FEDERAL MAGISTRATE FINES HOMEOWNER $21,000 FOR CREATING STINK OVER TOILET DAMAGE
A federal magistrate judge in the Eastern District of Texas, Sherman Division, recommended awarding a carrier $21,000 in fraud damages after a homeowner submitted claims for a toilet overflow. In Smith v. Allstate Texas Lloyds, No. 4:12-CV-486, 2013 WL 6177755 (E. D. Tex. Nov. 25, 2013), the homeowners sued Allstate for breach of contract and bad faith. Allstate counterclaimed for fraud, alleging the loss was not a “sudden and accidental” overflow, but was created when the flapper valve was hung open and the toilet simultaneously plugged. Allstate also contended in its counterclaim that it had paid over $20,000 on six previous toilet overflow claims which its investigation had revealed were all fraudulent.
The policyholders failed to submit any controverting evidence, and the magistrate recommended grating summary judgment in favor of Allstate both on the homeowners’ claims, and on Allstate’s fraud counterclaim, awarding the amount Allstate had overpaid on all the fraudulent overflow claims.