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Update on Tower Hill Lawsuit Against Florida Roofer Ricky McGraw


Tower Hill has filed a doozy of a 100-page plus proposed amended lawsuit against Florida roofer Ricky McGraw. I previously noted this lawsuit and promised updates in Ricky McGraw Is Going to Be a Footnote in the History of Florida Insurance Law—One Way or the Other.

The lawsuit initiated by Tower Hill Signature Insurance Company, along with its associated entities (collectively “Tower Hill”), against SFR Services, LLC, and associated individuals and entities (collectively “Defendants”), involves multiple claims centered around allegations of fraud, deceptive practices, and violations of Florida’s Deceptive and Unfair Trade Practices Act (FDUTPA) and Florida’s Racketeer Influenced and Corrupt Organization Act (RICO). Below is a detailed summary of the highlights and main points of the lawsuit and allegations brought by Tower Hill:

  1. Fraudulent Practices:
    • Assignment of Benefits (AOB): SFR Services induced Florida property owners to assign their insurance benefits to SFR by using deceptive tactics. These tactics included promising roof replacements irrespective of insurance claim outcomes and employing high-pressure sales tactics.
    • Inflated Estimates: After obtaining AOBs, SFR Services submitted estimates that were significantly inflated—often two to three times the actual cost. These estimates were prepared using a “proprietary” method designed to defraud insurance companies.
    • Misrepresentation and Concealment: Defendants misrepresented the extent and severity of damages, the costs of repairs, and the nature of their services. They also concealed material information from Tower Hill.
  2. Deceptive and Unfair Trade Practices:
    • Bait-and-Switch: SFR Services lured policyholders with promises of services they never intended to fulfill.
    • Pressure Sales: They used physical intimidation and harassment to pressure policyholders into signing AOBs.
    • False Representations: SFR Services falsely claimed to be working with Tower Hill and other insurers to resolve claims, when their actual intention was to submit inflated claims and engage in litigation if necessary.
  3. RICO Violations:
    • Pattern of Racketeering: The complaint alleges that SFR Services and the other defendants engaged in a pattern of racketeering activity by repeatedly submitting fraudulent claims and estimates.
    • Conspiracy: Defendants conspired to defraud Tower Hill, benefiting financially from the scheme and causing significant damages to Tower Hill.

Specific Incidents and Methods

  1. Free Inspections: SFR Services offered free roof inspections conducted by unqualified personnel who exaggerated or fabricated damages.
  2. Estimate Inflation: The estimates included costs for overhead and profit that were grossly inflated, often reaching amounts that far exceeded the actual costs of the work performed by subcontractors.
  3. Litigation Threats: When Tower Hill refused to pay the inflated claims, SFR Services would threaten litigation, leveraging Florida’s statutory mechanisms designed to protect policyholders.
  4. Subcontractor Payments: SFR Services paid subcontractors significantly less than the amounts claimed in the estimates submitted to Tower Hill. In some cases, the estimates were doubled or tripled.

Legal Claims and Relief Sought

  1. FDUTPA Violations: The plaintiffs seek damages for deceptive and unfair trade practices, including the overpayment of insurance claims, costs of defending multiple lawsuits, and associated attorneys’ fees.
  2. RICO Act Violations: The plaintiffs allege a pattern of racketeering activity and seek treble damages, attorneys’ fees, costs, and other relief deemed appropriate by the court.
  3. Fraud: Multiple counts of fraud are alleged against various defendants for making false statements of material fact, misrepresenting damages and repair costs, and deceiving Tower Hill into overpaying claims.
  4. Insurance Fraud: Specific counts of insurance fraud are alleged against all defendants for preparing and presenting inflated estimates, which constitute criminal acts under Florida law.

Key Points from the Third Amended Complaint

  • Defendants’ Roles: Ricky McGraw is described as the mastermind behind the scheme, while other defendants, including family members and associated entities, played significant roles in executing the fraudulent activities.
  • Financial Benefit: All defendants benefited financially from the scheme, either through direct payments or by diverting funds through various entities.
  • Damages: The plaintiffs seek substantial damages, including actual and consequential damages, treble damages under the RICO Act, and recovery of attorneys’ fees and litigation costs.

The lawsuit by Tower Hill against SFR Services and associated defendants centers on a complex scheme of fraud, deceptive trade practices, and racketeering activities. The defendants are accused of systematically inflating insurance claims and employing various deceptive tactics to defraud Tower Hill and benefit financially at the expense of the insurer. Tower Hill seeks significant damages and other relief to address the financial harm allegedly caused by these practices.

This is a significant lawsuit by a major admitted carrier in Florida against a roofer. I cannot think of anything like it in the past because the allegations involve far more than one claim and have RICO allegations. Again, allegations in lawsuits are not proof that they are true. Proof through evidence is the only meaningful method to determine the truth of a matter. In my view, the parties are in one of the most heated civil insurance lawsuits currently pending in the United States.

Thought For The Day About Lawsuits 

I was never ruined but twice: once when I lost a lawsuit, and once when I won one.
—Voltaire

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