Bad Faith Insurance Lawyers need to read this 2022 opinion from the Northern District of Texas, Dallas Division. The style of the case is, Vernon Humphries and Rebecca Humphries v. State Farm Lloyds.
The Humphries sued State Farm alleging State Farm failed to pay the full amount of their claim. After litigating some of the case, State Farm filed a motion for summary judgment regarding Humphries’ bad faith claims.
We will not state the detailed facts of this case. To get the facts of this particular case, a reading of the opinion is necessary.
What is stated in this opinion is how the Courts look at allegations of bad faith.
The Humphries predicate their claim of bad faith on their characterization of
State Farm’s investigation as outcome-oriented and pretextual. But the Humphries do not provide any expert testimony, proof of standard industry practice, or legal authority whatsoever to support their claim that State Farm’s investigation was not conducted adequately and in good faith. For example, the Humphries argue that the length of time the adjustor spent on the initial inspection was unreasonably short, but point to no evidence indicating that it was at all atypical by State Farm or industry-wide standards. Similarly, they contend that State Farm should have sent an engineer rather than an adjustor to conduct the first inspection because structural damage was involved and should also have at some point sent an electrician, but fail to allege that State Farm’s decisions represented a deviation from the standard practice.
Perhaps most illustrative of the Humphries’ failure to provide any sort of objective measuring stick against which to evaluate State Farm’s investigation, though, is their argument that Chivers’s inspection was so obviously deficient that it was even apparent to Mr. Humphries, who “is not an adjustor, engineer, or any kind
of property damage expert.” While the Humphries characterize Mr. Humphries’s
lack of expertise as a feature of their argument, it is in fact a flaw. For there is no
factual or legal basis to equate Mr. Humphries’s opinion with expert testimony or
reasonable industry standards capable of challenging the reliability of an adjustor’s work. And allowing an interested layman’s negative opinion of a technical investigation to serve as adequate evidence of the investigator’s bad faith would be deeply problematic. Without anything objectively indicating that State Farm’s investigation may have been inadequate and pretextual, the Humphries lack sufficient evidence to support their claim of bad faith.
To support a claim of breach of the duty of good faith and fair dealing against an insurer, a plaintiff must show that the insurer had no reasonable basis for denying or delaying payment of a claim, and that it knew or should have known that fact. But the mere fact that a defendant’s valuation is lower than competing valuations does not give rise to bad faith claims under Texas law. This is true even when the difference in valuations is significant. So, evidence establishing only a bona fide coverage dispute does not demonstrate bad faith. . . . But an insurer cannot insulate itself from bad faith liability by investigating a claim in a manner calculated to construct a pretextual basis for denial.