Five years after a South Texas hail storm, a Hidalgo County jury awarded homeowner John Griffith damages of $1,244,500 against USAA Texas Lloyd’s Co. (“USAA”) and at least $200,000 against claim adjuster AllCat Claims Service, L.P. (“AllCat”).  Griffith – a principal of the McAllen-based Griffith Law Group – filed the lawsuit alleging the defendants intentionally undervalued the cost of damages to his home during the inspection process.  He alleged the 2012 hail storm damaged his roof, pool, pool deck, fence, and satellite dish. The roof damage allegedly caused subsequent damage to the home’s ceilings, walls, insulation and flooring.  Griffith also complained that AllCat conducted a “substandard inspection” of the property, spending just one hour on site without getting on the roof to investigate the extent of damage.  Griffith’s attorney, Greg Cox of the Mostyn firm, argued his client’s damages were “grossly undervalued.”  The jury found in favor of Griffith on all counts, including breach of contract, knowing violations of the Texas Insurance Code, and fraud.

The jury awarded $70,000 in dwelling damage and $6500 for damage to “other structures.”  These “actual” damages were awarded in connection with USAA’s alleged breach of contract, insurance code violations, and fraud, although the jury awarded an additional $33,000 for “premiums” on the fraud claim for what they likely saw as “illusory coverage” under the applicable homeowner’s policy.  The jury found the following Insurance Code violations by both USAA and Allcat:  (1) failing to pay the claim when liability was reasonably clear; (2) failing to provide a reasonable explanation for the denial; (3) unreasonable investigations; and (4) misrepresenting coverage.

Unfortunately for AllCat, Texas courts have recognized that independent adjusters can be held liable under the Insurance Code for committing unfair or deceptive insurance practices.  See Gasch v. Hartford Indem. Co., 491 F.3d 278, 282 (5th Cir. 2007) (holding that an insurance adjuster who services a policy engages in the business of insurance and therefore could be held individually liable under the Texas Insurance Code); Liberty Mut. Ins. Co. v. Garrison Contractors, Inc., 966 S.W.2d 482 (Tex.1998) (any “person” who engages in the business of insurance can be held individually liable under the Texas Insurance Code).  There are, however, no cases in Texas authorizing the “comparative fault”/Insurance Code question the trial court submitted in this case.   The jury apportioned fault on an 80/20 basis between USAA and AllCat for failing to settle when liability was reasonably clear and for misrepresenting insurance coverage.  The jury also determined that liability should be split on a 70/30 basis for defendants’ failure to explain the basis for the denial.  It will be interesting to see how the Court apportions damages in its judgment.

The jury found that USAA’s conduct was committed “knowingly” and awarded $335,000 in additional damages.  The jury also awarded $200,000 for AllCat’s knowing Insurance Code violations.  Additionally, the jury authorized $114,000 in attorneys’ fees through trial and $85,000 in contingent appellate fees.  Finally, the jury hit USAA with a whopping $800,000 for alleged malice and fraud in connection with Griffith’s insurance claim.   No judgment has been entered as of yet and the case will certainly be appealed.  “There was no fraud, and we expect a reviewing court to reach the same conclusion,” USAA asserts in a statement about the case.   “The accusation of malice is outrageous. We will appeal this verdict, and we’re very confident that it will be reversed.”

This is certainly a case to watch as it winds its way through the appellate process.