Pezzuti vs. USAA

This case involves a claim and subsequent lawsuit against the USAA insurance company concerning coverage under my homeowner’s policy.

On June 10, 1996 my son Eric discovered a burglary from a car trailer parked outside a warehouse I was renting in Lake Park, Florida. The trailer belonged to a friend of Eric’s and he was using it to haul his race car to the track. Eric and his friend own modified Ford Mustangs and had a hobby of drag racing and had been doing it for about 10 years. All of the items stolen from the trailer were either Eric’s or my personal tools and some of his extra car parts that were in the trailer at the time. I wasn’t sure that my insurance would cover these items because the burglary wasn’t on my property or in my vehicle. I have all my insurance coverage (automobile, homeowners, life, and rental) with United Services Automobile Association (USAA) and had been a member for over 34 years, since 1964 when I first joined USAA while on active duty in the US Army.

I called USAA the next day to ask if the burglary was covered under any of my policies. I explained that the burglary occurred from a trailer parked at a warehouse I was renting. The lady that answered my call informed me that my "personal property" (or my son’s being he lived with me) was covered anywhere in the world under my home owners policy. She took the information and told me an adjuster would be contacting me. This call, by the way, was recorded, as are all calls made to USAA, unless the caller requests to not record the call. Recording calls seems like a good idea, but I found out later that USAA somehow "loses" the recordings that are unfavorable to them!

The next day an adjuster from USAA called me and asked questions about the burglary. Most of the questions he asked concerned the warehouse I was renting, what I did there, was it a business, etc. At that time we were just using the warehouse for working on our personal cars and projects. Being that most of the items stolen were mechanic’s tools and car parts, he asked if we did automotive repair at the warehouse. I again told him that we only work on our own cars and it was definitely not an auto repair shop. I had used the warehouse previously to start manufacturing fiberglass parts, but the business (called Stealth Industries) had been closed for 5 months, and we were just doing personal work there at the time of the burglary. Besides, the theft was not from the warehouse, but from a trailer parked outside on the street. The adjuster kept asking about Auto Repair and mechanics tools and trying to establish if there was an auto repair business at the warehouse. He didn’t ask about the trailer or about any other business that was previously done at the warehouse.

Later, when the adjuster received my list of the items stolen, he said that because it was such a large amount (over $5000 I believe he said) he would have to turn the claim over to another "group" at USAA.

I also had a claim the previous year on my automobile policy with USAA which was over $6000 (flood damage to motor in my car) which I believe may have been a factor in USAA’s decision to fight this claim. It appears to me that having 2 claims within a few years (even though it was different policies, automobile and homeowners) must have triggered their "guidelines" to automatically deny the second claim!

I reported the burglary the following day to the Lake Park Police. An officer responded and he made out the Police Report. He asked for a list of the items that were stolen, and I told him it would take a while to put together the list, being there were so many of my tools and Eric’s tools in the trailer. He gave me a form to fill out and return it when I had the list. I also needed a list of the tools taken and a description of them for the Insurance Report for USAA, so I made the list and gave a copy to the officer also. The value of the tools and parts stolen was over $7000.

I needed a copy of the Police Report to file with the insurance claim, so I had my daughter pick up a copy from the Police Station. This is where things started to go awry. The Lake Park Police Report had listed the theft from a business location, Stealth Industries. I called the police officer who made out the report and told him that might be a problem, because I had specifically told the insurance adjuster that it was not from a business, and I had never told the police officer it was, and never even mentioned a business name to the officer when he took the report. All the discussions with the officer took place in the street where the trailer was burglarized, and the warehouse was never discussed. He then said that he was directed to make the report that way by other officers in the department, and that the insurance company should call the LPPD if there was a problem. I believe now that this police report "modification" was done on purpose by the Lake Park Police Department due to problems my son was having with one of the other officers of the LPPD. (I won’t get into all the details, but this officer apparently owned a Mustang that was stolen while parked at a gay bar in West Palm Beach, reported it stolen elsewhere, and when it was recovered a week later, had a stolen motor in it that his friend at Quality Automotive in Lake Park had installed for him. He got in a lot of trouble over this I understand, with both his insurance company and the LPPD, and was even suspended for it. He erroneously believed that my son Eric had something to do with his car being stolen and has been harassing him ever since).

It is my opinion that the LPPD, when questioned by the USAA adjuster or investigator, made erroneous statements concerning the facts of the burglary and report. It appears that USAA acting in bad faith was more than willing to work with the LPPD to "manufacture" reasons and excuses to deny paying the claim. From this point on, I believe there was a conspiracy between USAA and the LPPD to accuse me of fraud and to deny my claim. It was to their advantage to work together and use the combined power of a "big insurance company" and a "police department" to gang up and to battle the "little guy".

It became obvious to me early on that USAA was looking for any reason they could to deny my valid claim. I talked to the USAA investigator a few months after the claim was filed. At that time he had not questioned anyone involved in the case, but said he had only been talking to the LPPD and an outside investigator he had hired.. He had not talked to me, my son, the owner of the trailer, the owner of the warehouse, or any of the people who had any knowledge of what had happened or gathered any facts in the case.

I was then requested by USAA to give an Examination under Oath concerning the burglary. The USAA attorney at that time claimed the reason for the examination was to exchange information between myself and USAA to try to resolve the claim. He used such phrases as "purpose is to gather information regarding my claim", "gain information to process the claim", "an opportunity for me to bring to the attention of USAA any information they should be aware of ", and "purpose is to exchange information". It became very apparent during the "Examination" that their only reason for questioning me was to dig into my personel life and generate confusion concerning the facts of the case, make unfounded false accusations, and then use the "discrepancies" they themselves caused to deny my claim! For example, after about 6 hours of questioning by the USAA attorney, the USAA adjuster, and their investigator, the only "items of controversy" were the wording of the original call I made to USAA regarding the claim (now they claimed I never said the burglary was from a trailer!), and an accusation by the USAA investigator made about ME altering the police report I sent them! At this point I became very angry and accused them of false, unfounded accusations that could easily be clarified in a few minutes. First of all, the initial phone call to USAA was recorded, so it would be very easy to verify what I had reported. The Second item could be resolved by a simple phone call to the LPPD to ask them about the police report. The USAA investigator said that he had not done either, but would do so the next day. I told the attorney and the investigators from USAA that they should check out their facts before making false accusations and then demanded that they apologize to me for the false accusations before I’d ever talk to them again. I also requested a printed copy of the Examination under Oath to verify what had been said, to show documented reasons for my concerns, and to send a copy to the Florida State Insurance Commissioner. (Although my later contact with the State Insurance Commissioner’s Office led me to believe that they tend to side with the insurance company in a dispute rather than the person complaining to them.) It appears that since Hurricane Andrew years ago, the state of Florida has to cater to the Insurance Companies to keep them in the state!

The day after the Examination, I phoned the USAA investigator’s supervisor and complained about his conduct. He agreed with me, and said that they had since called the LPPD and verified that I had not changed the police report, and also checked the tape of my initial call and verified what I had said. He said that this particular investigator was an ex-New York cop, was rude, and it was his nature to act in that way he did. (This must be a characteristic required in their "special unit" that handles claims over $5000!) He also said that this investigator would no longer be on the case. I might add that his supervisor was the only person at USAA who seemed reasonable to talk to, so of course, I was instructed not to talk to him anymore, and to direct all my questions to their attorney (the unreasonable one).

At that point, I expected to hear from USAA with an apology, and to continue the claim processing. Instead the USAA attorney took the tactic of claiming there was "no precedence for an apology on their part, or for them sending me a copy of the Examination", and basically ignored what had happened during the Examination and follow-up conversations. Instead he just did not forward the copy of the Examination under Oath to me as I requested. He later tried to make it appear that I did not want to sign the Examination under Oath so he could use it as an excuse to deny the claim! I have copies of all the correspondence with USAA and their attorney concerning these matters. Of course, the USAA attorneys have a way of ignoring facts, and fabricating their own versions of what happened.

I then received a letter from USAA saying that my claim was denied due to lies, concealment of information, fraud, etc., without any details or facts to explain why.

As the case developed, it was learned that the "excuse" by USAA to deny the claim was to accuse me of operating an auto repair facility out of the warehouse, thereby claiming the tools stolen were business tools! There never was an auto repair business there, and there was no evidence ever presented that there was. I showed USAA all the records of the earlier business of Stealth Industries, which clearly showed that it was a fiberglass fabricating business that had discontinued operation in late January 1996. The only "evidence" they were able to present at one of the depositions was some "hearsay" by the above mentioned LPPD Officer, and a "phony" zoning report form he also presented. (A formal request to the Lake Park Zoning Board revealed that the alleged violation was not even on their records). He also presented a "doctored up" receipt that my son received for his personal car from a transmission repair shop to imply he ran an auto repair shop. None of these items were presented at the trial (which would have been very embarrassing to both USAA and the LPPD).

It became apparent that another strategy of USAA was to nit-pick my claim report, my Examination under Oath (and my son’s which was later given), and generate more confusion and make if appear that we weren’t "cooperating", and then deny the claim for those reasons also. Another "out" for them in their policy is to avoid paying if there is a "failure to cooperate".

At this point I realized that based on the amount of this claim and my previous automobile claim I had made, they just flat out were not going to pay the claim and would make every effort to try to find some nitpicking reason to justify their denial. At that point, after a year of frustration, abuse, and false accusations by USAA and their attorneys, countless hours answering questions and letters, and their endless requests for personel records, bank statements, phone bills, tax returns, cable bills, etc for the last 5 years, I decided I’d had enough; USAA was being unreasonable, was not acting in good faith, and so I hired an attorney. (I only wish I’d done this earlier, but I assumed that USAA would act in good faith, and not resort to the tactics they did to get out of paying a valid claim.)


I would advise anyone that when an insurance company decides to subject you to their "Examination under Oath" that they have already decided they’re not going to pay the claim, are starting litigation, and are gathering up phony reasons to deny the claim. I’d like to see some statistics on "settled" claims that have gone past the point of "Examination under Oath" if anyone has any! That’s also a very good time to hire an attorney to have someone on your side looking out for your interests and rights against the big insurance attorneys.

Then USAA tried a new tactic. (to me anyway; maybe insurance companies do this all the time). They put together a list of numerous ways that my claim would be invalid (according to USAA) and accused me of all these numerous (but unfounded) scenarios! They filed a "Request for Admission" (I believed it was called) for each item, and claimed that if they did not get a reply for each one that it would be an admission that the statements were true! Again, I had to spend numerous hours answering them and explaining their numerous errors. After they received my responses, they requested "clarification" of the answers! More useless hours spent!

The next tactic of USAA, now that they realized that they were wrong about the auto repair business, and the other scenarios they "invented" which I categorically denied, was to concentrate on the excuse that we were not "cooperating" with them. The first feeble attempt was to claim that we were "preventing them from questioning Jimmy, the owner of the trailer that was burglarized. The USAA attorney claimed that they had called him 4 times, and he did not returned their calls. I talked to Jimmy and he said that his Mom said that someone from USAA called once, and did not leave a return number, and did not hear from them again other than that one call. I called the USAA attorney and told him of my conversation with Jimmy, and he still insisted that they called him 4 times and left phone numbers to call, and became very irate and called me a liar. I told him that he was the one who was a liar because Jimmy had no reason to lie about it, but the USAA attorney sure did (the failure to cooperate ploy!).

I then gave him Jimmy’s home phone, work phone, and told him to call him now because I knew he was there waiting for their call. I think they finally got to him, but to their dismay, he agreed with our story. So out of all this, they still said that "we refused to cooperate by preventing them from contacting Jimmy"!

Another example was to say that we "failed to cooperate" and help them locate and question my son’s girlfriend at the time of the burglary. I read my son’s Examination under Oath, and when questioned about his girl friend, he gave them her name and phone number. I verified that the name and phone number given to them were correct. She also said that they never tried to contact her, never got a phone call from USAA. The fact is that they never tried to call her (Re: USAA’s Claims Adjuster Ben XXXXX’s Deposition) but needed to put together a list of items to show "failure to cooperate". (Ben XXXXX never appeared at the trial, but we were prepared to hand him a telephone and have him dial her number.) He was probably embarrassed by his Deposition and didn’t want to lie under oath at the trial.

If USAA had acted in good faith and concentrated on the facts of the case, instead of their "wishful thinking" approach, this case would have ended long ago. But again, insurance companies do this every day of the week, and an individual like me (fortunately) goes through this maybe once in his lifetime. I guess the insurance companies use the strategy that works best for them, with complete disregard for the individual they are "out to get" once certain dollar amounts of claims come before them.

They also nit-picked the hundreds of questions they asked to come up with "lies" to justify their denial of the claim. These ranged from the initial phone call I made (never presenting the tape of the call that would clarify that), to the failure to help them contact witnesses for which they had valid phone numbers, to whether a "dog may have been barking" at the time of the burglary.

The most ridiculous tactic was for USAA to claim that my son’s hobby of drag racing his Mustang, was somehow tied to my previous partial sponsorship of a portion of his expenses, and therefore the only business of Stealth Industries was the race car! They really stretched things by saying that in their opinion, if I sponsored even a small part of his racing hobby that, therefore, anything used in his hobby such his personal tools and equipment, was "business" property, and therefore, not covered under my policy. (I might add that none of the items I ever paid for and used for sponsorship were any of the items that were stolen).

Another tactic of USAA was to flood the court with motions, requests, and various other paperwork to try to wear me down. By this time the law firm representing USAA switched to their "trial" attorney who wasn’t obnoxious and irritating as the first attorney was.

(By the way, the law firm is Butler, Burnette & Pappas of Tampa, Florida. Anyone out there have any dealings with them with Big Insurance?)

They obviously did not want him to appear before a jury and irritate them as well (seemed to be his specialty). The Judge on the case made the comment that in all his years of both civil and criminal court that he had never seen so many motions and requests filed in one case.

I might add that ALL the USAA motions they made were denied by the Judge. They were all pretty ridiculous and humorous.

The Judge really got a kick out of their Motion for Summary Judgement because we did not cooperate by helping them contact a person when we had provided them with a name and phone number! He had the same reaction for a Motion for Summary Judgement because I failed to sign an errata sheet for the Statement under Oath that they had refused to send me!

They seemed surprised that this Judge used his common sense and understanding of the law and ruled that all their frivolous motions for claim denial were just that. Perhaps there are other judges they deal with (and support financially) that usually agree with them!

A jury trial was eventually held, and I won the suit against them for about $7000. Of course they are appealing the verdict, and this will probably drag on for another couple years. So far they will have to pay my attorney costs of almost $xxx,xxx, their own costs of well over $xxx,xxx (and of course my $7000). By the time the appeal is resolved, there will probably be double that amount spent so far on attorney’s fees. I can only assume there must be some sort of tax write-off for the Insurance Company for these costs (and their attorneys do get paid by the hour). Or perhaps they need to spend some of their windfall profits they’ve made since the big insurance premium increases in the last few years.

Of course in the middle of all this, USAA cancelled all my insurance with them which has presented me with the additional difficulty in finding new insurance while suing an insurance company!

Try getting a new homeowner’s policy or car insurance in Florida, especially when you are suing another insurance company for a claim over $6000! I’ll be paying higher premiums for the rest of my life!

Based on USAA’s behavior and the results of this court action, we have filed a "Bad Faith" claim against USAA. This appears to me to be a "classic" definition of a bad faith claim, in that the insurance company has ignored the facts in this case, has done nothing to try to resolve this claim, and just acted in bad faith to deny the claim for trivial and frivolous reasons. Maybe this tactic works most of the time for "Big Insurance" companies, in that most people don’t have the time, patience, intelligence, money, or desire to battle a big insurance company and their high priced attorneys.

USAA  can have their side of the story here when they respond.



Ed Note.

We are alway intereste in hearing both sides of the story. We would like to hear why USAA or its lawyers do these kinds of manuvers.