November 6, 2002

Defamation suit filed in $32M mold case
Melinda Ballard, the victor in a high-profile $32 million mold case in the Dripping Springs area, claims Farmers Insurance Group of Cos. and a company spokesman falsely accused her of committing insurance fraud, according to a lawsuit.

Austin law firm Feazell Rosenthal & Watson PC filed the suit Wednesday in Travis County District Court.

Defendants are Los Angeles-based Farmers, which insured Ballard's 12,000-square-foot home; Bill Miller of Austin, an external spokesman for Farmers; and Hillco Partners LLC, an Austin public relations and lobbying firm where Miller is a principal.

The suit seeks a jury trial and unspecified monetary damages.
In the suit, Ballard alleges Miller stated in an Oct. 20 story in the Austin-American Statesman that Ballard's claims against Farmers were "fraudulent." In Texas, insurance fraud is a felony crime. The suit claims Miller's remarks defamed Ballard.

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Receive free Industry News via email. Choose from 46 different industries. "The corporate mentality of Farmers Insurance Group is such that the insurer believes that it can systematically lie and cheat; that it can walk all over the 'little guys' with impunity; and that it can defraud a policyholder and then defame that policyholder when she successfully challenges the insurer's fraudulent conduct," the suit states.

"It is time for a jury to send a message to Farmers Insurance Group for the purpose of teaching Farmers Insurance Group a lesson which it has thus far simply refused to learn or accept, before Farmers Insurance Group sets its sights on other policyholders and before other insurers adopt the corporate mentality of Farmers Insurance Group."

Jeff Beyer, senior vice president of communications for Farmers, says the Ballard situation is "tragically ridiculous."
"It's litigation lunacy," Beyer says.
"I don't know how this case has evolved into a $32 million issue. The record shows that Farmers responded to numerous claims by Ballard for water damage during the period she talks about," he says.

Hillco Partners' Miller says: "Whatever I've said in public about Melinda Ballard is the truth, and I stand behind that."
In 1999, Ballard took Farmers to court over allegations of bad faith and fraud. Ballard contended Farmers' actions resulted in toxic mold overtaking her home, causing more than $6 million in property damage. Ballard claimed insurers have known that toxic mold could cause water damage if handled improperly.

In 2001, Travis County jury found Farmers engaged in deceptive, misleading and fraudulent practices in connection with its handling of Ballard's water damage claims. Jurors awarded $32 million in damages to Ballard. That decision is under appeal.
Representing Ballard in the latest suit are Vic Feazall, Marc Rosenthal and Austin Tighe.

Any proceeds from the new litigation would be donated to the Texas Department of Insurance, according to Ballard's suit. The money would be used to establish a panel, coordinated by the state agency, to review homeowners' disputes.

Ballard is president of Policyholders of America, a nonprofit association trying to educate policyholders about insurance companies. The association has more than 73,000 Texas families among its members.
© 2002 American City Business Journals Inc.


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