People in Grand Prairie, Dallas, Fort Worth, Arlington, Richardson, Garland, Duncanville, De Soto, Irving, Mesquite, and other places in Texas, who have a homeowners insurance policy, probably know they are suppose to pay their premiums. Beyond paying those premiums, most people do not understand what other obligations they have as part of the policy.
One of the obligations most insureds have under a homeowners policy is to submit to an examination under oath (EUO) if requested by the insurance company. A 2005, case out of the Beaumont Court of Appeals discusses this obligation. The style of the case is, In re Foremost County Mutual Insurance Company and Jim Doland. Here is some information on the case.
It is a mandamus proceeding arising out of Foremost’s denial of a fire loss claim. The claim was denied after the insured, Kenneth Whitney, refused to submit to an EUO. Foremost sought an abatement of the lawsuit filed by Whitney until he had complied with the policy requirement of submitting to an EUO. The trial court refused Foremost’s request and the mandamus proceeding resulted.
After Whitney suffered the fire loss and he made a claim to Foremost, Foremost began an investigation of the claim. It’s investigator, Doland, suspected arson and asked much information from Whitney. Every time Whitney provided information, Doland would ask for more information. Eventually, lawyers for Foremost became involved and reaffirmed the request for Whitney to submit to an EUO. Whitney hired a lawyer and claimed that Foremost had waived its right to obtain the EUO.
The policy included the following paragraphs:
“PART IV – CONDITIONS All obligations of the Company under this policy are subject to the performance by the insured of the following conditions:
A. General Conditions Applicable to Both Parts of the Policy …
4. Assistance and Cooperation The insured and any person interested in or claiming any benefit under this policy shall cooperate with the Company and, upon the Company’s request, assist in making settlements, in the conduct of suits, and in enforcing any right of contribution, indemnity or recovery against any person or organization who may be liable for any injury, damage or loss with respect to which insurance is afforded under this poilcy.
5. Proof of Loss The Insured or someone in his behalf shall file proof of loss with the Company within 91 days after the occurrence of the loss, unless such time is extended in writing by the Company, and submit to and subscribe examinations under oath conducted by anyone designated by the Company, produce for the Company’s examination all pertinent papers, documents and records (or certified copies thereof, if originals be lost), permitting copies thereof to be made by or on behalf of the Company all at such reasonable times and places as the Company from time to time may designate ….
8. Action Against the Company No payment shall be due by the Company under this policy and no action shall lie against the Company unless, as a condition precedent thereto, the Insured shall have fully complied with all of the terms of this policy, nor until 30 days after proof of loss is filed and that amount of loss is determined as provided in this policy ….”
In discussing this case the court stated as follows:
“If policy language is worded so that it can be given a definite or certain legal meaning, it is not ambiguous and we construe it as a matter of law …. For an event to constitute a ‘condition precedent’ under a contract, the contract must provide that the event shall happen or be performed before a right can accrue to enforce an obligation.”
The court then pointed out that Paragraph IV A. 5. of Whitney’s policy provided that a claimant, upon the company’s request, shall “submit to and subscribe examinations under oath conducted by anyone designated by the Company …” Paragraph IV A. 8. provides that “no action shall lie against the Company unless, as a condition precedent thereto, the Insured shall have fully complied with all of the terms of this policy …” These policy provisions clearly required Whitney to provide an EUO upon Foremost’s request before filing suit.
Whitney’s argument that Foremost waived it right to obtain his EUO relied on Whitney’s assertion that Foremost was required, pursuant to the Texas Insurance Code Prompt Payment of Claims Act, to request the EUO within 15 days of Foremost receiving notice of the claim.
The court here pointed out the misreading of the statute by Whitney. The statute requires Foremost to begin its investigation and request documents and information it needs within 15 days, but also states that additional requests may be made during the investigation of the claim if such additional requests are necessary.
In conclusion, this court ordered that the case by abated until such time as the condition precedent, the EUO, had been completed.
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