Quality Panelbeating Shop Fined $31million for Substandard Job

A driver and passenger were seriously injured after their 2010 Honda Fit collided with a hydroplaning Toyota and a previous substandard roof repair by quality panelbeating shop John Eagle Collision Center was blamed  for  the severity of the crash. The court case awarded the injured couple US$42 million in damages.  John Eagle Collision Centre’s defence argued that pressure from the insurance company forced them to use a faster and cheaper repair method and that insurance company should therefore take responsibility.  Many quality panelbeating businesses in NZ tell us they are also under constant pressure from the BIG BRAND insurance companies to reduce collision repair costs. We’re told this includes reducing labour times to levels that are unsustainable for best practice repairs, and that using non-genuine replacement parts is common. Responsible panelshop operators do their best to push-back on unreasonable pressures but have little influence or power so are often forced into compromises. Many state that insurance pressure has squeezed industry margins so low that “there is no juice left in the lemon”. 

The quality panelshop shop in the U.S. involved in the legal case was found responsible for 75 percent of the couple’s ordeal and the jury awarded a total of $31.5 million in damages. They attributed the other 25 percent of the blame to the other driver. “I didn’t think that they were going to award the plaintiffs with that much money,” said Auto Body Association of Texas Executive Director Jill Tuggle , One of the jurors interviewed after the trial observed that John Eagle Collision had made a business decision to panel-bond the roof instead of following Honda procedures, and so “‘we made a business decision for them.’”

The Honda Fit was traveling in a 75 mph stretch of road in 2013 when a 2010 Toyota Tundra in the other lane hydroplaned into their path, leading to the Fit striking the right front quarter of the Tundra in a T-bone collision.  Two of the Tundra’s occupants were uninjured, while the other was merely bruised. The Honda Fit driver and passenger  were seriously injured and trapped inside the burning Fit, which they had purchased without knowledge of the previous repair at the quality panelbeating shop.

Experts for the plaintiffs said that the severity of the crash and the passenger injuries were the result of the body shop adhesive-bonding the Fit’s roof during a $8,500 hail repair in 2012 for the prior owner. Honda OEM repair procedures demand a shop spot-weld the front and rear corner edges of the new roof and then perform a combination of two- and three-plate spot welds and MIG plug welds.  “It can be seen that no welds are present,” wrote plaintiff’s expert Neil Hannemann, who inspected the Fit. “The buckling of the cant rail is due to the lack of welding of the roof panel, which was designed to be welded on and acting as a shear panel for disbursing crash loads.” The defense had argued the substitution of the panel bonding agent was equally acceptable and the shop actually was ahead of Honda’s own engineers in making that determination.

“The Honda Fit owners, Mr & Mrs Seebachan, would likely have had only minor injuries if not for the faulty repair,” Hannemann wrote. “One must remember that a vehicle’s safety systems are like links in a chain. Each system must work together to ensure the other safety systems perform as designed. When the faulty structural repairs were made, the crash-worthiness systems were all compromised.”  North Dakota State University Impact Biomechanical Laboratory director Mariusz Ziejewski concurred saying that te unibody car failed to properly distribute the energy around the couple, crushed their legs and trapped them inside the burning car.

The jury thought OEM procedures were “absolutely paramount,” particularly given the shop’s recognition by I-CAR, which demands quality panelbeating shops follow OEM procedures. The affiliation of John Eagle Collision with an OEM dealership also was “a huge deal” to the jury in showing the shop knew better.  The case also highlighted that any collision repair facility representing itself as certified would have to follow OEM procedures or in advance tell the customer it was going to repair the car incorrectly and secure permission to do so.  Jurors felt an OEM “recommended procedure” still meant the the shop must fix the vehicle that way or “they assume full liability.”

Collision repair trade groups and I-CAR have all repeatedly stressed that OEM repair procedures are the standard — but made the point that they still face resistance from insurers and other shops who treat them as merely suggestions.  Ignoring OEM repair standards and specifications is hard to justify and this pressure from insurance companies is as prevalent in NZ as it is in the rest of the world.  The opinion of many quality panelbeating businesses in NZ is that they are under constant pressure from insurance companies to reduce collision repair costs. This includes reducing labour times and using non-genuine replacement parts, all of which panelshops try to push back on but often with little success. Many state that insurance pressure has squeezed industry margins so low that “there is no juice left in the lemon”.  This helps explain why the industry is in such a crisis – every year more and more panelshops simply close the doors, and it’s been a decade since any new large scale facility has opened in NZ.

Hopefully this tragic case will serve as a wake-up call for quality panelshops everywhere, and will help them resist pressure from BIG BRAND insurance companies to reduce repair costs to even more unsustainable levels.  Quality collision repair facilities can now cite Seebachan v. John Eagle Collision to an insurer refusing to pay for the work to be done correctly, according to the defendants solicitor they can now say, “‘If I don’t, I could be taken to court, charged and penalised”. The argument may now be effective in the U.S.  Unfortunately it’s still unlikely to gain much traction in NZ but at least it could start a conversation, and hopefully encourage more recognition & compliance with I-CAR and manufacturers repair specifications. See more at http://crashmanagement.nz/end-new-zealand-collision-repair-industry/

3 Responses

  1. Justin
    | Reply

    yeah yeah of course blame the panelbeater for following the insurance assessors instructions! Every job’s an arguement now, you can only push back for whats right and fair so much before you end up banging your head against the wall. Assessors play the game, gauging out every dollar, argueing over everything including times, methods and parts and most of them haven’t even done the I-CAR courses but that doesn’t stop them telling us how to do the job. In the end you just give up or the day would be one long arguement. I’ve wasted 30 minutes justifying $20 – its stupid. No wonder the trade’s in a crisis an shops are closing the doors. I’m not surprised to hear a good shop’s been forced into a bad situation and even if this one’s in the States it’ll be happening here every day too. It’s gutting that the panelshop gets nailed and the assessor dictating the job gets off scott-free! Keep up the coverage and lets get this bullshit out in the open – more responsible shop owners and managers need to be talking about it and we need to be telling customers about it too. Time for CRA to step up too!

    • Bruce B
      | Reply

      Right about that mate ! In 30 years I’ve never seen so many good panel shops close as in the last couple of years. And NONE have opened. You’d have to be mad to spend a million bucks setting up a prime shop then accept $60 an hour for your highly skilled labour. So lets name names eh. Yes talking about you NZI! And now Lumley. And Vero etc. Way too much corporate power over small business. I know 3 shops now that DO NOT ACCEPT IAG JOBS. Pretty ballsy move when that accounts for 70 per cent of the collision repair trade but they say they are better off for it and plenty of other work to keep them busy. If every SRC stuck together we could fight for a fair return. Whats the chance?

  2. Reg P
    | Reply

    Your right about the panel and paint trade being powerless against insurance company pressure but you still can’t excuse substandard work. Bruce’s suggestion looks good but not many shops would make the move. I remember a backlash against State Insurance in the 80’s where a few shops turned away underpriced State jobs but not many joined the movement and it didn’t last. Corporates don’t give a dam about small businesses. Half the panel and paint shops in NZ could close and they still wouldn’t understand its because they’ve squeezed al the juice out of the lemon and they wouldn’t care as long as they still get big fat profits. Gemini groups here now anyway so maybe they’ll have the muscle to fight back. Good luck.

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