Weatherford insurance lawyers will tell you to be careful about what you sign when dealing with an insurance company. A recent case from the Eastern District of Texas re-intereates this point. The style of the case is, Dana O’Quinn v. General Star Indemnity Company. Here is some of the relevant information from that case.
On January 22, 2204, Dana’s husband Brian filed the Articles of Incorporation for Cahoots Entertainment. Dana completed an insurance application from General Star.
A fire occurred on July 4, 2011. A substantial claim was made. On February 15, 2012, Dana signed a Policyholder’s Property Damage Release that stated she accepted the settlement of all claims, but reserved the right to pursue “a supplemental claim for additional damages, if discovered, and to review and revisit the depreciation calculation.” General Star then issued a final payment. On February 6, 2013, Dana filed a supplemental claim for additional damages. A lawsuit was filed by Dana on July 24, asserting claims for breach of contract and bad faith. Both sides filed Motions For Summary Judgment.
The release Dana signed had the following language releasing General Star from:
“any and all claims, demands, actions, liens or causes of action of any kind whatsoever, founded in tort, common law, statute, contract or otherwise, including common law and statutory bad faith claims and claims arising under the Texas Deceptive Trade Practices Act and Sections 541 and 542 of the Insurance Code.”
Under Texas law, a release “surrenders legal rights or obligations between the parties to an agreement.” A release “operates to extinguish the claim or cause of action as effectively as would a prior judgment between the parties and is an absolute bar to any right of action on the released matter.” For the release to be effective, the release must ‘mention’ the claim to be released.
Under Texas law, releases are subject to the rules of contract interpretation. Contract terms are given their plain, ordinary and accepted meanings, and the contract should be construed as a whole in an effort to give effect to all of its provisions.
Ambiguities may exist, but only if the contractual language is uncertain or if it is susceptible to two or more reasonable interpretations. If the parties offer differing interpretations of the contract, that alone does not create ambiguity. A determination of contractual ambiguity is a matter of law for the court to decide by looking at the contract as a whole in light of the circumstances present when the contract was entered.
This court then got into a long analysis of the facts in the case and how the law applied to those facts. In conclusion the court said:
Based upon the findings and legal conclusions stated herein, the undersigned United States Magistrate Judge concludes that the plaintiff has established a genuine issue of material fact regarding the No-Evidence Motion for Summary Judgment is denied.
However, the Court further concludes that the Defendant has established that no genuine issue of material fact exists as to any of the causes of action asserted against the Defendant because the Plaintiff signed a release legally waiving her right to bring cause of action against the Defendant. Alternatively, the Court also finds that the Defendant has established that no issue of genuine material fact exists on any of the necessary substantive elements needed to prove the Plaintiff’s negligence, bad faith, and Texas Insurance Code claims. Summary Judgment is therefore proper on these causes of action for this reason, in addition to the effect of the release.
Bottom Line – Know what you are signing and the effect of what you are signing.
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