Grand Prairie, Weatherford, Fort Worth, Dallas, Arlington, and other business people in Texas need to understand what the insurance policy they have purchased covers, and what it does not cover.
The United States District Court, Northern District, Dallas Division, issued an opinion on July 27, 2011, in the case styled, Great American Insurance Company v. AFS/IBEX Financial Services, Inc., that would be interesting for these business people. The Judge in this case is Reed O’Conner. Here is some background.
This case arises out of a dispute over insurance coverage. AFS entered into an agreement with McMahon Sr., the owner of Charles McMahon Insurance Agency, authorizing McMahon Sr. to originate, create, and sign premium fiance agreements on behalf of insureds. AFS sought insurance coverage from Great American Insurance Company (GAIC) to protect it from crime risks. GAIC sold AFS two applicable policies.
McMahon Sr.’s son, Jr., submitted applications to AFS for financing when no insurance was meant to be obtained. AFS approved the financing requests and issued at least 120 checks payable to “Charles McMahon Insurance Agency.” Those checks were deposited into Jr’s own accounts. AFS submitted a claim to GAIC’s claim department and filed a lawsuit against the McMahon’s and the bank. GAIC denied AFS’s claim and filed suit seeking a declaratory judgment that the crime insurance policies issued to AFS did not provide coverage for losses stemming from checks issued by AFS payable to Charles McMahon Insurance Agency. This court eventually ruled in favor of GAIC.
This case ends up getting very complicated. This case was appealed, sent back to this court, had claims, cross claims, and appeals to various ruling by the court all through the legal process. There were assertions for breach of contract, violations of the Texas Insurance Code, common law bad faith, unfair claims settlement practices, claims for statutory 18% penalty and attorney’s fees.
The court got into a good analysis of the legal standards involved. It also studied where there was a bona fide dispute and how it should be looked at. What the damages were and what actually caused them. Lawsuit fees incurred by Chase. Calculations regarding lost profits, lost opportunities, and ruling regarding counterclaims in the lawsuit.
Even experienced Insurance Law Attorneys will disagree on the eventual outcome. Plus, it can be a certainty that this case will continue in the appeals process and stay in the court system for some time into the future.
What the case is noteworthy for, is that a reading of it gives the reader insight and understanding into how the courts look at and analyze these types of claim. The difficult facts of the case and the parties involved go to making it a difficult case.
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