Insurer wins ruling over claims payments: Appeals court

A federal appeals court on Tuesday affirmed a lower court ruling in favor of an insurer, in a case where a company’s public adjuster allegedly retained the policyholder’s claims payments.

Grand Rapids, Michigan-based Foremost Insurance Cos. issued an insurance policy to Thirteen Investment Co. Inc. for real estate in Berwyn, Illinois, according to the ruling by the 7th U.S. Circuit Court of Appeals in Chicago in Thirteen Investment Co. Inc. v.  Foremost Insurance Co., Grand Rapids, Michigan.

There was a fire at the Berwyn building in May 2018. Thirteen retained Branchburg, New Jersey-based Paramount Restoration Group Inc. as its adjuster, and directed any insurance company to include Paramount on all payments on the fire. Foremost sent settlement checks to Paramount checks totaling $155,890, according to court papers.

Paramount cashed the checks and kept the proceeds. It then performed some repair work on the building before Thirteen fired it as general contractor, according to the ruling.

Thirteen sued Foremost, seeking a declaration the insurer had breached its policy by not paying the claim. The U.S. District Court in Chicago granted Foremost summary judgment, and was affirmed by a unanimous three-judge appeals court panel.

Paramount “acted within the scope of its express, actual authority when it negotiated, settled, and received the checks for the claim,” the ruling said.

“Nothing in the policy says the checks were to be sent to Thirteen. But more importantly, Foremost delivery to Paramount was, by law, delivery to Thirteen,” the ruling said.

“Foremost agreed to provide coverage and payment for negotiated, claims” but not to “take responsibility for the actions of the public adjuster Thirteen hired,” it said, in affirming the district court.

Attorneys in the case did not respond to requests for comment.