CHICAGO — A federal judge refused to end a class action alleging State Farm improperly presumed fraud when processing property claims originating in predominantly Black Chicago area communities.
In February 2019, Connectors Realty Group Corporation, owned and operated by Darryl Williams, sued State Farm, accusing the Bloomington-based insurer of breaching contracts regarding coverage for a mixed-used building in the 600 block of West 79th Street, in the Auburn Gresham neighborhood on Chicago's South Side. According to court documents, that building first sustained damages when a residential tenant left a window open in January 2017 during extreme cold outdoor temperatures.
Williams, who is Black, said at the time State Farm owed almost $40,000 to cover “damage to the walls, floors, ceilings, drywall, electric, heating and gas, pipelines and water tank,” $55,000 for boiler damage, almost $35,000 in lost rental income and more than $111,000 in damages to the commercial space.
Kenneth Anspach
| Anspach Law Office
He said the same building incurred hail damage on April 17, 2017, for which State Farm refused to pay $17,500. A week later, there was a theft claim which Williams said entitled him to $43,500. Williams also said State Farm denied a theft and vandalism claim from February 2017, where damage reached $120,000.
Williams said State Farm’s claims adjuster, a white woman named Tina Beavers, told him she couldn’t reach the tenant who left the window open at the phone number Williams provided. He alleged that Beavers, in a January 2017 phone call, said “You mean to tell me you people don’t use Facebook and other social media and you don’t know any of her homeys who could get in contact with her?” and “We have a lot of fraud in your area.”
Another plaintiff, Antoine Nash, filed breach of contract claims for a homeowner policy covering the Calumet Park home he bought in January 2015. While he had the home listed for sale in the fall of 2017, Nash returned after a showing and discovered theft of personal property worth almost $47,000. He said State Farm denied the claim.
Nash said State Farm attorney Peter Alfieri requested bank statements and income tax returns and asked him to give a sworn deposition. When Nash brought the documents to Alfieri’s office and asked to remain present for the review of his information, he said Alfieri laughed, accused him of refusing to provide the information and predicted his claim would be denied. He said Alfieri implied that because Nash had filed a bankruptcy, he would “commit fraud and file a false claim.”
Though Nash eventually supplied the paperwork and gave the deposition, he alleged State Farm denied the claim without ever speaking to police or anyone connected with the showing that preceded the missing property.
The complaint also alleges that from 2010 through 2016, State Farm paid more claims in Chicago area ZIP codes where the population is majority white than those with more black residents. The plaintiffs initially asked to have the class include any black State Farm customers, living in a majority black ZIP code, who submitted a property loss or damage claim from 2015 through the present.
After U.S. District Judge Charles Kocoras struck class allegations as overbroad, and dismissed Nash’s claims, State Farm moved to dismiss an amended complaint. It also filed a counterclaim seeking to have policies rescinded based on what it called the plaintiffs’ misrepresentations.
In an opinion filed Oct. 7, Kocoras said the amended class definition includes the same geography and time descriptions, but is no longer too broad because it limits members to those whose claims were denied; those whose claims were sent to State Farm’s special investigators; or those whose claims were otherwise presumed fraudulent. Kocoras also said the dismissal of Nash’s complaints does not show class certification is impossible, reasoning “these fact-based arguments” should be raised after the plaintiffs seek certification.
Kocoras did not dismiss State Farm’s counterclaim. Although the plaintiffs argued recission is improper because State Farm already canceled the policy, Kocoras said the company “seeks to void the policy during the time it existed,” a viable legal request.
“Perhaps State Farm waived their right to seek rescission by not seeking it contemporaneously with cancelling the policy,” Kocoras wrote. “But plaintiffs do not make this argument and it is an issue better addressed at summary judgment.”
A telephone status hearing is set for Nov. 9.
Chicago attorney Kenneth Anspach is representing Connectors and Williams.
State Farm is represented by attorneys Sondra A. Hemeryck and Sarah E. Finch, of the firm of Riley Safer Holmes & Cancila, of Chicago.