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Star Windshield Repair, Inc. v. Western National Insurance Co.: INSURANCE - anti-assignment clauses in auto insurance extend to post-loss auto-glass claims

A07-216, A07-217, A07-830
Star Windshield Repair, Inc.,
as assignee for Aaron Helget, petitioner,
Appellant (A07-216),
Western National Insurance Co.,
Respondent (A07-216),
The Glass Network,
Claimant (A07-217),
Auto Glass Express, as assignee for
Kathy Heglos, claimant,
Appellant (A07-217),
Austin Mutual Insurance Company,
Respondent (A07-217),
State Farm Mutual Automobile
Insurance Company, petitioner,
Appellant (A07-830),
Archer Auto Glass, as Assignee of
Ronald Hornberg,
Respondent (A07-830).
Filed February 5, 2008
Affirmed in part and reversed in part
Shumaker, Judge
Blue Earth County District Court (A07-216)
File No. 07-CV-06-1876
Hennepin County District Court (A07-217)
File No. 27-CV-06-1333
Winona County District Court (A07-830)
File No. 85-CV-06-3587
Charles J. Lloyd, Livgard & Rabuse, P.L.L.P., 2520 University Avenue SE, Suite 202,
Minneapolis, MN 55402 (for appellants Star Windshield Repair and Auto Glass Express,
and for respondent Archer Auto Glass)
Eric J. Magnuson, Briggs & Morgan, P.A., 2200 IDS Center, 80 South Eighth Street,
Minneapolis, MN 55402; and
Mark R. Bradford, Bassford Remele, 33 South Sixth Street, Suite 3800, Minneapolis, MN
55402 (for respondent Western National Insurance Co.)
Steven R. Kluz, Mohrman & Kaardal, P.A., 33 South Sixth Street, Suite 4100,
Minneapolis, MN 55402 (for respondent Austin Mutual Insurance Company)
Leatha G. Wolter, Jenneane L. Jansen, Meagher & Geer, P.L.L.P., 33 South Sixth Street,
Suite 4400, Minneapolis, MN 55402 (for appellant State Farm Mutual Automobile
Insurance Company)
Considered and decided by Shumaker, Presiding Judge; Worke, Judge; and
Muehlberg, Judge.*
Anti-assignment clauses in comprehensive automobile insurance policies that by
their plain language preclude assignment of rights and duties or change of interest extend
to post-loss assignments of auto-glass claims.
* Retired judge of the district court, serving as judge of the Minnesota Court of Appeals
by appointment pursuant to Minn. Const. art. VI, 10.
Each of these appeals is taken from a district court decision resolving a motion to
vacate an arbitrators award related to claims for insurance policy proceeds made by auto
glass repair companies as purported assignees of the insured policyholders. In two of the
cases, the district court vacated the arbitrators awards, concluding that anti-assignment
language in the insurance policies precluded assignment of post-loss auto-glass claims.
In the third case, the district court denied the motion to vacate, concluding that the
assignment of a post-loss claim was not precluded by policy language. Because plain
language in each of the insurance policies precludes all assignments, we affirm the two
orders vacating the arbitrators awards and reverse the order denying the motion to
The dispositive issue in each of these companion cases is whether an antiassignment
provision in a motor vehicle insurance policy is enforceable as to post-loss
physical damage proceeds so as to preclude a purported assignee from asserting the right
to dispute the amount of such proceeds.
Each insurer provided comprehensive insurance, which included coverage for
windshield and glass damage. Western National Insurance Co. and Austin Mutual
Insurance Company had identical anti-assignment provisions in their policies: Your
1 We note that our decision in this case is consistent with that reached in Auto Glass Ins.
Co. v. Star Windshield Repair, Inc., No. A07-972 (Minn. App. Jan. 8, 2008).
rights and duties under this policy may not be assigned without our written consent.
State Farm Mutual Automobile Insurance Companys anti-assignment provision was
expressed differently: No change of interest in this policy is effective unless we consent
in writing.
In each case, an insured vehicle sustained windshield or glass damage and the
insured policyholder contracted with a glass repair company to fix or replace the
damaged item. Each repair companys agreement contained an assignment clause by
which the insured assigned to the company any claim for insurance proceeds.
The respective repair companies performed glass repair work and directly billed
the applicable insurers. Each insurer paid for the repair work but in an amount less than
that billed. Asserting rights as assignees under the insurance policies, the repair
companies initiated arbitration proceedings. Over the insurers objections, arbitrators
held hearings and made awards exceeding the sums the insurers had paid to the repair
The insurers respectively moved the district court to vacate the arbitration awards,
arguing that the purported assignments were void. In the cases of Star Windshield
Repair, Inc. v. W. Natl Ins. Co. and Auto Glass Express v. Austin Mut. Ins. Co., the
district court agreed with the insurers and vacated the awards. The repair companies
appealed. In the matter of State Farm Mut. Auto. Ins. Co. v. Archer Auto Glass, the
district court held that the anti-assignment provision did not extend to post-loss proceeds
and confirmed the award. The insurer appealed. We consolidated these appeals for
When a policy of comprehensive motor vehicle insurance prohibits the assignment
of rights, duties, or interests without the insurers consent, does the prohibition validly
extend even to the assignment of post-loss insurance proceeds?
It is undisputed that the arbitrations in these consolidated cases are governed by
the Minnesota No-Fault Automobile Insurance Act. Minn. Stat. 65B.41-.71 (2006).
No-Fault arbitrators are limited to deciding questions of fact, leaving the interpretation
of law to the courts. Gilder v. Auto-Owners Ins. Co., 659 N.W.2d 804, 806 (Minn. App.
2003) (quoting Weaver v. State Farm Ins. Cos., 609 N.W.2d 878, 881 (Minn. 2000)). But
no-fault arbitrators are authorized in certain cases to make legal determinations necessary
to grant relief. Weaver, 609 N.W.2d at 882. Accordingly, an arbitrators determination
of a legal issue is subject to de novo review. Klinefelter v. Crum & Forster Ins. Co., 675
N.W.2d 330, 334 (Minn. App. 2004).
The interpretation of a provision in an insurance policy is a legal issue. AMCO
Ins. Co. v. Ashwood-Ames, 534 N.W.2d 740, 741 (Minn. App. 1995), review denied
(Minn. Sept. 28, 1995). In each of the consolidated cases, an arbitrator interpreted an
anti-assignment clause in an insurance policy to permit the assignment of post-loss
insurance proceeds. If an arbitrator errs as a matter of law in making an award, the
arbitrator thereby exceeds his power and the award may be vacated. Minn. Stat.
572.19, subd. 1(3) (2006); Weaver, 609 N.W.2d at 882.
An insurance policy is a contract to which the general rules of contract law apply,
unless there are statutory provisions to the contrary. Waseca Mut. Ins. Co. v. Noska, 331
N.W.2d 917, 926 (Minn. 1983). One ubiquitous rule of contract law that applies here is
that, if there is no ambiguity in policy terms, the insurance contract is to be given its plain
meaning. Bobich v. Oja, 258 Minn. 287, 294, 104 N.W.2d 19, 24 (1960). The glass
repair companies do not contend that the anti-assignment clauses are ambiguous, nor do
we find them to be so. All the clauses here plainly have broad reach, precluding any
transfer of a right or interest under the respective policies. Thus, on the face of each
policy, the insured may not assign the right to receive insurance proceeds or the right to
litigate a dispute over the amount of proceeds claimed to be due. Despite this plain and
broad prohibition, the glass repair companies argue that Minnesota law allows the
assignment of post-loss property-insurance proceeds. In addressing this contention, we
note at the outset that these cases do not involve liquidated sums that the respective
insureds have merely directed their carriers to pay to third parties. Even under the
language of these policies, such a directive to pay a fixed sum to another would be
permissible. Caselaw has not always made the distinction between assigning liquidated
proceeds and unliquidated proceeds. The distinction is significant because the former
assignment implicates only the mechanical transfer of money, while the latter assignment
carries with it the substantive right to litigate the amount of the insurance benefit the
insurer is obligated to pay. In the context of the cases on appeal, the assignee of
unliquidated proceeds, here the glass repair companies, would have the right to submit
the claim, if it is ,000 or less, to mandatory and binding No-Fault arbitration. Minn.
Stat. 65B.525 (2006).
The glass repair companies argue that Minnesota precedent permits a post-loss
assignment of insurance proceeds despite an anti-assignment clause in the policy, and
that the purpose of such a clause is not depreciated by a post-loss assignment.
Addressing the latter argument first, we note that the glass repair companies
contend that the purpose of an anti-assignment clause is twofold. First, it prevents an
increase in the risk of loss to the insurer without the insurers knowledge and consent.
Second, it protects the insurer from having to do business with a party it has not chosen to
do business with. The companies argue that, because the loss has already occurred, there
can be no increase in the risk covered by the policy, and that, by statute, insurers are
required to do business with glass repair companies. See Minn. Stat. 72A.201, subd.
6(14) (2006) (providing statutory guidelines for settlement of window-glass damage
claims). Although the glass repair companies are correct in identifying at least two
reasons an insurer might include an anti-assignment clause in an insurance policy, when
the language of the policy is unambiguous, as it is here, we are not permitted to interpret
it, but rather we must give effect to the plain meaning the parties intended. See Thommes
v. Milwaukee Ins. Co., 641 N.W.2d 877, 880 (Minn. 2002) (When the language of an
insurance contract is unambiguous, it must be given its plain and ordinary meaning.).
That brings us to the contention that Minnesota precedent permits the type of
assignment at issue here. For that proposition, the glass repair companies rely on Windey
v. N. Star Farmers Mut. Ins. Co., 231 Minn. 279, 43 N.W.2d 99 (1950); Ill. Farmers Ins.
Co. v. Glass Serv. Co., 683 N.W.2d 792 (Minn. 2004); Reitzner v. State Farm Fire &
Cas. Co. Inc., 510 N.W.2d 20 (Minn. App. 1993), superseded by statute, 1994 Minn.
Laws ch. 435, 1, at 257, as recognized in Border State Bank of Greenbush v. Farmers
Home Group, 620 N.W.2d 721, 723 (Minn. App. 2000); and In re Estate of Sangren, 504
N.W.2d 786.
Windey involved a real estate purchase agreement that required the vendors
insurance proceeds from any property loss to be applied against the purchase price. 231
Minn. at 281, 43 N.W.2d at 100. Even though the contract contained an anti-assignment
of the policy clause, the supreme court held that the requirement in the purchase
agreement did not constitute an assignment of either the policy or the proceeds thereof.
Id. at 283, 43 N.W.2d at 101. In fact, [i]t gave the vendee no rights against the insurer,
but only against the [insureds] so far as concerned the application of the proceeds in case
of loss or damage. Id., 43 N.W.2d at 101-02. In dictum, the court went on to say that a
post-loss assignment is not an assignment of the policy:
Assignment, after loss, of the proceeds of insurance does not
constitute an assignment of the policy, but only of a claim or
right of action on the policy. Such an assignment does not
void the policy under a provision that if it is assigned without
the insurers consent it shall become void.
Id., 43 N.W.2d at 102 (citations omitted).
In Illinois Farmers, the Minnesota Supreme Court held that arbitration is required
to resolve automobile-glass claims. 683 N.W.2d at 796. But the insurer in that case did
not contend that glass claims were not assignable. Rather, the dispute centered on
whether the glass claims were arbitrable singly or collectively. Id. at 798. There is
nothing in the Illinois Farmers opinion that supports an inference that the insurance
policy here contained an anti-assignment clause. But, if the policy did have such a
clause, it is clear that the insurer did not raise it as an issue.
Reitzner dealt with a casualty insurance policy on property purchased by vendee
on a contract for deed. 510 N.W.2d at 22. The vendee was the named insured and the
vendors assignee was listed as an additional insured. Id. The property was damaged by
a fire that the named insured intentionally set. Id. Policy language stated that such an
intentional act voided the policy and precluded payment to the insured who set the fire
and to any other insured. Id. The court of appeals held that the clear language of the
policy excluded coverage to the additional insured. Id. at 24.
In dictum, the court discussed the standing of an assignee, who took an assignment
of both vendor and vendee interests, to bring an action against the insurer. Id. at 26. The
court concluded that despite a prohibition against assignment of this policy, the
assignee did not receive a pure assignment of the policy, but rather, received an
assignment of the proceeds due under the policy should the claim be successful. Id.
Finally, in Sangren, the court of appeals addressed the assignment of a
homeowners insurance policy that contained an anti-assignment clause. 504 N.W.2d at
790. The court held that the insurer had waived any objection to the assignment. Id.
Then, in dictum, the court added that this was not really an assignment of the policy.
Rather it was an assignment of the proceeds of the policy. Id.
None of the Minnesota precedents on which the glass repair companies rely
provides controlling law on the issue before us. In three of the cases, the comments
regarding the assignment of proceeds are dicta, and in the fourth, no issue as to a
prohibition of assignment was raised. Moreover, in the three cases in which the dicta
appears, the insurance policies prohibited assignment of the policy itself. The courts in
those cases simply recognized a difference between assigning a policy and assigning loss
proceeds. In the cases before us now, however, the anti-assignment clauses refer to rights
and interests and duties. This prohibitory language is broad enough to reach loss
proceeds as well as the policies themselves.
We hold that the issue on appeal is controlled by the Minnesota Supreme Courts
most recent decision as to contractual anti-assignment clauses in Travertine Corp. v.
Lexington-Silverwood, 683 N.W.2d 267 (Minn. 2004). Although it is not an insurancepolicy
case, Travertine observed that our precedent that parties may agree that their
contractual rights and obligations are not to be assigned is well-established. Id. at 272.
The court traced the precedent back to its 1964 decision in which the court explained the
general rule as to assignment of proceeds:
The general rule is that the right to receive money due or to
become due under an existing contract may be assigned even
though the contract itself may not be assignable. A contract
to pay money may be assigned by the person to whom the
money is payable, unless there is something in the terms of
the contract manifesting the intention of the parties that it
shall not be assigned.
Id. (quoting Wilkie v. Becker, 268 Minn. 262, 267, 128 N.W.2d 704, 707 (1964)).
The Travertine court then noted that the disputed management agreement
contained the prohibition that the rights and obligations of Berkey/Lenna shall not be
assignable. Id. The court held that this language was a sufficient indication of
something in the terms of the contract manifesting the intention of the parties that it
shall not be assigned. Id.
The glass repair companies here contend that Travertine is not sound authority
because it does not involve an insurance policy. The Minnesota Supreme Court has
stated that insurance policies are sometimes treated differently from ordinary contracts
because the insurance business is quasi-public in nature. Illinois Farmers, 683 N.W.2d at
802. The court has explained that, because of the nature of the insurance business, the
state may regulate it so as to protect the public and, [i]f a term in an insurance contract
conflicts with Minnesota statutes, the contract term becomes enforceable. Id. But as to
the issue of the broad prohibition against assignment without the insurers consent, the
glass repair companies have not shown that insurance contracts here are sui generis or
that anti-assignment clauses conflict with statutory law. Thus, general principles of
contract law apply, and Travertine, applying such principles, controls the outcomes of
these cases.
We also reject the glass repair companies argument that public policy dictates the
free assignability of post-loss proceeds. Just as the insurance industry is highly regulated,
Minnesotas auto glass industry is highly regulated as well. Illinois Farmers, 683
N.W.2d at 796. Public policy dictates that an insured ought to be able to select his own
auto glass vendor and that the insurer should be required to pay that vendor as long as the
vendors charge is fair and reasonable. That policy is reflected in Minnesotas Unfair
Claims Practices Act, Minn. Stat. 72A.201, subd. 6(14) (2006). The glass repair
companies have not shown how the anti-assignment clauses at issue violate or detract
from the public policy now codified or how a refusal to enforce the clauses would fail to
serve public policy.
Therefore, we affirm the district court decisions in Star Windshield Repair, Inc. v.
W. Natl Ins. Co. (A07-216) and Auto Glass Express v. Austin Mut. Ins. Co. (A07-217),
and we reverse the district court decision in State Farm Mut. Auto. Ins. Co. v. Archer
Auto Glass (A07-830).
Affirmed in part and reversed in part.


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