COURT AFFIRMS SUMMARY JUDGMENT DISMISSING BODY SHOP CLAIMS AGAINST INSURER SEEKING HIGHER LABOR RATES FOR COMPLETED WORK

March 1, 2019

Recently, the San Antonio Court of Appeals affirmed summary judgment in favor of an insurer and rejected the body shop’s claims seeking to recover a labor rate higher than provided for in the insurer’s damage estimates. In MGR, Inc. v. Geico Casualty Company, 2019 WL 573968 (Tex. App. – San Antonio, February 13, 2019),  Geico wrote damage estimates to repair insured vehicles, and MGR, Inc. d/b/a Miracle Body and Paint, an independently owned auto body shop in San Antonio, completed repairs on several vehicles. But after completing the repairs, Miracle claimed Geico failed to pay in full for the repairs because Miracle’s labor rates were higher than those in Geico’s estimates. Miracle then sued Geico to recover asserting claims for breach of contract, breach of implied contract, quantum meruit, suit on sworn account, negligent misrepresentation, fraud and fraud by non-disclosure. Finding no support, the trial court granted traditional and no evidence summary judgment in favor of Geico and this appeal followed.

Miracle’s claims were founded on Geico’s obligation to pay “prevailing market labor rates” based on the specific market. And Miracle argued that its rate was the prevailing market labor rate. Addressing the breach of contract claims, the court examined an affidavit from Miracle’s President attaching invoices from several other insurer’s paying higher labor rates, which Miracle argued as support that its rate was “reasonable and necessary” and, the prevailing market rate. In rejecting this argument, the court observed in part that “while the invoices from other insurers might demonstrate Geico paid less for similar work, they do not demonstrate Geico ever agreed to pay more.” The court then examined other claims asserted by Miracle and their respective elements, and affirmed summary judgment in favor of Geico on all claims.