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Big-firm attorneys get pro bono win in insurance dispute

By the time the federal jury returned a verdict on Oct. 17, two large St. Louis law firms had expended hundreds of thousands of dollars in billable hours and approximately $100,000 in costs just to force an insurance company to pay a Manchester couple’s fire-damage claim of $19,000.

“It was my first fire case,” said the couple’s court-appointed attorney, Jonathan Waldron.

Waldron is of counsel at Lathrop Gage in St. Louis and generally focuses on environmental and business litigation. He led a pro bono team that included Kenneth Heineman and Brandan Mueller of Husch Blackwell.

Said Waldron: “There were a lot of shenanigans that went on in this case.”

The insurance company, American Modern Home, was represented by Corey Kraushaar and Tyler McElroy of Brown & James in St. Louis. They did not respond to a request for comment.

The matter began on Jan. 3, 2014, when a fire broke out in the apartment of Aaron and Aimee Thomas in Manchester. West County EMS & Fire arrived and investigated. The couple had insurance through American Modern and claimed $19,000 in property damage (their policy limit was $30,000). About six months later, the insurance company retained Brown & James to depose the couple and request information and records from them.

In February 2016, two years after the fire, the insurance company filed for declaratory judgment of no coverage in the Eastern District of Missouri. It alleged the fire was “intentionally and willfully set” by the Thomases, saying they had “engaged in fraudulent conduct.”

Claiming poverty, the Thomases asked the court to appoint counsel. U.S. District Judge Catherine Perry appointed Husch Blackwell, where Waldron was employed at the time. After Waldron left Husch for Lathrop, he stayed on the case, and the two firms agreed to cooperate on it.

Waldron learned that one week after the fire, American Home had accepted liability. The company changed its posture, however, after receiving a phone call from Fire Marshal Dan Bruno of West County EMS & Fire. Bruno had investigated the scene on the day of the fire and interviewed the Thomases. According to his deposition, he began to conclude, partly based on Aaron Thomas’s body language, that the couple had intentionally set the fire.

Waldron said that on Jan. 21, Bruno called the insurance company’s adjuster to say he considered the fire to be suspicious. The adjuster then hired a private investigator. It emerged during discovery that Bruno and the private investigator then interviewed Aimee Thomas while secretly recording her. They warned her of the potential fallout from lying about the fire, the transcript showed. She stood firm on her account of the fire: that she had been heating up a pot of vegetable oil, covered it with a lid, got distracted by a phone call, and the pot burst into flames.

At one point during this interview, she asked: “Why would I purposely set a fire when my 2 1/2-year-old daughter is in the house?”

Waldron filed a counterclaim on behalf of the Thomases that included a request for a declaratory judgment and allegations of vexatious refusal to pay and the intentional infliction of emotional distress.

Waldron also filed a Daubert motion to exclude trial testimony from the fire marshal, who in a deposition had estimated that out of the 100 fires he had investigated for West County, he found a quarter of them to be intentionally set. Waldron, citing a 2015 report by the National Fire Protection Association, claimed that the national average was less than 2 percent.

“There is little reason to believe that arson is seventeen times higher than the national average in West St. Louis County,” Waldron wrote. “The more likely explanation is that there is something about Bruno’s methodology that causes him to find a statistically significant higher rate of incendiary fires than almost all others in his field.”

In a response filing, Kraushaar countered that Waldron was unfairly calculating the national average.

“Defendants’ attacks on the character and professionalism of Fire Marshal Bruno are unnecessary and unfounded,” he wrote.

Bruno was ultimately allowed to testify at trial, which was bifurcated and lasted seven days. The federal jury rejected the Thomases’ counterclaim of emotional distress. It agreed, however, that the insurance company should pay them $19,000 for the property damage, and $2,000 for vexatious refusal to pay, for a total of $21,000, in addition to attorneys’ fees, which have not yet been precisely calculated.

Waldron also has filed a motion for sanctions, alleging “repeated misrepresentations to this Court, to counsel and to the jury” by the other party. Kraushaar has responded by calling some of these allegations “obvious non-issues” and claiming that he and his clients simply changed their trial strategy.

The case is American Modern Home Insurance Company v. Thomas et al., 4:16-cv-00215.