Three-C Body Shops, Inc. v. Nationwide Mut. Fire Ins. Co.
2017 Ohio 1461
| Ohio Ct. App. | 2017Background
- Three-C Body Shops repaired a customer’s vehicle and billed $7,342.69; Nationwide (insurer) paid $4,072.28, leaving $3,270.41 unpaid.
- Three-C had a signed "Agreement and Repair Authorization" with the customer that purported to assign the customer’s insurance claim and authorize repairs; Three-C sent the Agreement to Nationwide.
- Three-C sued Nationwide in municipal court asserting breach of contract (as an intended third‑party beneficiary), unjust enrichment/quantum meruit, and declaratory relief; trial court granted Nationwide judgment on the pleadings.
- On appeal Three-C argued: (1) Nationwide is an intended third‑party beneficiary and thus liable for breach; (2) Nationwide was unjustly enriched by the repairs; (3) declaratory relief was proper and the assignment was valid.
- The appellate court reviewed de novo and affirmed dismissal on all counts, concluding Three-C could not show Nationwide breached the Agreement, had not conferred a direct benefit on Nationwide, and the asserted assignment was invalid and the insured was a necessary party to declaratory relief.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Nationwide can be liable for breach of the repair Agreement as an intended third‑party beneficiary | Three‑C: Nationwide was an intended third‑party beneficiary of the Agreement and can be sued for breach | Nationwide: Not a party to the Agreement; third‑party beneficiaries gain a right to performance but are not liable under the contract | Court: Rejected extending liability to intended third‑party beneficiaries; Three‑C cannot sue Nationwide for breach of a contract to which it is not a party |
| Whether unjust enrichment/quantum meruit claim lies against Nationwide | Three‑C: Repairs benefitted Nationwide by fulfilling its obligation to insured | Nationwide: Three‑C conferred benefit only on its customer, not on Nationwide | Court: Dismissed claim—no direct benefit conferred on Nationwide; indirect/collateral effects are insufficient |
| Validity/enforceability of the assignment in the Agreement | Three‑C: The Agreement assigned insured’s rights to Three‑C (claim number existed; insurer identified) | Nationwide: Insured could not assign rights to future settlement proceeds before liability was established | Court: Assignment invalid because insured had no present right to proceeds when signed (West Broad controls) |
| Whether declaratory relief was properly pled without joining the insured | Three‑C: Declaratory judgment appropriate to determine rights/obligations under Agreement and policy | Nationwide: Insured is a necessary party whose interests would be affected | Court: Dismissed declaratory claim—insured must be joined under R.C. 2721.12(A); joinder is jurisdictional |
Key Cases Cited
- Hill v. Sonitrol of Southwestern Ohio, 36 Ohio St.3d 36 (Ohio 1988) (adopts Restatement test distinguishing intended vs incidental third‑party beneficiaries)
- West Broad Chiropractic v. American Family Ins., 122 Ohio St.3d 497 (Ohio 2009) (insured may not assign prospective/contingent rights to future settlement proceeds before liability is established)
- EEOC v. Waffle House, 534 U.S. 279 (U.S. 2002) (a contract cannot bind a nonparty)
- Johnson v. Microsoft Corp., 106 Ohio St.3d 278 (Ohio 2005) (indirect purchasers generally cannot assert unjust enrichment against downstream defendants)