Florida judge slams SFR contractor for misrepresentation, fraud in Tower Hill case

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SFR Services, a Florida restoration firm made famous by its volume of claims litigation and its charges that United Property & Casualty Insurance Co. had instructed desk adjusters to change their estimates, is now in some legal problems of his own.

A circuit judge in Lee County recently found that SFR had intentionally withheld and misrepresented material facts during the appraisal process in a Fort Myers-area condominium claim dispute with Tower Hill Prime Insurance Co. after Hurricane Irma in 2017. The firm kept an estimate of $233,000 and failed to disclose a contract with a roofing company, which charged less than half for the actual work, Judge Michael McHugh wrote in his May 9 order.

“SFR Services knew that the cost of the roof scope of work was $99,000, as of at least March 20, 2020,” the judge noted. “Despite knowing this information, SFR Services continued to present an estimate generated by Elite Claims and continued to represent the value of the replacements for the clubhouse roof and both front doors to be in excess of $230,000, while also stating that their overhead and profit fell in line with the industry standard of 20%.”

Members of an appraisal panel, assigned to resolve differences between two other estimates, said they were unaware of Castillo Roofing’s lower price when they awarded the higher amount in the claim. The judge found that SFR, as the transferee of the condominium association, had violated the concealment and misrepresentation provision of the insurance policy and was “tainted by fraud.”

McHugh ruled in favor of Tower Hill and vacated the higher appraisal award, voided some coverage, and granted Tower Hill’s request for a new appraisal arbitrator.

Stuart, Florida-based SFR has already asked the Florida 6he District Court of Appeals to review the decision.

“Unfortunately, we are appealing this egregious ruling,” SFR Director Ricky McGraw said in an email to Insurance Journal. “We have moved to challenge the judge presiding over the case. Florida has made it difficult for contractors who help their clients.”

SFR’s attorney, Melissa Giasi, asked the judge to disqualify himself, arguing that he had done himself a disservice with his concerns about McGraw’s alleged fraudulent activity; the judge did not hold a jury trial; and he adopted a final order drawn up by Tower Hill which contained numerous errors. When that motion failed, Giasi asked the appeals court to step in and bar McHugh’s order. The appeals judges refused.

In its response to Tower Hill’s 2020 motion in Lee County, which asked the court to vacate the high-end appraisal award, SFR’s attorney also argued that Tower Hill had “dirty hands,” had acted bad faith and had incorrectly adjusted the claim. amount.

Judge McHugh did not see it that way. He also noted that the insured, Rookery Pointe Homeowners Association, did not participate in the alleged fraud.

“In fact, the condominium association, through its former president, Debbie Kiel, testified that they were so concerned by the estimate provided by SFR Services that they obtained their own estimates that were in line with Castillo Roofing’s estimate,” the judge wrote. .

McGraw and SFR Services have been thorns in the side of various insurance companies in Florida for years. Court records show the company has filed hundreds of lawsuits against insurers for AOB claims in recent years. Most famously, in early 2022, SFR charged in a federal lawsuit that United Property & Casualty had conspired with appraisal firms to systematically deny and pay thousands of roofing claims after Hurricane Irma.

The lawsuit, alleging violations of the law against organized crime, purported to show copies of text messages sent by a desk adjuster at the request of the UPC to field adjusters directing them to avoid estimating damage to the roof because the insurer planned to issue blanket denials.

A federal judge dismissed the lawsuit in October, noting that a federal statute leaves the regulation of the insurance business up to states, so federal law against organized crime does not apply.

Florida regulators this year deemed UPC insolvent and have placed the company in liquidation, likely making lawsuits against the insurer a long shot.

Meanwhile, SFR has filed similar charges in state court against people associated with the insurer. In a lawsuit filed last week in Pinellas County, SFR accuses various adjusters, UPC officials and UPC board members of participating in a scheme to underpay Irma claims, “no matter how damaged were the roofs of the people”. The complaint cites deposition testimony from a field adjuster who said UPC officials demanded that he remove portions of damage estimates from him.

Giasi (Florida Bar)

In the Lee County case, the judge said SFR was the party involved in the misrepresentation, a lawsuit that has left some insurance defense attorneys with a strong sense of disgust. They said SFR’s alleged tactics have not been uncommon in years of litigating claims against insurers and have helped drive exorbitant defense costs.

The Rookery Pointe case began in 2019, when the condominium association signed an AOB agreement with SFR. The restoration contractor initially provided an estimate of $355,759 for the replacement of three common area roofs: at the entrance doors and the clubhouse, as well as a fourth building that was not clearly identified.

SFR retained Elite Claims Consulting as its public appraiser for the condos, and in 2020 Elite submitted its own estimate of $314,828, the court explained. The next day, SFR hired Castillo Roofing to replace all three roofs for $99,000. McGraw confirmed that in his own testimony during the court proceedings, the judge’s order said.

McGraw also signed an affidavit of proof of loss, based on the Elite Claims estimate of $314,828. SFR also ordered Castillo Roofing to submit a permit application with a declared value of $233,525, something the judge said was intentionally misleading.

In response to Elite’s estimate, Tower Hill requested in March 2023 that the parties present their differences to an evaluation panel. The insurer also inquired about bids from roofing contractors on the Rookery Pointe structures.

“Without doubt, Castillo Roofing’s offer submitted to SFR Services would have responded to this request,” Judge McHugh wrote. “However, SFR Services did not approve it, nor did it provide documentation to Rookery Pointe or Elite Claims to submit to Tower Hill.”

SFR argued in court that it was not required to submit Castillo’s offer, because it was part of an AOB agreement: it had been assigned the rights and benefits of the policies, but not the duties or obligations.


The judge pointed out that in recent years, court rulings determined that the assignees did not have to comply with certain duties of the insured. But that case law was superseded by a 2019 AOB reform law passed by the Florida Legislature. That statute also requires grantees to provide updated and revised estimates of repair work, the judge said.

SFR also did not provide Castillo’s price during the appraisal process, the judge wrote, citing a 1999 Florida appeals court opinion that held there must be a “meaningful exchange of information” for an appeals panel to arrive accurately. to a fair number. But the appraiser chosen by SFR for the appraisal panel had testified that he was unaware of Castillo’s price and based his conclusions on the higher estimates. Tower Hill’s chosen appraiser said the same thing. McHugh acknowledged that Tower Hill alone could have asked for more estimates.

“Without Castillo Roofing’s invoices and information, there was never a meaningful exchange of information necessary for a proper appraisal,” the judge noted. McHugh acknowledged that Tower Hill, on his account, could have requested more budgets for the work.

A Tower Hill representative testified at trial that the insurer would have paid Castillo the $99,000 price, plus standard overhead and profit, had the company known about it, thus avoiding months of litigation.

Tower Hill’s attorney in the case, Michael Monteverde, could not be reached for comment for this article.

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