State Farm has elected to settle a lawsuit levied upon it by Ray Gunder of Gunder’s Auto Center, who accused the insurer of underpaying on labor rates and paint materials.
Attorney Brent Geohagan, Gunder’s legal counsel, received a letter from State Farm’s legal team stating that while they were not admitting to any wrongdoing or liability, they elected to provide full payment for the disputed amount of $553.77 to settle a lawsuit that Gunder had filed on behalf of his customer.
“This is huge," said Gunder. "This is the first of what we anticipate will be many such decisions from State Farm in the numerous other lawsuits we have filed against them for their repeated underpayments of our increased labor rates and PMC Logic paint and material invoices. This check, while made out to Gunder’s and Brent Geohagan, has the name of every quality repairer in the country and should send a strong, loud and very clear message that when push comes to shove, the little guy can take on the bullies and win. Like us, every shop can make a positive difference in this industry.
“As my good friend and business consultant, Barrett Smith of Auto Damage Experts, always says, ‘Only when the risks begin to outweigh the rewards do behaviors begin to change.’ I’m happy to see State Farm is beginning to change theirs.”
In April 2012, Gunder’s raised its body labor rate from $42 per hour to $48 and began demanding full payment of PMC Logic’s paint and material invoices. Since then, 37 insurers have provided the full labor and materials without much opposition. According to Gunder’s, those that have resisted include State Farm, Allstate, USAA, Travelers and GEICO, all of which are defendants in 40-plus current lawsuits levied by Gunder on behalf of his customers. Roughly 20 of those suits are believed to be against State Farm on similar issues.
“Today’s announcement may bring other insurers to reconsider their positions,” said Gunder. "Generally speaking, insurers often follow State Farm’s lead on such issues. It will be interesting to see what happens in the weeks and months ahead. I would like nothing more than to have positive and respectful working relationships with State Farm and every other insurer we deal with on behalf of our customers. This would be beneficial to our respective companies and allow us to do what we’re here to do: properly serve the consumer. Until then, we’ll just keep on pounding that rock!"
