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In 2013, a company that calls itself “the largest residential roofing company in Texas”, lost a legal battle over its contracts and the services it offers its customers. Lon Smith Roofing & Construction was ordered by a federal magistrate judge to pay $275,000 in damages and attorney fees to a Fort Worth couple who claimed the company failed to keep its contractual promise to arrange with the couple’s insurance company to pay for a new roof.

For those that don’t already know, the facts of the case go something like this: Lon Smith’s contract with Mr. and Mrs. Reyelts promised to make all arrangements with the Reyelts’ insurance company to cover the cost and replacement of a new roof. Lon Smith installed the new roof, but never made contact with the Reyelt’s insurance company. When the insurance company received a $15,000 bill for the new roof, it refused to pay, saying they had not seen the old roof before it was torn off nor been contacted by Lon Smith. Lon Smith went on to bill the Reyelts for the entire amount of the roof and, when they failed to pay, sent three demand payment letters threatening a lawsuit unless they paid. The Reyelts hired an attorney and sued Lon Smith claiming that Lon Smith failed to perform under the contract and alleging it was illegal for Lon Smith to negotiate on behalf of the Reyelts with their carrier. The court agreed and ordered Lon Smith to pay $275,000 in damages and attorney fees based on several different factors affecting the case. Lon Smith’s contract, read, in part: Lon Smith agrees “to pursue homeowners’ best interest for all repairs, at a price agreeable to the insurance company” and to work out “the final price agreed between the insurance company” and Lon Smith.

This is a clear violation of Texas UPPA laws.

In coordination with the Texas Association of Public Insurance Adjusters, the National Association of Public Insurance Adjusters filed an amicus curiae brief in the Fifth Circuit Court of Appeals supporting the trial court decision. The Fifth Circuit considered the party’s arguments and affirmed the trial court’s decision. The result: a contractor contingency agreement giving the contractor the right to negotiate a claim on behalf of a policyholder is illegal and, if held to account by the policyholder, the roofing contractor must return all amounts paid under the contract.

Following the outcome of the Reyelt’s case, another important development occurred when Lon Smith filed suit against a homeowner, Joe Key, in Tarrant County under similar circumstances. The Court in that case struck down Lon Smith’s contract as void, illegal and unenforceable. As a result of the Key case, a recent and very important development occurred when the 236th District Court certified a class action against Lon Smith Roofing comprised of all customers since 2003. Should the class action plaintiffs prevail, all Lon Smith customers over the past decade will be entitled to the return of all amounts paid for their roofs. The action taken by these two Court’s has sent a powerful message to contractors throughout Texas – attempting to offer the services of a public insurance adjuster without being licensed is against the law and you will be held accountable!

TAPIA applauds the hard work of the attorneys and other aligned advocates who’ve worked tirelessly in order to help bring awareness to this important issue. TAPIA will never stop working to protect the integrity of public insurance adjuster licenses and to ensure that Texas policymakers understand the dangers of unauthorized public adjusting.


Don Wood, TAPIA 2016 President

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