Articles Posted in Bad Faith Insurance

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.”’

Bad Faith insurance lawyers are always questioning themselves on where the line is drawn regarding bad faith claims.  This issue is discussed in this 2022, opinion from the Western District of Texas, San Antonio Division.  It is styled, Dr. John Winston, III v. State Farm Lloyds.

State Farm filed a motion for summary judgment regarding Winston’s bad faith allegations.

Winston sued State Farm regarding a claim for damage to Dr. Winston’s residence caused by a hail storm.

Bad Faith Insurance Lawyers need to read this 2022 opinion from the Northern District of Texas, Dallas Division.  The style of the case is, Vernon Humphries and Rebecca Humphries v. State Farm Lloyds.

The Humphries sued State Farm alleging State Farm failed to pay the full amount of their claim.  After litigating some of the case, State Farm filed a motion for summary judgment regarding Humphries’ bad faith claims.

We will not state the detailed facts of this case.  To get the facts of this particular case, a reading of the opinion is necessary.

Insurance companies and insurance agents have no general duty to obtain coverage nor to make sure the coverage is adequate.  On the other hand, courts have found insurance companies liable for affirmative misrepresentations, and an insurance agent who undertakes to procure insurance for another owes a duty to a client to use reasonable diligence in attempting to place the requested insurance and to inform the client promptly if unable to do so.  This is discussed in numerous cases, including, the 1992, Texas Supreme Court opinion, May v. United Services Ass’n of America.  Also, the 1999, 1st Court of Appeals opinion, Frazier v. Texas Farm Bureau Mutual Ins. Co.

An agent has a duty to keep the customer informed about the insurance policy’s expiration date when the agent receives information pertaining to expiration date that is intended for the customer.  This was discussed in the 1985, Texas Supreme Court opinion, Horn v. Hedgecoke Ins. Agency.

Additionally, the court in May suggested an agent could be found negligent if an explicit agreement or course of conduct showed the agent undertook to determine the customer’s insurance needs and counseled the customer as to how they could be met.

Insurance claims denial and negligence related to the insurance policy and claims are questions for insurers and the insured.  Here is a few things to keep in mind.

Negligence, in the insurance context as in others, consists of three elements:

(1)  a legal duty owed by one person to another;

Insurance claims lawyers are well aware that insurance companies prefer to litigate in Federal Court.  Proper pleading can often times prevent a case from being litigated in Federal Court.  Usually suing the adjuster who handled the claim will prevent removal to Federal Court.  The key is properly pleading claims against an adjuster.

This is discussed in a 2022, opinion from the Northern District of Texas, Dallas Division.  The style of the case is, Jackie Preston v. Nationwide Property & Casualty Insurance Company; Stevie Bruesewitz; and Matthew Vaughters.

Preston sustained damage to her property in 2019.  Nationwide was her property insurer and thus, Preston made a timely claim to Nationwide.  Preston became frustrated with Nationwide’s handling of her claim and sued Nationwide and the two adjusters, Stevie and Matthew.

Lawyers handling insurance claims that have been denied frequently have a conversations with clients about “bad faith” insurance.  Bad faith, generally speaking, often times centers around whether or not an insurance company has committed a fraud.

If allegations of fraud are going to be alleged, insurance lawyers need to understand that those claims that end up in a Federal Court are subjected to a higher pleading standard than those claims that are litigated in State or County Courts.  This is illustrated in a 2021, opinion from the Southern District of Texas, Galveston Division.  The opinion is styled, Smiley Team II, Inc. v. General Star Insurance Company.

Smiley made a claim against General Star after a vehicle was alleged to have crashed into Smiley’s building.  A lawsuit was eventually filed containing allegations that General Star failed to properly adjust the claim which resulted in an alleged underpayment of the claim.