IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF TEXAS

TEXARKANA DIVISION

DAVID J. POTTER, II, ET UX §

Plaintiff s §

§

V. §CIVIL ACTION NO. 5:23-cv-______

§

CRESTBROOK INSURANCE § JURY DEMANDED

COMPANY §

Defendant §

PLAINTIFF’S FIRST AMENDED COMPLAINT

I. PARTIES

1. Plaintiffs, David J. Potter II and wife, Aria Potter, are individuals, residents of

Texarkana, Bowie County, Texas, residing at #2 Forest Brook, Drive, Texarkana,

Texas 75503.

2. The Defendant, Crestbrook Insurance Company is a foreign insurance

company with its Principal Home Office located a state other than Texas. The

Defendant is doing business in the State of Texas, as well as other statesin the United

States, and did business in this case by underwriting the issuance of Certificate Of

Insurance Policy Number HO00054188 to the Plaintiffs as the insured party. The

Defendant through counsel has agreed to recognize the service upon the agent for

service for Nationwide Insurance Company, andwill answerthisAmendedComplaint

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within 21 days of receipt of a filed copy to this First Amended Complaint.

II. FEDERAL JURISDICTION

3. This court has original jurisdiction because the amount in controversy in this

action exceeds the sum of $75,000, exclusive of interests and costs, and the dispute

is between a citizen of the State of Texas and a Foreign Corporation doing business

in the State of Texas. 28 U.S.C. § 1332.

4. Venue is proper in this court because the Plaintiffs are residents and citizens

within the Eastern District of Texas and are the named insureds under a casualty

insurance policy issued to the policy owners of the insured property which sustained

damage located at #2 Forest Brook, Texarkana, Texas 75503.

III. JURY DEMAND

5. Plaintiffs hereby gives notice of her demand for a jury trial.

IV. BACKGROUND STATEMENT OF RELEVANT FACTS

6. At all times relevant to this the Plaintiffs’ cause of action, the Plaintiffs’ were

named insureds under Crestbrook Insurance Company’s Homeowner’s policy # HO

000054188-08. Notice of a claimwas given to Defendant’s agent who sold the policy

to Plaintiffs, namely, Youngblood Insurance. The Claim number assigned to the

claim was #CLM-00136170.

7. Plaintiff David J. Potter II noticed a loose tile in the bath/shower area of a

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downstairs restroom. Later, in preparation for the replacement of the tile, the

Plaintiff removed the floor tile outside of the shower in front of the water closet.

When the tile was removed, it was revealed for the first time that the wooden deck

underneath the tile wasrotten and deteriorated. (The house has a pier and beam floor

and foundation.) Subsequently it was then revealed that much of the bath floor was

rotted and the rotting floor extended back under the shower enclosure. No water had

ever been evidenced in the floor from the top side. Upon the discovery of the

apparent leak from the shower enclosure, the downstairs shower (not the master bath

shower) was placed off limits to the family and other showers in the house were then

used. During the increased use of those other bath facilities in the upstairs, as well

as the master bath on the first floor, additional, unexplained “water marks” on the

ceilings of the downstairs areas beneath the upstairs bathroom areas began to appear.

In addition, the increased use of the master shower caused black mold to begin to

show on the walls and ceiling of the downstairs master bath.

8. The Plaintiff, David J. Potter II, concluded that the shower pans were failing

and caused the damage through waterleaks out of the shower pans, and into the floors

beneath the showers. This was beginning to cause molds and water damage to various

locations in the house. 

9. On or about the 20

th

 day of July, 2023, the Plaintiff notified the defendant of

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the damage claim as a result of the failure of the Shower Pans throughout the house.

It was necessary to begin to repair at least one shower to permit the family to have a

useable shower and to stop the damage being caused by the use of the other shower

facilities in the house. Therefore, the entire shower in the downstairs restroom (nonmaster restroom) was removed including all rotted floor area (which necessitated the

removal of the water-closet and the shower pan and shower wall tiles).

10. The defendant gave notice of the desire by the claims manager to investigate

the cause of the damage. The first investigator hired by the Defendant was

Herndon/McFarland Inc. Plumbing from Addison, Texas. The report confirmed the

cause determined by the Plaintiff, David J. Potter II, namely that the shower pans

were leaking and that any and all other potentialsources of water intrusion that would

cause the rotted floors and other water damage to the house were ruled out.

Specifically, the sanitary sewer, domestic water system, bath tub drain, and sanitary

sewer were all ruled out and a possible explanation. 

11. Thereafter, apparently for the purpose of finding a reason to deny the claim, the

Defendant sent additional experts to investigate and determine the cause of the

damage. On July 27, 2023, the Defendant gave notice by email to Plaintiff, David J.

Potter II that the Defendant “would like to send an engineer to inspect your home to

further investigate causation of the damage throughout. Nederveld Engineering will

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be in contact with you in 1-2 days to setup an appointment. I (Jennifer Cuevas) will

try my very best to be on site during the inspection (depending on date/time). Please

leave home as is and do not do any demo.” On July 27, 2023, a request was made by

Defendant Nationwide for a forensic investigation as to the cause of the damage to

Plaintiff’s home. Omid Khandel, PhD, an engineer with Nederveld, Inc. and/or

Wesley A. Gerbick, a licensed Professional Engineer, and a Forensic Engineer,

visited the site and rendered their report on September 7, 2023.. The report fully

supported the conclusion of the Plaintiff. The engineers concluded, and rendered the

following Opinion: 

Based on our investigation, we have the following opinions:

1) The reported and observed bio-organic growth and/or water intrusion on the

bathroom 1, half bathroom, first-floor hallway around the light fixture, and the

wall above the stairs (i.e., location1, 3, 4, and 5, respectively) is due to the

reported leaks in the upper-level shower pans in bathroom 2 and 3 (i.e.,

location 6 and 7, respectively). We observed no evidence of water intrusion

from the roof and elevations of the building, and the location of bio-organic

growth corresponds to the location of the upper-level shower pans with

reported water loss in the plumbing test report issued by Herndon/McFarland,

Inc., on July 25, 2023. 

2) The cracked tiles in the master bathroom (location 2) are due to an ongoing

moisture intrusion belowthe shower enclosure. The ongoingmoisture intrusion

belowthe shower pan resulted in movement between underlaying materials due

to elevated moisture levels between the materials, which eventually displayed

as cracking in the tiles. The observed bio-organic growth is also likely due to

the same phenomenon. However, due to the presence of water heaters and

air-conditioning unit and their drain lines above the master bathroom and

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evidence of prior repair at the intersection of the master bedroom roof and the

side wall, we cannot rule out their potential contribution to the water intrusion

through the ceiling of the master bathroom.

3) The bio-organic growth on the pocket door in the bathroom 3 (location 7)

is due to elevated humidity due to a recent increase in the frequency of using

the shower. According to Mr. Potter, they increased using the shower in this

bathroom following the water intrusion and bio-organic growth in the to

lower-level bathrooms and observed an increase in the bio-organic growth and

swelling of the pocket door following thereafter. Additionally, we observed no

evidence of water intrusion in the attic space above this location, nor did we

observe evidence of water intrusion or bio-organic growth in the adjacent walls

and ceilings in bathroom 3 (i.e., location 7). No stains or other evidence of a

point source of water were observed on the door.

4) Regarding the timeline of the observed bio-organic growth, as noted in the

discussion section above, bio-organic growth on a directly wetted surface can

appear within one week or less while on a non-directly wetted surface, caused

only by humidity, can take 60 to 90 days before it becomes visible.

Accordingly,we are not able to pinpoint an exact date regarding the occurrence

of bio-organic growth. Reference #: CLM-00136170

12. The Plaintiff, David J. Potter II requested a copy of all reports and also

requested a “Proof of Loss” which had not been provided by the Defendant,

although a plaintiff’s claim had been acknowledged by the Defendant’s claims

department. 

13. On September 11, 2023, the Defendant’s claims Adjuster sent an email to

Plaintiff and othersstating “We are in receipt ofthe engineer report and are reviewing

it. We have to discuss thoroughly with mgmt. Before making a coverage decision.

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I will follow up with you and our insured (cc’d on this email) once that review is

complete. 

14. On September 14, 2023, Defendant’s claims adjuster,Jennifer Cuevas, sent an

email to Plaintiff stating: “Engineer report is attached per your request. We have a

meeting scheduled for tomorrow to discuss our coverage position. I will follow up

with you next week on the outcome.”

15. On or about September 22, 2023, the Defendant denied coverage on the basis

that the claim was presented more than 2 weeks from the date of damage to the

Plaintiffs’ home.

CAUSE OF ACTION #1: BREACH OF CONTRACT

16. The Plaintiffs adopts and restates all allegations set forth in Paragraphs 6-15

above.

17. The Defendant has breached the Homeowner’s insurance contract by failing

to timely accept the responsibility to pay insurance benefits required to be paid under

the terms ofthe contract for the reasonable costs of repair of the water damage caused

by the failed shower pans. By reason of the breach of contract, Plaintiffs is entitled

to a judgment against the Defendant for all reasonable costs of repairs which at this

time is not fully determined, but will exceed the minimum jurisdictional limits of this

court and is in excess of $75,000.00.

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CAUSE OF ACTION COUNT #2: VIOLATION OF 

THE TEXAS INSURANCE CODE

18. The Texas Insurance Code, Title Five (Protection of Consumer Interests),

Subtitle C. (Deceptive, Unfair, and Prohibited Practices), Chapter 542 (Processing

and Settlement of Claims), Sub-chapter B (Prompt Payment of Claims) setsstrict time

limits for processing a claim. Section 542.052 makes this law applicable to the

Defendant, and to this claim. Sec. 542.054 requires this sub-chapter to be “liberally

construed to promote the prompt payment of insurance claims.”

19. Section 542.055 (a) of Chapter 542 of the Texas Insurance Code requires that

“not later than the 15 day, after the date the insurer receives notice of a claim, the

insurer shall:

(1) acknowledge receipt of the claim; (this was done timely)

(2) commence any investigation of the claim; (this was done timely) and

(3) request from the claimant all items, statements, and forms that the insurer

reasonably believes, at that time, will be required from the claimant. (This would

include a “Proof of Loss” and was never done.)

(b) An insurer may make additional requests for information if during the

investigation of the claim the additional requests are necessary. (The Defendant

timely requested access by the Herndon/McFarland, Inc–Plumbing. Thereafter, the

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Defendant Unnecessarily, and unreasonably delayed in the processing of the claim

by hiring a forensic engineering firm to do additional investigations, but which came

to the same conclusion. The Defendant instructed the Plaintiff to leave the home “as

is and not to do any demo” work to repair the damage.

20. Section 542.56 of Chapter 542 of the Texas Insurance Code (“Notice of

Acceptance or Rejection of Claim”) provides:

“(a) Except as provided in Subsection (b) or (d) [inapplicable here], an insurer shall

notify a claimant in writing of the acceptance or rejection of a claim not later than the

15

th

 business day after the date the insurer receives all items, statements, and forms

required by the insurer to secure final proof of loss.” 

20. The Defendant, therefore, violated the prompt payment act by failing to notify

Plaintiffs of the Defendant’s acceptance or rejection of the claim “not later than the

15 business day after the date the insurer received] all items, statements, and forms

required by the insurer to secure a final proof

of loss.” Plaintiff contends that the Defendant had all information that was

reasonably necessary to determine the cause of damage when it receive the

investigative report from it experts who investigated the cause of damage, namely,

the Herndon/McFarland Inc. report dated July 25, 2023. Further delays in accepting

the claim were unreasonable and unfair to the insured/Plaintiffs.

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21. Section 542.056 (d) provides: If the insurer is unable to accept or reject the

claimwithin the period specified by Subsection (a) [15 daysfromreceipt of requested

documentation], the insurer, within that 15 day period shall notify the claimant of the

reasons that the insurer needs additional time. The Insurer shall accept or reject the

claim not later than the 45 day after the date the insurer notifies a claimant under this

section. Defendant is in violation of this section.

22. The Defendant did not notify the Plaintiffs that it needed additional time for

investigation, and did not accepted or deny the claim within the statutorily required

time. More specifically, the Defendant did not accept or reject the claim within 45

days after the date the insurer “notifies the claimant under this section” [under

Section 542.056].

23. Defendant has violated the Insurance Prompt Payment provisions in Section

542, Subchapter B at every point in this claim process. The request for a redundant

causation or forensic report was made beyond the period permitted by Section

542.055 and 542.056 of Subchapter B, Prompt Payment of Claims Act, of the Texas

Insurance Code, 

24. Section 542.058 (Delay in Payment of Claim) provides that delays in payment

of claims beyond the period specified, (“in no event for more than 60 days”), requires

the Insurer to pay damages and other items as provided in Section 542.060 of the

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Texas Insurance Code. The Plaintiffs have been delayed in making the repairs to

their home and delayed the use and benefit of their showersfacilitiessince June, 2023

until the claim was rejected on or about September 22, 2023.

25. Section 542.060 provides for sanctions and remedies for violation of the

Prompt Payment Act, to wit: “(a) If an insurer that is liable for a claim under an

insurance policy is not in compliance with this sub-chapter, the insurer is liable to

pay, in addition to the claim, interest on the amount of the claim at the rate of 18 %

a year as damages, together with reasonable attorney’s fees.”

CAUSE OF ACTION #3: VIOLATION OF THE 

TEXAS DECEPTIVE PRACTICES CONSUMER PROTECTION ACT

26. Section 17.50 of the Texas Business and Commerce Code, Chapter 17 (Relief

for Consumers) (“TDPA”) provides a cause of action for any act or practice in

violation of Chapter 541 of the Texas Insurance Code, and also provides in

subsection (b) that a consumer who prevails may, if the conduct of the defendant was

knowingly committed, recover “not more than 3 timesthe economic damages, which

in this case is 3 times the amount of the claim, plus prejudgment interest at 18% per

annum; and if the conduct was committed intentionally, the consumer may recover

damages for mental anguish, as found by the trier of fact, and the trier of fact may

award not more than 3 timesthe amount of damagesfor mental anguish and economic

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damages.

27. The Defendant has knowingly and intentionally committed the violations of

law governing the processing and payment of the claims on the casualty insurance

policy made the subject of this suit.

28. Texas Business and Commerce Code, Chapter 17, Sub-chapter E, Section

17.43 (Cumulative Remedies) provides that “The provisions of this sub-chapter are

not exclusive. The remedies provided in this sub-chapter are in addition to any other

procedures or remedies provided for in any other law. 

29. Plaintiffs has knowingly and intentionally violated the Texas DTPA for which

Plaintiffs claims mental anguish in an amount of at least $100,000.00.

CLAIM FOR ATTORNEY FEES FOR BREACH OF CONTRACT, 

VIOLATION OF THE TEXAS PROMPT PAYMENT ACT OF THE

INSURANCE CODE AND THE TEXAS DTPA

30. Plaintiffs has been required to hire the undersigned attorney to bring suit in

this court. Upon recovery of judgment in this court, the Plaintiffs is entitled to an

award of reasonable attorney fees under each stated cause of action, any one of which

would require the award of attorney fees, namelyBreach of Contract, Violation of the

Prompt Payment Act of the Insurance Code and Violation of the Texas DTPA.

Therefore, Plaintiffs prays for an award of reasonable attorney fees and costs of this

proceeding.

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Wherefore, premises considered, Plaintiffs prays for judgment against the

Defendant for the reasonable cost of repair for damage caused by water intrusion as

a result of failed shower pans and consequential damages arising therefrom, and for

loss of use since the date of the claim plus a reasonable period of time to accept the

claim(45 days), plus a period of time for repairs; for said damagesto be trebled under

the Texas Deceptive Trade Practices-Consumer Protection Act (“DTPA”), and for

reasonable and necessary attorney fees as may be shown by the evidence to be taxed

as costs, for costs of court herein expended, for post judgment interest of 18% per

annum as provided under the Texas Prompt Payment Act, and for all other just and

proper relief, both at law and in equity, as Plaintiffs may show themselves to be

entitled.

Respectfully Submitted,

_______________________________

David J. Potter, Attorney at Law

Texas Bar No. 16175000

901 N. Stateline Ave.

Texarkana, Texas 75501-5268

Ph. 903-794-2283

Cell Phone: 903-277-0442

Email: dpotter@potter-law.com

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/s/ Shorty Barrett

________________________________

Shorty Barrett

Texas Bar No. 24058754

6

th

 and Hickory Streets

Texarkana, AR 71854

ATTORNEYS FOR PLAINTIFFS

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