As of today, I have come to realize the truth of the following saying:
Never underestimate the stupidity of twelve people in a locked room.This is going to be a lengthy post.
As the loyal reader of my blog knows, I am an attorney. I just completed a two-week trial with one of the partners of my firm. We represent an international insurance company that was sued, along with its insured, by a water-damage restoration contractor for breach of contract.
A bit of background: in May of 2001, the insured's residence suffered water damage as a result of a massive hail storm (coupled with an already shitty roof). The insured, a prominent neurologist in the DFW metroplex, called his personal friend the contractor who came and dried out the house, then encouraged his friend to file a claim with the insurance company. Notably, the first thing this contractor asked for was the doctor's insurance policy. At the same time, he had the doctor sign a contract wherein the contractor agreed to provide remediation and restoration services, but in any event would receive 18% of any insurance funds paid.
Our client investigated the claim, and found a covered loss. The adjuster notified the good doctor's attorney advising of the approved loss. At that point, the attorney said that given preliminary testing that uncovered the presence of mold (although mold levels in the house were less than outdoor readings) they would be waiting to replace the roof until the costs of remediation (basically, tearing out the mold-infested portions of the house) and build-back (replacing the torn-out portions) were finalized so that all monies could be paid at once.
Now would be a good time for a primer on insurance law. Under a homeowners policy, there is a duty on the part of the homeowner to mitigate damages. Basically, you can't let your house go to shit if you know of a condition that will continue to damage your house (
i.e., a leaky roof). Failure to do so runs the risk of losing coverage.
In this case, the contractor, the "professional," did
nothing to stop the sources of water coming into the house. Instead, the doctor and his family moved out of the house, all furnishings were moved out, the house was sealed, and the HVAC was turned off. No tarps were put over the roof leaks, no roof cement, no patches. Nothing.
Regardless, the insurance company awaited estimates from the doctor's contractor for remediation and build-back. In October of 2001, the attorney sent a letter, advising our client that remediation and restoration were going to be very expensive (per the word of the contractor), and that demolition might be a better alternative. Our client requested the appropriate estimates to evaluate the options, which should have consisted of two sets: 1) a demolition estimate coupled with a rebuild estimate; and 2) a remediation estimate coupled with a build-back estimate.
In December of 2001, the doctor's attorney sent our client two estimates: a demolition estimate of $127,000, and a remediation estimate of $428,000. On the basis of these two estimates, the attorney (who is a fucking idiot) stated "as you can see, demolition is far cheaper. Therefore, the doctor wants to go ahead and tear down then rebuild the house. Give us policy limits in the sum of $3.1 million."
A little more information for you, which should be so obvious as to not have to be stated: you don't get to just demand policy limits. The insurance policy provides that you get the sums necessary to cover the covered losses. If it is cheaper to remediate and build-back, that is all you get regardless of what you intend to do with the proceeds. In any event, the estimates provided by the contractor were useless. A $127,000 estimate to demolish is meaningless if it would cost $1.8 million to rebuild the house, particularly if remediation and build-back would total approximately $900,000.
Regardless, this demand was "neither rejected or accepted" given the lack of sufficient information to make this decision, and our client was informed that the contractor was still preparing the additional estimates necessary to justify the demand. At this point (around April of 2002), additional testing was done on the house which revealed skyrocketing levels of mold. Our client brought in an independent contractor to opine whether the house could, indeed, be repaired. He realized at once that the house was being "cooked,"
i.e., made worse intentionally to jack up the costs to remediate and rebuild. In this case, the humidity levels in the house were out of control, allowing mold to spread throughout the house.
At that point, the doctor and his attorney were informed of the doctor's obligation under the terms of the insurance policy to mitigate damages, and that the humidity would have to be controlled. Now in any house in Texas this is done by running the air conditioner. In the doctor's house, however, there was water damage to the ceiling and sheetrock due to the uncontrolled water sources. Therefore, the house had to be dried out first, then the humidity levels brought under control.
The contractor jumped all over this. In June of 2002, he placed a
massive amount of equipment to dry out and control the humidity of the house to the tune of $6,200
a day. This was done at the authorization of the good doctor. Typically what is done with this sort of dehumidifying equipment is the house is dried down, any material that can't be dried is removed, the equipment removed, and the house's AC is turned on. Of course, any responsible contractor would have
at least made temporary repairs to the roof to stop the water sources from coming in. But this wasn't done here.
It should also be mentioned that all of this equipment requires electricity to run. Being suspicious about the house's ability to even
run all of this equipment at one time, we subpoened TXU's records for the relevant time period. We also calculated the electrical usage for this equipment which should have provided for a $1400/month electric bill,
at absolute minimum.
The doctor's bills didn't break $500.00.
But I digress. Also in June of 2002, our client received for the first time remediation and buildback estimates. Recall that in December of 2001 the remediation cost was estimated to be $428,000. Not this time: remediation was now estimated to be $1.1 million, with a build-back estimate at $1.8 million. These estimates were ridiculously over-priced and over-scoped. For instance,
all of the electrical wiring was slotted to be replaced. Crown molding was scheduled to be replaced in rooms where there was no crown molding. A new $14,000 door was to be installed. All of the appliances were to be replaced.
It was ridiculous, and our client called the contractor out on it. We told the doctor's attorney that the contractor needed to be pulled off of the job. However, the doctor's attorney insisted that the contractor have the opportunity to make it right, and the contractor promised to make the changes.
We didn't get another estimate until December of 2002.
And these estimates were
higher than the June 2002 estimates.
Un-fucking-believable.
And all this time the contractor is charging his "friend" $6,000 a day for useless, needless equipment.
Well, this went on through June of 2003: the contractor kept submitting estimates, and we kept tearing them to pieces. He, in turn, would promise to fix the "mistakes." We kept telling the attorney and the doctor that they were being robbed, kept pressuring the attorney and the doctor to fire ProTech, all to no avail, until finally in June of 2003 the doctor told the contractor to get the equipment out of the house after drying charges of $1.6 million were accrued.
It should be mentioned that during this time the insurance company was making advances to the doctor under his insurance policy. What he did with these funds was his choice, but all told, $790,000 of the doctor's policy proceeds went to the contractor for these drying services.
When all that was needed was to turn on the AC.
Un-fucking-believable.
Fast-forward to today. The contractor brought suit on his contracts with the good doctor, and sued the insurance company on some bullshit "implied contract" theory. There is a slight problem with this: under Texas law, an insurance company is a surety of the insured. Therefore, under the statute of frauds, any contract for the insurance company to answer for the insured's debt directly
must be in writing to be enforceable. Here, it was unequivocally admitted that there was no written contract between the insurance company and the contractor.
Further, at no time did the insurance company ever agree to become primarily liable for this debt,
i.e., at no time did the insurer say to the contractor: "this is on us, not out of the policy." At the close of the plaintiff's case, we filed our motion for directed verdict. The judge knows what he was supposed to do: grant it, and get us out of the case. Instead, he took it under advisement, stating that a directed verdict is a "harsh remedy." While I personally disagree, I can at least understand it: give the jury the chance to do the right thing.
You can probably guess what happened.
The jury, comprised completely of morons, came back and found that
both the insurance company and the doctor breached agreements with the contractor and tagged us
both for $705,000.00. Each.
After all, it's just an insurance company and a rich neurologist.
Un-fucking-believable.
The partner and I refused to meet with the jury afterwards. Why run the risk of lowering our IQs by breathing the same air as these idiots? I swear, if I ever run into
any of them, I will not hesitate to call him or her out for their stupidity. Fucking morons. Words cannot describe my contempt for these people.
But here's the real bitch of it: I like to think that I am intellectually honest. If there was
any basis for the jury's finding, I'd own up to it, and I could deal with it. But it's just so fucking stupid that I cannot wrap my head around it. The only saving grace is that our client will be taken care of via JNOV (judgment notwithstanding the verdict). The doctor, on the other hand, has a much tougher row to hoe. Oh, well. Maybe the judge will help him out, too. At least it would be the right thing to do.
