Fire Loss

Whether you live in Weatherford, Aledo, Azle, Willow Park, Hudson Oaks, Mineral Wells, Millsap, Brock, Peaster, Springtown, Poolville, Cool, or anywhere else in Parker County, a fire loss to your home can be a devastating loss. It is compounded when your insurance company refuses to pay for the loss. It is compounded further when they accuse you of arson.
The Texas Supreme Court issued an opinion in a case in 1998, styled “State Farm Fire & Casualty Company v. James and Cynthia Simmons.” The legal issue presented to the court was whether there was sufficient evidence to support a jury finding that State Farm breached its duty of good faith and fair dealing and whether there was some evidence to support a punitive damages award. We will go over the good faith and fair dealing only point due to technicalities surrounding the punitive damages award.
Background information:
James and Cynthia Simmons purchased their first home in 1983. The house was located on a large rural lot and they later bought the State Farm policy.
In the first year after moving in, the Simmonses and their two young children substantially improved the property. They installed a driveway and sidewalk, remodeled the bathroom, improved the home’s water well and for safety’s sake, moved a butane fuel tank farther from the house. James constructed a hog pen. He also built a dining room table for his wife and beds for each of his children, as well as purchased a number of picture frames.
In the first year after buying the house, James, a construction supervisor, experienced some down-time from work. As a result they missed several monthly mortgage payments but then refinanced and worked out the problem with the bank.
In the same month they refinanced their home, someone burglarized their home and they turned in a claim. Items taken included a television, silverware, a shotgun, and the kids piggy banks. This daytime burglary was not witnessed. However James followed the tracks of a wheelbarrow through the woods to the home of a nearby eighteen year old named, Tim Mattix. James confronted Mattix and another youth, Charles Wooddell. Mattix later confessed to the burglary. State Farm paid the claim within a few weeks of the burglary.
After the confrontation with Mattix and Wooddell, the Simmonses experienced a spate of vandalism: their telephone line was tapped into, eggs smashed in their mailbox, and their dog died under circumstances suggesting poisoning.
On Sunday, June 2, 1985, the Simmonses, along with James’s mother, left the house to take the children to an aunt’s home for the summer. They locked the doors and windows before they departed. A short time later, a neighbor noted a fire and called the fire department. The house was a total loss.
The loss was reported to State Farm the following day. State Farm immediately tagged the fire “suspicious” because of the recent theft claim. The claim was turned over to State Farm’s Special Investigation Unit. Four months later, in October, State Farm denied the claim.
Thirteen months later, the Simmonses sued. A jury found the Simmonses’ had not burned their home, thus establishing coverage under the policy. The jury also found that State Farm had breached its duty of good faith and fair dealing in handling the Simmonses claim and knowingly violated the Deceptive Trade Practice Act (DTPA). Finally, the jury found that State Farm acted with conscious indifference in determining whether there was a reasonable basis to deny the Simmonses’ claim.
This Supreme Court had earlier clarified the standard for recovery in bad faith cases in the case, Universe Life Insurance Company v. Giles. There the court held that an insurer breaches its duty of good faith and fair dealing by denying a claim when the insurer’s liability has become reasonably clear.
In order to assist the jury in finding bad faith the Simmonses put forth evidence that State Farm did not make a good faith effort to objectively investigate the Simmonses’ claim. This evidence included that State Farm immediately deemed the claim “suspicous” because of the earlier theft claim. That by the time State Farm had denied the fire claim, the legitimacy of the earlier burglary claim was unquestioned. In fact the police had returned a shotgun taken in the burglary, which James turned over to State Farm because the company had already paid for it.
Further there was evidence that State Farm’s investigation was not reasonable because State Farm failed to investigate the possibility that other potential suspects might have started the fire. Mike Hvasta, State Farm’s adjuster, testified at trial that revenge and spite are some of the more common motivations for arson, as did the County Fire Marshal. The Simmonses had identified five people who might have grudges against them including Mattix and Wooddell. Yet, State Farm never attempted to locate or contact any of these potential suspects.
The above is a pretty good listing of improper actions by State Farm and does not include everything that was testified to at trial. What is important here is that even companies that a lot of people think well of, such as State Farm, will do a poor job investigating a claim and unjustly deny a claim. When payment for a claim is not immediately forthcoming, an experienced Insurance Law Attorney should be sought. Delays in payment of a claim are often times in direct violation of not just one, but several provisions of the Texas Insurance Code.