Experience

Recovered $11.2 million in a paid-out insurance award and attorneys' fees for an insurance company facing fraudulent claims.

Auto-Owners v. Summit Park, 2016 WL 1321507 (D. Colo. 2016)

In an order issued April 5, the U.S. District Court for the District of Colorado vacated a $10.87 million property insurance award on the basis that the insured’s appraiser, George Keys, is partial and had failed to disclose personal and business relationships with the insured’s counsel, the Merlin Law Group. The Court further disqualified Mr. Keys from acting as an appraiser in the case and ordered the insurance company to file “any motion for sanctions that it desires.”

In the action, Wheeler Trigg O’Donnell (WTO) lawyers represented the plaintiff, Auto-Owners Insurance Company, in its objection to Mr. Keys’ role as appraiser in the case of Auto-Owners v. Summit Park Townhome Association (No. 14-cv-03417). Following a 2013 Colorado hailstorm, Summit Park submitted a claim for storm damage to residential buildings. Following an insurance appraisal that concluded with Mr. Keys and an umpire awarding approximately $10 million for damage from the storm, Auto-Owners promptly paid the award while reserving its rights to recoup the payment based on irregularities in the appraisal process, including Mr. Keys’ partiality.  

In its objection, Auto-Owners demonstrated that Mr. Keys had numerous, extensive undisclosed relationships with the insured’s law firm, Merlin Law Group, and its clients, often working on a contingency basis for a percent of the recovered insurance money (and on some occasions for as much as 20%-30% of the award amounts). Auto-Owners argued that Mr. Keys was anything but an impartial appraiser, as he had significant and lucrative business dealings with the insured’s attorneys and had direct financial incentive to inflate appraisal amounts. The Court noted that the appraisal award signed by Mr. Keys was $3.47 million—47%—greater than the amount Summit Park’s own public adjuster calculated prior to the filing of the lawsuit. Auto-Owners further demonstrated that Mr. Keys and Merlin Law Group attorneys had formed undisclosed fiduciary relationships, including attorney-client engagements in which Merlin Law Group attorneys had represented Mr. Keys in litigation or had performed transactional legal work for his insurance businesses. The Court stated: “While Keys’ relationship with Merlin is sufficient by itself to render him other than impartial, the totality of the circumstances here make this conclusion unavoidable.” The Court recently finalized the briefing schedule on sanctions with final briefs due on May 23.

WTO worked with the Denver firm Giometti & Associates to achieve the favorable outcome for Auto-Owners.

The ruling follows a similar state court ruling against Mr. Keys (AXIS Surplus Insurance Co. v. City Center West LP) issued just weeks prior. In the City Center case, WTO represented AXIS in a similar claim that exposed Mr. Keys’ undisclosed business and personal relationships with another national plaintiffs’ law firm, Childress Duffy, Ltd. The state court there stated that Mr. Keys was partial and that he had failed to be “aboveboard” by his failure to disclose his personal and business relationships with the policyholder and its lawyers.

Subsequent court rulings have resulted in sanctions against the plaintiffs, their lawyers, and Keys, and an award of 99.7% of attorneys' fees incurred by Auto-Owners.

Won order vacating a $10 million property insurance award and disqualifying a national property appraiser, and subsequently won sanctions against the policyholders and their lawyers, and won 99.7% of attorneys' fees and costs.