HOUSTON – A Harris County judge recently rendered a final judgment in favor of Houston based insurance company Southern Vanguard Insurance Company after a bench trial against a client of storm attorney Eric Dick.
Through attorney Dick, Maria Reyes filed a petition to manage appraisal against SVIC on Sept. 25, 2017, alleging the insurance company failed to properly adjust her claim for damages caused by Harvey, which only made landfall 30 days prior to her petition being filed.
For more than a decade, Texas lawyers have filed thousands of lawsuits against insurers every time a severe weather event impacts the state.
To calm the surge in storm-related litigation, the Texas Legislature passed House Bill 1774, affording insurance companies a chance to resolve a disputed claim by requiring policyholders to give insurers notice 60 days prior to filing a lawsuit.
HB 1774 became law on Sept. 1, 2017 – 24 days before Reyes filed her petition.
Apparently, Reyes wasn’t the only Dick client trying to compel appraisal right after the bill went into effect.
In its answer and counterclaim, SVIC says Dick filed a “20-page boilerplate, rambling, inflammatory, and procedurally baseless tirade” of an original petition, just like he had done in “more than 40 other cases” against at least 30 insurance companies since September 2017.
Court records show Dick has filed dozens of additional similar lawsuits since Harvey.
SVIC argued the petitions were filed in an attempt to “circumvent” HB 1774 and make a “legally unsupported” argument for fees to “justify” taking 45 percent of his clients’ insurance payments after appraisal – a process homeowners can invoke on their own without a lawyer.
Reyes, who failed to provide SVIC with a pre-suit notice, sued the insurer before engaging in appraisal, a requirement under her insurance agreement, the answer states.
SVIC argued that Reyes also breached her policy by naming an appraiser that is not “competent and disinterested,” Eric Ramirez, who has been used by Dick in possibly hundreds of appraisals and even been named as an expert witness on occasion by the attorney.
As previously reported, Ramirez sued Dick earlier this year claiming theft of services and fraud. Dick later replaced Ramirez with Ray Choate as the appraiser for Reyes.
Reyes’ petition drew the attention of Texans for Lawsuit Reform, a group that “vigorously” advocated for HB 1774.
Court Records show TLR filed a brief in support of SVIC, stating that the bill provided an enforcement mechanism when it comes to giving pre-suit notice and was designed to encourage the resolution of insurance claims without litigation.
“And speaking more broadly, the new law (HB 1774) is designed to protect individuals from storm-chasing attorneys who seek to profit from their misfortune while, at the same time, leaving policyholders with substantial remedies against insurance companies that fail to pay claims on time and in full,” the brief states.
TLR argued that since Sept. 1, 2017, Dick had filed numerous first-party lawsuits that appeared to be an attempt to avoid the application of HB 1774.
“The face of the Plaintiff’s pleading in this case shows that the date of loss was exactly 30 days before the date the lawsuit was filed,” the brief states. “The defendant insurance company could not have violated the Texas Insurance Code’s prompt payment of claims statute in that amount of time, given that the statute gives the insurance company several weeks to acknowledge, investigate, and pay a claim before a statutory violation occurs.”
TLR further argued it was “nonsensical” for a plaintiff to file a lawsuit and immediately seek abatement and that court intervention to appoint a contractually required appraiser is “wholly unnecessary.”
“If the policyholder was demanding appraisal under the insurance contract and the insurer was refusing to comply with its obligation to participate in the appraisal process, a lawsuit might be warranted,” the brief states. “But that is not what happened in this case.
“Here, instead of demanding appraisal in accordance with the insurance contract, appraisal is being demanded through the filing of a lawsuit, which is exactly what HB 1774 was seeking to curtail – the filing of unnecessary and abusive lawsuits.”
Court records also show that the case caught the attention of the Texas Association of Public Insurance Adjusters, a trade organization that wrote to the trial court two months after the petition was filed.
“It has come to TAPIA’s attention that attorney Eric Dick has filed dozens of lawsuits on behalf of (policyholders) wherein he immediately demands ‘Appraisal’ of the underlying insurance claim,” the letter states. “It is TAPIA’s understanding from reviewing previous court filings that Mr. Dick charges a 45% contingency fee for his services, even though he does not personally take part in the Appraisal process used to resolve the insurance claim.
“In addition to this attorney’s fee, the insured is also responsible for lawsuit filing fees, the Appraiser’s fee and half of the umpire’s fee. This is quite an expensive proposition and one which assures that the insured will not be made whole for their loss.”
TAPIA told the court that the appraisal process is intended to be a prompt and economical solution — in lieu of lawyer involvement and lawsuits.
“Unfortunately, in recent years it has become apparent that certain opportunistic attorneys have hijacked the Appraisal process for their own personal benefit and at the expense of the insured,” the letter states. “TAPIA believes that these practices need to stop.”
The Reyes lawsuit against SVIC proceeded through the appraisal process. An appraisal award was signed by Choate (the aforementioned appraiser who replaced Ramirez) and umpire Michael Fleming. The appraisal award put the replacement cost at $52,143 with an actual cash value of $48,665.24.
SVIC refused to pay the award and proceeded to trial.
After a bench trial, the court entered Findings of Fact and Conclusions of law stating that Reyes had “failed to discharge her burden”, “failed to prove a specific causal connection” and that the evidence was “insufficient to establish coverage under the policy.”
The court also set aside the appraisal was as a “mistake.”
Based on these findings, a final judgment for defendant SVIC was entered in the case on July 3.
“This trial result serves as a reminder to all Texas insurance companies that their claim positions can be vindicated when given a fair trial, which we are pleased to have been provided in this case,” said SVIC President Cory Moulton.
Eric Bowers, a partner at Zelle LLP who tried the case for SVIC, told The Record that the court carefully considered whether there was any evidence of damage that actually resulted from Hurricane Harvey as opposed to other causes.
“The court’s decision made clear that it was the plaintiff’s burden to prove causation for both the roof and interior damages claimed, a burden that the plaintiff did not meet,” Bowers said. “The court further recognized that an appraisal award not supported by causation evidence can be set aside as a mistake.
“SVIC should be commended for having the fortitude to fight a clearly erroneous appraisal award all the way through trial."
The Record contacted Dick for comment but the attorney declined to offer any statements on the case other than he would be embarrassed if four out of five of his experts were stricken at trial and that if that had happened to him, he’d call a malpractice attorney. Court records do not reflect such a ruling.