M.V.B. Collision v. Allstate Insurance
Creditors' and Debtors Rights'
Allstate appealed from a district court order denying its motion to dismiss the complaint, or alternatively, for summary judgment. Auto repair facility M.V.B. Collision repaired Hickey's car after an accident and Allstate agreed to pay Hickey $15,746 for the repair, considering the amount fair and reasonable. M.V.B. argued that $21,449 was the fair, reasonable cost of the repair, and had Hickey sign an "assignment and loan" agreement assigning his rights to pursue the balance to M.V.B. Allstate moved for dismissal, arguing M.V.B. acquired the assignment solely for purposes of bringing suit, thus violated New York's champerty statute. The district court disagreed, denying Allstate's motion, concluding while M.V.B. intended the assignment to be used in its dispute with Allstate regarding the labor rate paid by Allstate, and litigation was the vehicle through which it would use the assignment, M.V.B. met its burden of showing it had a legitimate and proper business purpose in obtaining the assignment. The panel agreed, affirming the order, finding when the purpose of an assignment is the collection of a legitimate claim, the champerty statute does not apply. It noted the mere intent to bring suit on a claim purchased did not constitute champerty.