Dallas Fort Worth Insurance Lawyer Blog

Hail Claims – Removal To Federal Court

March 7, 2015 | Mark S. Humphreys

Mansfield attorneys handling hail damage claims can tell you that the insurance companies are always trying to have lawsuits in Federal Court rather than State Court. Here is another opinion on that issue from the US Court, Northern District, Dallas Division. The style of this case is Ocotillo Real Estate Investments I, LLC, v. Lexington Insurance Company, et al.

This action arises from an insurance claim Ocotillo submitted to Tudor Insurance and Lexington Insurance Company regarding property loss from hail. Ocotillo filed suit against Defendants in state court. Ocotillo alleged claims for violations of the Texas Insurance Code, violations of the Texas Deceptive Trade Practices Act, breach of contract, and negligence. The carriers removed the state court action to Federal Court. Ocotillo moved to remand.

A defendant may remove a state court action to federal court if he establishes the federal court’s original jurisdiction over the action. It is the defendant’s burden to establish the existence of federal jurisdiction. Thus, to remove a case, a defendant must show that the action either arises under federal law or satisfies the requirements of diversity under 28 U.S.C. § 1441(b). Because removal raises significant federalism concerns, the removal statute is strictly construed and any doubt as to the propriety of removal should be resolved in favor of remand. A district court must remand a case if, at any time before final judgment, it appears that the court lacks subject matter jurisdiction. 28 U.S.C. § 1447(c).

Hail Claim – Declaratory Judgment

March 5, 2015 | Mark S. Humphreys

Burleson lawyers handling hail damage claims will know that insurance companies try to get cases into Federal Court. The US District Court, Northern District of Texas, Dallas Division issued an opinion in a case, illustrative of this tactic. The style of the case is, Tudor Insurance Company, et al. v. Ocotillo Real Estate Investments I, LLC.

This is declaratory judgment action in which Tudor and Lexington Insurance Company seek a declaration that they have no duty to provide coverage to Ocotillo for losses resulting from alleged hail damage to Ocotillo’s property. In its motion to dismiss, Ocotillo argues that because it has filed a state court action that will resolve all issue between the parties, the Court should abstain from considering this case.

Ocotillo filed the State Court Action on August 1, 2014. In the State Court Action, Ocotillo alleges claims against Carriers and additional defendants for violations of the Texas Insurance Code, violations of the Texas Deceptive Trade Practices Act, breach of contract, and negligence. Carriers timely removed the State Court Action. By separate order of this date, the Court denied the motion to remand on the grounds that Ocotillo had improperly joined in-state defendants.

Storm Damage Claims

March 3, 2015 | Mark S. Humphreys

Dallas insurance lawyers handling storm damage claims need to dread a recent opinion from the US District Court, Southern Division Texas, Houston Division. The opinion is styled, Nasti v. State Farm Lloyds, et al.

This is an insurance case arising from alleged storm damage to Nasti’s home which State Farm has filed a motion for summary judgment regarding. After the storm, Nasti was approached by Manley of Mac Roofing, who was offering free roof inspections to storm victims in the neighborhood. Both of Nasti’s neighbors on each side already had roofs replaced because of the storm. Nasti reported his claim to State Farm and requested an inspection with Mr. Manley present. State Farm adjuster Stewart Brown inspected Nasti’s roof and reported: “Reviewed 30yr fiberglass shingles for wind and hail damage with Mac’s Roofing present…. I did find damage that would be consistant w/ wind damage to the back left slope…. Inspected interior gameroom /entry and dining room and found water damage to ceilings.” Brown estimated the covered damage to be $3,107.54, less than the deductible of $6,584.00. Nasti requested a reinspection with a different adjuster. State Farm adjuster Dwight Johnson inspected Nasti’s roof and reported: “I inspected the roof with the contractor. My inspection revealed no evidence of storm related damage to the roof system…. The Shingle is a heavier 40 year shingle.” Despite finding no storm damage, Johnson did not alter Brown’s estimate of $3,107.54 damage. Nasti’s expert adjuster Shannon Kimmel inspected Nasti’s roof and reported:

I have visited Mr. Nasti’s home and inspected the damage to his roof. There is no question that Mr. Nasti’s roof was damaged by the severe wind and hail storm that hit The Woodlands, Texas, in June 2012…. I have adjusted thousands of these types of claims for various insurance companies, including State Farm…. In my opinion and based on my extensive experience as a former State Farm adjuster, inspections by Stewart Brown and Dwight Johnson were inadequate and unreasonable…. Photographs in the claim file clearly prove up covered damages resulting from wind and hail…. Mr. Brown’s and Mr. Johnson’s inspections and Mr. Brown’s damage estimate that was essentially rubber- stamped by Mr. Johnson-despite the fact that his findings contradicted Mr. Brown’s estimate-underestimated and/ or ignored obvious covered damaged [sic] that a reasonable adjuster, acting in good faith, would not have ignored.

ERISA Claims

March 1, 2015 | Mark S. Humphreys

Fort Worth insurance attorneys handling ERISA claims need to read this case from the US 5th Circuit Court of Appeals. It is styled, Killen v. Reliance Standard Life Insurance Company.

Killen worked for Covenant from 2002 until March 2009, when she claimed that neck, shoulder and upper back pain made it too difficult for her to continue. Reliance Standard administered Covenant’s long-term disability plan which is governed by ERISA.

Killen collected benefits from June 2009 to June 2011. During this time, Killen separately qualified for Social Security disability benefits. To continue receiving benefits under the Plan after two years, a claimant must be “totally disabled” such that she is incapable of performing the material duties of any occupation for which she is qualified by way of education, training, or experience. Under the contract, an insured is totally disabled if “due to an Injury or Sickness he or she is capable of only performing the material duties on a part-time basis or part of the material duties on a Full-time basis.”

Proof Of Loss – Must Be Timely Submitted

February 28, 2015 | Mark S. Humphreys

Mansfield insurance lawyers will tell their clients that a proof of loss must be submitted in a timely manner for losses. A 2015, US Southern District, Galveston Division opinion re-interates this point. The style of the case is, Fennelly v.Texas Farmers Insurance Company.

Following flood damage to his property caused by Hurricane Ike, Fennelly submitted two timely Proofs of Loss to Farmers, his insurer under a Standard Flood Insurance Policy issued through the National Flood Insurance Program. In response, Farmers paid Fennelly about $78,000,000. On August 9, 2009, the FEMA-extended deadline for filing a POL expired. On January 11, 2011, Fennelly filed his third POL for about $112,000.00 more in benefits. Farmers adjusted this claim and approved it in the amount of only about $7,000,000. On January 20, 2011, the adjuster’s supplemental report was sent to FEMA with a waiver request. On January 21, 2011, FEMA approved a waiver for the amount of the loss and scope of the damages outlined in the adjuster’s report. On January 25, 2011, Farmers sent Fennelly a letter informing him that it had approved the $7,000.00 supplemental amount, had rejected the remaining $105,000.00 of his claim and was “reserving all rights and defenses under the policy”; the supplemental settlement check was enclosed. On March 15, 2011, Fennelly demanded an appraisal of the remainder of his claim, but Farmers denied his request on March 22, 2011, because, in its opinion, its disagreement with the scope of damages claimed by Fennelly made an appraisal inappropriate. On January 24, 2012, Fennelly sued Farmers in an effort to recover the remainder of his POL under the policy.

The sole, dispositive issue in this case is whether, as Fennelly argues, FEMA expressly waived any challenge to the entirety of his third POL or whether FEMA’s waiver was, as Farmers argues, limited to only the $7,000.00 portion of the POL approved by Farmers’s adjuster. This Court agreed with Farmers.

Suing Insurance Agents

February 26, 2015 | Mark S. Humphreys

Insurance lawyers in the Dallas and Fort Worth area will tell you that being in a position to be able to sue an insurance agent who has committed acts costing their clients money are sometimes easy targets. Not only are they liable for wrongs they may have committed, but they can also be held accountable for things they did not do.

Insurance agents can be important persons/entities to sue in a lawsuit. Most agents do not work by themselves. They work in an office with other insurance agents and have CSR’s working for them. CSR’s are Customer Service Representatives. Almost any of the people working in an insurance office such as the CSR’s, or anybody in a clerical role or who handles money, faxes/mails policies, gives advice, etc can be considered an agent of the insurance company who provides the policy.

Texas Insurance Code, Section 4001.052(a) says, “a person who solicits an application for life, accident, or health insurance or property or casualty insurance is considered the agent of the insurer issuing a policy on the application and not the agent of the insured in any controversy between the insurer and insured, the insured’s beneficiary or the insured’s dependents.”

Taking Responsibility For Getting Insurance

February 24, 2015 | Mark S. Humphreys

Texas insurance lawyers will sometimes find themselves in a situation where there was no insurance on a piece of property. When this happens, the next question is why isn’t there insurance. Then, who is responsible for getting the coverage. This was the issue in a 1976, Texas Supreme Court opinion styled, Colonial Savings Association v. Taylor. Here is what happened.

This controversy arose because a house owned by, Mr. Taylor, which was destroyed by fire, was not insured. Mr. Taylor sued Colonial, contending that Colonial had gratuitously assumed responsibility for insuring the house and had negligently failed to do so. Trial was to a jury, which returned a verdict with answers favorable to Mr. Taylor, but the trial court entered judgment Non obstante veredicto for Colonial.

The property involved is located at 846 East 26th Street in Houston. There are two houses at this address, an older house near the street and a newer house behind it. Taylor purchased the property in 1967 from Mr. and Mrs. James E. Reynolds, taking title subject to a prior outstanding lien held by Colonial. In consideration for the conveyance Taylor made four over-due payments to Colonial on the Reynolds note which the property secured. Pursuant to the conveyance, Colonial transferred the mortgage loan to Taylor’s name, and he was made all subsequent payments thereon.

Agent Liability

February 22, 2015 | Mark S. Humphreys

Dallas insurance lawyers need to know this case discussing insurance agent liability. It is a 2008 opinion from the Corpus Christi Court of Appeals. The style is, Insurance Network of Texas v. Kloesel.

The Kloesel’s have owned and operated Kloesels’ Steakhouse since 1970. INT is an independent insurance agency. In 1993, the Kloesels wanted a different insurance company to safeguard their restaurant. The Kloesels approached Gary Nitsche, an insurance agent with INT, to discuss having INT procure insurance for their restaurant. When INT first procured a policy for the Kloesels, it obtained a policy that covered communicable disease claims. During the policy year, the Kloesels expressed their intent to add a horse-and-carriage operation to their restaurant. As a result, the carrier opted not to renew the Kloesels’ policy, which was set to expire in October 1994. INT notified the Kloesels of the need to change carriers and subsequently procured for them a general liability policy from Burlington, a surplus lines carrier, for the 1994-1995 policy year. The Burlington policy covered claims arising from the horse-and-carriage operation, which began in November 1994, but excluded communicable disease claims. The Kloesels paid the premiums for this policy and renewed it for the 1995-1996, 1996-1997, and 1997-1998 policy years.

During the 1997-1998 policy year, over ninety customers contracted Hepatitis A at the Kloesels’ restaurant; the Texas Department of Health concluded that this likely resulted from a food handler being infected with Hepatitis A. The Kloesels filed claims under the Burlington policy, but Burlington denied the claims based on the communicable disease exclusion. Two separate lawsuits were then filed against the Kloesels by the Simpsons and the Lairds–customers who had contracted Hepatitis A. Burlington defended the Kloesels in these two lawsuits under a reservation of rights. The Simpsons obtained a judgment in their favor worth $242,625. Eight months later the Lairds obtained a judgment in their favor worth $323,441. INT declined to cover the Kloesels for the amounts owed under the Simpson and Laird judgments.

Proving Hail Losses The Wrong Way Or Not At All

February 21, 2015 | Mark S. Humphreys

Fort Worth insurance attorneys who handle hail damage claims need to know how “not” to handle the claim. A US Northern District case from the Dallas Division is worth reading to know what courts are looking for in a lawsuit. It is a 2014 opinion styled, Stevenson v. Nationwide.

Stevenson filed a lawsuit against Nationwide. Stevenson’s claims included: (1) breach of contract; (2) violation of Section 542 of the Texas Insurance Code; (3) violation of the Deceptive Trade Practices Act; (4) violation of Section 541 of the Texas Insurance Code; (5) breach of duty of good faith and fair dealing; (6) fraud; and (7) conspiracy to commit fraud.

Stevenson contends that she is the owner of an insurance policy issued by Nationwide. She states that she owns the insured property. She states that on April 3, 2012, strong storms and tornadoes in North Texas caused severe damage to her home. She submitted a claim to Nationwide for damage, water damage, hail damage, windstorm damage, and mold damage to the Property as a result of the storm. She states that she asked Nationwide to cover the cost of repair to the Property pursuant to the Policy and any other available coverages under the Policy. She contends that Nationwide’s adjuster failed to properly adjust the claim made by her. Additionally, she contends that Nationwide has denied at least a portion of the claim without an adequate investigation. She asserts that Nationwide has failed to compensate her adequately under the terms of the Policy.

Misrepresentation By Insured

February 19, 2015 | Mark S. Humphreys

Dallas insurance lawyers know that ruling from other states are sometimes looked at by courts in Texas. One example is a 2014, opinion by the US 5th Circuit Court of Appeals. This court hears Texas cases, so knowing how they look at cases is important. The opinion is styled, Nationwide v. Baptist.

The district court held that the Baptists initially purchased a valid homeowner’s insurance policy from Nationwide, but that subsequent renewals of that policy were void ab initio because they occurred after the Baptists lost ownership of their home to foreclosure.

The parties do not dispute the relevant facts. The Baptists purchased the Nationwide policy in October 2006. Just over two years later, in November 2008, they lost their home to foreclosure. They did not inform Nationwide of the foreclosure sale, however, and they continued to occupy in the home. The Bank of New York, which had purchased the home at the foreclosure sale, sought and obtained a judgment evicting the Baptists on December 9, 2011. That should have caused the Baptists to vacate the home by January 13, 2012, but it was seriously damaged by a fire or fires on December 27 and 28, 2011. It was in conducting a post-loss investigation of the Baptists’ claims arising from these fires that Nationwide first discovered that they no longer held title to the property.