Opinion
SCF769/07.
Decided August 28, 2007.
William J. McLaughlin, Esq., Lynbrook, NY.
Martyn, Toher Martyn, Mineola, NY.
This is an action for recovery of damages to plaintiff's motor vehicle arising from an accident on February 10, 2007. Liability was not an issue. The only issue before this Court is the hourly rate to be charged for the repair of the subject 2002 240E Mercedes-Benz and the determination of an award if any, for the difference charged by the repair shop and the sum paid by the defendant. In this case, the sum sought by plaintiff is $3,450.20.
On February 11, 2007 plaintiff made a claim to his insurance carrier, defendant herein. Defendant recommended that plaintiff bring his car to Castle Repair Shop for repair. Plaintiff complied but was dissatisfied with his perception of the services to be provided by Castle, and that Castle was not a certified Mercedes-Benz repair shop. Plaintiff then authorized Mid Island collision, a Mercedes-Benz certified shop to perform the repairs. This authorization was given prior to defendant's appraisal of the vehicle. After the repair work had commenced plaintiff received a Notice of Rights letter dated February 19, 2007 (Defendant's Exhibit A) offering the names of other repair shops, none of which were Mercedes-Benz certified.
Brian McGauvern, General Manager of Mid Island Collision, testified in support of plaintiff's contention that the proper hourly rate for repair of the vehicle be determined at $75.00 rather than $44.00 for sheet metal mechanical/electrical and refinish labor. Defendant pays its repair shops $47.00 per hour for frame labor.
This witness further testified that $65.00 per hour is the "break even" point for his company when servicing a regular Mercedes-Benz. A high-end Mercedes-Benz requires an hourly labor rate of $115.00 due to electronic complexity, specialized equipment, and highly trained technicians, needed to work on such a car, whose training is paid for by Mid-Island. Mr. McGauvern also testified as to his belief that insurance carriers pay $65.00 per hour for labor. On cross examination, the witness was unsure if Mid Island collision had accepted hourly labor rates of $45.00-$50.00 from 2006 to the present from insurance carriers.
LaDonna Moore, a senior customer claims representative, testified for the defense. She acknowledged that the repair shops recommended to the plaintiff were not Mercedes-Benz certified and that the insured is responsible for any amount due above the defendant's estimate of repair costs if the insured selects his own repair shop. The last witness for the defense was Donald Retz, the senior appraiser who inspected the physical damage to the plaintiff's vehicle. Mr Retz testified that the defendant's hourly rate is guided by geographic area and that most other local repair shops, including Rallye Motors, a dealership specializing in the sale and repair of high end cars, accept its rate. The witness stated that he writes as many as six appraisals per day and that other repair shops accept the defendant's hourly rates.
When working to determine repair rates between an insurance company, the insured, and the repair shop to which the insured has brought his vehicle ("designated representative") an insurance company is required to comply with New York State Regulation 64 ( 11 NYCRR § 216.7) which controls "Unfair Claims Settlement Practices and Claim Costs Control Measures."
NYCRR § 216.7 (b) states:
Negotiations must be conducted in good faith, with the basic goal of promptly arriving at an agreed price with the insured or the insured's designated representative. If the insured's intended repair shop is not a designated representative of the insured, the insurer may also reach an agreement with that repair shop on the cost to repair the damaged vehicle, but that agreement shall not be biding upon the insured or the designated representative. Early in negotiations, the insurer must inform the insured's designated representative or, if there is not designated representative, the insured of all deductions that will be made from the agreed price. If an insurer shall require a proof of loss, its offer shall be communicated to the insured via a proof of loss. The insurer shall also communicate the offer to the designated representative. Determining the labor rate to be awarded when an insured chooses a repair shop not recommended by his insurance company has become a source of extensive litigation on both the federal and state level and will remain a major issue between insurers and repair shops until the Legislature enacts guidelines relieving the burden which has been placed upon the judiciary and litigants. The pecuniary interests of each side are abundantly apparent.
Presently, New York case law favors a case by case analysis of whether an insurance company should be liable for the difference in costs between the recommended repair shop and the shop chosen by the insured ( see, M.V.B. Collision, Inc. v. Allstate Insurance Company, 2007 U.S. Dist. Lexis 57930 [E.D.NY August 8, 2007]).
This Court in Gapud v. Kaur, 15 Misc 3d 1105 A, (Nassau Dist Court, 2007) rejected the insurance company's contention that it should not pay have to costs which exceeded the insurer's estimate. Citing Rizzo v. Merchants and Businessmen's Mutual Insurance Company, 188 Misc 2d 180, 727 N.Y.S.2d 250 (App Term 2001) the Court held that an insured is not automatically entitled to be reimbursed for the full amount charged by the repair shop authorized by the insured to make the repairs. Instead the burden of establishing the reasonable costs of the repairs necessary to bring the vehicle to its condition prior to the loss rests with the insured ( Gapud, supra).
After reviewing the testimony and evidence the Court concludes that the plaintiff has not met its burden. The contentions that electronic complexity and the need for specialized equipment are conclusory, unsupported by specific testimony. This Court also concludes that any special training necessary to properly repair a Mercedes-Benz vehicle is a cost of doing business properly placed with a repair shop.
Accordingly, substantial justice requires dismissal prima facie plaintiff's claim.
This constitutes the Decision and order of the Court.