NOT PAY MORE THEN [sic] THE AMOUNTS THAT ARE STATED ON THIS QUOTATION. IF MODIFICATIONS ARE NEEDED PLEASE CALL US FOR AUTHORIZATION. [Emphasis added.]

[16] The notice is unambiguous. There is no suggestion and no evidence that the plaintiff contacted the Insurer in any instance to modify or to renegotiate the price.

[17] The practice was that in each case, the plaintiff obtained the Authorization from the Insurer and obtained the owner’s signature on the form generated by the plaintiff titled “Work Order Estimate”. Document #2 in paragraph 8 above. The Work Order Estimate has a place for showing the “total cost to Customer (parts & labor)………” That blank is filled in as “O”. There is a place on the form for filling in “Insurance to be billed (parts & labor) $..........” This space is left blank. There is a place on the Work Order Estimate for showing “Original Estimate……per chip”. This space is also left blank.

[18] I find that the representation by the plaintiff to the car owner is that he will be charged nothing for the repair. I find that the plaintiff does not disclose in writing to the owner what the plaintiff will charge to the Insurer for effecting the repair. There is no evidence that the plaintiff discloses to the car owner the amount that the plaintiff will invoice the Insurer for the repair. The owner of the car is charged nothing and the car owner pays nothing for the windshield repair by the plaintiff.

[19] At the bottom of the Work Order Estimate is a section printed in very small print. It is sufficiently small that it was illegible in the motion materials and was retyped in legible font at the request of the court.

[20] It reads as follows:

FOR ALL SERVICES ASSIGNMENT OF RIGHTS AND PROCEEDS AND AUTHORIZATION TO PAY: in consideration of ResQ Auto Glass, Inc. agreeing to repair auto glass damage to my vehicle, I hereby assign to ResQ all rights which I have against my insurer for the collection of monies due for such repairs and/or replacements. This assignments includes, but not limited to, the right to receive direct payment of the claim from the insurance company, the right to make demand for payments (including the right make a demand under any relevant consumer protection statute or regulation), the right to sue the insurance company in a court of law for payments rightly owed to me, and the right to receive multiple damages, cost, interest and reasonable attorney's fees if a court determines that the insurer was unreasonable in withholding payment or if the court determines that the insurer is otherwise liable for such amounts. This assignment further includes, without limitation, the right to communication with, and to receive information from, my insurance company, on my behalf, relative to any claim I have made with my insurance company for the repair or replacement of damaged glass on my insured vehicle(s). I also hereby authorize ResQ, independent contractors and sub contractors to do all things necessary or proper to enforce the rights assigned hereunder. If my insurance company issues payments to me instead of ResQ, I agree to immediately forward payment.

ALL REPAIRS WILL RESULT IN A CLAIM CREATION AND BILLED TO YOUR INSURANCE COMPANY. REPAIRS MAY BE AT NO ADDITIONAL COST TO YOU AND/OR NO ADDITIONAL OUT OF POCKET EXPENSE. RESQ AUTO GLASS, INC. DOES NOT CONDONE THE USE OF THE WORD "FREE" BY ANY REP FOR ANY REASON UNDER ANY CIRCUMSTANCE.

I acknowledge that the above reference auto glass repair service has been completed to my satisfaction in a courteous and professional manner.

[Emphasis in original.]

[21] When the repair has been done, the plaintiff renders an invoice to the Insurer. The invoice rendered in respect of Taylor Milburn’s Jeep Wrangler is dated 04/04/2012. It shows a job scheduled for February 29, 2012 Windshield Repair, a quantity of 1 with a “list” of $100.00 and a net total of $113.00 including tax.

Below, it notes,

4/2/2012 Check 24992 Insurance Payment ($56.50)

Balance Due $56.50

[22] I infer, therefore, that payment was made by the Insurer on April 2, 2012, prior to receipt of the invoice, in an amount consistent with the Authorization.

[23] The plaintiff, through its independent contractor, did the repair and it invoiced the Insurer $100 plus tax instead of the $50 plus tax that was authorized. The plaintiff did not seek to renegotiate the price. The contract amount was $50 plus tax.

[24] The plaintiff contends that it ought to be paid at the rate of $100 because that is the “market” rate for windshield repairs in the industry.

[25] The plaintiff relies on the assignment in the Work Order Estimate reproduced above in asserting that it is an assignee of the car owner’s insurance or, alternatively, that it is an assignee of proceeds of the insured’s claim on the policy arising from the windshield repair.

[26] The plaintiff’s position is that each insured is entitled to be paid by the Insurer at the rate of $100 for the windshield damage and that by virtue of the assignment clause in the Work Order, the plaintiff has become the insured’s assignee and is entitled to sue the Insurer for same. As it has already been paid at the rate of $50 per repair in accordance with the Authorization generated in each case, the plaintiff sues for an additional $50 plus tax for all the windshield repairs that it has done for car owners insured by the Insurer commencing February 2012. The exact number is immaterial for purposes of the disposition of the motion, but the number is in the thousands.

[27] This dispute has its origins in a decision by the Insurer to reduce the amount that it would be prepared to pay for windshield repairs made by repairers like the plaintiff. It did so on the basis that traditional auto glass replacement and repair businesses operating out of permanent places of business have higher overheads than do repairers like the plaintiff who operate seasonally and out of temporary locations.

[28] On January 23, 2012, David Campbell, the National Auto Claims Manager for the Insurer, wrote in a letter to the plaintiff the following:

January 23rd, 2012 Co-operators General Insurance Company

ResQ Auto Glass

P.O. Box 9558, Station A

Toronto, Ontario

M5W W2K3

Dear Sirs:

Reference: Changes to The Co-operators Auto Glass programme

Co-operators General Insurance will be making changes to our Auto Glass claims programme, as of February 6th, 2012.

In the past, when The Co-operators set its rate for windshield repairs, the pricing was set for an Auto Glass partner that could.do both windshield repairs and auto glass replacements, The Co-operators recognized the investment required for an auto glass vendor to service all of our clients auto glass needs.

In recent years, a distinct windshield repair industry has arisen, with different cost structures than the traditional auto glass industry. The retail pricing offered solely for windshield repair is more affordable, and therefore we will be adjusting the amount that we pay for those firms that are part of this distinct windshield repair industry:

• For windshield repairs, up to and including 3 chips, $40 total, plus applicable taxes

Your firm has not done any auto glass replacement claims in the last 3 years. Any windshield repairs done after February 05th 2012 will be paid at the windshield repair industry rate.

Yours truly,

David Campbell, FCIP

National Auto Claims Manager

[29] I find that the Insurer gave clear prior notice of its intentions as to the new lower rate at which it was prepared to contract with the plaintiff to effect windshield repairs. There was no surprise. There was no unfairness. The Insurer subsequently increased the amount from $40 to $50. In each case where an automobile was presented to the Insurer as the prospective subject of windshield repair work, a contract was entered into specifically in respect of that car. The Insurer stipulated in the Authorization what it was prepared to pay and made it clear by noting in bold that it would not pay more than the stated amount in the absence of further authorization. The contract was solely between the plaintiff and the Insurer.

[30] The Work Order Estimate that the plaintiff presents to the car owner to sign shows an amount of “0” as the total cost to Customer. There is no obligation on the car owner to pay anything for the repair. The contract between the car owner and the plaintiff is that the car owner will allow the plaintiff to repair his windshield and bill his Insurer; in consideration the plaintiff effects the repair. The only contract incorporating a term of payment is that between the Insurer and the plaintiff and each instance of a repair of a windshield by the plaintiff of a car insured by the Insurer is covered by a separate contract.

[31] The plaintiff was at liberty to renegotiate the price with the Insurer. It did not do so in any of the cases. The plaintiff was at liberty to decline the work. It did not do so in any of the cases. What the plaintiff did was to accept the Insurer’s terms by its conduct of doing the repair work. Its attempt in this action to extract a higher price after the fact – either on the basis that it gets paid more for similar work by some other insurers that it deals with or on the basis that the Insurer is prepared to pay more to bricks and mortar auto glass companies for similar repairs than it is prepared to pay to the plaintiff has no legal foundation.

[32] Mr. Biehl, the Chief Financial Officer of the plaintiff deposed that the average rate paid to the plaintiff by various other insurers listed by him in his affidavit is $97.55. It is asserted by the plaintiff that this is the “market rate” and that the Insurer has a legal obligation to pay the plaintiff at the market rate because David Campbell indicated in his January 23, 2012 letter an intention to pay at the “windshield repair industry rate”.

[33] In my view, the statement in the Campbell letter stating that Co-operators would pay a $40 total for windshield repairs up to and including 3 chips is definitive as to the Insurer’s intentions. The fact that the author subsequently describes the rate as the “windshield repair industry rate” does not derogate from the specificity of the stated amount, and, a fortiori, does not derogate from the terms of the hundreds of specific individual Authorizations and resulting contracts subsequently entered into by the parties for each car repaired.

[34] The “market rate” is irrelevant. The Insurer has an obligation to the plaintiff to pay pursuant to its various contracts. This it has done.

[35] I would add parenthetically however, that the plaintiff has not demonstrated that the “market rate” for windshield repairs is $100. Mr. Biehl’s evidence in the first instance was misleading in that it does not disclose amounts paid by insurers with which the plaintiff is in dispute; nor does it include insurers with which it has entered into confidentiality agreements. It does not include amounts paid by insurers to other windshield repairers and it does not include rates charged by windshield repairers to car owner customers. As well, a mere list of insurers and rates, even if comprehensive which the plaintiff’s list is not, does not tell the story because it does not show volumes.

[36] There is evidence that where the plaintiff has charged a car owner directly for a windshield repair, the charge was $45. There is also evidence at Exhibit D of Mr. Campbell’s affidavit comprising 59 invoices for windshield repair work submitted during the relevant time period for reimbursement where the insureds have gone to windshield repairers to have the repairs done, have paid for the repairs and have then submitted proof of payment for such repairs. Those receipts indicate a range of a about $30 to $75 for windshield repairs with an average of $49.45.

[37] Also irrelevant is document #3 referred to in paragraph 8. This is a document to which neither the insured automobile owner nor the Insurer is a party. It appears to be a document speaking to the relationship between the plaintiff and its independent contractors. Whatever the independent contractor is required to covenant to the plaintiff as to what he will or will not do, it has no legal effect in relation to the Insurer.

[38] There is a separate contract between the plaintiff and the Insurer for each car that is the subject of repair. It expresses the terms as between the Insurer and the plaintiff for the particular car. The Insurer makes the offer by the Authorization. The plaintiff accepts it by its conduct.

[39] The Insurer’s obligation under the policy is to indemnify the insured for what he has paid to repair the damage to his car provided that the insured has purchased the coverage and provided that reimbursement is not precluded by the deductible amount. The policy gives the Insurer the right, at sections 7.6 and 6.6, to repair the car rather than reimburse. In the case at bar, the Insurer, upon being approached by an insured and the plaintiff, contracted directly with the plaintiff to effect windshield repairs for $50 regardless of whether it had an obligation under the insurance policy to do so. Vis-à-vis the insured, the Insurer was waiving the deductible where there was one.

[40] The way that these transactions were handled was an effort to deal efficiently with small damage for which the Insurer, for its own reasons, chose to pay to repair rather than to rely on the deductible. The insurer chose not to put the insured to paying for the repair, filing a claim in accordance with the policy and then waiting for reimbursement. The Insurer contracted directly with the plaintiff to do the repair, but there is no proof that the Insurer had an obligation to do so in any of the cases.

[41] There is no evidence that any of the hundreds (or thousands) of car owners in respect of whose windshield repairs the plaintiff now sues had an entitlement to indemnity under their policies for the repair under their individual policies. To show that entitlement, the plaintiff would have to show, in respect of each car, that coverage was purchased, that the deductible amount did not preclude the claim and that the damage was not incurred outside the limitation period in the policy for advancing a claim. The plaintiff has not done this.

[42] Second, and more significantly, because the Insurer has exercised its right under the policy to do the repair (assuming the insured has coverage), no right of reimbursement arises. The car owner has been made whole. His windshield is repaired and he has expended nothing. The car owner cannot point to any violation of the policy. Without a breach of the policy, the car owner has no cause of action against the Insurer.

[43] This brings me to the theory of the plaintiff’s claim. The plaintiff contends that it is the assignee of the car owners’ insurance contracts. It says that it is therefore an insured of the Insurer and thus empowered to make a claim under the policy. In the alternative, it is said that it is the assignee of proceeds of claims asserted or assertable by the car owners.

[44] I find that there was no assignment of the policy of insurance and that the plaintiff is not an insured of the Insurer. The policy is not assignable and the language in the plaintiff’s Work Order Estimate could not, in my view, on any reasonable construction, constitute an assignment of the car owner’s insurance policy. Indeed, the absurdity of assigning the benefits of one’s automobile insurance in consideration of windshield chip repairs is self-evident.

[45] In argument, counsel for the plaintiff retreated from the position taken on the pleading that the contracts of insurance had been assigned and contended instead that the plaintiff was the assignee of the right to receive from the Insurer the cost of repair. The plaintiff argues that the cost of repair is $100 because that is the amount that a number of other insurers pay it for similar work.

[46] The “assignment” at the bottom of the Work Order Estimate does not assist the plaintiff. Nemo dat quod non habet or, you cannot give what you haven’t got.

[47] Even assuming that the insured had an entitlement under the policy either to be indemnified for the cost of repair which he has paid or to have the insurer pay directly to have repair done, the insured has no right to be indemnified monetarily because the Insurer has caused the repair to be made. The insured has paid nothing and has undertaken no contractual obligation to pay anything for the repair. The insured therefore has no cause of action against the Insurer.

[48] As the insured has no cause of action against the Insurer to give, the plaintiff, as assignee, can have no higher right than the insured and it also has no cause of action.

[49] For the foregoing reasons, the motion for summary judgment is dismissed and the motion for summary dismissal is granted.

[50] Costs outlines having been previously filed, submissions as to scale of costs may be made in writing of no more than 3 pages in length. Copies of relevant offers to settle may be appended. They are to be delivered in 14 days by the defendant, and in 7 days thereafter by the plaintiff.

___________________________ Low J.

Released: February 11, 2015

2015 ONSC 883

COURT FILE NO.: Court File No. CV-12-457796

DATE: 201502011

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

RESQ AUTO GLASS INC.

Plaintiff

– and –

CO-OPERATORS GENERAL INSURANCE COMPANY

Defendant

REASONS FOR JUDGMENT

Low J.

Released: February 11, 2015