TDI secures legal victory against roofing contractor

TDI secures legal victory against roofing contractor | Insurance Business America

Legal Insights

TDI secures legal victory against roofing contractor

Contractor alleged that regulation violated free speech

Legal Insights

By
Kenneth Araullo

The Supreme Court of Texas has dismissed a lawsuit by Stonewater Roofing Ltd Co against the Texas Department of Insurance (TDI), which sought to overturn regulations preventing licensed public insurance adjusters from serving as both adjuster and contractor on an insurance claim.

According to AM Best, Stonewater argued that the separation requirement violated free speech and due process rights under the First and Fourteenth Amendments of the US Constitution. The TDI and Commissioner Cassie Brown requested the dismissal.

The state Supreme Court upheld a trial court’s ruling that the First Amendment did not apply because the regulations govern professional conduct rather than speech. It also agreed that Stonewater failed to demonstrate valid void-for-vagueness claims under the Fourteenth Amendment’s due process clause.

Previously, an appeals court had reversed the trial court’s decision, sending the case to the Supreme Court of Texas. In a ruling issued on June 7, the Supreme Court noted that sections of the insurance code represent standard licensing regulations based on a person’s role in a “nonexpressive commercial transaction, not what any person may or may not say.”

Justice John Devine’s opinion stated that the statutes are sufficiently clear to prohibit Stonewater’s alleged actions.

While Stonewater is not a licensed public insurance adjuster, its website described the company as an insurance specialist with a system designed to help customers settle insurance claims “quickly, painlessly and comprehensively.” The site also claimed extensive experience with the insurance claims process.