Dispute Over Amount Insured Owes Public Adjuster Resolved

      The court addressed a dispute over fees that the insureds allegedly owed the public adjuster. Public' Adjuster's, LLC v. Mark Gottesdiener & Co., et al., 2024 Conn. Super. LEXIS 2352 (Conn. Super. Ct. Nov. 6. 2024).  

    The insureds owned an apartment building that was substantially damaged by a fire. The building was insured by Quincy Mutual Group. The insureds signed a Public Adjuster Employment Contract with The Public's Adjuster, LLC (Adjuster). The contract authorized Adjuster to negotiate the reimbursable damages with Quincy on the insureds' behalf. Adjuster was to recover 8 1/2% of any amounts received by the insureds.

    Because of the extent of the fire damage, the work of negotiating a settlement with Quincy proved to be complex. Adjuster meticulously prepared several detained written estimates to by submitted to Quincy. 

    Unfortunately, the relationship between Adjuster and the insureds deteriorated. Nevertheless, the insureds ultimately received checks totaling over $600,000 from Quincy as a result of Adjuster's efforts. The insureds paid Adjuster a total of $37,604 in fees. Adjuster claimed that it was owed an additional $18,311.23 by the insureds.

    Adjuster sued for breach of contract and unjust enrichment. On the breach of contract claim, the court determined that the contract was invalid. The court determined that regulations regarding fees to be paid to a public adjuster had long been outdated by a statutory amendment. The regulation stated, "No public adjuster shall receive compensation in excess of 10% of the actual or final settlement of a loss covered by the employment contract." The regulation was unclear as to whether the "loss" upon which the public adjuster's percentage fee was based was the gross amount of the insured's recovery or the net amount after an insured paid attorney's fees and mortgage debts.

    A statute amendment enacted in 2012 attempted to clarify this issue. The statute provided, "Any fee charged to an insured by a public adjuster shall be based only on the amount of the insurance settlement proceeds actually received by the insured and shall be collected by such public adjuster after the insured has received such proceeds from the insurer." The court felt that the statute had been entirely ignored by both the Insurance Commissioner and the public adjuster industry for twelve years. The outdated regulation was completely inconsistent with the subsequently enacted statute. This meant the fee provisions in Adjuster's contract were void and invalid. 

    The court next considered whether Adjuster was entitled to a further recovery under an unjust enrichment theory. Adjuster had rendered a valuable performance to the insureds. Refusing the Adjuster any remedy would result in the unjust enrichment of the insureds.

    Adjuster, however, had kept poor records of amounts that the insureds received from Quincy. It was Adjuster's burden to prove its damages. Adjuster could only point to two checks totaling $56,073.69 that had been received by the insureds. Adjuster's damages in unjust enrichment were thus 8 1/2% of $56,073.69, 0r $4,766.37.