As discussed a few weeks ago on Roofing Insights, in early 2020, 33 Carpenters and State Farm were embroiled in a legal battle that involved State Farm accusing 33 Carpenters of acting as a licensed public adjuster during a home improvement project with one of their clients.
Through a sordid series of events, State Farm ultimately defeated 33 Carpenters in the Iowa Supreme Court, which not only had immediate major financial ramifications for 33 Carpenters, but it also cost the roofing company a sizeable amount of business in 2020.
This case had a profound impact on Austin Nelson, who is the vice president and owner of 33 Carpenters, so much so that he traveled from the Quad Cities in Iowa up to Minneapolis to meet with Roofing Insights and unpack everything that transpired between him and State Farm.
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“There were a lot of different things that happened with our counsel, but I would say this: presented with a better story, more facts, and the truth of the situation, then the Supreme Court comes to a different conclusion,”
Nelson says at the outset of his conversation with Roofing Insights CEO Dmitry Lipinskiy.
“The conclusion that the court came to did not best serve the public interest. The public’s interests are best served when a doctor charges for his services, when the auto body guy charges for his services, and when the repair contractor charges for his services.”
But none of that happened, and ultimately, the Iowa Supreme Court ruled that State Farm’s initial assessment of the house that 33 Carpenters was repairing was indeed appropriate.
Still, much confusion remains, even after all these months.
“We did not get one dollar. We got exactly what they offered,”
Nelson says, in reference to State Farm’s $40,000 estimate on a job that 33 Carpenters had estimated would cost $77,000 after every product and service was considered.
Moreover, the immediate fallout from the case resulted in 33 Carpenters taking a hit in the eyes of the public.
“The court said that 33 Carpenters was acting as a public adjuster without a license, and the Iowa Insurance Division issued a cease and desist for operating as a public adjuster without a license. The local news station ran a story saying that a local contractor was ordered to cease and desist operations. The county sheriff came into my office and said we had to shut our place down.”
That day, Nelson and his staff had to react to such potentially devastating news. The first order of business included interpreting the cease-and-desist letter they were suddenly presented with.
“We contacted our lawyer immediately and he didn’t know why they were doing that, but of course it was at the encouragement of the insurance agencies,”
Nelson explains.
The combination of the cease-and-desist letter, plus a local news station broadcasting the event had the potential to destroy 33 Carpenters.
Yet, all this seemed like overkill once you consider that a respected company like 33 Carpenters was simply trying to help a homeowner get a new roof.
“You need to understand what the Supreme Court said we did that constituted public adjusting without a license,”
says Nelson.
One of these things the Iowa Supreme Court outlined in their ruling was that 33 Carpenters had a six-step process on their website that advertised how they would act as an advocate on a homeowner’s behalf during the insurance claims process.
Many roofing companies do this, but most of them are not licensed public adjusters.
In some cases, roofing companies work with public adjusters to assist with claims, and at the time of 33 Carpenters dispute with State Farm, the company was working with three public adjusters.
“From 2014 until 2017, we had no less than three public adjusters that worked for us,”
Nelson says.
This would have been a pivotal piece of evidence during the trial, but Nelson’s lawyer did not present it to the court, an inexplicable mistake, especially when you take into account that his lawyer submitted an affidavit in 2019 stating that 33 Carpenters worked with multiple public adjusters.
“One of the other things that the Supreme Court said was that my salesman discovered damage on the home and shared it with the homeowners as if it was unbeknownst to them, but it wasn’t unbeknownst because in the homeowners’ depositions they knew they had damage. It says that we directed the customer to file an insurance claim, but we did not direct anybody to do anything. We just presented them with all the information,”
Nelson says.
Had Nelson’s legal team been more in tune with the facts surrounding this claim, it is very likely Nelson and 33 Carpenters would have come out victorious against State Farm.
Instead, Nelson is left to ponder what could have been, all while being forced to accept the fact that his business suffered irreparable damage as a result.
“We know that we lost at least $15 million last year [in 2020],” Nelson claims, citing a hailstorm in April 2020 that exponentially drove up demand for roofers in the Quad Cities.”
“People from the community were coming to our office to sign up for roofs,”
says Nelson.
As a result, 33 Carpenters was so busy that despite the onset of COVID-19, they were still hiring new roof technicians.
But things would soon take a turn for the worse.
“That [demand] activated the insurance people and our competition,”
says Nelson.
“The insurance commission issued their cease and desist. The local news picked up the story and eleven homeowners associations that I had done free repair work for left me.”
“It was an interesting lesson on loyalty. I wasn’t painted by the Supreme Court as being a fraud or having done anything deceptive. There was never any question about us [33 Carpenters] honoring our warranties. It was simply an issue of the insurance company doing what they always do, which is trying to starve out contractors.”
To watch the full hourlong video in which Nelson explains the entire sequence of events between him and State Farm, click on the video above!
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