Fraud and Unjust Enrichment in a Texas Roof Damage Claim

It is important for claimants to use the utmost honesty when making a property damage claim. Fulgham v. Allied Property and Casualty Insurance Company illustrates the dangers of lying to an insurance company about a property damage claim. The plaintiff appealed an award of damages to his insurer as well as a finding of fraud and unjust enrichment. In the summer of 2009, he’d made a claim for damage to his roof, asserting that the damage was caused by a hail storm.

The insurer’s claims specialist inspected the building and estimated the cost of removing and replacing the roof. After payment was issued, he contacted the claims specialist to assert that repairs would be more than what had been estimated. The claims specialist got a comparison estimate to repair the roof the way the claimant wanted and then paid the added amount.

That winter, the claimant added a claim for interior damage to the building. The claims specialist took a look and realized that the claimant had misrepresented the purpose of the building in the declarations form. He’d stated it was a commercial real estate office. A few months later, the insurer asked the claimant to complete a Sworn Statement in Proof of Loss and paid him for claimed damages. Months later, it paid more money related to the roof.

The following summer, the claimant submitted an invoice for cleaning the building’s contents. A claims specialist took a look at the building and realized very little work had been done to clean the building contents since the prior inspection. The claimant said the invoice was an estimate. The claims specialist came back with other representatives from the insurer to take a look. The insurer had paid the insured $899,160.00 by that time.

The claimant again asserted more damages related to construction and debris removal. The following year, he sued the insurer, claiming that the insurer hadn’t properly participated in the appraisal process. The insurer counter-sued him for fraud and unjust enrichment. The plaintiff’s claims were dismissed, and the jury heard the insurer’s case. The jury awarded the insurer damages of $899,160.00.

The plaintiff appealed, arguing there was insufficient evidence of fraud. The appellate court explained that to prove fraud, the following elements had to be established: ¬†(1) a material false representation, (2) the speaker knows it is false or doesn’t have knowledge to support it being true or not, (3) an intent to induce the listener’s reliance, (4) actual reliance, and (5) a resulting injury. The claimant argued that the insurer hadn’t presented enough evidence it actually relied on his misrepresentations during the application process and that the insurer had conducted its own investigation anyway.

The appellate court explained that the question provided for the jury to answer didn’t distinguish between fraud while applying for insurance and fraud during the claims process. Therefore, evidence of relying on misrepresentations in the claims process was enough to support a finding of fraud. The claims specialist had relied on misrepresentations that the roof was damaged by a hailstorm when it wasn’t and that extra work was necessary. The jury heard how the claimant’s employees took steps to misrepresent the existence of a loss. The lower court’s judgment was affirmed.

If you have a property damage claim that you believe has been improperly denied or underpaid by an insurer, contact the Hoch Law Firm at 1-800-828-5160 or through our online form.