Shannon Loyd, partner at Gravely & Pearson, L.L.P., said that after application of penalties under the Prompt Payment of Claims Act, the judgment should total $1.6 million.  This verdict is the second Hurricane Ike recovery for Gravely & Pearson, L.L.P., coming on the heels of a $4 million verdict on behalf of an apartment complex owner against Lexington Insurance, a unit of American International Group.

About Gravely & Pearson, L.L.P.

Gravely & Pearson, L.L.P. represents insurance policyholders in disputes arising out of the bad faith actions and poor claims handling by their insurance companies.  According to the Texas Lawyer, Gravely & Pearson L.L.P. was responsible for the largest insurance verdict in the state ofTexasin 2011.  Gravely & Pearson, L.L.P. lawyers are consistently recognized for their work at both the trial and appellate level.

The verdict is the second successful commercial insurance coverage verdict this month for Gravely & Pearson, L.L.P.

In 2007, the trial court had dismissed this case based on a legal issue regarding the identity of the parties.  In a remarkable turnabout, Gravely & Pearson, L.L.P. convinced the Texas Supreme Court, that the trial court was mistaken in dismissing the church’s case, and the case was sent back for trial on the merits.

About Gravely & Pearson, L.L.P.

Gravely & Pearson, L.L.P. represents insurance policyholders in disputes arising out of the bad faith actions and poor claims handling by their insurance companies.  According to the Texas Lawyer, Gravely & Pearson L.L.P. was responsible for the largest insurance verdict in the state of Texas in 2011.  Gravely & Pearson, L.L.P. lawyers are consistently recognized for their work at both the trial and appellate level.

Published April 30, 2011

GALVESTON — A jury returned a $3.96 million verdict against a Boston insurance company, saying it didn’t fairly compensate owners of an apartment complex damaged by Hurricane Ike.

The verdict rendered Thursday was the first in Galveston or Harris counties against an insurer related to residential damage caused by the storm.

Ike made landfall Sept. 13, 2008, causing widespread flooding and damaging much of the Upper Texas Coast.

The trial in Judge Lonnie Cox’s 56th District Court, in Galveston, lasted nine days.

Ten members of the 12-person jury ordered Lexington Insurance of Boston, Mass., to pay $3.96 million in damages to Jaw The Point, a limited liability company that owned The Point apartments, 7301 Stewart Road. Only 10 jurors must agree in civil cases, Cox said.

The Galveston complex, consisting of 168 units in 13 buildings, sustained about 3 feet of flood water, and couldn’t have been rebuilt without raising the structures to meet flood guidelines, Matthew Pearson, the plaintiffs’ attorney, said Friday.

“The issue the jury decided was solely judging the conduct of the insurance company and how they adjusted the claim,” Pearson said.

“They found not only that it engaged in bad faith, but they did it intentionally.”

Messages left Friday for Lexington’s attorney weren’t returned.

Emery Jakab, of Houston, was present at the trial and one of the major shareholders.

The shareholders purchased the complex in the summer of 2007 when it was 83 percent occupied, Pearson said.

The owners completed $560,000 in renovations, including exterior work and the addition of a playground.

The unit was 100 percent occupied with a waiting list before the storm, Pearson said.

“The Point was one of about 135 apartment complexes in the Galveston and Houston area that were part of an insurance program that included several layers of insurance, first being Lexington,” Pearson said.

The buildings sustained roof and structural damage, and because the buildings were damaged at more than 50 percent of their value, they had to be demolished, Pearson said. Codes would have required owners to elevate the buildings about 2 feet to meet flood guidelines, he said.

“There was no way they could do that, so it had to be torn down,” Pearson said, noting that would encompass a large part of the insurance policy.

“Instead of paying that, they ignored it until the money ran out,” Pearson said.

Lexington paid the owners $1.1 million on their original windstorm claim. The owners also received their flood insurance claim, Pearson said.

The owners haven’t decided what to do with the property, Pearson said. They hired a Galveston architect to design the rebuild, he said.

The first verdict related to Hurricane Ike damage in Galveston County came March 7. A jury sided with the insurer named in a lawsuit related to a damaged sailboat, court officials said.

Many of the thousands of cases filed in Galveston and Harris counties related to Hurricane Ike insurance claims have been settled before reaching trial.

Gravely & Pearson, L.L.P. the policyholders law firm, has filed an amicus curiae (“friend of the court”) brief in In re Universal Underwriters of Texas Insurance Company with the Supreme Court of Texas. The case concerns the treatment of an appraisal clause in insurance policies. Gravely & Pearson, L.L.P. filed the brief as part of its commitment to advocacy for the rights of property owners and policyholders because the case involves important issues of public policy and legal significance.

The amicus brief filed today states that insurers are using the appraisal process to absolve themselves from several Texas statutes that impose liability on insurance companies to promptly investigate and pay covered claims. If Texas law allows insurers to delay the investigation and payment of claims through the appraisal process, it will encourage insurers to underpay the coverage they owe to their policyholders to trigger the appraisal process and allow them to pressure their policyholders to accept less than what they are owed.

Gravely & Pearson, L.L.P. filed its brief on behalf of three “friends of the court,” including Texas Apartment Association, Inc. (“TAA”), an organization consisting of over 10,000 members holding multifamily properties valued in excess of 150 billion and paying over 3 billion in annual property taxes. TAA is one of the most influential advocates for property rights in Texas.

The brief was also filed on behalf of Texas Association of School Boards Legal Assistance Fund, an organization of nearly 800 public school districts in Texas that advocates the positions of local school districts in litigation with potential statewide impact, and the Texas Organization of Rural & Community Hospitals (“TORCH”), an organization of rural and community hospitals, corporations, and interested individuals working together to address the special needs and issues of rural and community hospitals, staff, and patients they serve.

The case now before the Supreme Court of Texas started after massive hail damage to a Euless, Texas car dealership, Grubbs Infiniti. Grubbs’ made a claim on its commercial property insurance policy with Universal Underwriters of Texas Insurance Company. Universal determined that there was only minimal damage caused to the property despite damage estimates stating that the entire roof had to be replaced because of the hail damage.

Grubbs sued Universal for breach of contract and bad faith. Only then, six months after Universal was originally aware of Grubbs’ disagreement, did Universal try to avoid liability in the lawsuit by asking the trial court to send the parties through a binding “appraisal” process to determine the amount of the covered loss.

Marc Gravely, one of the brief’s authors, stated “the importance of this appraisal issue to Texas policyholders cannot be understated. The insurance industry’s position on appraisal eviscerates the rights of a property owner to recover their full measure of damages and undermines critical public policies that were put in place to make sure that policyholders who suffer a catastrophic loss to their businesses or their homes get the help from their insurance companies when they really need it.”

Universal Underwriters Amici Curiae Brief

In this mandamus proceeding, relators Travelers Lloyds of Texas Insurance Company, Travelers Property & Casualty, the Travelers Lloyds Insurance Company, the Travelers Indemnity Company of America, and Kevin Shelton (the Travelers entities) claim they are entitled to a writ of mandamus directing the trial court to grant their motion for severance and abatement. After a panel of this court denied mandamus relief in a memorandum opinion, relators filed a motion for rehearing.

Read the full article by downloading the PDF

San Antonio Express-News
June, 2007

A San Antonio jury has awarded $250,000 to a Kendall County woman in a sex discrimination suit against San Antonio Aerospace L.P. Hue “Lisa” Levasseur, 51, sued her former employer in 2005 after she was fired in March 2004. She complained to the Equal Employment Commission, which not only gave her the green light to sue the company but also found it had discriminated against her.

The aircraft maintenance company plans to appeal the verdict once presiding Judge Peter Sakai signs off on it.

Levasseur was fired, according to court documents, after failing to lubricate an aircraft wing. She claimed her firing was part of a pattern of discrimination, and a jury agreed with her; handing down the verdict last week after a three-week trial.

“An employer can fire you for just about anything,” said Levasseur’s lawyer, Matthew Pearson of Gravely & Pearson LLP in San Antonio. “The employer has all the power and generally controls all the documents and the witnesses.”

San Antonio Aerospace fired Levasseur because she created an unsafe situation by failing to lubricate the wing, according to Cecily Kaffer, the attorney who defended the company in the case.

“San Antonio Aerospace is obligated to act in the interest of air safety and did so in this case, and the company is disappointed with the verdict and plans to appeal,” said Kaffer, an attorney with the Alabama law firm Jackson Myrick The Kullman Firm.

Pearson said Sakai also could rule that SAA is responsible for the attorney’s fees in the case. Because that award is still pending, Pearson would not allow Levasseur to be interviewed.

The award covers lost wages and benefits and damages for past emotional pain, suffering and inconvenience. No punitive damages were awarded, nor were damages awarded for future emotional pain, suffering and inconvenience.

Pearson said they did not seek a future award because Levasseur wants to go back to work somewhere as an airplane mechanic.

“She can go to an employer and say, ‘I was wrongfully fired. A jury of my peers found it that way,’” he said.

San Antonio Aerospace is a subsidiary of Singapore Technologies Aerospace Ltd. and has an engineering division in Alabama.

SAA does maintenance for customers that include FedEx, UPS, Northwest Airlines, Japan Airlines International, the Republic of Singapore Air Force and the Royal Air Force of Oman.

Clear Channel Communications Inc.’s buyout proposal may be one of the biggest in history, but several shareholders are saying it’s not good for them. So far, at least 10 complaints about the deal are pending in federal and Bexar County district courts.

The San Antonio-based media giant wants to merge with Boston-based Bain Capital Partners LLC and Thomas H. Lee Partners LP.

Clear Channel released this statement: “We believe this litigation is without merit. In fact, the Clear Channel board of directors conducted a full strategic review as well as a highly competitive and thorough public auction process involving multiple potential buyers before determining the merger agreement with THL Partners and Bain Capital maximizes value for all shareholders.”

Bain and Thomas H. Lee declined to comment.

Clear Channel announced in November that it would go private for $26.7 billion, including $8 billion in debt, or $37.60 a share.

“We believe that the shareholders aren’t being offered enough money for their shares,” said San Antonio attorney Marc Gravely, whose firm Gravely & Pearson is representing Pioneer Investments Germany. “We believe the market value is higher than the amount currently agreed to by Clear Channel.”

Equity analysts have released reports suggesting Clear Channel shares actually could fetch $40 or more. In November, one analyst suggested that shareholders reject Bain and Thomas H. Lee’s offer because the company’s assets could command a higher price if sold piece by piece.

One example of those assets’ value can be found in the company’s recent radio station sales, transactions separate from the proposed buyout.

So far, 76 of the 448 smaller-market radio stations Clear Channel plans to sell are under purchase agreements valued at more than $100 million, according to documents filed with the Federal Communications Commission.

Fidelity Management & Research, Clear Channel’s largest institutional shareholder, has said it would vote against the deal. The mutual-fund company says the price doesn’t reflect the company’s true value.

Much of the opposition to the merger surrounds the rising value of the billboard company Clear Channel Outdoor Holdings Inc., which is 90 percent owned by Clear Channel Communications.

“The price is not adequate at this time,” said New York attorney Gregory Nespole, whose firm has been named as one of two interim class counsels for a consolidated shareholder suit. The suit hasn’t yet been granted class-action status.

Court documents also allege Clear Channel didn’t give other potential investors enough time to make offers and is withholding information.

“The disclosures in the proxy statements being sent to all the shareholders is inadequate,” said Roger Mandel, a Dallas-based attorney whose firm, Stanley, Mandel & Iola, is also leading the consolidated shareholder suit.

Mandel said attorneys will seek to keep Clear Channel’s privatization proposal from going before shareholders for a vote March 21.

Clear Channel isn’t the only company that has faced shareholder resistance recently.

A Delaware court ruled this week that Caremark Rx Inc. would have to postpone a shareholder meeting to vote on its merger proposal with CVS Corp. because shareholders are seeking more information.

The Alaska Laborers Employers Retirement Fund, the City of St. Clair Shores Police & Fire Retirement System, Pioneer Investments, DD Equity Partners LLC and Levy Investments Ltd. are among those that have filed suit against Clear Channel, its board of directors, Bain and Thomas H. Lee.

Attorneys representing Northbrook, Ill.-based Allstate Insurance Co. have filed a motion in Bexar County District Court asking the judge to dismiss a civil lawsuit brought against it by an employee who claims, in part, that he was fired for helping to expose fraud.

The lawsuit was filed against the insurer in late May by former Allstate employee Fred Klecka, who is based in San Antonio.

In the lawsuit, Klecka alleges that Allstate retaliated against him and later fired him for “refusing to obstruct justice.”

Klecka’s court pleadings claim that he has suffered “general and special damages in the form of lost wages and benefits, emotional distress and mental anguish.” He is seeking $10 million in damages.

However, in Allstate’s response to Klecka’s claims, filed with the court on June 23, the insurer denies every allegation made against it in the litigation.

Allstate’s response further contends that Klecka’s “claims are frivolous, asserted in bad faith or for purposes of harassment and are entirely without merit.”

Justin Schmitt, a spokesman for Allstate based in Chicago, says the company is not at liberty to comment about the specifics of the case because the litigation is still pending.

“What I can tell you is that we don’t believe Allstate’s actions were inappropriate in any way,” Schmitt says. “And we routinely cooperate with law enforcement in appropriate situations to the extent possible.”

The allegations

In the original pleadings, Klecka, who worked as an adjuster in the insurer’s “fraud unit,” alleges he was asked to investigate a claim as a favor for an Allstate agent manager. In his investigation, the pleadings allege, Klecka uncovered suspicious claims activity on the part of an employee working within Allstate’s claims department.

This investigation, the pleadings allege, prompted an internal investigation by Allstate and eventually led the FBI to launch its own “fraud and embezzlement” investigation in Allstate’s claims department. As a result of the FBI probe, Klecka claims in the lawsuit, two individuals, including a former Allstate employee, were indicted in November 2004 and “pled guilty to several of the charges.”

However, Klecka contends in the pleadings that Allstate’s management had instructed him and others not to cooperate with the FBI investigation. Klecka refused, he claims, which led to months of retaliation against him in the workplace. He charges in the lawsuit that Allstate managers “began to overly criticize” his work “both verbally and through periodic evaluations.”

Klecka alleges in the lawsuit that he reported the retaliation to Allstate’s human resources department, but was “never taken seriously.”

When Allstate realized that Klecka would not quit, the lawsuit asserts, Allstate fired him in July 2005.

Klecka’s attorney, Matthew Pearson, a partner in the local law firm of Gravely & Pearson LLP, argues that his client was treated unjustly.

“We intend to sue for lost wages and benefits, mental anguish. He was with the company for over nine years … ” Pearson says.

Pearson adds that right now he is in the discovery phase of the litigation, taking depositions and gathering information in preparation to go to trial. Cases like these, he adds, can often take up to 18 months to go to trial, if they are not settled before that point.

In its pleadings filed with the court, the insurer asks that all charges be dismissed and that Klecka be ordered to pay attorney’s fees and court costs.