Insureds challenge handling of claim for fire damage

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The defendant insured a small gift shop and leather goods store in Yarmouth that was damaged by fire in February 2016.

The plaintiffs/insureds terminated their public adjuster after receiving more than $500,000 in payments and submitted their own claims to the defendant insurance carrier for items such as “money and securities,” fine arts and accounts receivable, without providing any documentation supporting the losses.

The plaintiffs claimed all documentation of the losses burned in the fire, along with thousands of dollars in cash, rare books, oil paintings, fine tapestries, etchings and antiques, which the plaintiffs alleged were all kept in the unfinished attic of the retail space.

The plaintiffs filed suit after being offered payment for their “building” and “extra expense” claims, but without (a) initiating statutory reference under the policy, or (b) returning the signed releases required to obtain payment on those claims.

The plaintiffs claimed that the defendant acted in bad faith by failing to deny their undocumented claims with sufficient speed or clarity.

At trial, the plaintiffs offered no evidence of the existence of the lost “money and securities,” or any damage to “fine arts,” and admitted they had made no attempt to collect on their alleged “accounts receivable.”

Evidence was also introduced concerning the plaintiffs’ failure to disclose a security interest in their inventory, cash and accounts, and photographs were introduced of several items that were claimed “consumed by fire,” demonstrating that the items were existence and in good condition, months after the fire occurred.

The jury found that the plaintiffs failed to satisfy a condition precedent to suit, and thus, the plaintiffs could not prevail on the contract claim. The jury found that there was no violation of 93A and that the plaintiffs had withheld or omitted information material to the claim, voiding the policy.

Action: Insurance
Injuries alleged: Breach of contract, bad faith, unfair settlement practices, violation of G.L.c. 93A
Case name: Surtan Mfg Co. v. American European Insurance Co.
Court/case no.: Barnstable Superior Court/No. 1872CV00095
Jury and/or judge: Jury/Judge Mark Gildea
Demand: $2.5 million
Amount: $0 (defense verdict)
Date: Nov. 21, 2025
Attorneys: Nora Adukonis and Gayatri Deodhar, of Litchfield Cavo, Lynnfield (for the defendant)