USAA member wins $1.8M in suit

A Hidalgo County jury this week awarded a USAA member $1.8 million after finding that the San Antonio-based insurer and one of its adjusters committed fraud and acted with “malice” in mishandling a claim from a 2012 hailstorm.

McAllen lawyer and USAA member John Griffith sued USAA Texas Lloyd’s Co. and insurance adjuster AllCat Claims Service of Boerne in 2014, accusing them of undervaluing and underpaying his claim for damage to his home.

Jurors deliberated for about 2 ½ hours Tuesday, after a weeklong trial, before awarding Griffith $1.8 million in damages, which includes $800,000 in punitive damages for “clear and convincing evidence that the harm to (Griffith) resulted from malice by USAA.”

Gregory F. Cox, Griffith’s lawyer, called the jurors’ unanimous decision “an extraordinary and strongly worded finding for a civil insurance case.” Cox is with the Houston-based Mostyn Law Firm.

USAA spokesman Roger Wildermuth called the accusation of malice “outrageous” and said the company would be appealing the verdict.

“This verdict is the latest example of the litigation abuse that follows hailstorms in Texas,” Wildermuth said in an email. “There was no fraud, and we expect a reviewing court to reach the same conclusion.”

The verdict was delivered just a week after Gov. Greg Abbott proclaimed in his State of the State address that hailstorm litigation is “the newest form of lawsuit abuse.” He urged the Republican-controlled Legislature to send him a bill that he can sign into law to limit such lawsuits.

Opponents have argued that the legislation would boost insurance industry profits and restrict consumer access to the courts.

Hidalgo County appears on the American Tort Reform Foundation’s list of “Judicial Hellholes.” The organization in December issued a “Hailstorm Lawsuit Warning” for the county, calling it a plaintiff-friendly jurisdiction that attracted more than half the 21,000 hailstorm lawsuits filed in Texas from 2012 to 2015.

The ATRF called Hidalgo a favorite jurisdiction for the Mostyn firm. The foundation noted that two federal judges in McAllen have been critical of the lawsuits filed by the firm.

“Each case has to stand on its merits, and that’s what my firm does,” Cox said.

In Griffith’s case, he alleged that hail the size of baseballs caused extensive damages to his home’s roof, siding and windows. Water leaked into the house, including the ceilings, walls, insulation and flooring, leading to structural damages, the lawsuit added.

USAA assigned AllCat to assess the claim. The AllCat adjuster, however, conducted an inadequate inspection and “grossly undervalued” the damage by withholding sales tax for construction materials and contractor overhead and profit from the estimate, the lawsuit alleged.

The defendants even listed the wrong date for the hailstorm, the lawsuit added.

The mishandling of Griffith’s claim delayed repairs to the home, resulting in additional damage, the lawsuit said.

Griffith asked someone to inspect his property, and that person determined the damages at about $119,000, Cox said. USAA paid $32,000 after Griffith’s $6,740 deductible, Cox said.

Wildermuth confirmed that USAA paid Griffith about $32,000 to make repairs to his wood roof, but he added that Griffith made no repairs to the roof and simply kept the money.

“To this day, the roof is not leaking, even without repairs,” Wildermuth said.

Nevertheless, jurors found that USAA and AllCat engaged in an unfair or deceptive act and awarded Griffith $76,500 for damage to his house, pool and other property. They also awarded him an identical amount for USAA’s failure to comply with the terms of his insurance policy.

Griffith received $109,500 in damages resulting from USAA’s fraud, the jury determined. The jury also directed USAA to pay Griffith $335,000 after finding that its conduct was “committed knowingly.” AllCat must pay $200,000. Griffith’s lawyers were awarded about $200,000 in fees.

The lawsuit noted that Griffith’s experience was not an isolated case, adding that USAA’s entire claims process is “unfairly designed to reach favorable outcomes for the company at the expense of the policyholders.”

USAA has been defending itself against similar lawsuits that allege that it uses a “cost containment scheme” to delay, deny or reduce medical payouts to customers injured in auto accidents. pdanner@express-news.net Twitter: @AlamoPD Express-News archives contributed to this report.