Texas Supreme Court Holds a Roofer Claiming to Be an “Insurance Specialist” Cannot Circumvent Public Adjuster Licensing Requirements on First and Fourteenth Amendment Grounds
By Erin K. Rutherford
In Texas Dep’t of Ins. v. Stonewater Roofing, Co., the Texas Supreme Court upheld the trial court’s grant of the Texas Department of Insurance’s (TDI) Rule 91a motion to dismiss Stonewater’s allegations that Texas’ licensing and dual capacity regulations violate free speech and due process rights because the First Amendment is inapplicable and Stonewater Roofing, Co. (Stonewater or the roofer) “failed to state cognizable void-for-vagueness claims under the Fourteenth Amendment’s Due Process Clause.” Stonewater is a roofing contractor that is not a licensed public insurance adjuster but on its website claims to be an “Insurance Specialist,” “The Leader in Insurance Claim Approval,” and “highly experienced with the insurance claims process.” Additionally, Stonewater’s customer contracts “authorize” it “to negotiate on [the customer’s] behalf with [the] insurance company and upon insurance approval to do the work specified.” Stonewater filed its suit after a dissatisfied customer sued Stonewater for violation of Chapter 4102 of the Texas Insurance Code, which governs public adjuster licensing and prohibits contractors from acting as a public adjuster or advertise to adjust claims for any property which the contractor is providing or may provide contracting services.
After conducting a First Amendment analysis, the Court reasoned that Chapter 4102 does not regulate or limit protected expression but states the requirements for a person to get a public insurance adjuster’s license. Accordingly, the Court held that Stonewater failed to state a cognizable First Amendment claim. Similarly, the Court found that Chapter 4102 as applied to the facts at issue satisfies due process because it “set[s] out in terms that the ordinary person exercising ordinary common sense can sufficiently understand and comply with.” Again, the Court held that Stonewater failed to state a cognizable claim and agreed with TDI that Stonewater’s causes of action had “no basis in law or fact.”
The case is Texas Dep’t of Ins. v. Stonewater Roofing, Co., No. 22-0437, 2024 Tex. LEXIS 440, at *1 (Tex. June 7, 2024).
Private: Erin K. Rutherford