The Importance of the Mike’s Auto Body ‘David v. Goliath’ Victory: A Q&A with Attorney Jordan Rodrigues
by Alana Quartuccio Bonillo
There are no small victories for auto body shops, especially when an independent shop can get a win against a billion dollar insurance company.
That is precisely why AASP/MA member shop, Mike’s Auto Body’s (Fall River) recent win against Travelers Insurance on an appeal is a BIG deal and remains a widely talked about topic among Commonwealth collision repairers.
To recap: a small claims court magistrate ruling in favor of Travelers Insurance was to cost Mike’s Auto Body owner, Mike Penacho, $16,000. Penacho, and a related business, All Day & All Night Towing which faced the same charges, decided to invest the time and money into appealing the matter – fighting for their rights – and it bode successfully in their favor!
Because this win garnered so much attention, NEAR reached out to Penacho’s attorney, Jordan Rodrigues, to dive a bit deeper into the situation and what these automotive businesses had to contend with as a way of better educating readers on what to expect if faced with the same allegations.
New England Automotive Report: Let’s go back to where it all began. What did Travelers’ initial complaint against Mike’s Auto Body and All Day & All Night Trucking allege and what happened in small claims court?
Jordan Rodrigues: The allegations within Travelers’ initial small claims complaints were pretty much mirror images of one another. Travelers was alleging that Mike’s Auto Body and All Day & All Night Towing were billing Travelers for unreasonable charges. Travelers made payment to Mike’s Auto Body and All Day & All Night Towing “under protest” and then later filed suit under M.G.L. c. 93A stating that the conduct was unfair and deceptive and therefore in violation of the statute. At the initial small claims court hearings before a clerk magistrate, Travelers was successful in convincing the clerk magistrate of their position, and the clerk magistrate awarded treble damages plus attorney’s fees, interest and costs against Mike’s Auto Body and All Day & All Night Towing.
NEAR: How long did the process take from start to finish – from where the magistrate voted in favor of Travelers to Mike’s Auto and All Day & All Night Towing appealing?
JR: The cases were originally filed by Travelers quite some time ago, in February 2021. The All Day & All Night Towing cases were heard first on July 22, 2022, and the Mike’s Auto Body cases were heard on August 19, 2022. The judgments were entered on all matters on August 23, 2022. The appeal hearings were heard before a judge on November 30, 2022. Therefore, from the date when the judgments were first entered until the time when we were heard on appeal was approximately 99 days. We did not receive notice of the favorable appeal decision until approximately December 13, 2022 when the judge made his ultimate decision and notices were forwarded to the parties.
NEAR: What did the appeals hearing entail? Can you share details of some of the testimony given on the body shop’s behalf by expert witnesses?
JR: As far as the appeal hearing itself, it was before a single judge of the district court. Travelers had an appraisal manager/supervisor as their witness, and we were able to cross-examine him regarding the alleged unreasonableness of the charges they were contesting. It was brought to light that not only has Travelers paid Mike’s Auto Body and All Day & All Night Towing for these exact charges in the past (and currently), but also that it pays other shops, as well. In some instances, the charges paid were actually more than what was being contested in these cases. We had expert witnesses for both the body shop and the tow company. In conjunction with the testimony from the company owners, we were also able to show through our experts that the charges were fair, customary, reasonable and keeping within industry standards.
NEAR: Although this does not set a precedent, why is this appeal so important to body shops?
JR: Although not precedent-setting, the appeal victory is important to the industry in the sense that a court of law found the rates to be fair and not unjustified, as alleged by the insurance company. The shops did the work and are entitled to be paid for the services rendered, as with any industry or business. The ‘David versus Goliath’ scenario is real in the sense that a billion dollar insurance company can exert a large amount of pressure onto these small businesses and be quite successful in making them cave a lot of times. This appeal victory shows that if you do everything right, have the proper documentation in place and your charges are fair, reasonable and justifiable, you can be successful in taking on the insurance companies.
NEAR: What should body shops be aware of when faced with the same issue as Mike’s Auto Body?
JR: If other shops are confronted with similar issues, the best thing to do is to try to come to an agreement with the insurance company beforehand; that way, it can reduce or prevent the situation of receiving payments “under protest,” which then creates a situation where the shop is waiting and wondering if the insurance company is actually going to try and claw back some (or all) of the funds in that payment. A business cannot operate with that kind of uncertainty, and the finality of payments has to be as absolute as possible. Given the rising costs of everything nowadays, a shop cannot afford to take a payment “under protest” and use those funds within the business only to be sued by an insurance company months or even years later; however, there are some instances where an agreement cannot be reached and taking the payment “under protest” may be the only option. If that situation does arise, the shop should contact an attorney familiar with these types of matters in order to help the shop navigate and go through the various options moving forward. That way, there are no surprises, and the proper planning can be put in place.
Want more? Check out the March 2023 issue of New England Automotive Report!