A New York appeals court has reinstated a repair shop's breach-of-contract lawsuit against State Farm over an alleged collision repair underpayment of at least $6,548.38. The court found the insurer never produced the survey it cited in arguing it had paid in full.
The Appellate Division, Second Judicial Department, issued the decision Sept. 23 in Prospect Auto Sales and Repairs, Inc. v. State Farm Mutual Automobile Insurance Company. It reversed a state Supreme Court order in Putnam County that had granted State Farm summary judgment dismissing the shop's complaint, and it denied State Farm's motion. Justices Mark C. Dillon, William G. Ford, Helen Voutsinas, and James P. McCormack all concurred, according to the decision.
Shop sued as the policyholder's assignee
The dispute stems from a Feb. 20, 2023, accident involving a 2018 Audi Q7 insured by State Farm. The policyholder, Janet Sukhram, filed a claim under the policy's collision coverage.
Two days later, Sukhram brought the vehicle to Prospect Auto Sales and Repairs. She signed a repair authorization and a designated representative authorization, which together allowed the shop to repair the vehicle and negotiate repair costs and payment with State Farm. She also signed an assignment of claim, which gave the shop her rights to any damages stemming from State Farm's failure to pay the full repair bill, according to the decision.
The shop completed the repairs at a cost of $19,736.60, but State Farm paid $13,188.22, the court said. As Sukhram's assignee, the shop sued for breach of contract to recover the difference.
The shop alleged State Farm had a duty to negotiate with it in good faith. It cited Insurance Law Section 2601, Regulation 64, and the policy itself. It alleged the insurer failed to negotiate in good faith on matters including the repair methods, parts, and materials needed to restore the Audi, as well as their cost.
Court says the complaint seeks contract damages
State Farm moved for summary judgment. It argued, among other things, that Insurance Law Section 2601 and 11 NYCRR 216.7 provide no private right of action. In an April 25, 2024, order, Justice Gina C. Capone agreed and dismissed the complaint, the appellate court said.
The appellate panel disagreed with that reading of the complaint. It found the shop did not sue for violations of the statute and regulation themselves. Instead, the shop sought breach-of-contract damages partly grounded in claims that State Farm violated them, according to the decision. In reaching that conclusion, the court cited East Collision, Inc. v. State Farm Mutual Automobile Insurance Co., a 2025 Westchester County Supreme Court decision.
Insurer did not produce its rate survey
State Farm argued it had already paid what it owed for the necessary repairs. Under the terms of the policy, State Farm said, it based its payment on its own repair estimate, which the court described as written at "the prevailing competitive rate" set by a survey the insurer prepared.
The panel called that argument "wholly conclusory and unsubstantiated" because State Farm "never furnished the survey it purported to rely upon," the decision states.
State Farm also submitted an affidavit from one of its representatives on whether it had negotiated with the shop in good faith. The court found that affidavit did not reflect the representative's own knowledge and instead "improperly relies on hearsay within hearsay," according to the decision.
Because State Farm did not make the threshold showing required of it as the party seeking summary judgment, the court said its motion should have been denied regardless of how strong the shop's opposing papers were.
The New York ruling follows a separate State Farm decision in April, when the U.S. Court of Appeals for the 6th Circuit ruled that roughly 90,000 Tennessee policyholders cannot jointly sue the insurer over a downward adjustment it applies when valuing totaled vehicles.
The Law Offices of Anthony J. Mamo Jr., P.C., represented the shop. Mura Law Group, PLLC, of Buffalo, N.Y., represented State Farm, according to the decision. The decision, 2026 NY Slip Op 05431, may still be revised before it appears in the Official Reports.
