Case 1:15-cv-00645-RP Document 1 Filed 07/30/15 Page 1 of 7

IN THE UNITED STATES DISTRICT COURT

FOR THE WESTERN DISTRICT OF TEXAS
AUSTIN DIVISION
NATIONAL UNITY INSURANCE
COMPANY

PLAINTIFF,
V.

STEVE KERBEL,
DEFENDANT.

CASE NO. 1:15-CV-00645

PLAINTIFFS COMPLAINT

TO THE HONORABLE JUDGE OF SAID COURT:

National Unity Insurance Company (sometimes hereinafter referred to as National Unity
or Plaintiff) states and alleges as follows:
I.
NATURE OF CASE
1.

This action arises out of Defendant, Steve Kerbels, negligent mismanagement of

an auto insurance program designed and administered for the Plaintiff, National Unity. National
Unity is an insurance carrier in the automobile insurance business. Kerbel is the President of Rio
National Insurance Services, Inc. (Rio) and at all times was acting in his capacity as President
of Rio.

Kerbel reached out to National Unity and proposed that Rio serve as Program

Administrator for a non-standard car insurance program in Arizona, Colorado, New Mexico, and
Nevada. All of National Unitys operations are in San Antonio, Texas. This Court, based on
specific jurisdiction, has personal jurisdiction over Kerbel for all of his own torts. Tyson v.
Austin Eating Disorders, 2013 WL 3197641 (W.D. Texas 2013). By causing a consequence in
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Texas, Kerbel subjected himself to the jurisdiction of the Texas Courts. Id.; Wien Air Alaska,
Inc. v. Brandt, 195 F.3rd 208, 213 (5th Cir. 1999). Kerbel is personally liable for all his own torts
because he had direct, personal participation in the wrongdoing. He was the guiding spirit
behind and the central figure in all that was done to National Unity. Ennis v. Loiseau, 164
S.W.3rd 698 (Tex. AppAustin 2005, no pet.).
2.

In soliciting National Unitys business for Rio, Kerbel represented he was an

experienced non-standard auto administrator. Kerbel did not advise National Unity that his
insurance license had been revoked in Missouri or that a program he had designed and
administered for Pride National Insurance Company led directly to the insolvency of Pride
National Insurance Company.
II.
PARTIES
3.

Plaintiff, National Unity Insurance Company, Inc., is a Texas Corporation with its

principal place of business in San Antonio, Texas.

4.

Defendant is an individual resident of Colorado. Service on him may be had at

6365 Corporate Drive, Colorado Springs, CO 80919 or wherever he may be found.

III.
JURISDICTION AND VENUE
5.

This Court has jurisdiction over Defendants person because he engaged in

tortious conduct directed at National Unity. Pleading further, Plaintiff incorporates Paragraph 1
by reference for all purposes.
6.

This Court had jurisdiction pursuant to 28 U.S.C. 1332 because the amount in

controversy exceeds $75,000.00, exclusive of interest and costs, and because there is complete
diversity of citizenship between the Plaintiff and Defendant.
7.

Venue is proper in this jurisdiction pursuant to 28 U.S.C. 1391 because a

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substantial part of the events or omissions giving rise to the claim occurred in this District.
IV.
FACTS
8.

In soliciting National Unitys business on behalf of Rio, Kerbel represented that

he was an experienced non-standard auto insurance administrator. Kerbel did not disclose that
his insurance license had been revoked in Missouri and that he had agreed never to apply for a
Missouri insurance license again, or that his service as Program Administrator had been the
primary cause of the insolvency of Pride National Insurance Company. Nor did Kerbel advise
National Unity when, after Rios retention as Program Administrator for National Unity, that
Kerbel was sanctioned by the Colorado securities regulators for and Ordered by them to make
more than $800,000 in restitution. The relationship between National Unity and Rio was in the
nature of a Managing General Agency relationship, definitionally giving rise to a confidential
relationship and a fiduciary duty running to National Unity. The National Unity/Rio agreement
was a typical one in the insurance industry and shows why the company/administrator
relationship involves a high level of trust and confidence.

These arrangements allow the

Administrator to collect substantial upfront fees and commissions in consideration for running
the program with reasonable care generally and, specifically, calculating and setting rates in a
manner that sets a large enough premium to cover claims. Kerbel negligently designed the
program with rates for customers far lower than those customers merited. Kerbel also acted
negligently in his supervision of the manner in which Rio adjusted and resolved claims. As a
result of Kerbels negligence, National Unity sustained damages when it was required to bear the
costs of claims that far exceeded the low premiums charged. Further, Kerbel benefitted by
earning money from the sale of the policies while National Unity lost money by paying claims
that could not be supported based upon the low premiums charged.
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Kerbels negligence

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included, but was not limited to the following: (1) proposing low rates, (2) misapplication of the
underwriting scoring system by setting rates lower than the customers driving record merited,
the result of which led to poor drivers receiving low rates, (3) poor record keeping which did not
allow National Unity to discover the other negligent acts, and (4) negligent claims handling.
Examples of Kerbels negligence include: 1269 drivers under the age of 55 received a mature
driver discount reserved only for drivers over 55. 51 of those insured who received over 55
discounts were actually under 20. Safe driver discounts were provided when not earned, genders
were misstated and insureds with at-fault accidents were not surcharged. Further, Kerbel rejected
National Unitys suggestions for rate increases by arguing that historical loss development data
should not be used. Kerbels record keeping prevented the periodic audits from revealing the
systematic under charging of premium.

Rios negligence was not discovered until Rios

relationship was in liquidation mode and National Unity saw the full system back up and could
diagnose why the programs loss ratios were so high.
V.
CLAIMS FOR RELIEF
A.

Negligence and Gross Negligence

9.

National Unity incorporates by reference each of the preceding and succeeding

paragraphs.
10.

Defendant did not act with reasonable care, and therefore, he was negligent in his

dealings with National Unity. Moreover, he engaged in conduct that was grossly negligent in
that when viewed objectively from his own stand point, the conduct he engaged in involved an
extreme degree of risk to National Unity considering the probability and magnitude of the
potential harm to National Unity and he had subjective awareness of the risk involved but,
nevertheless proceeded with conscious indifference to the rights and welfare of National Unity.

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11.

As a proximate and foreseeable result of Defendants wrongful conduct, National

Unity has suffered damages which include actual, direct, indirect, special, lost profits, and
consequential damages. National Unity seeks recovery of all damages, including pre-judgment
and post-judgment interest as allowed by law.
12.

Because Defendants conduct was grossly negligent, National Unity requests

exemplary damages in an amount to be determined by the jury.

B.

Breach of Fiduciary Duty

13.

National Unity incorporates by reference each of the preceding and succeeding

paragraphs.
14.

Defendant owed fiduciary duties to National Unity. These duties include the

duties of care, loyalty, good faith and full disclosure. He breached these duties through his
conduct. These breaches directly resulted in improper benefits to Defendant and injuries to
National Unity.
15.

As a proximate and foreseeable result of Defendants wrongful conduct, National

Unity has suffered damages which include actual, direct, indirect, special, lost profits,
consequential damages, and disgorgement of fees.

National Unity seeks recovery of all

damages, including pre-judgment and post-judgment interest as allowed by

C.

Breach of the Duty of Good Faith and Fair Dealing

16.

National Unity incorporates by reference each of the preceding and succeeding

paragraphs.
17.

By its nature, the contractual arrangement between Rio and National Unity

creates a relationship of trust and confidence and therefore, a duty of good faith and fair dealing
arose. Defendants conduct breached that duty of good faith and fair dealing that is inherent in
the relationship between insurance company and program administrator or managing general
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Agent.
18.

As a proximate and foreseeable result of Defendants wrongful conduct, National

Unity has suffered damages which include actual, direct, indirect, special, lost profits, and
consequential damages. National Unity seeks recovery of all damages, including pre-judgment
and post-judgment interest as allowed by law.
VI.
JURY DEMAND
19.

National Unity requests a trial by jury for all issues triable to a jury.
VII.
PRAYER FOR RELIEF

WHEREFORE, National Unity respectfully requests that Defendant be summoned to

appear herein, that this Court grant judgment in its favor and against Defendant with respect to
each count and award National Unity the following relief:
a.

award damages, including actual, direct, indirect, special, lost profits,

consequential damages, and disgorgement of fees and commissions, in an amount
to be determined at trial;

b.

award exemplary damages in an amount to be determined by the jury at trial;

c.

award its costs;

d.

award pre- and post-judgment interest to the extent allowed by law; and

e.

award such other and further relief, general or special, at law or in equity, to
which they may show themselves justly entitled.

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Respectfully submitted,
KELLY HART & HALLMAN LLP
303 Colorado Street, Suite 2000
Austin, TX 78701
Tel 512.495.6400
Fax 512.495.6401
BY:

/s/ J. Stephen Ravel

J. STEPHEN RAVEL
State Bar No. 16584975
Steve.Ravel@kellyhart.com

ATTORNEY FOR NATIONAL UNITY

INSURANCE COMPANY

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