"Continuous Input" Not Required for Public Adjuster Who Provided "Valuable Services"

COMMERCIAL PROPERTY – PUBLIC ADJUSTER COMPENSATION – "VALUABLE SERVICES"
Public Adjustment Bureau, Inc. v. Greater New York Mut. Ins. Co.
(1st Dept., decided 10/29/2015)

When an insured hires a public adjuster but the claim is not resolved short of a lawsuit that an attorney for the insured eventually settles, is the public adjuster still entitled to its agreed-upon compensation percentage of the insured's recovery?  It is if it performed "valuable services" for the insured.

Section 25.10(b) of New York's insurance regulations (Title 11 NYCRR), entitled "Right to compensation", states:
(b) If a public adjuster performs no valuable services, and another public adjuster, insurance broker (in accordance with section 2101[g][2] of the Insurance Law) or attorney subsequently successfully adjusts such loss, then the first public adjuster shall not be entitled to any compensation whatsoever. 
Following a partial collapse of a garage at the Seward Park Housing Complex on January 15, 1999, defendant Seward Park Housing Corp. made a claim to its insurer, defendant Greater New York Mutual Insurance Company (GNYMIC), for repair/rebuilding costs. To help with its insurance claim, Seward Park retained plaintiff, Public Adjustment Bureau, Inc. (PAB), a licensed public adjuster. Seward Park's retainer agreement with PAB stated that PAB would "perform valuable services, to include preparation and submission of claim detail and to advise and assist in the adjustment of the loss," and would be paid "seven percent of the amount of loss and salvage . . . when adjusted or otherwise recovered."

Following extensive first-party coverage litigation Seward Park eventually settled with GNYMIC in May 2010, but disputed its obligation to pay PAB its fee.  PAB commenced this action against Seward Park and GNYMIC to collect its percentage fee of Seward Park's settlement recovery.  Seward Park moved and PAB cross-moved for summary judgment. Supreme Court granted Seward Park's motion, dismissing PAB's complaint, but in 2012 the First Department, Appellate Division, reversed that order and reinstated the complaint, holding that the question of whether PAB performed "valuable services" for Seward Park presented a question of fact.

This lawsuit returned to Supreme Court and was eventually tried to a jury, which found in favor of PAB.  Supreme Court granted Seward Park's post-trial motion for judgment notwithstanding the verdict, reasoning that PAB's services were limited to a futile initial attempt to settle with GNYMIC and that none of PAB's work was used in the trial against GNYMIC or to obtain the ultimate settlement. Supreme Court expressed the view that "valuable services" "must consist of continuous input that contributed to the settlement or adjustment of the claim," and concluded that PAB made no such continuous input. PAB appealed (again).

In REVERSING the Supreme Court's judgment and reinstating the jury's verdict, the First Department found no basis in New York Insurance Law or the related regulations for the trial court's imposition of the requirement that a public adjuster provide "continuous input" in the settlement process to be entitled to its fee. Instead, the First Department concluded that when viewed in the light most favorable to PAB, evidence presented at the trial
could lead rational jurors to find that although PAB was not directly involved in the trial against [GNYMIC], it had provided "valuable services" in connection with the ultimate settlement of Seward Park's insurance claim. These services could have included the preparation of the initial claim forms, the retention of a firm to investigate the damage and repairs, meeting with that firm and with architects, engineers, and counsel to discuss the claim, communicating with the insurance company regarding those repairs, and making [PAB senior adjuster Gerald] Scheer — who was deposed — available to testify at the trial. From this, the jury could have rationally concluded that PAB's work before trial constituted a valuable contribution to the trial and to the ultimate settlement, if only by preserving Seward Park's claims and aiding in the damages assessment and investigation.
In rejecting Seward Park's argument that PAB's work could not be deemed valuable because it did not directly procure or contribute to the lawsuit or the ultimate settlement, and because Seward Park could have settled its claim without PAB's input, the First Department noted that PAB was undisputedly involved in Seward Park's substantial compliance with all policy requirements, "which is a prerequisite for an insurer's obligation to pay under the policy [.]"

Seward Park also unsuccessfully argued that PAB failed to establish that but for PAB's conduct, Seward Park would not have recovered against its insurer, the First Department observing that "neither the Insurance Law nor the retainer agreement requires a 'direct and proximate link,' or the actual procurement of a settlement. Each requires merely that the public adjuster provide 'valuable services' in connection with a settlement."

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