Blue Ash Auto Body, Inc. v. Progressive Cas. Ins. Co. ( 2011 )

[Cite as Blue Ash Auto Body, Inc. v. Progressive Cas. Ins. Co., 2011-Ohio-5785.]
IN THE COURT OF APPEALS
FIRST APPELLATE DISTRICT OF OHIO
HAMILTON COUNTY, OHIO
BLUE ASH AUTO BODY, INC., : APPEAL NO. C-110083
TRIAL NO. A-0907630
FINNEY AUTOMOTIVE COMPANY, :
INC., O P I N I O N.
:
and
:
VALLEY PAINT & BODY, INC.,
:
Plaintiffs-Appellants,
:
vs.
:
PROGRESSIVE CASUALTY
INSURANCE COMPANY, :
PROGRESSIVE SPECIALTY :
INSURANCE COMPANY,
:
PROGRESSIVE PREFERRED
INSURANCE COMPANY, :
PROGRESSIVE DIRECT INSURANCE :
COMPANY,
:
ARTISAN & TRUCKERS CASUALTY
COMPANY, :
and :
UNITED FINANCIAL CASUALTY :
COMPANY,
Defendants-Appellees. :
OHIO FIRST DISTRICT COURT OF APPEALS
Civil Appeal From: Hamilton County Court of Common Pleas
Judgment Appealed From Is: Affirmed
Date of Judgment Entry on Appeal: November 10, 2011
Waite, Schneider, Bayless & Chesley Co., L.P.A., Stanley M. Chesley, Joseph T.
Deters, W.B. Markovits, Terrence L. Goodman, Terence R. Coates and Erica L.
Eversman, for Plaintiffs-Appellants,
Baker & Hostetler LLP, Ernest E. Vargo, Michael E. Mumford, Ted T. Martin and
Robert T. Razzano, for Defendants-Appellees.
Please note: This case has been removed from the accelerated calendar.
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OHIO FIRST DISTRICT COURT OF APPEALS
S UNDERMANN , Judge.
{¶1} Blue Ash Auto Body, Inc., Finney Automotive Company, Inc., and
Valley Paint & Body, Inc., (collectively, “the auto-body shops”) appeal the trial court’s
judgment that granted summary judgment in favor of Progressive Casualty
Insurance Company, Progressive Specialty Insurance Company, Progressive
Preferred Insurance Company, Progressive Direct Insurance Company, Artisan &
Truckers Casualty Company, and United Financial Casualty Company (collectively,
“Progressive”). We conclude that the trial court properly granted summary
judgment on the auto-body shops’ claims for breach of contract and unjust
enrichment. We therefore affirm the judgment of the trial court.
{¶2} The auto-body shops filed a class-action lawsuit against Progressive
that included claims for deceptive trade practices, breach of contract, unjust
enrichment, tortious interference, and civil conspiracy. The auto-body shops alleged
that Progressive illegally steered its insureds to its network of automobile repair
shops; that Progressive used unregistered, illegal repair shops; that Progressive
illegally suppressed prices; that Progressive interfered with the auto-body shops’
professional collision repair judgment; that Progressive misapplied cost-database
information; and that Progressive refused to pay the auto-body shops for necessary
repairs on behalf of its insureds. Progressive filed a motion for summary judgment
on the breach-of-contract and unjust-enrichment claims. The trial court granted
summary judgment to Progressive on those claims. The auto-body shops dismissed
their remaining claims and now appeal.
{¶3} In their first assignment of error, the auto-body shops assert that the
trial court erred when it granted Progressive’s motion for summary judgment with
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OHIO FIRST DISTRICT COURT OF APPEALS
respect to the claim for breach of contract. Summary judgment is proper when (1)
there remains no genuine issue of material fact, (2) the moving party is entitled to
judgment as a matter of law, and (3) reasonable minds can come to but one
conclusion, and with the evidence construed in favor of the party against whom the
motion is made, that conclusion is adverse to that party. Civ.R. 56(C); Temple v.
Wean United, Inc. (1977), 50 Ohio St.2d 317, 327, 364 N.E.2d 267. We review the
trial court’s decision to grant summary judgment de novo. Doe v. Shaffer, 90 Ohio
St.3d 388, 390, 2000-Ohio-186, 738 N.E.2d 1243.
{¶4} The auto-body shops contend that, because they are third-party
beneficiaries of Progressive’s contracts with its insureds, the auto-body companies
are entitled to enforce the contracts’ requirement that Progressive pay to have
insured vehicles restored to pre-loss condition. According to the auto-body shops,
Progressive breached the contracts by failing to pay the auto-body shops the
reasonable costs of repair. The trial court concluded that the “no benefit to bailee”
clause in the insurance contracts between Progressive and its insureds
unambiguously precluded auto-body shops from benefitting from the policy. The
auto-body shops argue that the clause in the contracts is ambiguous at best and
should be construed against the drafter, Progressive. But we need not reach the issue
of whether the clause is ambiguous, because we conclude that the insurance
contracts did not evince a clear intention to benefit the auto-body shops.
{¶5} The auto-body shops would have enforceable rights under
Progressive’s insurance contracts only if the companies were intended beneficiaries.
To distinguish intended beneficiaries from incidental beneficiaries, the Ohio
Supreme Court has adopted the statement of law in the Restatement of the Law 2d,
Contracts (1981), Section 302. Hill v. Sonitrol of Southwestern Ohio, Inc. (1988), 36
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OHIO FIRST DISTRICT COURT OF APPEALS
Ohio St.3d 36, 40, 521 N.E.2d 780. According to the Restatement, “a beneficiary of
a promise is an intended beneficiary if recognition of a right to performance in the
beneficiary is appropriate to effectuate an intention of the parties and either (a) the
performance of the promise will satisfy an obligation of the promisee to pay money
to the beneficiary; or (b) the circumstances indicate that the promisee intends to give
the beneficiary the benefit of the promised performance.” Restatement of the Law
2d, Contracts (1981), Section 302. Absent meeting the requirements set out in the
Restatement, a third-party beneficiary is an incidental beneficiary without
enforceable rights under the contract. Id.{¶6} To explain the Restatement’s rule, the Hill court adopted language in
Norfolk & W. Co. v. United States (C.A.6, 1980), 641 F.2d 1201, that outlined the
“intent to benefit” test. Hill, supra, at 40. Under the test, courts look to the intent of
the promisee to determine whether the promisee intended the third party to benefit
from the contract. Id., citing Norfolk, supra, at 1208.
{¶7} The Ohio Supreme Court has recently expounded on its application of
the “intent to benefit” test in Huff v. FirstEnergy Corp., Slip Opinion No. 2011-Ohio-
5083. In Huff, the court considered whether a person who was injured by a falling
tree that was located near a utility’s easement was a third-party beneficiary of the
contract between the utility and its service contractor. The analysis of the issue
began with the court’s recognition that “Ohio law * * * requires that for a third party
to be an intended beneficiary under a contract, there must be evidence that the
contract was intended to directly benefit that third party. Generally, the parties’
intention to benefit a third party will be found in the language of the agreement.” Id.
at ¶12.
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{¶8} With this principle in mind, the Huff court concluded that the trial
court had properly granted summary judgment to the service contractor on the issue
of whether the injured person was an intended beneficiary of the contract because “it
[was] unambiguous that neither [the utility nor the service contractor] intended to
make the [plaintiffs] third-party beneficiaries under the contract.” Id. at ¶14. The
court was not convinced that a provision in the contract that the service contractor
would work “to adequately safeguard all persons and property from injury” was
sufficient to create a genuine issue of material fact about whether the injured person
was an intended beneficiary under the contract. Id. at ¶17-19. The court concluded
that the contract had not been entered into for the general benefit of the public.
Rather, the intent of the parties was to ensure that the utility’s lines would be free
from trees and vegetation. Importantly, “[t]he contract contain[ed] no language
establishing an ongoing duty to the general public on behalf of either [the utility or
the service contractor].” Id. at ¶14.
{¶9} Using Hill as guidance, we turn to the contracts between Progressive
and its insureds. As in Hill, the contracts here did not evince an intention on the part
of either Progressive or its insureds to benefit the auto-body shops. The purpose of
the contracts was to provide insurance coverage to the insureds for damage to their
covered vehicles. There is no indication in the contracts that the promisees—here,
the insureds—entered into the insurance contracts to benefit the auto-body shops.
Rather, any benefit to the auto-body shops was incidental to the insurance coverage
provided. Like in Hill, the contracts contain no language establishing an ongoing
duty to the auto-body shops. Their involvement is limited to the extent that they are
chosen by the insureds to repair a vehicle.
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OHIO FIRST DISTRICT COURT OF APPEALS
{¶10} The auto-body shops argue that Progressive’s relationships with auto-
body shops, its recognition of the significant role played by auto-body shops, and its
day-to-day processes used to ensure that a covered vehicle is returned to its pre-loss
condition demonstrate Progressive’s intent to benefit the auto-body shops. But
where the contracts are unambiguous about their purpose and about the lack of
intent to benefit third parties, we need not look to extrinsic evidence of Progressive’s
relationships with the auto-body shops. We conclude that the auto-body shops are
incidental beneficiaries to the insurance contracts. The trial court properly granted
summary judgment to Progressive on the contract claim. The first assignment of
error is without merit.
{¶11} The auto-body shops’ second assignment of error alleges that the trial
court erred when it granted summary judgment to Progressive on the unjust-
enrichment claim. To establish unjust enrichment, the auto-body shops had to
demonstrate “(1) a benefit conferred by [them] upon [Progressive]; (2) knowledge by
[Progressive] of the benefit; and (3) retention of the benefit by [Progressive] under
circumstances where it would be unjust to do so without payment ('unjust
enrichment')." Hambleton v. R.G. Barry Corp. (1984), 12 Ohio St.3d 179, 183, 465
N.E.2d 1298.
{¶12} The auto-body shops assert that their work done to restore
Progressive’s insureds’ vehicles to pre-loss condition benefited Progressive in that
the work fulfilled Progressive’s contractual obligations to its insureds. But the auto-
body shops could not demonstrate that retention of any benefit was unjust. The
shops voluntarily entered into repair contracts with the insureds and knew in
advance Progressive’s estimates for the work. The auto-body shops were free to
refuse to do the work. We conclude that the trial court properly granted summary
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OHIO FIRST DISTRICT COURT OF APPEALS
judgment to Progressive on the auto-body shops’ unjust-enrichment claim. The
second assignment of error is without merit. And we therefore affirm the judgment of
the trial court.
Judgment affirmed.
H ILDEBRANDT , P.J., and F ISCHER , J., concur.
Please Note:
The court has recorded its own entry this date.
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