Dallas Fort Worth Insurance Lawyer Blog

Insurance – Direct Action

December 29, 2015 | Mark S. Humphreys

Dallas area insurance lawyers need to read a Texas Supreme Court, 2014 opinion. It is styled, In re Essex Insurance Company.

This is a mandamus proceeding wherein the Court reaffirmed Texas’s “no direct action” rule barring third-party plaintiffs from suing a tortfeasors’s liability insurance company directly until the tortfeasor’s liability has been finally determined by agreement or judgment. In this case, Rafael Zuniga sued San Diego Tortilla (SDT)) after a serious injury sustained while operating a tortilla machine. SDT’s liability insurance company, Essex, agreed to defend SDT, subject to a reservation of rights to deny coverage based in part on an exclusion for bodily injury to the named insured’s employees. Zuniga and SDT asserted that Zuniga was working as an independent contractor.

After Essex rejected Zuniga’s offer to settle for policy limits, Zuniga filed an amended petition adding Essex and seeking a declaration that the policy requires Essex to indemnity SDT for its liability to Zuniga. Essex filed to dismiss the claims against it under Texas Rule of Civil Procedure 91a, arguing that the “no direct action” rule, Zuniga’s lack of standing, and lack of ripeness bar Zuniga from suing Essex until SDT’s liability has been determined. The trial court denied the motion to dismiss. Essex filed a petition for writ of mandamus, which the appeals court denied, but which this court granted.

Agents And Cheaters

December 27, 2015 | Mark S. Humphreys

Attorneys who handle many insurance cases can tell stories of clients being ripped-off by insurance agents. Some pocket premiums rather than send the premiums to the insurance company. Some forge signatures on applications. Some fill out false information on applications without telling their customer. Some tell you that you have the coverage you are requesting when you do not.

Having said the above, the vast majority are honest hard working people. The problem is the few who are crooks. The Insurance Journal will report on cases where a person tries to take advantage of an insurance company. But the Insurance Journal will also report on agents who take advantage of their customers. A recent article is titled, Michigan Insurance Broker Sentenced on Racketeering Charge.

A Troy, Mich., insurance broker was sentenced last week to 14 months to 20 years in prison on one count of racketeering, the state attorney general’s office announced.

“Other Insurance” Clauses

December 26, 2015 | Mark S. Humphreys

Lawyers handling insurance cases are aware of clauses in the insurance contract that are different from other types of contracts. The Claims Journal published an article in November of 2015, that discusses “other insurance” clauses. The title of the article is, “Insurance Policy ‘Escape” Type ‘Other Insurance’ Clause Given Short Thrift by California Court.”

An insurer is ordinarily free to restrict the risks it will underwrite and is responsible only for losses within the coverage wording of its policies of insurance. The courts at least say they will not rewrite the terms of a policy for any purpose, including to make them conform to judges’ notions of sound public policy. For judges to do so would exceed their authority. In brief, plain policy language limiting coverage must be respected by the courts.

But – and in law there seems always to be a “but” — an exception to these general rules of policy wording enforcement is recognized regarding “other insurance” clauses generally and “escape” other insurance clauses in particular. “Escape” clauses purport to provide that coverage evaporates in the presence of other insurance, departing from the historical purpose of “other insurance” clauses – to prevent multiple recoveries when more than one policy provided coverage for a particular loss. Partly because “escape” clauses are objects of judicial distrust, the modern trend is to require multiple insurers on a single risk to contribute on a pro rata basis regardless of the type of “other insurance” clauses in their policies.

Bad Faith Insurance And The Fight

December 24, 2015 | Mark S. Humphreys

Insurance lawyers in the Dallas and Fort Worth areas who are honest and straight forward with their clients, will let them know up front that winning a case on allegations of “bad faith” are an up hill fight. The Texas Supreme Court and the various appellant courts look negatively on bad faith claims. This is illustrated in the 1993 case, State Farm Lloyd’s v. Nicolau. It is important to realize there are still cases wherein bad faith allegations can win, but it is equally important that the facts of each case have to be carefully scrutinized and discussed before one should believe they can prevail on a bad faith claim.

Here is a little about the Nicolau case. The part from the dissent has to be calculated in discussing a case.

This is a suit against a homeowner’s insurer alleging malicious bad faith, etc., for refusing to pay the full amount of a claim. A jury found for Mr. and Mrs. Nicolau on various contractual, tort and statutory theories, also finding actual and punitive damages. The trial court rendered judgment n.o.v. on all claims except breach of contract. On appeal, the 13th Court of Appeals in Corpus Christi reinstated the jury’s findings and rendered judgment against State Farm (including punitive damages). Held: judgment of Court of Appeals reversed in part and judgment rendered striking the exemplary damages (because there was no legally sufficient evidence of malice); judgment of was affirmed insofar as it awarded Mr. and Mrs. Nicolau actual damages for State Farm’s bad faith.

Interpreting Appraisal Clause

December 22, 2015 | Mark S. Humphreys

Mineral Wells insurance lawyers are aware of appraisal clauses in insurance contracts. Interpreting them is not always easy. The Amarillo Court of Appeals issued an opinion in a 2015 case that needs to be read. It is styled, In Re Century Surety Company.

This is a mandamus proceeding that arises from a lawsuit by an insured, Jefferson, against Century.

The lawsuit filed on December 16, 2013, arises out of a claim submitted for hail damage which occurred on May 28, 2013, alleging breach of contract and extra-contractual claims. A lawsuit was filed suing Century, an adjusting company, and two individuals.

Property Damage And Suing The Adjuster

December 20, 2015 | Mark S. Humphreys

Insurance law attorneys in Graford and Garner areas of Parker County need to keep up with court rulings concerning insurance issues. A recent case from a U.S. District Court, San Antonio Division is a good read. The style of the case is Spar Enterprises, LP v The Cincinnati Insurance Company and Elizabeth Ortiz.

Spar filed this case in State District Court and it was removed to Federal District Court based on Cincinnati’s allegation that Ortiz was not a proper party for defeating Federal jurisdiction.

Spar suffered storm damage and filed a claim with Cincinnati. Cincinnati assigned Ortiz to adjust the claim.

Exclusions In A Commercial Policy

December 19, 2015 | Mark S. Humphreys

Reading and understanding policy exclusions is important to an insurance lawyer. This is illustrated in a U.S. District Court, S.D. Texas, Houston Division case. The style of this case is, Scottsdale Indemnity Company v. Rural Trash Service, Inc., et al.

This is a summary judgment that was granted in favor of Scottsdale.

Scottsdale filed a declaratory judgment action seeking a judgment that it has no duty to defend its insured, Rural Trash, in a tort lawsuit. The tort lawsuit was brought by an employee, Joseph Rios, in connection with injuries he suffered on the job.

Protection Under A Homeowners Policy

December 17, 2015 | Mark S. Humphreys

If you talk to an experienced insurance law attorney, he will be able to tell you about protections afforded under a Texas insurance policy that many people do not realize. While each policy needs to be read carefully, a homeowners and a commercial policy will often defend the homeowner and those living in the household and business owners against many types of lawsuits. The exclusions from coverage will usually be those related to claims arising out of the use of an automobile.

KVUE ran an article recently titled, 22 Families Sue Owners of Luecke Farm for Hidden Pines Fire. The lawsuit is probably protected by a homeowners policy or at least a commercial policy if the farm is a commercial operation. Here is the story.

Twenty-two families who had their homes and/or property damaged by October’s Hidden Pines Fire in Bastrop County have filed a lawsuit against the owner of Luecke Farm.

Insurance And Amount In Controversy

December 15, 2015 | Mark S. Humphreys

Texas insurance lawyers know insurance companies always want to wage litigation in Federal Court. A recent case illustrates this. The case is from the U.S. District Court, Northern District of Texas, Dallas Division. The style of the case is Clear Vision Windshield Repair, LLC v. Allstate Fire and Casualty Insurance Company.

This lawsuit was originally filed in State District Court wherein Clear Vision alleged violations of the Texas Insurance Code, Chapters 541 and 542. Allstate caused the case to be removed to Federal Court asserting there was diversity of citizenship and the amount in controversy exceeded $75,000. Clear Vision disagreed and contended that Allstate had not shown the amount in controversy exceeded $75,000. Specifically, Clear Vision contended there were nine individuals who had windshield repairs that were not paid or not fully paid and that the individual claims cannot be segregated to meet the jurisdictional threshold for diversity jurisdiction. Allstate countered that the rule against aggregation of claims does not apply because Clear Vision is the only plaintiff and Clear Vision has stated it seeks monetary relief in excess of $100,000.

A federal court has an independent duty, at any level of the proceedings, to determine whether it properly has subject matter jurisdiction over a case. This duty must be policed by the courts on their own initiative even at the highest level.

Permission To Drive Car

December 13, 2015 | Mark S. Humphreys

Insurance lawyers want to know when coverage is provided in the situations they are presented with. Who is covered when a car is being loaned or borrowed? That question is addressed in a 1967, Corpus Christi Court of Appeals case styled, Phoenix Insurance Company v. Allstate Insurance Company.

The material facts in evidence are undisputed. At all times relevant here, Phoenix was the insurer of a car owned by the named insured Ralph Gilster, Jr. Father Wallace J. Stiles, assistant pastor and Youth Director of St. Mary’s Church, Victoria, Texas, contacted Gilster for the purpose of borrowing this car on June 27th to return to their homes in Victoria six girls who were attending a Summer School of Catholic Action for Youth in Corpus Christi. Borrowing the car and returning the girls to their homes in Victoria was in line with Father Stiles’ duties as Youth Director, a fact which Gilster well knew. He had on a number of other occasions borrowed Gilster’s car for out of town trips in connection with such duties. Gilster knew the purpose for which Father Stiles wanted the car, and readily agreed with his request. The distance from Victoria to Corpus Christi and return is a total of 180 miles. Nothing was said between the two as to who would drive the car during the trip, nor had anything been said as to who should drive on any of the other occasions that Gilster had let Father Stiles use the car in his church work. Gilster testified that as a matter of fact, he didn’t give the matter of who would drive any thought; though he further stated that he considered that Father Stiles would be the one to take the car, use it, and bring it back. The words ‘use’ and ‘borrow’ were the terms used in the conversation between Gilster and Stiles, and no reference was made by either party as to who would actually operate the car.

On June 25th, two days before the trip to Corpus Christi, Father Stiles asked James DeLane to drive on this trip. It was agreed by both of the parties that Gilster had not given express permisson for James to drive; but Father Stiles after testifying about the former times he had borrowed Gilster’s car for such trips, on which occasions some one other than himself had driven, stated that he believed it all right that DeLane drive. James, 16 years of age, was president of the Church’s Catholic Youth Organization (C.Y.O.) He had obtained his drivers’ license two years before this, and frequently on these Church trips drove for Father Stiles, who considered him a very good and careful driver. On the morning of June 27th, James went to the Gilster residence, got the car keys from a servant and drove the car to the Rectory where he picked up Father Stiles, and they proceeded to Corpus Christi. They got the six girls and, with James DeLane driving, went back to Victoria. Father Stiles then instructed James to let him off at the Rectory where he had some church duties to perform, and to take the girls to their homes and then to return the car to Gilster’s home. While the girls were being delivered to their homes, an accident occurred between the car driven by James and one driven by Sandra Lou Barr and owned by her father. James had not deviated from his route at any time, and at the time of the accident was engaged in carrying out the instructions of Father Stiles, and in executing the purpose for which the car had been borrowed from Gilster. At a meeting between Gilster, Father Stiles and James DeLane in Gilster’s office two or three days after the accident Gilster made no adverse comment on the fact that James was driving at the time of the accident.