Eric D. Sheppard, Plaintiff, v. Carter Bro Inc., Defendant. (2026)

The issue is whether, pursuant to Insurance Law § 2610 and the principle of unjust enrichment, plaintiff, whose vehicle was damaged by an insured non-party's vehicle, is entitled to reimbursement from the defendant car repair shop, where the latter received third-party insurance proceeds to repair plaintiff's vehicle but did not perform any repairs, and plaintiff prefers to use another repair shop. This court finds that plaintiff is entitled to reimbursement and grants judgment in his favor.

A trial on this small claims matter was held on April 30, 2026. Plaintiff Eric Sheppard ("plaintiff" or "Sheppard") brought this action against defendant Carter Bro Inc. ("defendant" or "Carter Bro"), a car repair shop, seeking $2,624 as reimbursement for insurance proceeds received by defendant. On October 1, 2023, Plaintiff was involved in a collision that caused damage to his car and brought his car to Carter Bro to have it repaired. Plaintiff's car was inspected at defendant's car repair shop by GEICO, the insurer of the other driver involved in the collision. In November 2023, GEICO sent Carter Bro a check for $3,035 to repair plaintiff's car. At trial, there was inconsistent testimony between plaintiff and defendant as to whether the car was held at Carter Bro for a couple of weeks before the inspection. However, plaintiff and defendant gave consistent testimony that after the inspection the car was no longer at the premises, and that no repairs were performed. Plaintiff claimed that he repeatedly called defendant to find out when to bring the car for repairs but received varying excuses for why the repairs had to be delayed. Sometime after receiving the check from GEICO, defendant gave plaintiff $900 from those funds to travel to a funeral, with the expectation that those $900 would be returned when the car was brought back for repairs. Plaintiff seeks to repair his car elsewhere, using the funds from GEICO that remain in the possession of Carter Bro.

Pursuant to Insurance Law § 2610, an insurer cannot force an insured to have their repairs performed at a specific repair shop. Section 2610(a) provides: "Whenever a motor vehicle collision or comprehensive loss shall have been suffered by an insured, no insurer providing collision or comprehensive coverage therefor shall require that repairs be made to such vehicle in a particular place or shop or by a particular concern." Section 2610(b) further provides: "In processing any such claim ..., the insurer shall not, unless expressly requested by the insured, recommend or suggest repairs be made to such vehicle in a particular place or shop or by a particular concern." Furthermore, an obligation to use a certain shop cannot "be implied or created by the disbursement and acceptance of insurance proceeds in the amount of the insurer's estimate of repairs." Rizzo v Merchants and Businessmen's Mut. Ins. Co., 188 Misc 2d 180, 183 (App Term, 2d Dept 2001). Any suggestion that the acceptance of insurance funds by a repair shop binds the insured to that shop constitutes a "steering" tactic that is prohibited by Insurance Law § 2610. Id.

Since Sheppard's repair check was received by Carter Bro from the other driver's insurance rather than his own, the issue is raised whether Insurance Law § 2610 applies to plaintiff, who is a third-party claimant, and not the "insured" as described in Insurance Law § 2610. In analyzing section 2610, the Court of Appeals noted that the "Legislature enacted the predecessor to section 2610 (b) in 1974 "to discourage the use of 'referral' body shops by insurers" and to "prevent any insurer, unless expressly requested by the insured, from recommending or suggesting to any claimant that repairs be made in a particular place or shop or by a particular concern." [emphasis added] Allstate Ins. Co. v. Serio, 98 NY2d 198, 205 (2002). An insurer's duty to defend and pay extends to third-party claimants who are paid according to a judgment or settlement against the insured; such insurance is classified as "third-party insurance." Great N. Ins. Co. v. Mount Vernon Fire Ins. Co., 92 NY2d 682, 688 (1999). Accordingly, this court finds that the protections afforded by Insurance Law § 2610 extend to plaintiff as a third-party claimant, and Carter Bro's acceptance of the insurance proceeds from GEICO did not preclude plaintiff from receiving services from a different repair shop. It is therefore Carter Bro's duty to return the proceeds to plaintiff.

Furthermore, allowing defendant to retain the insurance proceeds without having completed any repairs would amount to unjust enrichment. "To recover for unjust enrichment, a plaintiff must show that (1) the defendant was enriched, (2) at the plaintiff's expense, and (3) that it is against equity and good conscience to permit the defendant to retain what is sought to be recovered." Hong Qin Jiang v Li Wan Wu, 179 AD3d 1035, 1040 (2d Dept 2020). Here, Carter Bro was enriched upon receipt of the repair check, it was at Sheppard's expense because the check was his compensation for the accident, and permitting Carter Bro to retain the funds would be against equity and good conscience as they did not conduct any repairs.

The Civil Court Act ("CCA") § 1804 provides that the court must conduct hearings upon small claims in such manner as to do substantial justice between the parties according to the rules and principles of substantive law. O'Hara v. Bates, 2025 NY Slip Op. 51146(U), 2025 NY Misc. LEXIS 6289 *1-2 (App. Term 2d Dept 2025). In accordance with this duty, the court grants plaintiff a judgment of $2,135, representing the $3,035 GEICO insurance payout to defendant, less $900 which defendant already distributed to plaintiff.

Plaintiff also brought a separate small claims action against Steven Carter, under Index Number sc-000420-26/ki, claiming "parking fees and out of pocket repairs." This court finds that the second action is duplicative of the instant matter since both actions seeks damages arising from the same occurrence. Bettan v. Geico Gen. Ins. Co., 296 AD2d 469, 470 (2d Dept. 2002). As such, the second action must be dismissed. Id. This constitutes the decision and order of the court.

Dated: June 26, 2026

Hon. Tehilah H. Berman

Judge, Civil Court Kings County

Tehilah H. Berman, J.