Bad Faith Insurance

What Proves Bad Faith?

December 3, 2016 | Mark S. Humphreys

For insurance lawyers, the above question captures the ultimate question. Most cases do not involve bad faith. They are simple breaches of the insurance contract. The Northern District, Dallas Division discussed the law in a recent opinion. The opinion is styled, Yasser Alhamzawi v. Geico Casualty Company.

This is a summary judgment opinion. Plaintiff had insurance with Geico and sustained a hail damage loss to his insured car. After an estimate, Geico issued two checks totaling $5,819.19 to Plaintiff and Plaintiff cashed the checks.

Plaintiff then got more estimates for amounts over $30,ooo. Plaintiff sent these estimates to Geico for payment. Geico had instructed Plaintiff to have the repair shop call if the amount they paid was insufficient so that a new estimate could be obtained. Plaintiff did not do this, but instead got his brother to do the repairs. Plaintiff then sued Geico for bad faith, for not fully paying the claim. Geico asserted that Plaintiff had violated the policy by not cooperating with the policy provision requiring cooperation.

Bad Faith And Claim Denial

December 1, 2016 | Mark S. Humphreys

Bad faith attorneys need to know when bad faith in insurance occurs and when it does not. A 1995, Texas Supreme Court case is worth reading. It is styled, Republic Insurance Co. v. Stoker.

The Stokers were involved in a chain reaction car wreck caused by an unidentified pickup truck which dropped a load of furniture causing a chain reaction. The truck was not struck by any of the vehicles. The Stokers had no collision insurance and therefore submitted a claim under their uninsured/underinsured coverage. Republic originally denied the claim because it concluded that Mrs. Stoker, the driver, was more than fifty percent at fault in causing the accident.

The Stokers sued for breach of insurance contract, breach of good faith and fair dealing, of violations of the Deceptive Trade Practices Act, and violations of the Texas Insurance Code. The Stokers alleged that Republic gave an invalid reason for denial of their claim.

Hire A Grand Prairie Insurance Lawyer

November 6, 2016 | Mark S. Humphreys

Whether the attorney is in Grand Prairie or Dallas or Fort Worth or wherever, you need an attorney who knows insurance law and will fight the insurance companies. An insured starts out with the cards stacked against him as is illustrated in a Washington Post story titled, Drinks, Junkets and Jobs: How the Insurance Industry Courts State Commissioners.

When the Arkansas insurance commissioner weighed the merits of a hospital’s billing complaint against United Healthcare, her interactions with one of the nation’s largest health insurers extended far beyond her department’s hearing room.

During months of deliberations, Commissioner Julie Benafield Bowman met repeatedly with United Healthcare lawyers and lobbyists over lunch and drinks at venues such as the Country Club of Little Rock.

Going For Bad Faith

November 1, 2016 | Mark S. Humphreys

Garner insurance lawyers who know insurance law, know that actually prevailing in a bad faith claim is difficult. Getting the insurance company to pay what they should is not hard but getting the extra money for bad faith in Texas is difficult because of the way Texas Courts interpret the law. An Appeals Court in Corpus Christi was making it easier in a 2016 opinion styled, In Re State Farm Lloyds. This is a mandamus opinion dealing with discovery issues.

Angelica Gongora’s home was damaged in hailstorms. She submitted a claim with State Farm. The adjuster, Sylvia Garza, inspected Gongora’s home and asserted that the damage did not exceed the deductible and therefore did not pay the claim. Gongora sued State Farm stating that Garza failed to include all of the damages in her estimate and that Garza grossly undervalued the damages and failed to include adequate funds in the estimate to cover the costs of repairs.

Gongora subsequently invoked the appraisal clause in her homeowner’s policy and the appraisal came back at more than ten times the amount Garza had estimated. State Farm paid the appraisal amount. In the lawsuit Gongora propounded discovery to State Farm seeking production of:

State Farm And Bad Faith Insurance

October 20, 2016 | Mark S. Humphreys

Dallas and Fort Worth insurance lawyers know all too well the games some insurance companies play to beat the system. That knowledge has taken on new meaning after reading this story from BloomBerg. The story is titled, State Farm Faces Suit Over Claims It Bankrolled Judge.

Some customers of State Farm Mutual Automobile Insurance Co. claim the company conspired to help elect an Illinois Supreme Court justice candidate so he could vote to throw out a $1 billion award against the company. Now they will be able to bring their case as a group.

A federal judge on Sept. 16 ruled that 4.7 million State Farm policyholders can band together to sue the insurer for allegedly lying about its efforts to financially back Lloyd Karmeier for a seat on Illinois’ highest court. Customers contend in their class-action lawsuit that State Farm defrauded them by secretly bankrolling Karmeier’s 2004 campaign. In exchange, they allege, Karmeier provided a key appellate vote against upholding the $1 billion verdict in a case over the use of generic parts in car repairs.

Bad Faith Claims And Mental Anguish Damages

August 28, 2016 | Mark S. Humphreys

A 1998, Dallas Court of Appeals case is a good read for lawyers wanting to recover mental anguish damages in bad faith insurance cases. The case is styled, State Farm Lloyds v Johns.

Johns house was built in 1964. Johns moved in to her house in 1972. In the summer of 1990, Johns noticed evidence of extensive foundation problems including door misalignment, significant cracks in the interior walls and a slope on the floor. Repairmen later discovered two plumbing leaks under the house. Johns made a claim for foundation damage alleging that the plumbing leaks caused the soil underneath the house to expand resulting in upheaval of the foundation, thereby damaging the structure. State Farm concluded that John’s foundation problems were not cause by the plumbing leaks, but rather asserted that the damage occurred from natural soil movement common to north Texas. State Farm’s homeowners policy excludes damage caused by ordinary settlement. Based on the exclusion, State Farm denied the claim.

Johns filed suit against State Farm alleging wrongful denial of her claim, violations of the Texas Insurance Code, and violations of the Texas Deceptive Trade Practices Act. The trial court rendered judgment on the verdict in favor of Johns based on the DTPA and Insurance Code claim. State Farm appealed.

“Knowing” Conduct By Insurance Company

August 27, 2016 | Mark S. Humphreys

A 1998, Dallas Court of Appeals case is a good read for lawyers handling bad faith insurance cases. The case is styled, State Farm Lloyds v Johns.

Johns house was built in 1964. Johns moved in to her house in 1972. In the summer of 1990, Johns noticed evidence of extensive foundation problems including door misalignment, significant cracks in the interior walls and a slope on the floor. Repairmen later discovered two plumbing leaks under the house. Johns made a claim for foundation damage alleging that the plumbing leaks caused the soil underneath the house to expand resulting in upheaval of the foundation, thereby damaging the structure. State Farm concluded that John’s foundation problems were not cause by the plumbing leaks, but rather asserted that the damage occurred from natural soil movement common to north Texas. State Farm’s homeowners policy excludes damage caused by ordinary settlement. Based on the exclusion, State Farm denied the claim.

Johns filed suit against State Farm alleging wrongful denial of her claim, violations of the Texas Insurance Code, and violations of the Texas Deceptive Trade Practices Act. The trial court rendered judgment on the verdict in favor of Johns based on the DTPA and Insurance Code claim. State Farm appealed.

First Party Claim vs Third Party Claim

August 14, 2016 | Mark S. Humphreys

Oak Cliff insurance lawyers need to understand the difference between a first party claim and a third party claim. A 1996 Beaumont Court of Appeals opinion may help. The case is styled, Rumley v. Allstate Indemnity Co.

The wife, Joyce Rumley, sustained personal injuries in a one car vehicle accident in which her husband, Wilburn Rumley, was the driver. Mrs. Rumley filed a claim for benefits under their insurer, Allstate. Allstate paid PIP benefits but refused to pay liability because the policy contained a family member exclusion. At the time the Texas Supreme Court had granted writ of error but had not yet issued an opinion in National County Mutual Ins. Co. v. Johnson. In that decision, the Texas Supreme Court invalidated the family member exclusion. Wife sued Allstate and Ted Pate, a senior staff claims representative for Allstate, for breach of duty of good faith and fair dealing, violations of the Texas Insurance Code, and violations of the Texas DTPA.

Allstate filed a Motion for Summary Judgement on the grounds that Wife’s claim was a third-party claim for which Defendants owed no duty of good faith and fair dealing; there was a reasonable basis for denying the claim in that the family member exclusion was an unsettled issue of law; and there was no special or contractual privity between Pate and Rumley. The trial court granted summary judgment and wife appealed.

Punitive Damages In Insurance Cases

August 7, 2016 | Mark S. Humphreys

Insurance attorneys in Weatherford can tell you that an insurance company will often times mistreat their customers. The question would be, does the conduct arise to the level as to allow punitive damages and if so, how do you know that and what are the punitive damages.

Their are a couple places in the Texas Insurance Code to look for answers. The first place is under “definitions” which is found in Section 541.002.

(1) “Knowingly” means actual awareness of the falsity, unfairness, or deceptiveness of the act or practice on which a claim for damages under Subchapter D is based. Actual awareness may be inferred if objective manifestations indicate that a person acted with actual awareness.

Bad Faith Insurance Law In Texas

August 2, 2016 | Mark S. Humphreys

Insurance attorneys in Dallas can tell you where the relevant laws to be used in insurance bad faith cases can be found. One place is the Texas Insurance Code.

Here is a starter.

Sec. 541.002. DEFINITIONS. In this chapter: