Luciano Martinez and Lidia Martinez v. Progressive Casualty Insurance Company, American Strategic Insurance Corporation, and Hometown Insurance Agency, Inc.

IN THE DISTRICT COURT OF OKLAHOMA COUNTY STATE OF OKLAHOMA LUCIANO MARTINEZ and LIDIA MARTINEZ, Plaintiffs, vs. PROGRESSIVE CASUALTY INSURANCE COMPANY, AMERICAN STRATEGIC INSURANCE CORPORATION, and HOMETOWN INSURANCE AGENCY, INC., Defendants. PETITION COME NOW Plaintiffs, Luciano and Lidia Martinez, and for their causes of action against Defendants, Progressive Casualty Insurance Company, American Strategic Insurance Corporation ("Progressive Defendants"), and Hometown Insurance Agency, Inc. ("Hometown"), hereby alleges and states as follows: PARTIES 1. Plaintiffs are natural persons, Luciano and Lidia Martinez. 2. Defendant Progressive Casualty Insurance Company ("Progressive") is a foreign insurer licensed to do business in the State of Oklahoma. Progressive Casualty Insurance Company may be found and served via its statutory service agent, the Oklahoma Insurance Department, in Oklahoma County, Oklahoma. Progressive Casualty Insurance Company wholly owns and controls Defendant American Strategic Insurance Corporation. 3. Defendant American Strategic Insurance Corporation ("ASI") is a foreign insurer licensed to do business in the State of Oklahoma. American Strategic Insurance Corporation may be found and served via its statutory service agent, the Oklahoma Insurance Department, in Oklahoma County, Oklahoma. 4. Defendant Hometown is an Oklahoma corporation. Hometown is an insurance agency authorized to sell ASI/Progressive Home policies, including Plaintiffs’ policy of insurance at issue. 5. Defendants Progressive and ASI operate by and through a holding company group that uses the registered trademark “The Progressive Corporation.” See Oliver v. Farmers Ins. Grp. of Companies, 1997 OK 71, ¶16, 941 P.2d 985, 988 (“Whatever else Farmers Insurance Group of Companies does, it is clearly a name under which a number of Farmers-related companies insure against risks.”). Progressive companies, including Progressive and ASI, are members of the Property & Casualty Group of the Progressive group of companies. 6. Progressive and ASI market and sell a Progressive Home Policy. By and through this affiliation, Defendant Progressive directly or through its subsidiaries, issues policies, collects premiums, pays commissions to agents, and handles every aspect of the ASI property claims handling, including the operation of the entire claims organization which necessarily includes and involves employing and training claims personnel. Under this regime of control Progressive and ASI can each be held liable for bad faith and breach of contract. Reference to ASI and Progressive collectively shall mean “Progressive Defendants.” 7. Plaintiffs entered into a contract of insurance with the Progressive Defendants with the specific understanding that they had been provided the requested scope of replacement cost coverage for their residence (including the roof), household contents, and other structures ("Insured Property"). 8. Plaintiffs purchased what was represented and held out as that of a homeowners’ replacement cost policy of insurance through Defendant Hometown. At the time Plaintiffs purchased and renewed their homeowner’s policy with Progressive Defendants, Hometown was an agent and/or ostensible agent of Progressive Defendants. 9. Venue is proper pursuant to 12 O.S. §§ 137 and 139. FACTUAL BACKGROUND 10. Plaintiffs contacted Hometown’s Ardmore office to obtain replacement cost coverage for their home. Plaintiffs requested a replacement policy which would provide coverage for their home in the event of a loss. In this regard, given Oklahoma’s extreme weather, Plaintiffs specifically requested a policy that would fully replace their roof in the event of a loss. Plaintiffs chose Hometown based upon its expertise and representation that its insurance specialists were uniquely qualified to find the best insurance company to fit their insurance needs and risk. 11. As an authorized agent for the Progressive Defendants, Hometown receives instruction from Progressive Defendants that it is the “first line of defense” in underwriting. Progressive Defendants further require Hometown to independently verify the conditions of the homes it writes for Progressive policies. Among other things, Defendant Hometown was to independently verify the condition of the Insured Property. The purpose of this verification is multi-faceted: (1) to determine if the condition of the property disqualifies or otherwise renders it ineligible for a Progressive homeowners’ policy; (2) to determine if the property requires further evaluation by the Progressive Defendants’ underwriting department; and (3) to aid Hometown in answering the necessary questions to calculate an accurate replacement cost value of the Insured Property. Further, the Progressive Defendants require Hometown to provide Plaintiffs with notice of an inspection of the Insured Property and to report the results of that inspection to both Plaintiffs and the Progressive Defendants. 12. With this, the age, condition and predominate roof surface materials were all factors that not only affected the eligibility to obtain replacement cost coverage on a roof but also dictated the calculation of the increased premium associated with the purchase of this coverage. In order to determine the roof’s eligibility, Hometown was required to independently verify the condition of the roof and the Insured Property. In the event the roof and/or Insured Property was ineligible for the requested replacement cost coverage (i.e., old, worn, in poor condition or otherwise affected by pre-existing conditions), Hometown had an independent duty to report the same to Plaintiffs and to Progressive Defendants. 13. Neither Hometown nor Progressive Defendants advised Plaintiffs at any time that their roof or any other facet of the Insured Property was too old, worn, in poor condition, or plagued by pre-existing damage or defective workmanship which would exclude coverage or render the roof ineligible for the replacement cost coverage Plaintiffs specifically requested. Rather, Hometown and Progressive Defendants advised and represented to Plaintiffs that their home (including the roof) was in good condition, qualified, and was eligible for full replacement cost coverage by meeting all of Progressive Defendants’ guidelines and underwriting requirements (i.e., age, physical condition) and, as such, Plaintiffs were eligible to purchase and subsequently renew their Policy which was represented and held out by Hometown as one providing full replacement cost coverage. But Hometown failed to do anything to independently verify the condition or characteristics of the Insured Property before making such representations. 14. Hometown then procured, and the Progressive Defendants issued, a supposed replacement cost insurance policy, Policy No. OKA82632 (the “Policy”) covering Plaintiffs’ Insured Property. Hometown assured Plaintiffs that the Policy provided broad form scope of replacement cost coverage for all weather-related damage (including damage sustained to the roof), no matter the extent or severity and without exclusion and, despite the associated increased premium costs, was an outstanding value for their insurance dollars. Moreover, Hometown represented the Policy to provide replacement cost coverage that would fully replace all damage with like, kind quality in the event of a covered loss. In fact, and at Hometown’s recommendation, Plaintiffs purchased additional endorsements to ensure their home was as protected as it could possibly be, including the HomeShield Package and increased RCV coverage endorsement. 15. In procuring the Policy for Plaintiffs, Hometown also independently established, calculated and set the replacement cost values in the Policy. Hometown recommended and represented to Plaintiffs that they should insure their home to 100 percent of its replacement cost value, as determined by Hometown, utilizing Progressive Defendants’ valuation software. Plaintiffs were neither asked nor were they required by Hometown or Progressive Defendants to calculate or request a specific amount of coverage for the Insured Property. Instead, Hometown and Progressive Defendants represented to Plaintiffs that Progressive Defendants’ valuation software was a reliable and accurate tool, and as a result, the amount of coverage independently selected and calculated by Hometown was accurate, correct, represented 100 percent to insurance-to-value, and was sufficient to repair and/or replace the Plaintiffs’ Insured Property back to its pre-loss condition in the event of a loss. Plaintiffs relied on these representations. 16. Hometown, however, took no steps to independently verify the accuracy of any data upon which it relied to calculate Plaintiffs’ replacement cost value. Instead, and unbeknownst to Plaintiffs, Hometown relied on unconfirmed assumptive data generated by the Progressive Defendants’ software tool. This data pre-populates into the tool without any input from Plaintiffs. Pursuant to Progressive Defendants’ training and directives, Hometown was required to independently verify the accuracy of this data. 17. But Hometown did nothing to independently verify the pre-filled valuation data. Rather, and based on the unconfirmed pre-populated data, Hometown calculated the value of the Insured Property as if it were in perfect condition. Hometown is incentivized to issue Progressive’s most expensive policies and endorsements without checking for any potentially disqualifying issues with the property—namely, because Hometown is paid based on commission from policy premiums. 18. On or around March 4, 2025, a storm inflicted severe damage upon the Insured Property. As wind and debris swirled, Mrs. Martinez heard a loud bang—the sound of a tree slamming the top and side of the family home. The back porch separated from the home, windows broke, and shutters were ripped from their hinges. And after the eye of the storm passed, water poured into the new holes in the exterior. Once Plaintiffs were able to return outside, they saw swaths of missing shingles and debris across the property: 7 19. Plaintiffs quickly submitted a claim to the Progressive Defendants. Following submission of the claim, Progressive Defendants (through their adjusters) confirmed Plaintiffs home suffered storm damage, but refused to estimate for the full scope of damage. 20. For example, Plaintiffs retained estimates from no fewer than three separate contractors who found their roof—having suffered extensive damage from the tree impact and wind speeds—required total replacement. To this day, however, the Progressive Defendants have refused to allow for a full roof replacement. Rather, the Progressive Defendants have only offered insufficient patchwork repairs. Moreover, the Progressive Defendants have failed to estimate for the complete damage Plaintiffs sustained to their contents, porch, siding, and chimney (which was literally thrown from the roof of the house in the storm). As a result, Plaintiffs have had to pay thousands of dollars out of pocket to make necessary repairs. 21. When Plaintiffs requested the Progressive Defendants send an engineer to evaluate the full extent of damage, Progressive Defendants refused. Progressive Defendants have further and unnecessarily delayed the proper adjudication of Plaintiffs’ claim by failing to answer and return phone calls and other correspondence from Plaintiffs. 22. Making matters worse, and contrary to the representations of Hometown, Plaintiffs have since realized their Policy does not, in fact, provide for true replacement cost to their roof. Rather, the Progressive Defendants apply a straight-line depreciation “schedule” to Plaintiffs’ roof based on its age and generic material type—irrespective of the actual condition of Plaintiffs’ roof. As a result, and despite Hometown’s representations that it procured a full replacement cost policy for the Insured Property (including the roof), Plaintiffs’ Policy does not provide for replacement cost coverage to their roof, which is in dire need of a full replacement. Rather, the Policy Hometown procured, and Progressive Defendants issued arbitrarily reduces coverage on Plaintiffs’ roof by three percent every year (i.e. the Policy only covered 97% of the admitted replacement cost value of Plaintiffs’ roof after one year, 94% the following year, etc.). This is not a replacement cost policy; it admittedly does not provide full replacement cost coverage on the roof, nor does it cover the expected costs to fully replace Plaintiffs’ roof. Plaintiffs did not get the Policy they requested, nor the Policy Hometown promised. 23. Progressive Defendants’ denial of Plaintiffs’ claim is predicated upon a systemic practice of (a) attributing much of the damage to preexisting issues and/or non-covered causes, (b) ignoring evidence of covered damage, including professional opinions obtained by their insureds and (c) utilizing “estimating software” Progressive Defendants knew was inaccurate to calculate a damage estimate so as to knowingly escape proper payment on Plaintiffs’ claim. 24. Progressive Defendants are engaged in an institutional pattern and practice of denying and/or underpaying valid homeowners claims by: (1) wrongfully denying (in whole or in part) valid claims; (2) providing their insureds with false justifications for the wrongful denials or through adjuster or agent misrepresentations; and (3) actively and fraudulently concealing their fraudulent practices from their insureds. 25. And in nearly every instance of its wrongful denials, Progressive Defendants attribute damage to pre-existing issues that would (or should) have disqualified the property from coverage under Progressive Defendants’ underwriting guidelines. Progressive Defendants issue such denials without conducting a full and fair investigation of the claim. Specifically, Progressive Defendants are prohibited from denying a claim on the basis that the claimed damage resulted from another cause unless Progressive Defendants first conducted an inspection of the roof and Insured Property prior to the inception of coverage. This requirement arises under both Oklahoma law, as well as Progressive Defendants’ own guidelines, policies, and procedures. Nevertheless, Defendant Hometown, Progressive Defendants’ authorized agent, sold and/or renewed Plaintiffs’ Policy and made affirmative representations as to the condition of said the Insured Property without any knowledge of their accuracy or any attempt to independently validate the same—knowingly violating Progressive Defendants’ own guidelines, policies, and procedures. 26. Progressive Defendants, in furtherance and as part of their pattern and practice, additionally attempted to provide cover and justification for their wrongful denials and/or underpayment of valid claims by concocting false justifications or reasons therefor. 27. The manner in which Progressive Defendants handled Plaintiffs’ claim illustrates Progressive Defendants’ bad faith pattern and practice. Progressive Defendants denied and undervalued Plaintiffs’ claim on the grounds that claimed damage was the result of non-covered and pre-existing causes despite the fact Progressive Defendants failed to perform a pre-inception and/or periodic renewal inspection (or any other required inspection) demonstrating the claimed damage was, in fact, pre-existing or otherwise not covered. 28. Plaintiffs had no means to discover that they would not be paid their full replacement cost benefits until after the ensuing claim. Despite demand, Progressive Defendants have failed and/or refused to pay all monies due and payable under the terms of the subject Policy. COUNT I BREACH OF CONTRACT Plaintiffs fully incorporate into this paragraph each and every allegation in the preceding paragraphs of this Petition as if each were fully iterated verbatim herein, and for their additional claims against Progressive Defendants, hereby alleges as follows: 29. Plaintiffs entered into a contract of insurance with Progressive Defendants to provide homeowners insurance for their Insured Property. Plaintiffs’ homeowner’s Policy was in full force and effect at all material times hereto. 30. Plaintiffs provided proper and timely notice to Progressive Defendants and Defendant Hometown of their claim, which caused significant damage to the Insured Property. 31. Plaintiffs’ policy coverage includes wind damage without any limitations or exclusions. 32. Plaintiffs have in all material ways complied with the terms and conditions of the Policy. 33. Progressive Defendants breached their contractual obligations under the terms and conditions of the insurance contract with Plaintiffs by failing to provide coverage to pay Plaintiffs all benefits to which she is entitled under the terms and conditions of the Policy and for wrongfully underpaying and denying portions of Plaintiffs’ claim. 34. As a result of Progressive Defendants’ breach of contract and other wrongful conduct, Plaintiffs has been damaged in an amount in excess of Seventy-Five Thousand Dollars ($75,000.00), exclusive of attorneys’ fees, costs and interests. COUNT II BREACH OF THE DUTY OF GOOD FAITH AND FAIR DEALING Plaintiffs fully incorporate into this paragraph each and every allegation in the preceding paragraphs of this Petition as if each were fully iterated verbatim herein, and for their additional claims against Progressive Defendants, hereby allege as follows: 35. Progressive Defendants have breached their duty to deal fairly and in good faith by engaging in the following acts and omissions: a. failing to pay the full and fair amount for the wind damage sustained by Plaintiffs in accordance with the terms and conditions of the Policy; b. failing to perform a proper, timely and objective investigation in regards to Plaintiffs’ claim, disregarding the documented wind speeds and storm that produced said wind damage, and thereby unfairly and without valid basis, reducing the fair amount of Plaintiffs’ claim; c. purposefully, wrongfully and repeatedly withholding pertinent benefits, coverages and other provisions due to Plaintiffs under the terms and conditions of their Policy in violation of the Unfair Claims Settlement Practices Act, 36 O.S. §§1250.1-1250.16; d. purposefully, wrongfully and repeatedly failing to communicate all coverages and benefits applicable to Plaintiffs’ claim; e. forcing Plaintiffs to retain counsel to recover insurance benefits to which they are entitled under the terms and conditions of the insurance contract; f. failing to perform a fair and objective investigation of Plaintiffs’ damages and engaging in an outcome-oriented investigation on Plaintiffs’ claim designed to deny and/or reduce the amount of money paid to Plaintiffs; g. refusing, without proper cause, to pay Plaintiffs all benefits they are owed under the insurance contract and pursuant to Oklahoma law; h. having no reasonable basis in their refusal to recognize and pay Plaintiffs their benefits owed under the Policy for damages; i. knowingly and intentionally failing to engage in proper claims handling practices and failing to compensate their insured for losses covered under their homeowner’s insurance Policy; j. engaging in these improper claims handling practices knowing that their insured would suffer financial harm; k. knowingly and intentionally utilizing valuation software to calculate the replacement cost of Plaintiffs’ Insured Property, knowing such software was inaccurate and systematically and methodically designed to overinflate premiums to maximize Progressive Defendants’ financial gains; l. knowingly and intentionally engaging in a pattern and practice of denying claims or ensuring damage claims fall below the deductible; m. knowingly and intentionally using a combination of claim estimating software and unit pricing they knew to be inaccurate to calculate a damage estimate to systematically and methodically underpay homeowners’ claims, including that of Plaintiffs; n. knowingly and intentionally failing to disclose to Plaintiffs Progressive Defendants’ lack of compliance with their own underwriting guidelines, policies, and procedures in denying coverage to Plaintiffs on the basis of pre-existing damage without the support of a prior inspection; o. putting their interest in maximizing financial gains and limiting disbursements above the interests of Plaintiffs; p. knowingly and intentionally failing to inspect the Insured Property prior to inception of the coverage and/or maintain current information as to the condition of the property prior to the loss; and q. knowingly and intentionally engaging in: i) outcome-oriented investigations and claims handling practices; ii) a pattern and practice of denying indemnity payments owed to their first-party insureds on valid storm damage claims, including denial and underpayment of Plaintiffs’ claim; iii) a pattern and practice of ignoring storm damage, and/or intimating or disregarding opinions and findings of independent roofers so to perpetuate its fraud and further its scheme; iv) an arbitrary and capricious method of adjusting Plaintiffs’ claim; v) an arbitrary and capricious disregard of granular loss as evidence of storm damage—even though it compromises the integrity and longevity of a roof—as means of denying and/or underpaying all but the most severe roof damage claims; vi) an arbitrary and capricious method of refusing to issue indemnity payments owed to Plaintiffs; vii) a fraudulent scheme that includes ignoring storm damage so as to proffer a scripted denial, which Progressive Defendants intended to, and in fact did, use to rubber-stamp its prejudged bad faith claims handling practices; viii) a fraudulent scheme that includes disregarding opinions and findings of independent roofers so as to proffer a scripted denial, which Progressive Defendants intended to, and in fact did, use to rubber-stamp its prejudged bad faith claims handling practices; ix) a fraudulent scheme that included denying Plaintiffs’ claim based on pretextual findings of pre-existing damage; and x) a fraudulent scheme that included the concealment through both positive acts and omissions, the sham nature of its investigations and findings, the fraudulent basis for the denial of coverage under Plaintiffs’ valid insurance Policy, and other critical aspects of the scheme. 36. The conduct of Progressive Defendants, as described above, constitutes bad faith and is a material breach of the terms and conditions of the insurance contract between the parties. Progressive Defendants have no reasonable basis in their refusal to recognize and pay Plaintiffs their benefits under the Policy for damages caused by wind to their Insured Property. 37. The conduct of Progressive Defendants, as described above, constitutes bad faith and is a material breach of the terms and conditions of the insurance contract between the parties. Progressive Defendants have no reasonable basis in their refusal to recognize and pay Plaintiffs the agreed replacement cost as per the Policy for damages caused by wind to their Insured Property. 38. As a consequence of Progressive Defendants’ breach of the duty of good faith and fair dealing, Plaintiffs have sustained damages, including deprivation of monies rightfully belonging to their, and ordinary or garden variety harm of anger, stress, worry, physical and emotional suffering that naturally results from an insurance failure and have been damaged in an amount in excess of Seventy-Five Thousand Dollars ($75,000.00), exclusive of attorneys’ fees, costs and interest. 39. The conduct of Progressive Defendants was intentional, willful, malicious, and/or in reckless disregard of the rights of others. 40. The actions of Progressive Defendants during the handling of Plaintiffs’ claim demonstrate they acted intentionally and with malice and breached their duty to deal fairly and in good faith. The actions of Progressive Defendants were intentional, malicious, and consistent with an overall collective corporate goal of increasing profits through the systematic underpayment and denial of claims and are sufficiently egregious in nature so as to warrant the imposition of punitive damages. 41. Plaintiffs further allege Progressive Defendants enjoyed increased financial benefits and ill-gotten gains as a direct result of the wrongful conduct described above herein, which resulted in the injury to Plaintiffs. COUNT III NEGLIGENT PROCUREMENT OF INSURANCE Plaintiffs fully incorporate into this paragraph each and every allegation in the preceding paragraphs of this Petition as if each were fully iterated verbatim herein, and for their additional claims against Progressive Defendants and Hometown, hereby allege as follows: 42. Plaintiffs contacted and engaged Defendant Hometown to procure, renew, and maintain insurance for their Insured Property. Plaintiffs informed Hometown of the specific property to be insured/renewed and provided all details that Hometown requested about the Insured Property. Plaintiffs asked Hometown if it could procure a full replacement cost policy including full replacement coverage for the roof. Hometown assured Plaintiffs it could do so and represented to Plaintiffs its familiarity with the type of insurance Plaintiffs requested and represented that it could obtain the insurance coverage requested and agreed to (and represented that it did) procure such coverage that would provide full replacement cost coverage to repair and/or replace the Insured Property (including the roof) back to its pre-loss condition in the event of damage and/or loss. 43. Hometown is an agent and/or ostensible agent of Progressive Defendants, and as such, serves as the first line of underwriting for Progressive Defendants. What this means: Hometown is required to know about the specific property to be insured, including the condition of the roof. Specifically, Hometown was not only required to conduct an inspection of Plaintiffs’ Insured Property and independently verify its condition—including the roof—it was required to maintain current information as to the condition of the Insured Property prior to the inception and/or renewal of the Policy. In the event the roof was plagued by defective construction, wear, tear, latent defects, or inadequate workmanship, then Hometown had an independent duty to report the same to Plaintiffs and to Progressive Defendants. 44. At no relevant time did either Hometown or Progressive Defendants ever advise Plaintiffs that their home had “preexisting” damage or that their roof did not qualify for full replacement coverage because of its age or because it was essentially uninsurable because it was affected by defective construction, wear, tear, latent defects, or inadequate workmanship, and thereby failed to meet the underwriting guidelines of Progressive Defendants and was not eligible for the full replacement cost coverage that Plaintiffs had requested. 45. Instead, Hometown represented to Plaintiffs that the home and roof were in good condition and eligible for full replacement cost coverage (versus ACV coverage) by meeting all of Progressive Defendants’ guidelines and underwriting requirements (i.e., age, physical condition, etc.) and that there were no preexisting issues with the property (including the roof) that would limit or restrict the scope of coverage in the event of either a partial or total loss, and that in the event of damages or loss, said damages and losses had full replacement cost coverage and would be fully paid, and the property (including the roof) would be restored back to its pre-loss condition in the event of a loss. 46. Hometown also independently calculated the replacement cost values utilizing the Progressive Defendants’ valuation software. Hometown ostensibly based the Policy’s replacement costs limits on its inspection, measurements, and calculations, which would capture and account for any customized or specialty components of the Insured Property. Further, Hometown calculated the Policy’s replacement cost limits—which directly affect Plaintiffs’ premiums—as if Plaintiffs’ home was in perfect condition. Indeed, the age of dwelling (including the roof), construction and roof type directly impacted the replacement cost values and associated premiums. Hometown represented that its replacement cost value calculations reflected the specific dollar amount Plaintiffs are actually reasonably likely to incur in replacing their specific property (i.e., 100% insurance-to-value). Hometown represented to Plaintiffs that it was an expert and highly proficient in using the Progressive Defendants’ valuation software. Hometown assured Plaintiffs that the Policy provided the full scope of replacement coverage Plaintiffs requested. Hometown asked general questions about the Insured Property, and, aside from answering those questions, Plaintiffs had no input regarding the amount of coverage Hometown independently selected and calculated. 47. Having assured Plaintiffs that they met all underwriting guidelines and that their home and roof qualified for the replacement cost coverage requested, Hometown procured, and Progressive Defendants issued the Policy that supposedly provided full replacement cost coverage and issued premium statements, and Plaintiffs, relying on Hometown’s assurances, paid such statements in a timely manner. At all times material hereto, the subject Policy remained in full force and effect, and Plaintiffs complied with the terms and conditions of the Policy. 48. What Plaintiffs did not know until after their loss, however, was that the Policy failed to provide replacement cost coverage for the roof they had requested. Rather, the Policy arbitrarily decreased the available coverage for Plaintiffs’ roof every year based on a “schedule” that Hometown did not disclose to Plaintiffs. The Policy accordingly did not square with Hometown’s representations as to the scope of coverage the Policy actually afforded. 49. Plaintiffs relied on Hometown’s representations. Plaintiffs trusted and believed Hometown had the requisite insurance agent skills and expertise to properly procure, renew, and maintain the specific insurance coverage Plaintiffs requested. 50. At all material times hereto, Hometown acted as the agents, employees, or ostensible agents of Progressive Defendants, and Progressive Defendants are vicariously liable for their conduct. 51. Hometown had a duty to accurately inform Plaintiffs of all coverages and advise them of the benefits, risks, limitations and exclusions in the coverage procured and thereafter renewed. Hometown further had a duty to perform a reasonable inspection of the Insured Property prior to procuring and renewing the Policy to ensure no changes to scope of coverage were necessary or required to provide and maintain the specific scope of coverage Plaintiffs requested. 52. Hometown breached its duty owed to Plaintiffs by: a. Failing to procure and renew policy that covered all weather-related damage sustained to the roof—big or small—without exclusion. b. Failing to procure a policy that provided true replacement cost coverage to the roof—rather than an arbitrarily-decreasing coverage amount every year. c. Failing to confirm whether the dwelling and/or roof met all underwriting guidelines, particularly with regard to the condition of the roof and preexisting damage. d. Procuring and renewing a Policy on Plaintiffs’ Insured Property (including the roof) that did not provide replacement cost as promised and that, in reality, provided illusory coverage; e. Procuring and renewing a Policy which did not accurately reflect the replacement cost of Plaintiffs’ Insured Property (i.e., an amount that was 100% insurance-to-value as promised); f. Procuring and renewing a Policy and calculating the coverages that, as written, does not provide replacement coverage to fully repair and/or replace the Plaintiffs’ Insured Property back to its pre-loss condition, in contradiction to what Plaintiffs was promised; g. Failing to follow and abide by Progressive Defendants’ underwriting policies/guidelines and failing to perform all necessary inspections of the Insured Property; h. Reporting to Progressive Defendants and Plaintiffs that the Insured Property (including the roof) was in good condition and met all underwriting requirements prior to the inception of coverage; i. Utilizing valuation software to calculate replacement cost values knowing such software was inaccurate and in no way commensurate with the estimating software used in claims; and j. Utilizing valuation software to calculate the replacement cost of Plaintiffs’ Insured Property, knowing such software was inaccurate and systematically and methodically designed to overinflate premiums to maximize the Defendants’ financial gains. 53. Plaintiffs assumed the Policy of insurance procured, renewed, and maintained by Hometown conformed to their agreement with it. 54. Hometown was negligent and breached its duty owed to Plaintiffs by failing to adhere to Progressive Defendants’ underwriting guidelines and failing to accurately and truthfully answer Plaintiffs’ questions regarding the Policy coverages, and by promising Plaintiffs the Policy it selected and calculated for Plaintiffs was correct and provided full replacement cost coverage such that it would fully repair and/or replace the Insured Property (including the roof), back to its pre-loss condition in the event of a loss. 55. Plaintiffs relied on Hometown to procure, renew, and maintain a policy that provided full replacement cost coverage that would pay 100 percent of the actual cost to repair and/or replace the subject Insured Property (including the roof), back to its pre-loss condition in the event of a loss. Hometown knew, or should have known, that Plaintiffs relied on its representations that the Insured Property had met all underwriting requirements and that the coverage was as it represented, and it was foreseeable that the failure to procure a Policy as promised could unnecessarily expose Plaintiffs to significant harm, losses, and damages. 56. As a result of Defendants’ conduct, Plaintiffs have sustained damages, including deprivation of monies rightfully belonging to their, and ordinary or garden variety harm of anger, stress, worry, physical and emotional suffering, and has been damaged in an amount in excess of Seventy-Five Thousand Dollars ($75,000.00), exclusive of attorneys’ fees, costs and interest. 57. The conduct of Hometown and Progressive Defendants was intentional, willful, malicious and in reckless disregard of the rights of the Plaintiffs and is sufficiently egregious in nature so as to warrant the imposition of punitive damages. COUNT IV CONSTRUCTIVE FRAUD AND NEGLIGENT MISREPRESENTATION Plaintiffs fully incorporate into this paragraph each and every allegation in the preceding paragraphs of this Petition as if each were fully iterated verbatim herein, and for their additional claims against Defendant Hometown and Progressive Defendants, hereby allege as follows: 58. Hometown represented to Plaintiffs that they had the best policy Progressive Defendants wrote. Hometown further represented to Plaintiffs that the Policy they purchased was not subject to any weather-related exclusions. Hometown represented there were no preexisting issues with the property (including the roof) that would limit or restrict coverage in the event of either a partial or total loss and that the dwelling met all of Progressive Defendants’ underwriting requirements. And though Hometown made certain representations regarding the scope of coverage the Policy purportedly offered (i.e., that the Policy provided broad form replacement cost coverage that would fully pay to replace the roof in the event of a loss), it did not disclose the fact that the Policy failed to provide replacement cost value for Plaintiffs’ roof and instead decreased and limited the roof’s coverage arbitrarily year-over-year. 59. Hometown represented to Plaintiffs that their Insured Property met all of Progressive Defendants’ underwriting guidelines and that there were no preexisting issues with the Insured Property (including the roof) that would either prevent issuance of the replacement cost policy or exclude coverage for any damage sustained to their Insured Property. 60. Hometown had a duty to exercise reasonable diligence and skill in obtaining and accurately notifying Plaintiffs of the nature and character of the insurance procured. Hometown breached this duty by misrepresenting to and/or concealing pertinent material facts from Plaintiffs as follows: a. Selling illusory and limited and escalating depreciating coverage on the roof and representing to Plaintiffs at the time the policy was issued that their roof met all underwriting guidelines and that any and all damage sustained to the roof would be fully replaced knowing such statement was untrue. b. Misrepresenting to Plaintiffs at the time the Policy was procured and with each renewal that the Policy provided full replacement cost coverage for the roof when, in fact, the depreciation schedule made it impossible for Plaintiffs to receive full replacement cost. c. Misrepresenting to Plaintiffs at the time the Policy was procured and with each renewal that the Insured Property (including the roof) met all underwriting requirements. d. Misrepresenting to Plaintiffs at the time the Policy was procured and with each renewal that the roof was eligible for full replacement insurance coverage based on the roof’s age and condition so to overinflate premiums to maximize the Defendants’ financial gains. e. Misrepresenting that the Insured Property (including the roof) was in good condition, the Policy purchased by Plaintiffs was not subject to any exclusions, and there were no preexisting issues with the Insured Property (including the roof) that would limit or restrict coverage in the event of either a partial or total loss. f. Misrepresenting that the replacement cost valuation (and as calculated by Defendant Hometown) was an amount commensurate with supported valuation calculations that were necessary for Plaintiffs to replace their Insured Property in the event of a loss. g. Misrepresenting that the replacement cost valuation (as calculated by Defendant Hometown), and for which premiums were paid, was equal to the estimated replacement cost (100 percent insurance-to-value), as calculated by Hometown. h. Misrepresenting that Progressive Defendants’ underwriting policies/guidelines were followed and met and that all necessary inspections of the Insured Property occurred and were properly conducted. i. Misrepresenting that the valuation software utilized was accurate and commensurate with the estimating software that would be used in claims. j. Misrepresenting to Plaintiffs that the Policy covered all fortuitous loss and that, in the event of weather, all damage sustained to the roof—big or small—was fully covered by the Policy and would pay to fully replace all damage with like, kind quality materials. k. Misrepresenting to Plaintiffs that the Policy provided full replacement cost coverage contrary to what was promised. 61. As a result of Hometown’s breach of duty, Hometown gained an advantage for itself by misleading Plaintiffs to their prejudice. Hometown misrepresented the nature and character of the Policy procured and renewed for Plaintiffs; Hometown misrepresented the Policy as one of full replacement (for all coverages) that would fully restore, replace, and/or repair Plaintiffs’ Insured Property (including their roof) back to its pre-loss condition in the event of a loss caused by a covered event with like, kind, quality materials. 62. Hometown’s misrepresentations constitute constructive fraud. 63. Plaintiffs were induced to accept, purchase, and renew the Progressive Defendants Policy by Hometown’s misrepresentations and constructive fraud. 64. Plaintiffs were misled by Hometown’s misrepresentations and constructive fraud. Plaintiffs relied on Hometown’s misrepresentations to their detriment. 65. Hometown is the agent and/or ostensible agents of Progressive Defendants for purposes of these misrepresentations, and as such, are vicariously liable for them. 66. As a result of the Defendants’ constructive fraud and misrepresentation, Plaintiffs have sustained damages, including deprivation of monies rightfully belonging to their, and ordinary or garden variety harm of anger, stress, worry, physical and emotional suffering, and have been damaged in an amount in excess of Seventy-Five Thousand Dollars ($75,000.00), exclusive of attorneys’ fees, costs and interest. Plaintiffs are further entitled to reformation of the insurance contract to provide coverage consistent with Hometown’s misrepresentations. 67. The conduct of Defendants was intentional, willful, malicious and in reckless disregard of the rights of the Plaintiffs, and/or was grossly negligent, and is sufficiently egregious in nature so as to warrant the imposition of punitive damages. PRAYER FOR RELIEF WHEREFORE, Plaintiffs, Luciano and Lidia Martinez, pray for judgment against Defendants, Progressive Casualty Insurance Company, American Strategic Insurance Corporation, and Hometown Insurance Agency, Inc., for: (a) Actual and punitive damages each in an amount in excess of $75,000.00; (b) Disgorgement of the increased financial benefits derived by any and/or all of the Defendants as a direct result of the Defendants’ wrongful conduct; and (c) Prejudgment interests, costs and attorneys’ fees. Respectfully submitted, Jeff D. Marr, OBA No. 16080 Carole Dulisse, OBA No. 18047 Nick Marr, OBA No. 34284 Ashton Poarch, OBA No. 34308 Marr Law Firm 3100 Northwest 149th Street Oklahoma City, Oklahoma 73134 Telephone: (405) 236-8000 Facsimile: (405) 236-8025 Email: [email protected] [email protected] [email protected] [email protected] Attorneys for Plaintiffs