Claims Against Adjusters

Dallas County insurance attorneys know to make an adjuster part of a lawsuit whenever it is possible to do so. One reason is to make sure the case is fought in Federal Court rather than State Court.
The United States District Court, McAllen Division, issued an opinion recently in the case styled Garza v. Geovera Specialty Insurance Company. Here, Geovera had the case removed to Federal Court. Garza was successful in getting the case remanded to State Court by pointing to specific violations of the Texas Insurance Code committed by the adjuster who is named Kenneth Allen DeMaster.
In the petition filed by Garza, Garza pointed to these actions on the part of DeMaster asserting DeMaster conducted a substandard inspection of Garzas’ property. For example, DeMaster spent a mere forty-five minutes inspecting Garzas’ entire property for hail storm and/or windstorm damages. Furthermore, DeMaster told Garza that, because he believed their damages were low, they would not have insurance coverage if they continued with their claim. DeMaster was neither qualified nor authorized to make coverage determinations. The inadequacy of DeMaster’s inspection is further evidenced by his report, which failed to include all of Garzas’ hail storm and/or windstorm damages noted upon inspection. Moreover, the damages that DeMaster actually included in his report were grossly undervalued. DeMaster also improperly withheld material sales tax and a contractors’ overhead and profit from his estimate, in total contravention of applicable Texas Department of Insurance directives. Ultimately, DeMaster’s estimate did not allow adequate funds to cover the cost of repairs to all the damages sustained. DeMaster’s inadequate investigation was relied upon by GeoVera in this action and resulted in Garzas’ claim being undervalued and underpaid.
Together, GeoVera, TeamOne, DeMaster, and Perfetti set about to deny and/or underpay on properly covered damages. As a result of this unreasonable investigation of the claim, including not providing full coverage for the damages sustained by Garza, as well as under-scoping the damages during their investigation and thus denying adequate and sufficient payment to Garza to repair their home, Garzas’ claim was improperly adjusted. The mishandling of Garzas’ claim has also caused a delay in their ability to fully repair their home, which was resulted in additional damages. To this date, Garza had yet to receive the full payment to which they are entitled under the Policy.
In light of the above allegations, the petition appears to sufficiently allege that DeMaster violated section 541.060 of the Texas Insurance Code, which states in relevant part:
(a) It is an unfair method of competition or an unfair or deceptive act or practice in the business of insurance to engage in the following unfair settlement practices with respect to a claim by an insured or beneficiary: … (1) misrepresenting to a claimant a material fact or policy provision relating to coverage at issue; … (7) refusing to pay a claim without conducting a reasonable investigation with respect to the claim; ….
The portions of the petition set out above clearly allege DeMaster’s role as an adjuster engaged in the business of insurance, such that he is a “person” subject to the insurance code. Moreover, by alleging that DeMaster did not conduct a reasonable investigation and engaged in misleading or deceptive behavior, the petition sufficiently alleges that DeMaster violated portions of Section 541.060 of the insurance code. As a result of those considerations, the Court found that the petition both states a cause of action against DeMaster and gives DeMaster fair notice of the relief sought. These findings form the basis of this ultimate conclusion: the allegations in the petition are sufficient to state a claim against DeMaster under state-court pleading standards.