7th Circuit finds for insurance company in adjuster’s game of chess

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A public adjuster who assured an Indiana homeowners association that the way to get a claim for storm damage processed was to play a game of chess with the insurance company, got checkmated when he failed to heed the deadline for filing a lawsuit, prompting the 7th Circuit Court of Appeals to make this observation: “Such is the price of gamesmanship.”

Kris Kassen, a public adjuster, was hired by Legend’s Creek Homeowners Association after hail and wind damaged the north-facing sides of the condominium buildings. The storm occurred in May 2016 and the homeowners association filed a claim with Travelers Indemnity Company in September 2016.

Travelers issued a check for $644,674.87 just two months after receiving the claim. But in January 2017, Kassen said the repairs were unacceptable. Travelers submitted two more checks totaling $267,204.90 for additional repairs.

Kassen then told Travelers the repairs were insufficient and the north-facing side had to be completely replaced. Travelers agreed and in February 2018 submitted an estimate of the cost to replace and paint the damaged sides.

However, less than three weeks before the two-year contractual deadline to bring a legal action, Kassen demanded Travelers replace all sides of the condominium buildings because the new sides did not match the undamaged ones. Travelers denied the request, maintaining it would only replace and paint the damaged sides.

Legend’s Creek sued, charging Travelers with breach of contract and bad faith. The insurance company responded with a motion for summary judgment on the grounds that the lawsuit was brought outside of the two-year contractual limitations.

After the U.S. District Court for the Southern District of Indiana granted the insurance company’s motion for summary judgment, Legend’s Creek appealed.

The 7th Circuit affirmed in Legend’s Creek Homeowners Association, Inc. v. Travelers Indemnity Company of America, 20-3163, 21-1288 and 21-2196, finding the district court “provided thorough opinions explaining why summary judgment was appropriate … .”

Legend’s Creek had argued the policy’s requirement that it cooperate with the investigation and settlement claim prevented it from initiating a legal action. Also, the homeowners association asserted Travelers waived the two-year limit because it did not provide a warning that it would rely on the contractual provisions.

The 7th Circuit brushed aside those arguments.

In particular, the appellate panel noted Legend’s Creek did not identify any terms in the policy that it could not have abided by within the two-year window and, as such, could have brought a legal action before the deadline.

Moreover, the 7th Circuit found the two sides were not negotiating. Rather, Travelers was granting the claims and only rejected the “eleventh-hour request” by Kassen.

Likewise, the circuit court had little patience for Legend’s Creek final stance that Travelers waived strict compliance to the suit limitation when it failed to answer an email from Kassen asking about the deadline to apply for replacement cost benefits.

“… (W)ere a college student to ask a professor to extend a paper deadline and receive no answer, common sense tell us that no extension was granted and that the original deadline remained,” Senior Judge Daniel Manion wrote for the court.

Ultimately, the appellate panel found the homeowners association’s position “somewhat hard to credit.” As early as February 2018, Kassen anticipated the new sides would not match the undamaged sides, but he did not discuss the matter with Travelers’ representative.

“In Kassen’s words to the Legend’s Creek Board, the claims process was a ‘game of chess.’ His plan was to let Travelers replace the north-facing sides and then argue thereafter that the purported mismatch required Travelers to replace and paint the rest of the sides,” Manion wrote. “To ‘win the game,’ Kassen told the Board, they had to stay ‘several turns ahead of Travelers.’

“Unfortunately for Legend’s Creek, it lost the game because Kassen failed to foresee that Travelers might checkmate it by raising the contractual suit limitation,” Manion continued. “Had Kassen been upfront with Knopp in February 2018, it would likely have received Travelers’ denial within the two-year limitation period. Such is the price of gamesmanship.”

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