Jury rules insurance company overpaid beach hotel operators by $16.2M for storm damages; another company settles for $1.6M

The insurance adjuster representing Nationwide Insurance in damage claims from 6 hotels owned or operated by Professional Hospitality Resources PHR approved damage payments totaling $21.5 million about 8 hours after being fired and after drinking with PHR's representative at Mahi Mah's.

A federal court jury in Columbus, OH Thursday ruled in a suit by Nationwide against adjusters, McLaren's Toplis of Chicago and Larry Wood of Isle of Wight, that the insurance company be awarded $16.2 million.  A suit against the primary adjusting company, National Catastrophe Adjusters of Indianapolis (NCA), was settled last week for $1.6M. 

Nationwide, with home offices in Columbus, said its policy with PHR  made the insurer liable for just $5.3 million.

On Thursday afternoon, a jury decided in favor of Nationwide on three claims, awarding $5.4 million in each case.

U.S. District Judge Algenon L. Marbley clarified how much was owed when lawyers for the adjuster, McLarens Toplis of North America, and its agent, Larry Wood, questioned whether the jury meant $5.4 million total in its award.

Marbley said, "The plaintiff was awarded the precise total amount of damages that it claimed to have suffered as a result of the defendants' conduct and supported by the evidence admitted at trial.''

Rick E. Marsh, an attorney for the adjusters. "We don't think that's right.''  He did not indicate whether he'd appeal.

Wood, hired by McLarens Toplis on August 29 to handle claims for PHR's six (6) hotels, was fired from the case after 13 days - on Sept. 11 about 10 a.m.  

He testified under cross examination that he immediately turned around and called John Henkel, the public adjuster who was working for PHR to tell him he'd been dumped.  He also asked for a meeting with Bruce Thompson, a PHR principal who along with Edmund C. Ruffin are both ex-convicts who are the city's partners in a plot to build a so-called 4-star hotel on the oceanfront at 31st Street.

Neither PHR, Thompson or Ruffin were parties in this suit.

Wood testified he had a meeting the afternoon after being fired with Thompson.  He told Thompson and others in the meeting 'that he would stand behind all of the commitments that he had made; that the only thing he has as a man was his word and integrity...".

Without fully inspecting the hotels and after only a few days on the job, Wood stated that all 577 rooms should be refurbished and one of the hotels, The Best Western was closed for 9 months. During the trial, Gus DeAngelo, a former regional director for PHR, testified that only 6 to 10 percent of the hotel rooms were damaged by Hurricane Bonnie which struck the resort city on Aug. 28, 1998.

That evening, after meeting with Thompson, he met Henkel about 6 or 7 p.m. for drinks at Mahi Mah's.  He estimated he only spent about an hour drinking with Henkel.  When he left Mahi Mah's Henkel came running after him.  

"He says, Larry, I'm in trouble.  We have discussed a lot over the last few weeks and nothing is in writing.  Nothing is memorialized in writing? He said that to you didn't he?"  Nationwide's lawyer Phillip Yeager asked Wood.  "Yes, Sir," Wood replied.

Despite the fact he'd been fired about 8-hours earlier, Wood signed a document entitled 'Items Authorized by Nationwide Adjuster," obligating the insurance carrier for the losses.  He admitted on the witness stand that he didn't tell Nationwide, NCA, McLarens, or any of his previous bosses of his actions.  And he couldn't explain why the issue never came up while the two were inside drinking.

PHR had planned to renovate one of the hotels before the storm and knew another needed a roof replacement even before the storm hit, according to testimony.

The jury found that Woods, an adjuster hired by McLarens Toplis and National Catastrophe to help settle claims for Nationwide, made verbal commitments and then signed the document listing new carpeting, wall coverings, beds, TVs and other furnishings for PHR's 577 hotel rooms.

Woods, claimed in testimony that these were items he had discussed with PHR and that the hotel owner misunderstood, thinking he could authorize payment.  But he nevertheless signed the document obligating Nationwide to pay.

Nationwide employees testified that the full $21.5M payment was honored initially because Wood had 'represented' the company in authorizing the payment.  Later it was discovered he had violated the terms of the insurance policy and was never given authority to settle the claims, never mind, he did it hours after being fired from the job, according to testimony.

See also:
Adjuster acted more like Santa Claus than Scrooge in representing his company
Adjuster claims friendship with PHR owner and admits his mouth exceeded his authority