In a Hurricane Ike case tried in Houston two weeks ago, eleven members of a Harris County jury rendered a verdict for the Plaintiff, AMJ Investments (“AMJ”), against Defendant United National Insurance Company (“United”) awarding a total of $1,600,000 in damages (before attorney’s fees and costs).   The jury deliberated between for five hours.

The jury found United failed “to comply with its agreement with AMJ” and awarded $300,000 as compensation owed for Hurricane Ike damage that was covered by the policy but not paid by United. The jury also found United failed to (1) “attempt in good faith to effectuate a prompt, fair, and equitable settlement of a claim when [its] liability has become reasonably clear” and (2) attempted to “enforce a full and final release of claim from a policyholder when only a partial payment has been made…”  For these Insurance Code violations, the jury awarded $300,000 as “policy benefits for repair or replacement of AMJ’s property due to damage…covered under [the] policy.”  The jury also found these unfair practices under the Insurance Code were engaged in ‘knowingly’ by United for which it awarded AMJ $1,000,000. The jury then awarded attorneys’ fees of $79,300 for preparation and trial of the case, an additional $30,000 in the event of appeal to the Court of Appeals, and another $30,000 in the event of an appeal to the Supreme Court of Texas.

The case was tried before the Honorable Dan Hinde of the 269th Judicial District Court by Gravely & Pearson of San Antonio (representing AMJ) and Tucker, Taunton, Snyder & Slade of Houston (representing United National Insurance Company).

Witnesses testifying on behalf of Plaintiff were Art Boutin, an Independent Adjuster who prepared an estimate  of  damages  to  the  property,  Mike  Krismer,  certified  indoor  environmental  consultant  and licensed mold consultant, Peter dela Mora, P.E. and AMJ’s Public Adjuster Gary Crone.  Matt Pearson testified  regarding  plaintiffs’  attorneys  fees.   Plaintiffs  also  called  one  of  United’s  Property  Claim Directors and Independent Adjuster in their case in chief.  (Mr. Krismer is from Corpus Christi and has two decades of experience testifying for plaintiffs in foundation, mold and other water damage cases.)

Witnesses testifying on behalf of United were Ron Kelm, P.E., John McReynolds, contractor/adjuster expert, Steve Grossman, Architect, and Craig Koehne, P.E. – all from the Houston area. United also called its Property Claim Director and adjuster in its case in chief.

During the claim, United retained Rimkus Consulting to assist with the investigation of claims for roof damage, additional structural damage, and specifically the exterior window system. Three engineers from Rimkus provided United forensic assistance during the claim.

During the handling of the claim United issued payments to the insured for water damage extraction and remediation of approximately $1 million and additional payments for property damage repairs of approximately $1.4 million.  During the claim, AMJs Public Adjuster and United reached an agreed upon scope of loss and claim settlement amount for all the claimed property damage to the seven story structure, with the exception of the roof and window damage.  During the lawsuit and trial, AMJ argued their prior agreement to the scope and amount of the basement water damage was inaccurate.

As of press time, a final judgment has not been entered.

Editor’s Note: Because the jury charge instructed the jury that the covered property damage was also the measure of damage for any Insurance Code violations (in addition to the measure of the damage for the contract claim), this portion of the jury verdict may not withstand appellate scrutiny.  The plaintiffs may be required to make an election of remedies on this issue given the submission. Likewise, the "knowing" finding under the Insurance Code is an exceptionally high standard tantamount to an intentional tort which is typically very hard to sustain on appeal.

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