Sometimes cases are lost because the policyholder attorney lacks information about an insurance company. I was recently thinking about this when our firm’s Knowledge Manager, Ruck DeMinico, sent a property insurance opinion involving a claim with Liberty Mutual to our firm’s attorneys. The opinion, Delfrate v. Liberty Mutual Fire Ins. Co., ___ F. Supp. 2d ___, 2010 WL 3023866 (M.D. Fla. July 16, 2010), demonstrates these perceptions.
I have never met the attorney that brought the lawsuit, to the best of my memory, but he is not a member of the American Association for Justice‘s Bad Faith Litigation Group. Had he been a member, he could have requested information about other instances and procedures Liberty Mutual has regarding its claims handling. Members of this group help their clients by sharing such information with one another so that claims practices of insurance companies are made transparent. Kelly Kubiak of our firm is the current Co-Chair of that organization.
The lawsuit involved an insurance claim for a leaky roof which started from the Hurricanes in 2004. Liberty Mutual was an insurer. The leak was apparently never fixed and the policyholder suffered from living in a mold infested structure. The judge noted these facts and the complaint as follows:
The insured obtained a homeowner’s policy from the insurer, which policy provided coverage from 2004 to 2007. In August and September, 2004, hurricanes Charlie and Francis damaged the roof on the insured’s home. In order to stop “minor leaking,” the insured employed a repairman to patch the roof. In 2005, under pressure from the homeowner’s association, the insured hired someone to pressure clean the roof. However, the cleaner refused to wash the roof after discovering several loose tiles. The plaintiff submitted a claim to the insurer. Because of the insured’s inability to locate a roofing contractor, the insured “hired people to remove the old roof and [ ]place [thirty] [pounds] [of] felt and tarp[ ]” on the roof. Excessive rain and wind blew the felt and tarp off of the roof and caused “extensive leaking.” The insured again called the insurer and requested benefits under the policy.
The leak in the roof resulted in “extensive damage” inside the house consisting of black mold in the attic and on the walls. The insurer refused to pay (1) for a repair of the roof because the roof “was not built to code” or (2) for mold remediation because the roof continued to leak. In 2005, the insured located a roofing contractor and agreed to pay $32,500 for a new roof. After the contractor replaced the roof, the insured sued and refused to pay the contractor because “the contractor had not fully replaced damaged wood [ ]or repaired fascia appropriately.” In due course, the insured settled the lawsuit and paid the contractor, because the insured wished to sell his home.
During this time, the insurer on four occasions offered “to settle the claims” of the insured. The insured refused each offer as inadequate. The insured alleges (1) that the insurer “with full[ ] knowledge” of the insured’s “infirmities” and disabilities “engaged in a willful and outrageous pattern of delay and withholding of benefits ….;” (2) that, [n]otwithstanding the immediate danger presented by the increasing mold infestation, the [insurer] withheld payments and living expenses which forced [the insured] to live longer in the mold infested house and aggravated mold condition;” and (3) that the insurer’s conduct “was outrageous and deliberate and, knowing [of] [the insured’s] infirmities, designed to force [the insured] to discount the full value of his claim.” In 2007, due to the mold’s effect on the insured’s health, the insured vacated the house.
I wonder if the attorney would have changed the complaint if he knew of Liberty Mutual’s claims practices as we noted in Liberty Mutual Claims Documents Ordered Produced. Many other attorneys, knowing of these practices, have sued Liberty Mutual with facts of those claims practices which some would suggest would give rise to "outrageous motives" to reduce the amounts paid on claims. Whether those facts would have been enough to convince a judge to let the matter proceed is not known because they were never plead. Instead, the Court ruled the following:
In order to state a claim for intentional infliction of emotional distress, a plaintiff must allege facts showing outrageous conduct by the defendant. See Dependable Life Ins. Co. v. Harris, 510 So. 2d 985, 986 (Fla. 5th DCA 1987). “Whether alleged conduct is outrageous enough to support a claim of intentional infliction of emotional distress is a matter of law, not a question of fact.” Gandy v. Trans World Computer Tech. Grp., 787 So. 2d 116, 119 (Fla. 2nd DCA 2001). A plaintiff fails to show outrageous conduct even if the plaintiff alleges that the defendant’s conduct was (1) intentionally tortious or criminal, (2) intended to inflict emotional distress, (3) malicious, or (4) aggravated enough to warrant punitive damages. The defendant’s conduct must qualify as “‘so outrageous in character, and so extreme in degree, as to go beyond all possible bounds of decency, and to be regarded as atrocious, and utterly intolerable in a civilized community.’“ Metro. Life Ins. Co. v. McCarson, 467 So. 2d 277, 278-79 (Fla.1985) (quoting RESTATEMENT (SECOND) OF TORTS § 46 (1965)).
In this action, accepting the insured’s factual allegations as true, the insurer’s conduct fails to rise to the level of outrageous conduct. The insurer offered four times in three years to settle the insured’s claim. Even if the insurer’s offers were either inadequate or “designed to force [the insured] to discount the full value of his claim,” the insurer’s conduct fails qualify as “outrageous” for the purpose of stating a claim for intentional infliction of emotional distress.
I know that Vivian Persand will follow up with the attorney to provide him the information we have regarding Liberty Mutual. I hope he uses that information and joins the Bad Faith Litigation Group so the policyholder comes out better in the future.