Dallas Fort Worth Insurance Lawyer Blog

Who Can Properly Sue An Insurance Company For Bad Faith

January 7, 2017 | Mark S. Humphreys

Dallas and Fort Wort insurance lawyers will commonly get calls from people who want to sue an insurance company because the insurance company was not treating them right in the claims process. Many times these people will be third party claimants. Third party claimants cannot sue the other guys insurance. First party claimants are those people who are dealing with their own insurance company. An insurance company does not owe any duty of good faith or fair dealing when dealing with a third party. This is illustrated in a 1994, Texas Supreme Court opinion styled, Allstate Insurance Company v. Watson.

Watson was injured in a car accident. Watson brought suit against the insured under an automobile liability policy issued by Allstate and also brought suit against Allstate alleging unfair claim settlement practices under Section 541.060 of the Texas Insurance Code and for failing to attempt in good faith to effectuate a prompt settlement where liability had become reasonably clear. Watson also brought suit under the Texas Deceptive Trade Practices Act, breach of contract, and the common law duty of good faith and fair dealing. The trial court granted Allstate’s Motion for Summary Judgment against Watson. The Court of Appeals reversed and remanded the trial court, holding that Watson, as a third-party beneficiary, could bring action under the Insurance Code without first proceeding directly against the named insured of the policy.

This Texas Supreme Court held that the Texas Insurance Code does not confer upon third-party claimants a direct cause of action against an insurer for unfair claim settlement practices. This section is an exclusive list of statutory unfair and deceptive acts or practices. However, the section does not define unfair claim settlement practices to be an unfair or deceptive act or practice. Section 541.151 provides a private cause of action for any practice defined by Section 17.46 of the DTPA as an unlawful deceptive trade practice. However, unfair claim settlement practices is not among the enumerated items defined by Section 17.46.

Bad Faith – How To Get There?

January 5, 2017 | Mark S. Humphreys

It’s easy to say “bad faith.” It’s not always easy to prove. Insurance lawyers have to look hard and rarely will be successful. A 1992, San Antonio Court of Appeals opinion helps explain why. The case is styled, State Farm Lloyds v. Polasek.

A fire destroyed the Polasek’s video rental business. State Farm denied insurance claim on ground of arson. The Polasek’s filed suit for breach of contract and bad faith. At trial, the jury found that the Polaseks had not committed arson and that State Farm had acted in bad faith because it did not have a reasonable basis for denying the claim. The jury awarded $40,000.00 property damages, $200,000.00 mental anguish, and $500,000.00 exemplary damages. State Farm appealed. On appeal, the San Antonio Court of Appeals reversed the bad faith judgment.

A bad faith cause of action is not satisfied by proof that State Farm should have paid the claim or that State Farm acted unreasonably in denying the claim. Instead, a bad faith cause of action requires proof of a negative: that no reasonable basis existed for denying or delaying payment of the insurance claim. Under a bad faith cause of action, carriers still maintain the right to deny invalid or questionable claims and will not be subject to liability for an erroneous denial of a claim. A bad faith cause of action requires a much different and more demanding proof than a suit for breach of the insurance policy.

Application And Life Insurance Policy

January 3, 2017 | Mark S. Humphreys

The application for a life insurance policy has to be attached to a life insurance policy. This is illustrated in a 1994, Texas Supreme Court case styled, Fredonia State Bank v. General Life Insurance Company.

The insured died as the result of a gunshot wound to the head. Prior to his death, he had purchased two life insurance policies, each in the amount of $250,000.00 issued by General. General denied the beneficiary’s claim for benefits. Fredonia State Bank, an assignee of one of the two policies and executor of the insured’s estate, sued to collect the proceeds of the policy.

General asserted as defenses that the insured had committed suicide and that the insured had made misrepresentations regarding his medical history, which were material to the risk assumed by General.

Intentional Acts?

January 1, 2017 | Mark S. Humphreys

Here is one for an insurance attorney to answer. A potential new client comes in the door. This person says they were drinking and got drunk, then they punched a friend in the face causing injury. The friend sues for the harm that was done and your potential new client asks his insurance company to defend him in the lawsuit. Is there coverage?

Guidance for the answer is found in a 1997, Dallas Court of Appeals opinion. The opinion is styled, Wessinger v. Fire Insurance Exchange.

This is a declaratory judgment action brought by Fire Insurance against its insured under a homeowner policy. Fire Insurance sought a declaration of no coverage for an incident in which the insured became intoxicated and assaulted a third-party friend. The insured and the third-party answered and counterclaimed asserting breach of insurance contract, violations of the Texas Deceptive Trade Practices Act and the Insurance Code. Fire Insurance moved for summary judgment stating that the insured’s actions were not accidental but were intentional conduct excluded from coverage. The trial court entered summary judgment in favor of the carrier.

Hurricanes And Flood Insurance

December 31, 2016 | Mark S. Humphreys

Palo Pinto residents may not think they will ever need flood insurance but those living around the Brazos River may think otherwise. In any event, knowing what is going on in the hurricane and flood insurance industry is helpful for insurance law attorneys. The Insurance Journal published an article in November 2016 dealing with this topic. The article is titled, Q&A: Deloitte Insurance Expert Discusses Hurricane Season And Flood Insurance.

Although Atlantic hurricane season ends in November, cleanup from any damage seen on the East Coast could last beyond the end of the season. Some coastal areas, such as Virginia Beach, were impacted this season, particularly by flooding.

Flooding is the nation’s number one natural disaster, with roughly 25 percent of all flood insurance claims filed in low to moderate risk areas, according to data from the Insurance Information Institute. Many standard homeowners’ policies don’t cover flood damage, making it an important consideration for insurers and their clients as Atlantic hurricane season comes to an end and the cleanup continues.

Policy’s That Exclude Drivers

December 29, 2016 | Mark S. Humphreys

One situation insurance lawyers see often is where a person is involved in an accident with another driver and the other driver is at fault. When it comes to making a claim against the insurance company for the other driver, you find out the other driver does not have coverage due to wording in the insurance policy. Or maybe that situation happens to you. So what is the law in the situations.

Named drive exclusions are common. That is where a policy specifically excludes a named person or driver. This is most common in households where there is a young driver such as a son or daughter who, because of the increased risk, the insurance company will charge a much higher premium, so the parent has the child excluded rather than pay the high premium. The problem arises when the child drives the car anyway and gets involved in a wreck. There will be no coverage.

However, an insurance driver may not exclude drivers by class, i.e., a “all unlicensed drivers.” Texas Transportation Code, Section 601.076 says:

Uninsured / Underinsured Cases

December 27, 2016 | Mark S. Humphreys

Lawyers who handle uninsured and underinsured motorist (UM) cases need to read this 2016, Corpus Christi Court of Appeals opinion. The case is styled, In re Luna.

In this UM case, the Court conditionally granted a petition for mandamus where the insured sought to obtain the deposition of State Farm’s corporate representative. In this case, Luna originally sued Armando Antunez, the intoxicated, uninsured motorist who caused Luna to sustain severe injuries. Luna also sued State Farm for UM benefits and for extra-contractual claims. The Court severed all three cases from each other and abated the UM and the extra-contractual case during the case against Antunez.

During the original case filed against Antunez, Luna requested the deposition of State Farm’s corporate representative. The trial court denied that request, and Luna did not challenge the Court’s decision in the case against Antunez. Eventually, Luna took a default judgment against Antunez and began prosecuting the UM case against State Farm.

Hail Claims – Prompt Notice

December 25, 2016 | Mark S. Humphreys

For lawyers handling hail damage claims, a Southern District, McAllen Division opinion is an interesting read. The case is styled, Gloria Martinez v. State Farm Lloyds.

Martinez’s claims arise out of a storm that damaged her property in 2012 or 2014. It is undisputed that Martinez first gave notice of a loss on September 25, 2014. She eventually filed suit against State Farm alleging breach of contract and extra-contractual claims. State Farm caused the case to be removed to Federal Court and a few months later filed a motion for summary judgment.

Under Federal Procedural Rule 56, summary judgment is proper when there is no genuine dispute as to a material fact and the movant is entitled to as a matter of law. A fact issue is “material” if its resolution could affect the outcome of the action, while a “genuine” dispute is present only if a reasonable jury could return a verdict for the non-moving party.

Properly Suing The Adjuster

December 24, 2016 | Mark S. Humphreys

Insurance lawyers will usually attempt to keep their clients cases in State Court rather than Federal Court. Trying to do so and being successful at doing it are two different matters. Here is a case where it was successful. It is a Southern District, Houston Division opinion. The case is styled, Marcus Richard, et al v. Geovera Specialty Insurance Company, et al.

Plaintiffs allege in essence that there was a leak and water overflow from the plumbing system within their home that caused significant damage to walls, flooring, windows, and balcony of the home, as well as damage to Plaintiffs’ personal belongings and contents of the home. Plaintiffs allege they submitted a claim under their policy with Geovera and that the adjusters handling the claim were inadequately and/or improperly trained and supervised, and failed to perform a thorough and reasonable investigation.

A lawsuit was filed in State Court and promptly removed to Federal Court by the Defendants. The Defendants claim the removal was proper pursuant to diversity jurisdiction, 28 U.S.C. Sections 1332(a), 1441(a), and 1446. The Defendants allege that the adjuster were improperly joined in an effort to defeat diversity jurisdiction. This Federal Court ultimately ruled in favor of Plaintiffs.

Uninsured Motorist Coverage And Workers Comp

December 22, 2016 | Mark S. Humphreys

An insurance law lawyer might be asked how uninsured motorist coverage works with workers compensation insurance. One way that it works is explained in a 2016, Austin Court of Appeals opinion. The opinion is styled Soledad v. Texas Farm Bureau.

Soledad was a passenger in a vehicle owned and leased by her employer, Schneider National Carriers, when it was involved in a single vehicle accident. Jeff Noe, a fellow employee, was driving the vehicle. Both were working with Schneider at the time of the accident, which was the result of Noe’s negligence. Soledad suffered injuries.

Soledad had uninsured motorist (UM) coverage on her own personal vehicle with Farm Bureau. Schneider had workers compensation insurance on its employees and also had liability coverage on its vehicles.