Two Great Plains dealership groups have won the right to trials on assertions that their insurers wrongfully refused to fully reimburse them for repairing hail-damaged vehicles.
In Nebraska, a federal judge rejected a bid by Houston Specialty Insurance Co. to dismiss the suit filed by three dealerships owned by Rhoden Motor Cos.: Superior Honda of Omaha, Acura of Omaha and Honda of Lincoln.
The insurer paid Rhoden Motors more than $14.3 million. That was about $1.3 million less than the claims, however, because it discounted the repair costs and refused to pay for what it considered “unapproved supplements,” the decision said.
In a separate Kansas case, the U.S. Court of Appeals for the 10th Circuit reinstated a suit by Brandon Steven Motors accusing Landmark American Insurance Co. of breach of contract and breach of the duty of good faith for failing to pay it $2.3 million to repair hundreds of its vehicles.
The Nebraska suit involved claims arising from May 2019 and April 2020 hailstorms. Rhoden Motors notified Houston Specialty’s Vehicle Inventory Program and hired an independent company, Dent Impressions, to repair its vehicles, according to the decision by Chief U.S. District Judge Robert Rossiter Jr.
The stores provided parts to Dent Impressions at wholesale prices. They then submitted invoices for reimbursement that included Dent Impression’s mark-up for parts, the decision said.
In fighting the breach-of-contract suit, Houston Specialty argued it properly discounted the repair cost claims under a policy provision for work done by the stores. Rhoden Motor countered it hadn’t performed any repairs, merely sourced the necessary parts, which was consistent with common industry practices.
The insurer also asserted a portion of the dealership group’s claims was for unnecessary repairs, for repairs to vehicles later determined to be total losses or for unapproved supplemental work.
Siding with the dealership group, Rossiter held that providing parts “does not transform that transaction into an act of ‘repair’ ” under the policy language. As for the allegedly unapproved repairs, Rossiter found factual issues for trial on whether Rhoden Motors had fully cooperated with the insurer.
Lawyers for both sides in the Nebraska case didn’t respond to questions from Automotive News. Court records show a trial scheduled to begin April 8.
In Kansas, Brandon Steven Motors submitted its claim to Landmark after a May 2019 hailstorm hit its Wichita stores.
The insurer hired Expert Auto Claims to inspect the vehicles and assess the damage. Experts prepared a spreadsheet that set the damage at $2.3 million. The dealership group accepted that number and hired USA Dent to fix the vehicles, the appeals court’s Feb. 9 decision said.
Brandon Steven Motors sued after Landmark refused to pay, and a lower court judge dismissed the case.
In a decision by Judge Carolyn McHugh, the appeals court reversed that ruling and said a trial is necessary to decide whether Landmark and the dealership group had reached an agreement that the insurer would settle the claim based on the $2.3 million figure on the spreadsheet.
The next step is for a trial date to be set, said dealership lawyer Brendan McPherson, of Kansas City, Kan. Landmark’s lawyers didn’t respond to questions from Automotive News.