Dallas Fort Worth Insurance Lawyer Blog

Suing An Allstate Adjuster

August 15, 2015 | Mark S. Humphreys

Fort Worth insurance law attorneys will often find themselves in a position where they are suing an Allstate adjuster. One reason for doing so would be to keep a lawsuit in a State Court rather than a Federal Court which is where Allstate would prefer to litigate a case. A U.S. Corpus Christi Division of the Southern District of Texas court issued a remand in a case that Allstate had removed to Federal Court. The style of the case is, W. Ohio St. Condo Association v. Allstate Insurance Company, et al.

This is an insurance coverage dispute arising from wind and hail storm damage to W. Ohio commercial property. Allstate timely removed the case from state court on the basis of diversity jurisdiction, with its allegation that the non-diverse claims adjuster, Kevin Pakenham, was improperly joined.

Pursuant to 28 U.S.C. 1332, diversity jurisdiction requires the citizenship of all plaintiffs to be diverse from the citizenship of all defendants and the amount in controversy to exceed the sum or value of $75,000, exclusive of interest and costs. It is undisputed that the parties, with the exception of Pakenham, are diverse and that the amount in controversy exceeds the sum of $75,000. Therefore, the only issue for the Court is whether Pakenham was improperly joined such that his non-diverse citizenship may be disregarded.

Properly Suing The Adjuster

August 13, 2015 | Mark S. Humphreys

Dallas insurance lawyers have to know how to properly sue an insurance adjuster. This is important in many cases so that a case can be maintained in a State Court rather than being litigated in a Federal Court. A 2015, U.S. District Court case from the Northern District of Texas, Dallas Division, provides guidance for doing this properly. The style of the case is, Linron Properties, Ltd. v. Wausau Underwriters Insurance Company and Sara Springman.

Linron Wausau and adjuster Springman for the improper handling of an insurance claim under a Commercial Property Policy, which Linron purchased from Wausau. After a storm caused damage to the insured property, Linron sought coverage for the cost of repairs under the terms of the Policy and Wausau hired Springman to serve as the adjuster for Plaintiff’s claim. Linron asserts that Springman “conducted an outcome-oriented investigation and also hired experts she knew would under-scope Plaintiff’s damages in order to allow Wausau to avoid payment on the claim.” As a result of Wausau’s and Springman’s actions, Linron claims that it has been wrongfully denied full coverage for the damages sustained to the property.

Linron sued Wausau and Springman in State Court asserting claims for breach of contract and various violations of chapters 541 and 542 of the Texas Insurance Code.

Suing Insurance Companies

August 11, 2015 | Mark S. Humphreys

When suing an insurance company, the pleading of a lawsuit have to be proper or the case gets thrown out of court. An example of an insurance company trying to do this is found in a 2015 case from the United States District Court, Southern District of Texas. It is styled, Garza v. Scottsdale Insurance Company,et al.

This is an insurance coverage dispute arising from hail storm damage to Garza’s home. Scottsdale removed the case from state court on the basis of diversity jurisdiction, with its allegation that the non- diverse claims adjusters, Wardlaw Claims Service, L.L.P. and Michael Clark (jointly Adjusters), were improperly joined. The Court granted the motion of Garza to remand from the Federal Court to the State Court, ruling that in this case the proper pleading standard was met.

Scottsdale’s argument is that Garza has not satisfied pleading rules because, while federal courts often apply Texas “fair notice” pleading rules in removal decisions, Texas pleading rules are no longer as liberal as they once were. Scottsdale refers to newly adopted Texas Rule of Civil Procedure 91a, which provides for dismissal “on the grounds that [the cause of action] has no basis in law or fact.”

Farmers Insurance Taking Advantage Of Policy Holders

August 9, 2015 | Mark S. Humphreys

Insurance lawyers in the DFW area need to stay on top of the insurance news in Texas. One good resource for keeping informed is the Insurance Journal. The Insurance Journal published an article in March of 2015 and another related article in July of 2015.

The first article tells us that on the heels of a recent multi-million dollar refund agreement with the state’s largest homeowners insurer, the Texas Department of Insurance announced a revised settlement with the second largest homeowners insurer, Farmers Insurance, stemming from a 2002 lawsuit by the state against Farmers.

The settlement now goes before a Travis County District Court for approval.

Coverage Extensions In Insurance Policies

August 8, 2015 | Mark S. Humphreys

Fort Worth insurance lawyers who handle commercial case need to read a 2015, Austin Court of Appeals opinion. It is styled, 3109 Props, L.L.C.; Detour, Inc.; and Richard Linklater v. Truck Insurance Exchange.

Linklater appealed a summary judgement in the trial court in favor of TIE on their claims for breach of contract, unfair insurance practices, and violation of the prompt payment statute. This appeals court upheld the summary judgment.

3109 Props and Linklater, a filmmaker, were the named insureds on a commercial property insurance policy issued by TIE. A property owned by Linklater located at Cardinal Drive in Paige, Texas was destroyed by fire. Stored in the building and also destroyed in the fire was Linklater’s archive of materials from his various film projects. The archive had been appraised and was estimated to be worth at least $500,000. According to Linklater, the archive had been stored at 171 Cardinal Drive since at least 2010 in a building erected for that purpose and owned by Linklater.

National Flood Insurance Program Law

August 6, 2015 | Mark S. Humphreys

Lancaster insurance attorneys will occasionally see a claim covered by the National Flood Insurance Program. Each of these types of government programs are governed in their own particular way. The United States District Court for the Southern District of Texas, Galveston Division issued a ruling that attorneys handling these types of claims need to know about and read. The style of the case is, Ruby Pal v. Texas Farmers Insurance Company.

This is a summary judgment ruling wherein Farmers sought to have the court dismiss the case filed by Pal.

Pal’s property was damaged in flooding during Hurricane Ike in September 2008. At the time, Pal had insured the property for $110,000.00 against flood loss with Farmers, a WYO insurer with the National Flood Insurance Program. Pal’s initial claim was adjusted and paid, on December 29, 2008, in the amount of $53,610.45. The extended deadline for filing a Proof of Loss (POL) for Hurricane Ike claims expired on August 7, 2009. Seven months later, on March 11, 2010, piled filed her second POL seeking policy limits. Farmers negotiated Pal’s claim and by April 7, 2010, determined she was due an additional $7,644.68. The parties requested a waiver of a timely POL for that amount which was approved by FEMA on April 13, 2010. On October 1, 2010, Pal sued Farmers seeking additional proceeds under her policy. The parties continued to negotiate her claim, but reached impasse around May 30, 204. As a result, Farmers filed the summary judgment motion.

Insurance Companies Want To Be In Federal Court

August 4, 2015 | Mark S. Humphreys

Tarrant county insurance attorneys need to read this opinion from the United States, Northern District Court, Amarillo Division. It is styled, Johnnie Shannon v. Underwriters at Lloyd’s London, et al. There are many reasons an insurance company would prefer to have a legal fight in Federal Court rather than State Court. This opinion helps insurance law attorneys keep those cases that qualify in State Court.

Shannon filed a lawsuit in State Court against Underwriters for violations of the Texas Insurance Code among other reasons. Underwriters timely filed a motion for removal to Federal Court. Shannon filed a motion to remand which was granted by the Court.

Title 28, U.S. Code, Section 1441 states that a civil action is not removable if any “of the parties in interest properly joined and served as defendants is a citizen of the State in which such action is brought.” A case must be remanded if at any time before final judgment it appears that the district court lacks subject matter federal jurisdiction. A conclusion that the suit was improvidently removed requires remand.

Health Insurance And Intoxication Exclusions

August 2, 2015 | Mark S. Humphreys

Insurance attorneys in Dallas County need to be able to know how the courts interpret exclusions in policies when the exclusions rule out coverage for injury resulting from intoxication of narcotics. The United States Western District Court in Austin issued an opinion in June of 2015, dealing with this issue. It is styled, Eleanor Crose v. Humana Insurance.

This is an adverse ruling to Crose involving a summary judgment.

Crose is insured under a health insurance policy issued by Humana. Crose suffered a stroke which left him mentally and physically impaired. He filed a claim which Humana rejected citing a policy exclusion rendering benefits non-payable when the insured’s injury is “due to being intoxicated or under the influence of any narcotic unless administered on the advice of a health care practitioner.” Crose sued for violations of the Texas Insurance Code Sections under 541.060 and 542.051.

Texas Guaranty Fund

August 1, 2015 | Mark S. Humphreys

Insurance attorneys need to be able to discuss the Texas Guaranty Fund with their clients and how this fund works.

Four large insurance companies were declared insolvent in 2013, and as a result lawyers will have situations where a client has their insurance company become insolvent. The Texas Property and Casualty Insurance Guaranty Association (TPCIGA), was established in Chapter 462 of the Texas Insurance Code. Insurance companies do not file bankruptcy, they become insolvent. When an insurance company becomes insolvent or impaired, TPCIGA assumes the handling of the claims of the defunct insurance company. TPCIGA is a non-profit, unincorporated association of all Texas licensed property and casualty insurance companies. The Texas Legislature created the TPCIGA to provide protections to Texas insurance policyholders and claimants when an insurance company fails.

Chapter 462 states the TPCIGA must only pay “covered claims.” In general, a covered claim is an unpaid claim that arises out of a policy issued by an insolvent insurance company. The claim must be made by a Texas resident at the time of the insured event or must be a first-party claim for damage or property that is permanently located in Texas.

Assignment Of Benefits

July 30, 2015 | Mark S. Humphreys

Insurance lawyers get calls from companies that have an assignment of benefits (AOB). This AOB is discussed in an article published by Claims Journal. It does a good job of discussing it and even though it talks about events in Florida, Texas has essentially the same laws and these AOB’s are being seen in Texas.

The problem for property insurers? No one is willing to take a firm position against the surge of AOB lawsuits, which are proliferating to the point where they are in danger of strangling insurers. The Courts are deferring to the Legislature but the Legislature is seemingly uninterested in making change.

The problems are endemic to Florida’s private market. The “carrier of last resort,” Citizens Property Insurance Corporation, is in the midst of a legislatively mandated, large-scale depopulation program, in which it has slashed its number of policies by about a third in the last several years. Citizens’ loss is a gain for several upstart carriers, but the AOB crisis is showing no signs of abetting and costs to defend these frivolous claims are becoming exorbitant.