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$105,000 Verdict Upheld Against Body Shop for Fraud and Consumer Sales Practices Violations

Synopsis of the Case

Jeremy Williams owned a 2010 Nissan Maxima and was involved in an accident that resulted in extensive damage to his vehicle.  In October 2012, he contracted with Sharon Woods Collision Center, a body shop just north of Cincinnati, to perform the repairs in conformity with I-CAR guidelines and use only Nissan OEM parts in the repair. It is important to note that the Sharon Woods Collision Center was under different ownership during the repair in question and litigation process than it is today. When Williams got his car back, he noticed abnormalities which led him to hire an expert to conduct an extensive inspection.  The inspection found that a structural bonding adhesive was used to attach panels where only welding was the Nissan approved method of repair.  There was also accident repair residue in and on the vehicle, and the vehicle’s seams were improperly sealed.  Sharon Woods refused to compensate Mr. Williams for the cost to re-repair his vehicle properly by another shop, so he hired a “lemon law” attorney to pursue damages against the shop.

In January 2014, Williams filed suit against Sharon Woods for violating the Ohio Consumer Sales Practices Act, breach of warranty, and fraud and deceit.[1]  He sought $15,000 in compensatory damages, triple punitive damages and attorneys’ fees for Sharon Woods’ alleged fraud.  Sharon Woods, of course, denied liability.  The case wound its way through the Hamilton County Common Pleas Court for the next two years and a two-day jury trial was held in June 2016. The result was a sweeping verdict against the shop.  The jury awarded the Plaintiff $105,462.59, which was $18,735.97 in damages and $86,726.62 in attorney’s fees and litigation costs.  These fees and costs do not include what Sharon Woods paid their own attorneys.  There is also a question as to whether the shop’s liability insurance covered any of Sharon Woods’ attorney’s fees and litigation costs in this matter.  The jury found Sharon Woods failed to repair the vehicle to a workmanlike standard, misrepresented to the customer that they did, stalled or delayed or attempted to avoid a legal obligation, charged for labor based on an estimate of time rather than the actual time to repair the vehicle, failed to provide the customer with an itemized list of repairs, failed to tender replacement parts, and committed other deceptive and unfair practices. 

Sharon Woods and their attorneys filed many post-verdict motions to try to nullify the verdict without success, so they appealed the verdict to the First District Court of Appeals, which is one step below the Ohio Supreme Court, and is responsible for hearing all appeals from Hamilton County trial courts.  The shop argued that the trial court erred in three ways:

  1. That the Plaintiff did not present evidence before as to the value of the vehicle after the accident, but before the alleged shoddy repairs;
  2. That the attorney fees for violation of the Consumer Sales Practices Act were limited to those violations committed knowingly and failed to separate the attorney hours spent on those claims from those that were not; and
  3. That the trial court erred in denying Sharon Woods’ motion for new trial.[2]

The First District Court of Appeals ruled against Sharon Woods’ on all three assignments of error, upholding the jury’s verdict.       

What does this mean for repair shops in Ohio?

While Williams v. Sharon Woods Collision Center is an outlier in many ways, Ohio body shops and service centers need to pay very close attention to its implications.  There are also some potential positive developments which we will address further below.

Sharon Woods’ litigation strategy did not make economic sense.  It likely became a very personal matter to both parties where neither would give an inch.  According to a 2004 study, only 3% of civil cases filed in the United States ever reach a jury trial.[3]  The attorney’s fees and costs to take a case to a jury too often dwarf the amount of money in dispute.  That was the case here, but for whatever reason, the Sharon Woods Collision Center former owner dug his heels in and fought until the bitter end.  While fighting for “principle” can sometime make sense, that decision should always be tempered with a cost-benefit analysis.  When the shop appealed and lost, it also created new and potentially bad precedent for both shops and insurance companies when the verdict was affirmed.  It is highly recommended that shops who are threatened with litigation by customers or former customers retain competent and experienced legal counsel as soon as possible.

Potential Positive Impact of Williams on the Automotive Repair Industry

A positive impact Williams could have on the industry is to serve as a wake-up call for shops to pay much closer attention to the most up to date I-CAR, Technology Maintenance Council Recommended Practices (TMC), and manufacturer’s repair standards and stop cutting corners to save costs at the expense of customer safety.  The ASA of Ohio has made a push for decades to educate body shops and service centers to do exactly this.  On a related note, Mike Anderson will be conducting a Learn to Research; Research to Learn Workshop in Columbus on Friday, October 19, 2018 and Saturday, October 20, 2018 in Independence, Ohio from 9 AM-3:30 PM.  Shop owners, managers, estimators, blueprinters, and technicians are encouraged to attend and learn the most efficient ways to search OEM repair procedure websites. More information is at https://asaohio.org/training-and-events/learn-to-research-research-to-learn-workshop.html.   

Williams is a real world perfect storm of the financial calamity that can ensue for real or alleged shop failure to follow I-CAR, TMC, or the manufacturer’s specific guidelines for repair.  If a mistake is made in a repair by a technician, it would behoove the shop to address that issue as soon as possible.  As Williams demonstrates, attempting to cover up mistakes brings the full force of the Consumer Sales Practices Act into play where six figures or more in compensatory and punitive damages, attorneys’ fees, and litigation costs can be assessed to a shop that engages in such behavior.  For many shops, such a result might severely impact the longevity or health of their business.  This impact also does not account for the shop’s own attorney fees in such a matter where, even if the shop was insured, the insurance company would undoubtedly (and successfully) disclaim any responsibility for fraud on the part of the shop owner.  Based on our experience in defending similar claims, the shop’s own legal fees were likely over six figures without regard to the award provided to the Plaintiff.  For many shops, such a result would run them out of business. 

When negotiating with insurance companies on behalf of a customer, shops can, with the assistance of legal counsel, cite the Williams decision as a very compelling reason for refusing to acquiesce to insurance company pressures to cut corners on repairs.  A response of, “We are not going to violate the law” with regards to a cut rate repair demand should shut down the discussion.  Ohio regulations regarding insurance adjusters are set forth in the Ohio Administrative Code (OAC).  For example, OAC §3901-1-24 (B) (6) prohibits public insurance adjusters and public insurance agents from making an inventory of loss or damage other than that which is fair and honest.  Shop Owners would be wise to familiarize themselves with OAC Ann. 3901-1-54, that prohibits a number of unfair property/casualty claims settlement practices.  OAC Ann. 3901-1-54 (H) (1) imposes an extra duty of care on insurers who “steer” customers to one repair shop:

If the insurer provides the name of only one repair shop, it shall ensure that the repairs

                are performed in a workmanlike manner.

                 Further, Section 5 of the same regulation, states:

                An insurer which elects to repair and designates a specific repair shop for automobile

                repairs shall cause the damaged automobile to be restored to its condition prior to the

                loss.  The insurer shall assess no additional cost against the claimant other than as stated

                in the policy, and the repairs should be effected within a reasonable period of time.

 

                OAC §3901-1-54 (H)(5) will likely hasten the death of the “dedicated repair shop,” because insurance companies certainly do not want to be responsible for property damage and personal injuries as a result of shoddy work on the part of the repair shop. 

               

Shop owners and managers should print and keep a copy of OAC §3901-1-54 close at hand, as well as OAC §3901-1-07 that details additional prohibitions on insurance agents and adjusters under the Ohio Unfair Trade Practices Act.  We will detail these regulations in a future article to further empower shop owners when dealing with insurance companies’ demands to cut costs on repairs that could lead to claims like those in Williams.

 Due to financial constraints, customers may consent to a less expensive repair that is not fully up to I-CAR, TMC, or manufacturer specifications.  This could pose several significant problems.  First, a detailed, written waiver of liability should be executed by the customer.  We are working with the Ohio ASA to draft a comprehensive, yet easy to understand waiver that adds a solid layer of protection for shops from potential liabilities and puts the customer on notice of their own duty to inform secondary buyers of that vehicle of such repairs.

While in this case, using a structural adhesive in place of a weld was never an appropriate repair, ever changing manufacturers’ repair specifications may impact or inform this issue going forward.  It is all the more crucial to make sure shop operators and technicians are consulting the most up to date manufacturers’ procedures.  Operators and managers should make absolutely certain to document your information sources in the repair file to prove you were utilizing up to date information and not stale third party data.  If there is one big takeaway from Williams, it is that should a repair dispute proceed to Court, shop owners will be held to the high standard of repair expert, so it is crucial to operate as such in everyday business by documenting all repairs and maintaining good records.

 

David A. Miller and Brian R. Redden
Attorneys
Buechner Haffer Meyers & Koenig Co. LPA
Cincinnati, Ohio
dmiller@bhmklaw.com
bredden@bhmklaw.com
(513) 579-1500

Technical Contributions from:

Christopher Sterwerf
Fairfield Auto & Truck
Fairfield, Ohio
CSterwerf@FairfieldAutoTruck.com
(513) 874-5857

 



[1] The Ohio Consumer Sales Practices Act (“OCSPA”) (Ohio Rev. Code § 1345.01 et. seq.)

[2] Williams v. Sharon Woods Collision Center, Inc., 2018-Ohio-2733, ¶8, 16, 22.

[3] “Government Survey Shows 97 Percent of Civil Cases Settled.” Phoenix Business Journal 30 May 2004.  https://www.bizjournals.com/phoenix/stories/2004/05/31/newscolumn5.html

 
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