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Monteiro v. Performance Adjusting Public Insurance Adjusters, LLC

Superior Court of Rhode Island

March 26, 2014


Providence County Superior Court

For Plaintiff Casby Harrison, III, Esq.

For Defendant: William A. Quattrucci, Jr., Esq.



This non-jury matter was tried before the Court, sitting in Kent County, by agreement of the parties, on Plaintiff Julia Monteiro's (Monteiro or Plaintiff) Complaint for contract damages against Defendants Performance Adjusting Public Insurance Adjusters, LLC (Performance Adjusting) and Multi-State Restoration, Inc. (Multi-State)(collectively, Defendants), [1] and on Defendants' Counterclaims for breach of contract, book account and unjust enrichment. The parties' claims arise from the work performed by Defendants on Plaintiff's real property following a fire.

This Court has jurisdiction pursuant to G.L. 1956 § 8-2-13 and renders its Decision in accordance with Rule 52 of the Rhode Island Superior Court Rules of Civil Procedure.



Having heard the testimony presented by the parties, examined the exhibits admitted into evidence, and assessed the credibility of the witnesses, the Court makes the following findings of fact.


The Property

On or about May 24, 2005, Monteiro purchased a two-family home at 346-348 Woonasquatucket Avenue, North Providence (the Property) for $258, 000. The purchase price was structured as follows: $18, 000 down payment by Monteiro; $202, 000 adjustable-rate thirty-year first mortgage from First Franklin, and a $37, 000 fixed-rate thirty-year second mortgage also from First Franklin. At the time of the purchase, Monteiro intended to renovate and then rent out the first-floor unit and, thereafter, renovate the two-story unit on the second and third floors of the building where she and her two daughters would reside. In the meantime, Monteiro and her two daughters lived with Monteiro's mother on Carrington Avenue, Providence.

After the closing and through September 2005, Monteiro's two brothers, her then-fiance, and a friend renovated the Property. None of these individuals was a licensed contractor, and there was no evidence that building permits had been obtained for any work they performed. The work generally consisted of cosmetic improvements and included the following: tiling, laying linoleum or sanding the floors in each room in the first-floor unit; painting throughout the first-floor unit; installing new cabinetry in the first-floor unit bathroom; removing old sheetrock and installing new sheetrock and compound on walls and ceilings throughout the upper two floors; tiling the walls in the second-floor bathroom; and removing linoleum in the kitchen and bathrooms on the top two floors. All this work was performed at no cost to Monteiro. In July 2005, Monteiro rented the first-floor unit at the rate of $1, 050 per month.

According to Monteiro, her brothers, her then-fiance and her friend did not in any way change or even touch the existing electrical wiring on either the second or third floors in the course of tearing down the walls and putting up new sheetrock. Monteiro further testified that the electrical system on the second and third floors worked fine before the new sheetrock was installed, and there was no need to hire any professional to do further electrical work. By mid-September 2005, the only renovations Monteiro intended to complete before moving her family into the Property later that month were to sand the floors and to sand and paint the new sheetrock on the second and third floors.


The Fire

On September 21, 2005, a fire started in the basement of Monteiro's two-family house.[2] The basement area sustained fire, smoke, soot and water damage. Although the fire was limited to the basement, there was minor damage in one area of the exterior vinyl siding, some smoke damage to the first-floor unit, and some smoke damage in the stairway leading from the basement to the first floor. Additionally, the windows on the first floor and some windows on the second floor were broken in the course of extinguishing the fire. No credible evidence was presented to demonstrate that there had been any significant fire, smoke, soot or water damage to the second or third floors. By all accounts, this was a minor fire. Fortunately, no one was injured.

Monteiro's daughter, Sharon Monteiro, first learned of the fire when she received a phone call from the North Providence Fire Marshall while she was at the Carrington Avenue home. The Fire Marshall instructed that the owner of the Property should bring the homeowner's insurance policy to the scene. Sharon Monteiro, in turn, retrieved Plaintiff and brought her to the Property with her homeowner's insurance policy provided by Liberty Mutual. While at the scene of the fire, sometime around 11:00 that morning, Plaintiff was approached by an unknown man who informed her that he could help with boarding up the home. Although unidentified, Plaintiff came to learn the man worked for William D'Amico (D'Amico), a public adjuster. D'Amico is the owner and sole member of Performance Adjusting and the president, manager and sole owner of Multi-State.

On the day of the fire, Lionel Bernardino (Bernardino), the then-Building Official in North Providence, viewed the Property. Bernardino recalled that the fire started in the basement and caused water and smoke damage to the floor joists and to the first-floor unit. He further testified that when a fire is in the basement of a structure he would not ordinarily inspect the upper floors. Indeed, he did not recall having inspected the second and third floors of the Property on September 21, 2005.


Agreements with Performance Adjusting and Multi-State

On the day of the fire, Monteiro executed certain documents provided by D'Amico's representative while at the Property. One such document, an Insurance Adjusting Agreement, provided as follows:

"To the insurance companies interested, we the undersigned hereby agree to retain Performance Adjusting, to assist in the adjustment of the above loss and agree to pay for the services 10% of the total recoverable amount of the loss. We also request that you include Performance Adjusting, on any insurance disbursement whether in part or in whole." Pl.'s Ex. 2, at 1.

Another document, an Authorization to Perform Services and Direction of Payment, provided in part:

"Customer" [ ] authorizes MULTI-STATE RESTORATION, INC . . . to perform any and all necessary cleaning and construction services on Customer's property at 368 [sic] Woonasquatucket Ave N. Prov . . . and with respect to items that need to be cleaned at a remote location, to remove and clean such items as necessary.
"Customer authorizes Insurance Company . . . to directly and solely pay MULTI-STATE.
"If for any reason the check should come to or be made payable to the Customer, Customer then agrees to pay MULTI-STATE immediately upon receipt of the check from the insurance company . . . .
"If the loss is not covered by insurance, Customer agrees to pay the total amount to MULTI-STATE upon receipt of the invoice.
"It is my understanding that the services to be performed by MULTI-STATE will be limited to those, which are authorized by my Insurance Company.
Liberty Mutual Group _
. . .
"Customer agrees that MULTI-STATE is working for the Customer and not the Insurance Company or agent/adjuster.
"Additional remarks: Any work being completed by Multi-State Restoration will not be subject to a 10% fee be [sic] Performance Adjusting, Inc." Pl.'s Ex. 2, at 3.

Thus, on September 21, 2005, Plaintiff entered into two contracts, one with Performance Adjusting and one with Multi-State. See generally Pl.'s Ex. 2.

Later in the afternoon on September 21, 2005, Plaintiff met D'Amico for the first time at 1135 Charles Street, North Providence, the office housing both Performance Adjusting and Multi-State. D'Amico reviewed her Liberty Mutual homeowner's insurance policy at that time. Plaintiff's Deluxe Homeowner's Policy with Liberty Mutual provided $250, 000 replacement cost for the dwelling, $25, 000 for other structures, $125, 000 for personal property, and $50, 000 for loss of use.

At that initial meeting, D'Amico explained that Multi-State would use its own funds to remediate the Property until the insurance company paid on the loss under the terms of the homeowner's policy, that Performance Adjusting would deal with the insurance adjuster so that Plaintiff did not have to, and that this would not cost Plaintiff anything so long as Multi-State was performing the construction services.


Review and Approvals by Liberty Mutual

After receiving the insurance company information from Plaintiff, D'Amico contacted Liberty Mutual and was directed to adjuster Ricky Turgeon (Turgeon), with whom D'Amico had not had any prior dealings. In the meantime, Performance Adjusting and/or Multi-State began work on the Property; namely, boarding it up, removing water, drying and spraying a microband to stop mold growth. In doing this work, D'Amico wore two hats: as Plaintiff's public adjuster through Performance Adjusting, as well as her contractor through Multi-State.

On September 22, 2005, D'Amico and Turgeon met at the Property to discuss and review the basic scope of the work to be done. As is typical with a fire loss, the extent of work needed was not apparent immediately after the fire because certain areas remained wet from the firefighting equipment. Accordingly, as is commonplace to allow time for the area to dry out, D'Amico and Turgeon returned to the Property on October 13, 2005, to fully inspect the premises.

Prior to that second meeting, Multi-State prepared and submitted to Liberty Mutual its estimate to repair the fire damage, which totaled $263, 958.07. Defs.' Ex. N. That estimate, prepared by D'Amico, reflected minimal work to be done on the second and third floors, including cleaning walls and ceilings, sealing drywall for odor control, replacing certain windows, and some painting in the front stairway. Id. at 12-16.

Turgeon's first estimate for the work Liberty Mutual was authorizing to be done was completed after his second meeting with D'Amico, on November 16, 2005. Defs.' Ex. O. Turgeon's estimate reflected replacement cost value of $113, 646.80, depreciation in the amount of $12, 341.43, and actual cash value of $101, 305.37. Id. at 23-24. The work that Liberty Mutual authorized to be done on the second and third floors was limited to replacing, sealing and painting windows. Id. at 17-19.

By letter dated November 29, 2005, Turgeon advised Monteiro that a payment of $99, 305.43 was paid to Performance Adjusting as "[t]he structure damage was resolved on November 29, 2005." Pl.'s Ex. 4. Multi-State deposited the funds into its general business checking account. The $99, 305.43 payment reflects the reduction of a $1000 advance and the $1000 applicable deductible from the replacement cost and applicable depreciation set forth in Turgeon's November 16, 2005 estimate.[3] Id. The November 29, 2005 letter was copied to Performance Adjusting and advised that "[t]he repair time based upon the damages should not exceed a four (4) month period of restoration, ending March 31, 2006, this includes application of permit, demolition and rebuild." Id. The letter also reflected that this initial payment included rental loss for September through December, with additional checks to be forwarded each month in the amount of $1050 beginning in January and ending in March 2006. Id.

Although Turgeon's November 29, 2005 letter indicated that the structure damage was resolved as of that date, Turgeon's own deposition testimony, as confirmed by D'Amico's trial testimony, revealed otherwise. See Turgeon Dep. 40, Sept. 25, 2007.[4]D'Amico immediately responded to Turgeon by way of another written estimate to address the differences between the two estimates completed to date. See Defs.' Ex. P. This estimate again reflected only limited work to be performed on the upper two floors of the Property and certainly did not reflect the need for any demolition of existing drywall or electrical work on either the second or third floors. Id. at 9-11.

Thereafter, D'Amico and Turgeon again met at the Property on January 24, 2006, to further narrow the issues on which they differed in their estimates. Turgeon Dep. 60. Turgeon reworked his estimate and agreed that Liberty Mutual would pay $143, 241.69 in replacement costs for the loss. Defs.' Ex. Q. Liberty Mutual's own in-house contractor attended that inspection and concurred with Turgeon's estimate. Turgeon Dep. 62.[5]

By letter dated February 1, 2006 to Monteiro, with a copy to Performance Adjusting, Turgeon confirmed that he was making some revisions to his original estimate following his January 24, 2006 inspection of the Property. Defs.' Ex. F. Moreover, that letter confirmed that the period of restoration for which Liberty Mutual would pay for loss of fair rental value was four months, ending on March 31, 2006, which remained the time period that would include application for permits, demolition and rebuilding. Id.

By check dated February 17, 2006, Liberty Mutual tendered an additional $27, 476.90 under Plaintiff's policy for additional building damage and cleaning of the second and third floors. Pl.'s Ex. 6. Monteiro endorsed the check at D'Amico's request and the funds were deposited by Multi-State into its general business checking account. Thus, by mid-February 2006, Multi-State had received $126, 782.27[6] from Liberty Mutual to repair Plaintiff's Property that had been damaged by the fire.

Without ever responding to Turgeon or Liberty Mutual in writing after receiving the additional funds in mid-February, D'Amico, in his role as a public adjuster, determined that his negotiations with Liberty Mutual had not concluded. Turgeon disagreed and testified at his deposition that he assumed D'Amico accepted the revised estimate of $143, 241.69[7] because D'Amico never wrote back to Turgeon after Turgeon's February 17, 2006 communication and disbursement. Turgeon Dep. 31, 36.


Work Performed by Multi-State

For the duration of the period that D'Amico was negotiating with Liberty Mutual, and notwithstanding the substantial payments that had been made to Multi-State by mid-February 2006, little had been done in the way of actual construction at the Property. According to D'Amico, there were two reasons for this. First, he testified that work on the Property "could only be done once numbers were agreed to, " and that any work that was being done was "minimal." In determining for himself in February 2006 that Plaintiff "didn't get the right number, " D'Amico proclaimed the negotiating process to still be ongoing, without notifying Liberty Mutual. Second, D'Amico faulted the inferior workmanship on the second and third floors that allegedly raised "code issues" with local building officials as the basis for doing little work on the Property.

According to Plaintiff, who was anxious to get the Property repaired, to rent out the first floor unit again, and to move her family in to the top two floors, she routinely inquired of the status from D'Amico and reminded him that Liberty Mutual had given only four months, through March 31, 2006, to repair the Property. D'Amico advised Plaintiff to take Liberty Mutual's November 29, 2005 letter regarding both the amount paid and the four-month period of restoration "with a grain of salt" because "it [didn't] mean it's what the final number is or how much time it would be." In December 2005, Plaintiff "checked every day" to see how the repair work was going and noted at that time that the electrical work was just beginning. She reported to D'Amico that she was not satisfied at that time with the progress of the work. D'Amico responded that he had a problem pulling permits with North Providence officials, to which Plaintiff then asked to see correspondence from the Town. No such correspondence was produced in response to Plaintiff's request, nor produced at trial.

Sharon Monteiro also checked on the Property frequently to see if work was being done. In March 2006, she observed a moving truck with Multi-State's name and telephone number on it at the Property and materials in the dumpster that she believed did not originate from the Property. That same month, she and Plaintiff visited the North Providence Building Inspector's office to review any documentation that addressed the purported difficulty in pulling permits as D'Amico had claimed. There was nothing in the Town's files which indicated that there was faulty wiring or a cease and desist order relating to the Property. An electrical permit had been issued just days before the Monteiros visited the Building Inspector's office.


Plaintiff's Affidavit

During the time period in which Plaintiff and her daughter asserted that they continually checked on the status of the work being done on the Property, Plaintiff executed an Affidavit prepared by or at the direction of Defendants. On March 7, 2006, several weeks after Liberty Mutual had paid out $126, 782.27, Plaintiff executed an Affidavit that was notarized by Multi-State's then-counsel Joseph J. Hurley in North Providence. Pl.'s Ex. 7. That Affidavit provides:

"I am the owner of 346-348 Woonasquatucket Avenue, North Providence, which was substantially damaged by a fire on September 21, 2005. Following this fire, I engaged the services of a person who represented himself to be a licensed building contractor. He stated that he would obtain all necessary building permits and then perform the necessary work. It has subsequently come to my attention that he did not obtain the required building permits, and was acting in violation of local building codes. I have attempted to contact him to discuss this; however, he does not respond to my telephone calls and appears to have removed himself from the Providence area. As a result, in order to have the work completed in ...

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