Michael L. O'Donnell Recovers $11.2 Million for Auto-Owners in Unique, Three-Part Victory
December 1, 2016 11:01 AM
In three separate rulings arising out of one litigation in 2016, Wheeler Trigg O’Donnell (WTO) partner and IADC member Michael O’Donnell along with other members of the WTO team, recovered more than $11.2 million for Auto-Owners Insurance. In doing so, the WTO team exposed a national effort by plaintiffs’ attorneys to defraud insurers in property damage claims. The case was Auto-Owners v. Summit Park (2016 WL 1321507, D. Colo.).
The team won
1. reversal of a $10.87 million property damage award and disqualification of the plaintiff’s appraisal expert (April);
2. “the harshest sanctions possible” against the property owner, its lawyers, and its appraisal expert (August); and
3. attorneys’ fees and costs recovering 99.7% of the expense Auto-Owners incurred to defend itself against corrupt appraisal practices (October).
The successive rulings have sent shockwaves through the plaintiffs’ bar nationwide as these fraudulent practices come under the close scrutiny of courts. As a result of these rulings, which are among the first in the nation to directly address such plaintiffs’ practices, the insurance industry stands to save significant sums of money in coming years.
In March, O’Donnell argued in federal court that a property owner (Summit Park), its law firm, and the law firm’s property damage appraiser had colluded to overstate hailstorm damage estimates in order to inflate the damages award in an insurance claim. WTO demonstrated that the parties had acted in direct violation of the judge’s instruction to disclose personal and business relationships that might render an appraiser impartial.
The WTO team presented evidence of direct business relationships and patronage between the law firm and the appraisal expert, as well as evidence that the parties had overtly engaged in practices designed to inflate damages estimates and insurance payouts. In April, the Court issued a strongly worded order vacating the appraisal award (which Auto-Owners had paid in good faith, reserving the right to contest later if irregularities emerged) and invited Auto-Owners to submit “any motion for sanctions that it desires” against the property owner, its counsel, and the appraiser.
In August, following sanctions briefing, the Court issued another strongly worded ruling, in which it determined that, based on the egregious conduct of the parties and apparent repeat nature of their corrupt practices, "only the harshest of sanctions” would serve to effect meaningful change in the parties’ behavior. In October, the Court approved Auto-Owners’s request for attorneys’ fees, characterizing WTO’s fees as entirely reasonable and awarding 99.7% of the requested amount.