Dallas Fort Worth Insurance Lawyer Blog

Life Settlements

September 1, 2016 | Mark S. Humphreys

Life insurance lawyers in Dallas and Fort Worth might have a situation where someone sells their life insurance policy to a third party. This situation is discussed in a National Law Review article titled, Life Settlement Disclosure Legislation.

What are an insurer’s duties to insureds about disclosing the possibility of a life settlement? At least three recent cases have addressed an insurer’s duty to inform insureds about the existence and availability of life settlements. Moreover, a handful of states have already enacted legislation requiring insurers to inform insureds about the possibility of a life settlement.

With respect to legislation, a handful of states have enacted various versions of the NCOIL Life Insurance Consumer Disclosure Model Law (the “NCOIL Model Law”), requiring insurers to inform policy owners of alternatives to the lapse or surrender of a policy. While the disclosure statutes are similar in requiring notification of alternatives to the lapse or surrender of policies, the legislative framework is not uniform. This presents a potential legal minefield for insurers. Some states require disclosure and others do not, but even within those states that require disclosure, the triggers for disclosure and disclosure requirements themselves differ.

Can I Buy Someone Else’s Life Insurance Policy?

August 30, 2016 | Mark S. Humphreys

Weatherford life insurance lawyers, this writer included, have represented clients trying to recover proceeds from a life insurance policy purchased by third parties. The answer is yes. WealthManagement.com purchased an article discussing this issue. It is titled, Facilitating Life Settlements.

As growing numbers of aging baby boomers turn to their advisors to help them achieve their retirement and estate planning objectives, many estate attorneys are faced with decisions regarding life insurance policies purchased that are no longer relevant. Life settlements have steadily gained greater recognition as a vital financial planning tool. Yet, some estate attorneys may be hesitant to recommend them until they gain deeper insight into the “inner workings” of what they view as a nascent industry with a still-maturing regulatory environment.

Based on our experience, estate attorneys have three priorities relating to life settlements.

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.

Insurance Claims And Emotional Distress

August 25, 2016 | Mark S. Humphreys

Damages and coverages available under an insurance policy will vary depending on the circumstances and policy language. As it relates to a claim for emotional distress, a 1994, 5th Circuit Court of Appeals case is a good read. The opinion is styled, Travelers Indemnity Co. v. Holloway.

In this declaratory judgment action, the insurance carrier, Travelers contended that it had no duty to defend its insured, Wanda Holloway, against a lawsuit for intentional infliction of emotional distress, since it was not covered under the policy. Holloway, the mother of a junior high school student competing for a cheerleader position, allegedly plotted to kill Heath, the mother of one of her daughter’s competitors. The mother of the competitor brought suit against Holloway alleging “outrageous conduct causing severe emotional distress” or “intentional infliction of emotional distress.” Holloway sought a defense from Travelers. Travelers argued that Holloway was not entitled to a defense and that there was no coverage, since (1) the conduct did not constitute an “occurrence” under the policy, (2) the conduct was excluded from coverage as intentional conduct, and (3) the conduct was not alleged to have caused “bodily injury” as defined by the policy.

The 5th Circuit affirmed the District Court’s opinion that there was no duty to defend or coverage since there was no allegation or evidence of a bodily injury.

Hail Claims And Staying Out Of Federal Court

August 23, 2016 | Mark S. Humphreys

Lawyers who handle hail claims know the insurance companies prefer to fight lawsuits in Federal Court. Hail claims lawyers know one way of defeating the insurance company desire to be in Federal Court is by suing the adjuster. The Sherman Division, Eastern District issued an opinion illustrating how to Not file a lawsuit against an adjuster. The style of the opinion is Walters v. Metro. Lloyds Ins. Co.

The Walters residence sustained hail damage. The insurance company, Metropolitan, assigned Buchanan to adjust the claim. The claim was denied and Walters sued Metropolitan and Buchanan in State Court and the case was then moved to Federal Court by Metropolitan and Buchanan.

The only question at this point in the case is whether or not Buchanan was improperly joined as a defendant to defeat diversity jurisdiction.

Motion To Remand – Water Damage

August 21, 2016 | Mark S. Humphreys

Insurance lawyers would prefer to fight their cases in State Court rather than Federal Court. The opposite is true for insurance companies. Unfortunately, the insurance companies win most these battles for which court the case should be contested. A U.S. District Court, Galveston Division opinion illustrates some of the arguments. The case is styled, Lopez v. United Prop. & Cas. Ins. Co.

Lopez sued United in State Court alleging his home sustained water damage and that United failed to fully cover the damages. Suit was filed for violations of the Sections 541 and 542 of the Texas Insurance Code.

In order to defeat diversity jurisdiction, Lopez sued the adjuster, Bibiana Aguilar, assigned to handle the claim also.

ERISA – Total Disability

August 20, 2016 | Mark S. Humphreys

ERISA lawyers know how tough these ERISA claims are. This is illustrated in a case from the Texas Southern District styled, Sarmiento v. Metropolitan Life Insurance Co.

Tammy Sarmiento sued for wrongful denial of benefits under ERISA, 29 U.S.C. 1332. The plan is through her employer, American Airlines. Her claim for long-term benefits was denied by the plan administrator. The Plan automatically ends long-term disability benefits (a) when the employee is no longer totally disabled as defined by the Plan and (b) after twenty-four months if the disability is for a mental-health disorder.

Tammy worked as a staff assistant. In August of 2011, she stopped working because she was having short-term memory loss. She was diagnosed with encephalopathy, major depression disorder, and frontal lobe syndrome. Under the Plan, encephalopathy is a physical condition. She applied for and received short-term and long-term benefits.

You’ve Got To Sue The Adjuster Properly

August 18, 2016 | Mark S. Humphreys

For Mansfield insurance adjusters, a 2016 opinion from the U.S. District Court, Houston Division, is an example of one way to properly sue an adjuster. The style of the case is, Robinson v. Allstate Tex. Lloyds & Timothy James Wesneski.

Robinson, a Texas citizen is insured with Allstate. She alleges she filed a claim with Allstate after her house was damaged during a storm on November 25, 2015. She alleges Wesneski, a Texas citizen and the adjuster Allstate hired to investigate the claim, conducted a substandard investigation. She alleges that Wesneski’s inadequate investigation caused her claim to be improperly evaluated and underpaid. Wesneski found that the amount of damage to Robinson’s property at $484.93, below the amount of the policy deductible. Robinson hired a private adjuster, who estimated the damage caused by the storm to be $25,818.77.

Robinson filed this lawsuit in Texas state court, naming Allstate and Wesneski as defendants. Robinson asserted that Wesneski violated the Texas Insurance Code and the Texas DTPA. She alleges Wesneski failed to conduct a reasonable and adequate investigation, which caused Allstate to undervalue her insurance claim. Allstate caused the case to be removed to Federal Court based on Allstate not being a Texas citizen and that Wesneski was joined just to defeat diversity jurisdiction and Robinson filed a Motion to Remand.

Life Insurance And Lifestyle

August 16, 2016 | Mark S. Humphreys

Life insurance attorneys know that in Texas, a life insurance claim cannot be denied after two years have passed. However, what happens when a person purchases life insurance and then his policy gets rejected because the underwriters don’t like the persons lifestyle. According to an article published by Insurance Journal, this denial is occurring. The article is titled, Marijuana Ties May Signal Risky Lifestyle To Insurers.

A few weeks ago, Derek Peterson got a letter from Mutual of Omaha, turning him down for life insurance.

“Our decision was based on,” the letter said, then trailed off (Monty Python-style) and picked up in all caps: