GEICO wins appeal in case filed by Miracle Body and Paint over labor rates

By Takesha Thomas | Feb 18, 2019

SAN ANTONIO – A San Antonio auto body shop has lost an appeal against GEICO to recoup funds it says were lost in a breach of contract claim.

On Feb. 13, the 4th Court of Appeals in San Antonio affirmed the 45th Judicial District Court of Bexar County's ruling granting a traditional and no-evidence summary judgment to GEICO Casualty Co. 

Chief Justice Sandee Bryan Marion ruled that MRG Inc. and Miracle Body and Paint "failed to produce evidence of mutual assent to the terms of an express or implied contract." 

Miracle is a San Antonio-based, independently owned auto body shop. The company sued GEICO over allegations of breach of contract, breach of implied contract, quantum meruit and suit on a sworn account, and, in the alternative, negligent misrepresentation, fraud and fraud by nondisclosure.

According to the ruling, Miracle performed auto body work on vehicles insured by GEICO and GEICO paid Miracle according to the labor rates disclosed in the GEICO repair estimates. The lawsuit states that after completing the repairs, GEICO failed to pay the full amount for repairs to multiple vehicles because the labor rates in GEICO’s repair estimates are lower than the rates Miracle charges.

"GEICO argues Miracle did not produce more than a scintilla of evidence to establish the existence of any valid contract in which GEICO agreed to pay Miracle based on labor rates in excess of the rates disclosed in the GEICO repair estimates," the ruling states.

The ruling states Miracle argued that the parties had an implied contract, "whereby GEICO agreed to pay Miracle’s invoices based on the 'prevailing market labor rate' for work performed, which Miracle argues is the labor rate Miracle charged."

Under each of GEICO's automobile insurance policies, the company "is obligated to pay the prevailing market labor rates based on its overall experience in the specific market in question," in the event of a covered vehicle damage claim, the ruling states.

"In this case, any services Miracle rendered were for the benefit of and accepted, used and enjoyed by GEICO insureds, not GEICO. If GEICO received any benefit, it was too indirect and attenuated to support a quantum meruit claim. Therefore, because GEICO failed to produce evidence that valuable services were rendered to and accepted by the person sought to be charged (GEICO), the trial court did not err in granting GEICO’s no-evidence motion for summary judgment on Miracle’s quantum meruit claim," Marion wrote.

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