Articles Posted in Bad Faith Insurance

Insurance lawyers have a tendency to talk a lot about “bad faith” in the context of insurance disputes.  However, the Courts have a strong tendency to rule that most cases are simply a breach of the insurance contract and do not amount to “bad faith” and violations of the Texas Insurance Code.  A 2022 opinion discussing this was issued by the Western District of Texas, San Antonio Division.  The opinion is styled, Ted Switzer v. State Farm Lloyds.

Switzer held a property insurance contract with State Farm covering his residential property.  This case arises from Switzer’s claim for coverage benefits due to damage to his property caused by a hailstorm on May 27, 2020.  Based upon allegations that State Farm improperly failed to satisfy its insurance coverage liability, Switzer asserted causes of action for breach of the insurance contract, violation of the Texas Insurance Code , Section 541 for unfair settlement practices, violation of the Prompt Payment Act in Texas Insurance Code, Section 542, violation of the Texas Deceptive Trade Practices Act, (DTPA) breach of duty of good faith and fair dealing, and common law fraud.

State Farm filed this Motion for Partial Summary Judgment on the causes of action of violation of the Texas Insurance Code, Section 541 for unfair settlement practices, violation of the DTPA, breach of duty of good faith and fair dealing, and common law fraud.  State Farm also seeks summary–judgment dismissal of Switzer’s claim for exemplary damages based upon these causes of action.  In his response, Switzer concedes summary judgment is appropriate on the causes of action of fraud and violation of the DTPA.  Consequently, summary judgment on these two causes of action will be granted.

“Bad Faith” attorneys need to read this 2020 opinion from the Western District of Texas, San Antonio Division.  The opinion is styled, Macklin Keller v. State Farm Lloyds.

Keller had property insurance with State Farm.  Keller made a claim for hail storm damage.  Keller sued State Farm alleging, among other things, improper handling of the claim and for allegations of bad faith and statutory violations of the Texas Insurance Code.  State Farm filed a motion for summary judgment on the bad faith and statutory violations.

An insurer holds a duty to deal fairly and in good faith with its insureds.  An insurer breaches this duty and will be liable if it knew or should have known that it was reasonably clear that the claim was covered.  Consequently, under this reasonably-clear standard for determination of liability, an insurer breaches its duty of good faith and fair dealing by denying a claim when the insurer’s liability has become reasonably clear.

Here is a 2022 opinion from the Northern District of Texas, Dallas Division, wherein the Court explains the standards for a summary judgment motion to be granted.  The opinion is styled, Poonam Hospitality d/b/a Quality Inn & Suites v. Lexington Insurance Company.

The facts of the case can be gleamed from reading the opinion.  Here is set out the things that a Federal Court looks at when ruling on a motion for summary judgment.   Here, a response to the motion was not provided to the Court.

Pursuant to Federal Rule of Civil Procedure 56(a), summary judgment shall be granted when the record shows that there is no genuine dispute as to any material fact and that the moving party is entitled to judgment as a matter of law.  A dispute regarding a material fact is “genuine” if the evidence is such that a reasonable jury could return a verdict in favor of the nonmoving party.  When ruling on a motion for summary judgment, the court is required to view all facts and inferences in the light most favorable to the nonmoving party and resolve all disputed facts in favor of the nonmoving party.  Further, a court “may not make credibility determinations or weigh the evidence” in ruling on a motion for summary judgment.

Bad Faith Insurance was a topic of discussion in this 2022, opinion from the Eastern District of Texas, Sherman Division.  The opinion is styled, Michael Utley v. State Farm Lloyds.

Utley submitted a claim to his insurer, State Farm, for alleged hailstorm damage.  State Farm adjusted the claim asserting the damage did not exceed the deductible of $2,577.00.  Utley’s hired a public adjuster who asserted a damage estimate of $116,884.52.

Utley filed a lawsuit and asserted bad faith causes of action related to various violations of the Texas Insurance Code.

Here is a 2022 opinion from the Northern District of Texas, Dallas Division, that articulates how courts look at insurance bad faith claims.  The opinion is styled, Art Dallas, Inc. v. Federal Insurance Company and Derek Franks.

This is an insurance dispute involving Federal Insurance Company (FIC) and Art Dallas, Inc’s (ADI) extracontractual claims or “bad faith” claims against FIC.  The opinion, in part, comes from FIC’s Rule 12(c) motion.

The standard for deciding a motion under Rule 12(c) is the same as the one for deciding a motion to dismiss under Rule 12(b)(6).

Insurance attorneys must know the time period from which the statute of limitations starts.  This issue is addressed in a 2022, opinion from the Southern District of Texas, Houston Division.  The opinion is styled, Patriot Logistics v. Travelers Property & Casualty Company of America.

This case deals with various issues and the facts of the case can be read in the opinion.  It is a summary judgment opinion.  Here, the focus is the statute of limitations on the bad faith claim.

The Fifth Circuit holds that under Texas law the statute of limitations begins to run when the particular cause of action generally accrues—being ‘“when facts come into existence that authorize a party to seek a judicial remedy . . . regardless of when the plaintiff learns of the
injury.”’