Blue Ash Auto Body, Inc. v. Grange Property & Cas. Ins. Co.

[Cite as Blue Ash Auto Body, Inc. v. Grange Property & Cas. Ins. Co., 

.]




                          IN THE COURT OF APPEALS
                      FIRST APPELLATE DISTRICT OF OHIO
                           HAMILTON COUNTY, OHIO




 BLUE ASH AUTO BODY, INC.,                            :      APPEAL NO. C-220165
                                                             TRIAL NO. A-2003832
         Plaintiff-Appellant,                         :

                                                      :         O P I N I O N.
   VS.
                                                      :

 GRANGE PROPERTY & CASUALTY                           :
 INSURANCE COMPANY,

       Defendant-Appellee.                            :




Civil Appeal From: Hamilton County Court of Common Pleas

Judgment Appealed From Is: Affirmed

Date of Judgment Entry on Appeal: December 21, 2022


Dennis A. Becker, for Plaintiff-Appellant,

Gallagher, Gams, Tallan, Barnes & Littrell, L.L.P., and Mitchell M. Tallan, for
Defendant-Appellee.
                    OHIO FIRST DISTRICT COURT OF APPEALS



CROUSE, Judge.

       {¶1}   Plaintiff-appellant Blue Ash Auto Body, Inc., (“Blue Ash”) appeals from

the judgment of the Hamilton County Court of Common Pleas granting summary

judgment on its breach-of-contract and unjust-enrichment claims in favor of

defendant-appellee Grange Property & Casualty Insurance Company (“Grange”).

Because we agree that Grange is entitled to summary judgment on both claims, we

affirm the judgment of the trial court.

                     Factual and Procedural Background

       {¶2}   Blue Ash is an auto body shop in Hamilton County, Ohio. Grange is an

automobile insurer. In October 2020, Blue Ash filed a complaint against Grange in

the Hamilton County Court of Common Pleas, bringing claims for breach of contract

and unjust enrichment. In March 2021, Grange filed a motion for summary judgment

on all claims. In March 2022, the court granted summary judgment in favor of Grange.

       {¶3}   Blue Ash alleges that Grange owed it $18,447.98 for repairs made to

approximately 14 vehicles owned by Grange insureds. Essentially, Blue Ash contends

that the reasonable cost of repairs exceeded the amount that Grange agreed to pay for

each customer. In exchange for excusing those customers from personally covering

the shortfall, Blue Ash released the vehicles to the customers and obtained an

“Assignment of Proceeds” from each insured that provided, in relevant part:

       In exchange for excusing me from making immediate full payment for

       repairs to my Vehicle and/or releasing a possessory lien that Repair

       Facility has or may have the right to assert, I hereby assign any claim

       and/or proceeds that have accrued or may accrue under my insurance

       contract or that I may have and/or be entitled to obtain from the person


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                    OHIO FIRST DISTRICT COURT OF APPEALS




       at-fault in the accident relating to ______________ for the amount

       Repair Facility, in the exercise of professional judgment, deemed

       necessary and proper to repair my Vehicle including repair costs, labor,

       parts, towing, parking, storage, garage insurance allocation, parts,

       labor, and/or administrative charges.

                                           ***

       I expressly understand that my execution of this agreement may result

       in Repair Facility suing my insurance company and I knowingly

       authorize that act.

       {¶4}   In its motion for summary judgment, Grange did not dispute that Blue

Ash performed the work, but it did dispute that the “reasonable amount owed” under

each insurance policy was equivalent to the amount Blue Ash charged each customer.

Grange also noted that its policies contain an anti-assignment provision, and that it

never gave its consent for the purported assignment.             Grange highlighted the

limitation of liability, cooperation, and anti-assignment provisions included in each

customer’s policy, which read:

       A. Our limit of liability for the loss will be the lesser of the:

          1. Actual cash value of the stolen or damaged property, reduced
             by the salvage value if you or the owner retain the salvage; or

          2. Amount necessary to repair or replace the property using
              parts from the vehicle’s manufacturers or parts from other
              manufacturers;
                                    ***
       B. A person seeking any coverage must:

          1. Cooperate with us in the investigation, settlement or defense
             of any claim or suit.
                                     ***


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                    OHIO FIRST DISTRICT COURT OF APPEALS



       A. Assignment/Transfer of Your Interest in This Policy

                   Your interest, rights or duties under this policy may not
                   be assigned or transferred without our written consent.
(Emphasis sic.)

       {¶5}   Grange argued that summary judgment should be granted on both

claims given the anti-assignment provision in the policies, and because there was no

benefit conferred upon Grange.

       {¶6}   A hearing on the motion was held on January 28, 2022. On March 25,

2022, the court granted summary judgment on all claims in favor of Grange. In its

entry, the court held that the breach-of-contract claim failed because the “assignment

is in direct contradiction to the anti-assignment provision in Defendant’s policies and

[is] therefore unenforceable.” As to the unjust-enrichment claim, the court held that

it also failed because the benefit conferred was entirely upon the vehicle owners, and

not Grange.

       {¶7}   In two assignments of error, Blue Ash challenges the trial court’s

judgment on both claims.

                                 Breach of Contract

       {¶8}   An appellate court reviews a trial court’s ruling on a motion for

summary judgment de novo. Helton v. Fifth Third Bank, 1st Dist. Hamilton No.

C-210451, 

, citing Grafton v. Ohio Edison Co., 

, 

 (1996). “Summary judgment is appropriately granted when there

exists no genuine issue of material fact, the party moving for summary judgment is

entitled to judgment as a matter of law, and the evidence, when viewed in favor of the

nonmoving party, permits only one reasonable conclusion that is adverse to that

party.” 

; Civ.R. 56.


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                    OHIO FIRST DISTRICT COURT OF APPEALS




       {¶9}    While the moving party “bears the initial burden of informing the court

of the basis for its motion and demonstrating the absence of any genuine issues of

material fact,” the nonmoving party then bears the “reciprocal burden to set forth

specific evidentiary facts showing the existence of a genuine issue for trial.” Blue Ash

Auto Body, Inc. v. Frank, 

, 

 (1st Dist.).

       {¶10} A breach-of-contract claim requires the plaintiff to establish (1) the

existence of a contract, (2) a breach of that contract, and (3) damages resulting from

that breach.     Gilman v. Physna, LLC, 1st Dist. Hamilton No. C-200457,

.

       {¶11} This case comes down to the first element: whether a contract existed

between the parties. Grange contends that the anti-assignment provision in its

policies invalidates any assignment taken by Blue Ash, and thus no contract existed.

Blue Ash contends that the anti-assignment provision does not apply, because rather

than having an interest in the policy, it has an assignment of a “chose in action.”

       {¶12} An insurance policy is a contract between the insurer and the insured.

Pilkington N. Am., Inc. v. Travelers Cas. & Sur. Co., 

,

, 

. A “chose in action,” has been defined as “the

right to bring an action in tort and in contract.” Id. at ¶ 20. Generally, “all contract

rights may be assigned, except under three conditions”:

       (1) “if there is clear contractual language prohibiting assignment, an

       assignment will not be enforced.”

       (2) “an assignment must not materially change the duty of the obligor,

       materially increase the insurer’s burden or risk under the contract,



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                    OHIO FIRST DISTRICT COURT OF APPEALS




       materially impair the insurer’s chance of securing a return on

       performance, or materially reduce the contract’s value”

       (3) “the assignment will not be valid if it is forbidden by statute or by

       public policy.”

(Citations omitted.) Id. at ¶ 36.

       {¶13} In Pilkington, the Ohio Supreme Court held that “[i]nsurance policies

are generally construed such that assignment of an interest is valid after the

occurrence of the loss insured against, and the assignment is then regarded as a

transfer of the chose in action, even in the face of an anti-assignment provision.” Id. at

¶ 40. Essentially, the court reasoned that because the loss was fixed at the time it

occurred, the assignment was valid despite the anti-assignment provision. Id. at

¶ 40-43 (holding that the duty to indemnify in a commercial general liability policy

was assignable as a chose in action where covered losses were fixed at the time of the

occurrence).

       {¶14} In a later case, the Ohio Supreme Court explained that “[a] person may

not assign the right to the future proceeds of a settlement if the right to the proceeds

does not exist at the time of the assignment.” W. Broad Chiropractic v. Am. Family

Ins., 

, 

, 

, ¶ 26. Importantly, the

court noted that allowing such assignments could promote litigation and discourage

settlement because the assignee “expects full payment and lacks interest in negotiating

the amount of the debt,” and because “the third-party insurer lacks the ability to

dispute the amount or reasonableness of the charges.” Id. at ¶ 22. The court warned

that “[u]pholding the legality of such assignments opens the door for other creditors

to seek debt protection through assignments: the pharmacy, the automobile repair

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                    OHIO FIRST DISTRICT COURT OF APPEALS




shop, other medical providers.” Id. at ¶ 24; see Frank, 

, 

 (discussing the public policy concerns raised in West Broad).

       {¶15} The Southern District of Ohio applied both Pilkington and West Broad

to a case involving a similar assignment made by State Farm insureds to Blue Ash. See

Blue Ash Auto Body, Inc. v. State Farm Mut. Auto. Ins. Co., S.D.Ohio No. 1:20-cv-393,

 (Mar. 10, 2021), aff’d, 6th Cir. No. 21-3365, 

 (Dec. 3, 2021). Like the case at bar, in State Farm, Blue Ash

obtained an assignment of proceeds for customers insured by State Farm, and sought

to collect on its cost of repairs, despite exceeding the amount that State Farm agreed

to pay on behalf of its insureds. Id. at 2. State Farm’s policies contained similar

anti-assignment language. Id. at 2-3, 5. The court held that the assignment was

invalid because it implicated all three Pilkington conditions. Id. at 8. Accordingly,

the court granted summary judgment to State Farm on the breach-of-contract claim.

Id.

       {¶16} Our analysis of the Pilkington conditions yields the same result. First,

the language of the Grange policies is unambiguous. It states, “Your interest, rights or

duties under this policy may not be assigned or transferred without our written

consent.” Grange did not give its consent.

       {¶17} Second, if given effect, the assignment would materially change

Grange’s obligations under the policies. Grange would effectively be at the mercy of

whatever amount Blue Ash determined was necessary to repair the vehicles. “While

the insureds have a general right to contest a coverage estimate from [the insurer], the

right to negotiate is markedly different than a third party’s demand for payment in

full.” Mercedes-Benz of W. Chester v. Am. Family Ins., 12th Dist. Butler Nos.

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                   OHIO FIRST DISTRICT COURT OF APPEALS




CA2009-09-244, CA2009-09-245 and CA2009-09-246, 

, ¶ 20

(affirming grant of summary judgment in favor of insurer and holding that because

“the anti-assignment clause is valid under Pilkington and comports with public policy

according to West Broad, the [anti-assignment] clause invalidates the insureds’

attempt to assign their contractual rights to [the body shop.]”); see Blue Ash Auto

Body, Inc. v. State Farm Mut. Auto. Ins. Co., S.D. Ohio No. 1:20-cv-393, 

, at 8 (“Second, allowing Blue Ash to collect from State Farm

materially changes State Farm’s obligations under the policy with the Customers.”).

       {¶18} Finally, the assignment is contrary to public policy as it would promote

litigation because Grange’s only method of contesting a demand for payment would

be through litigation. See State Farm at 8 (“Third, the assignment is against public

policy - State Farm would have no means, as the third-party insurer, to dispute the

amount or reasonableness of Blue Ash’s charges.”); Mercedes-Benz at ¶ 23 (“Assigning

the right to seek proceeds to [the body shop], therefore, increases the likelihood of

litigation rather than relying on any negotiation settlement the insureds could have

achieved with their insurer.”); W. Broad Chiropractic, 

, 2009-

Ohio-3506, 

, at ¶ 22-23 (discussing public policy concerns that arise

with similar assignments).

       {¶19} Because we hold that the assignment was invalid, the trial court

properly granted summary judgment in favor of Grange on the breach-of-contract

claim. The first assignment of error is overruled.




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                    OHIO FIRST DISTRICT COURT OF APPEALS




                                Unjust Enrichment

       {¶20} In Blue Ash’s second assignment of error, it argues that it has a valid

claim for unjust enrichment. Grange contends that the claim fails because Blue Ash

did not confer a benefit upon it. We agree.

       {¶21} To establish a claim for unjust enrichment, a plaintiff must show that:

(1) they conferred a benefit upon the defendant; (2) the defendant had knowledge of

the benefit; and (3) retention of the benefit would be unjust under the circumstances.

Helton, 1st Dist. Hamilton No. C-210451, 

.

       {¶22} In Three-C Body Shops, Inc. v. Nationwide Mut. Fire Ins. Co.,

, 

 (10th Dist.), the Tenth District faced a similar scenario

to the case at hand in which a body shop completed work for customers and sent the

insurer an agreement that purportedly obligated the insurer to reimburse the body

shop for all charges. Id. at ¶ 3. The insurer underpaid, the body shop alleged unjust

enrichment, and the trial court granted judgment on the pleadings in favor of the

insurer. Id. at ¶ 4. On appeal, the court held that while the repairs restored the

vehicles to their pre-accident condition, the connection between the body shop and

the insurer “is too indirect to constitute a ‘benefit conferred’ for purposes of a common

law claim of unjust enrichment.” Id. at ¶ 27. Thus, the court held that dismissal of the

body shop’s claims was proper. Id.; see State Farm, S.D. Ohio No. 1:20-cv-393, 

, at 9, quoting Three-C at ¶ 27 (“Blue Ash’s claim that the

benefit to the Customer benefitted [the insurer] is ‘too indirect to constitute a benefit

conferred’ for the purposes of unjust enrichment.”).

       {¶23} Blue Ash again asserts that the benefit conferred upon Grange is “the

benefit of repairs being completed to satisfy the insurer’s obligations to insureds.”

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                   OHIO FIRST DISTRICT COURT OF APPEALS




Other than this statement, Blue Ash has not put forth any facts to demonstrate that it

conferred a benefit upon Grange. Rather, Blue Ash voluntarily performed the work,

and voluntarily released the vehicles to the insureds before receiving full payment.

Such a benefit is too indirect to constitute a benefit conferred upon Grange.

       {¶24} For these reasons, we hold that the trial court properly granted

summary judgment in favor of Grange on Blue Ash’s unjust-enrichment claim. The

second assignment of error is overruled.

                                     Conclusion

       {¶25} In light of the foregoing analysis, we overrule Blue Ash’s first and second

assignments of error, and affirm the judgment of the trial court.

                                                                    Judgment affirmed.

MYERS, P. J., and WINKLER, J., concur.



Please note:

       The court has recorded its entry on the date of the release of this opinion.




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