It will happen to someone in Grand Prairie, Weatherford, Fort Worth, Arlington, Lake Worth, Benbrook, Crowley, North Richland Hills, or somewhere else in Tarrant County or a surrounding area. A spouse will be upset or depressed or temporarily out of control and while in one of these mindsets, burn the house down on purpose.
The San Antonio Court of Appeals issued an opinion in 1996, in a case where it appears a spouse burned down the house. Of course the insurance company denied the claim based on the policy defense of arson. The style of the case is, Jan Saunders v. Commonwealth Lloyd’s Insurance Company.
This was an appeal from a summary judgment in an insurance bad faith case. Here is some background.
Jan and Dan Saunders’ house was completely burned down by a fire. Commonwealth’s investigation concluded that Dan Saunders was responsible for setting the fire and he was later convicted of arson, but this conviction was overturned and he was later acquitted of the crime.
Commonwealth continued with its denial of the claim.
Although Commonwealth treated Jan as an innocent spouse, it refused to pay any part of the claim because the house was community property. Later the company agreed to pay her half of the claim, plus interest, based on Texas common law. This put an end to her contract claim but she continued with the bad faith claim.
Under Texas law, an insurer who can prove that it possessed a reasonable basis for denying or delaying payment of a claim, even if that basis is eventually determined by the fact finder to be erroneous, enjoys immunity from statutory bad faith claims under the Texas Deceptive Trade Practices Act and the Texas Insurance Code.
So the issue here was whether Commonwealth proved it had a reasonable basis to deny the claim. Commonwealth argued that its reasonable basis for denying the claim of Jan was that Texas law did not allow the innocent spouse to recover insurance proceeds when community property was destroyed by the arson acts of the culpable spouse.
An examination of past Texas law on this issue showed that historically, Texas law did not allow either an innocent spouse or an innocent co-insured to recover insurance proceeds when community property was destroyed by the arson acts of her culpable spouse. At the time of this case, the Texas Supreme Court had not decided whether an innocent spouse could recover under the same circumstances if the property destroyed was community property.
This court examined how this issue regarding arson and community property was being handled by the Texas courts and by the Federal courts. Based on the analysis and the state of the law at that time, the insurance company was not acting in bad faith in denying the claim. Thus there was no claim left for Jan to pursue since her contractual claim had already been paid. Thus, this court upheld the summary judgment ruling of the trial court.
When someone loses property in an arson fire and the claim for the loss is denied, it is important to seek the counsel of an experienced Insurance Law Attorney. The facts of the case and the relationships of the parties involved all calculate into determining whether there is any coverage for the innocent party.
Updated: