Dallas Fort Worth Insurance Lawyer Blog

How Courts Review Bad Faith

June 21, 2025 | Mark S. Humphreys

Bad faith handling of a claim by an insurance company is not as clear as many people believe. This issue is discussed in 2025 opinion from the Northern District of Texas, Fort Worth Division. The opinion is styled, Cowboy Christian Missions v. Church Mutual Insurance Company, SI.

A tornado destroyed numerous building owned by Cowboy Christian that were insured by Church Mutual. A claim was made and Church Mutual made payments but Cowboy Christian alleges the claim was underpaid and filed suit for breach of contract and bad faith for various violations of the Texas Insurance Code. Church Mutual filed for summary judgment on the bad faith claims.

Insurance companies have a duty to deal fairly and in good faith with an insured in the processing of claims. A plaintiff may sue for a breach of this duty if its insurer denies or delays their claim without any reasonable basis for the denial or delay. But under Texas law, “evidence establishing only a bona fide coverage dispute does not demonstrate bad faith.” This means that “as long as the insurer has a reasonable basis to deny or delay payment of a claim, even if that basis is eventually determined by the fact finder to be erroneous, the insurer is not liable for the tort of bad faith.” In other words, a genuine dispute over the scope of insurance coverage is an inherently reasonable basis for denying coverage.

Life Insurance Policy Benefits And Divorce – What To Know

June 14, 2025 | Mark S. Humphreys

Life Insurance lawyers need to know the statute and case law that deals with life insurance policies after a divorce. The relevant statute is Texas Family Code, Section 9.301.

To start with, a 1994 opinion from the Fort Worth Court of Appeals, says that one spouse can designate his or her estate as the beneficiary of the policy, at the expense of the other spouse, absent a showing of actual or constructive fraud. The opinion is styled, Street v. Skipper.

A 1981 opinion from the Eastland Court of Appeals says that policies may contain provisions automatically divesting a spouse of any interest in the proceeds, if the parties are “legally separated” or divorced. This opinion is styled, Pilot Life Insurance Company v. Koch. Also, according to a 1987 opinion from the 14th District Court of Appeals, the divorce decree may divest the former spouse of any right to the insurance proceeds. That opinion is styled, Novotny v. Wittner.

Life Insurance And The Application

June 7, 2025 | Mark S. Humphreys

Insurance attorneys know the application for a life insurance policy is a frequent source of litigation. Here is a 2008, United States Fifth Circuit Court of Appeals opinion discussing the issue. The opinion is styled, Liu v. Fidelity and Guaranty Life Insurance Company.

Liu filled out a life insurance application which stated that he had not been diagnosed with cancer within the previous ten years. The policy issued two days after he was diagnosed with cancer. The carrier denied coverage arguing the representation in the application was a condition precedent.

The Fifth Circuit stated that: “Under Texas law, the responses given in a life insurance application are mere representations, rather than warranties that would be capable of making coverage void or voidable. Short of inserting an unambiguous “good health warranty” demonstrating that the parties intended the contract to rise of fall on the literal truth of an insured’s general certification of good health, Texas has not allowed an insurer to change that result by contracting to make truthful application answers a condition precedent to coverage.” Alternatively, a “good health provision” that “expressly provides that coverage does not take effect unless the applicant is in good health” operates as a condition precedent. In this case, the Health as Stated (Good Health) Clause incorporated the application, which turned on the truth of the statements at the time they were made. Thus the clause violated the Texas Insurance Code which states that a provision that voids a policy because of a misrepresentation is void unless certain requirements are met. The policy was not automatically void.

Life Insurance – Justified Delay In Determining Claim?

May 31, 2025 | Mark S. Humphreys

Here is a 2025 opinion from the Southern District of Texas, Houston Division, with an interesting twist. The opinion is styled, Kimberly Russell v. State Farm Life Insurance Company.

The lawsuit alleges that State Farm took too long to investigate a claim for life insurance benefits. The unusual aspect of this case is that the insured’s filed a motion for summary judgment because of the alleged delays in processing the claim. It is usually the life insurer filing this type of motion.

On January 7, 2022, Davion D’Angelo Smith obtained a life insurance policy from State Farm. Following his passing on May 26, 2022, his mother and named beneficiary, Kimberly Russell, promptly filed a claim. In this suit, she alleges that State Farm engaged in prolonged delays and excessive documentation requests, beginning with a basic request on August 16, 2022. She also claims that despite her prompt compliance, State Farm repeatedly asked for additional or revised documents without clear justification. Over the next year, the company allegedly sent multiple “still processing” notices without providing substantive updates or raising specific concerns about coverage.

Settlement Agreement Enforceable?

May 24, 2025 | Mark S. Humphreys

Here is a 2025 opinion from the Northern District of Texas, Dallas Division. The case discusses whether a settlement agreement reached between a parties attorney and the Defendant is enforceable. The style of the opinion is, Farmers Lloyds Insurance Company Of Texas v. Herman Haynes and Sharla Haynes.

While this is a personal injury claim, the settlement issues apply to all types of cases. Briefly, the Haynes hired an attorney to represent them in a personal injury lawsuit. Negotiations between the attorney and Farmers began with an eventual agreed settlement. After the settlement, the Haynes refused to sign settlement documents. The Haynes refused the settlement and fired their attorney.

Farmers sued the Haynes for breach of contract and filed this motion for summary judgment.

Reasonable Care To Protect Property

May 17, 2025 | Mark S. Humphreys

Almost all homeowners policies will require the insured to use “reasonable care” to protect their property from damages. Here is a 2025 opinion from the Southern District of Texas, Houston Division, that deals with that issue. The opinion is styled, Dorcas Giwa v. State Farm Lloyds.

This is a summary judgement case.

The facts of the case are that Giwa flew to Africa. While in Africa, the Covid-19 shutdown in the U.S. began and, apparently due to the travel restrictions, she was unable to return home for over a year. As a result, as Winter Storm Uri approached in February 2021, Giwa asked her three adult children, including her son, Kay Giwa, to take care of her home in her absence. The night before the storm hit, Kay son wrapped the pipes, opened all the cabinet doors, drained the faucets, and turned off the main water line connected to the house. However, Kay turned the main heating system off because “it was warm in the house,” and he was trying to “follow the local city guidelines.”

Proper Notice Must Be Given When Suing Under Section 542A

May 10, 2025 | Mark S. Humphreys

Here is a case regarding ‘Notice” under Texas Insurance Code, section 542A.007(d). It is a 2025 opinion styled, Devindra Investments, Inc. v. Wesco Insurance Company. It is from the Northern District of Texas, Amarillo Division.

Before the Court is Defendant Wesco Insurance Company’s amended Opposed Motion to Limit Plaintiff’s Recovery of Attorneys’ Fees. Pursuant to § 542A.007(d) of the Texas Insurance Code, Defendant moves the Court to preclude Plaintiff Devindra Investments, Inc. from recovering any attorney’s fees incurred after July 25, 2024. The sole issue is raised by Plaintiff’s timely presentation of adequate notice to an independent adjuster retained by a third-party claims administrator on Defendant’s behalf, but not to Defendant directly. After considering the arguments of the parties and applicable law, the Court finds the Motion should be GRANTED IN PART by limitation of Plaintiff’s recovery of attorney’s fees and DENIED IN PART by precluding fees incurred after July 26, 2024.

Chapter 542A of the Texas Insurance Code applies to first party insurance claims made under Texas law and resulting from forces of nature such as hailstorms. That chapter requires that a claimant provide presuit notice to any person from whom the claimant seeks damages, and it establishes various criteria such notice must meet.

Delay In Paying Claim – The Difference Between 541 and 542

May 3, 2025 | Mark S. Humphreys

Slow payment of an insurance claim can create a claim for extra monies under the Texas Insurance Code. An opinion from a 2025, Fifth Circuit case is an important read on this issue. The opinion is styled, Sterling Senechal v. Allstate Vehicle and Property Insurance Company.

This is a summary judgment opinion wherein claims were made for delays in paying the claim under Texas Insurance Code, Sections 541 and 542.

Allstate had eventually paid the claim but Senechal sued because of the slow payment. The Facts of the case can be learned from reading the opinion. The distinctions between the two sections are set forth here.

Homeowners Claims – Vacant Or Unoccupied

April 26, 2025 | Mark S. Humphreys

A common reason for claim denial is when a home is not being lived in at the time of the loss. The reason for denial will be denied due to an exclusion in most policies excluding coverage for structures that are vacant or unoccupied. A February 2025 opinion from the United States Fifth Circuit discusses this issue. The opinion is styled, Crystal Childers; Bradley Childers v. Allstate Indemnity Company.

This is a summary judgment opinion.

The Childers had coverage on their home through Allstate and later purchased another home and had it insured by a “Landlords Package Policy.” This policy had exclusions for when a structure was vacant or unoccupied for more than 60 consecutive days immediately prior to the loss.

Life Insurance Claims – Tort Or Contract

April 19, 2025 | Mark S. Humphreys

Life insurance claim denials will bring up many issues to be discussed, based on the Facts of the case. Here is a January 2025 case that presented an issue the Courts have never seen before. The opinion is styled, Mark Howell and Leslie Howell vs. Southern Farm Bureau Life Insurance Company.

This is a case of first impression for the Court. This lawsuit arises out of SFBLIC’s denial of a life insurance claim. Wade Howell applied for a life insurance policy that named his parents, Plaintiffs Mark and Leslie Howell, as the beneficiaries. Pending before the Court are claims of breach of contract and a violation of Chapter 542 of the Texas Insurance Code.

The allegation by SFBLIC in this summary judgment opinion is that Wade made misrepresentations in his claim for life insurance and as a result of the misrepresentations SFBLIC says the policy is void.