Dallas Fort Worth Insurance Lawyer Blog

Pollution Exclusions

January 31, 2015 | Mark S. Humphreys

Dallas insurance lawyers need to have some familiarity with pollution exclusions in insurance policies. A 1998, Texarkana Court of Appeals case is worth reading. The style of the case is, Allen v. St. Paul Fire & Marine Insurance Company. Here is some information from that case.

This appeal arises from a summary judgment rendered in favor of St. Paul in an insurance coverage dispute. The Allens sued St. Paul based on the judgment in a suit by the Allens against Tawakoni Water Utility Corp. The underlying suit alleged damages arising out of Tawakoni’s failure to provide “potable” water, “good quality” water, water “reasonably fit for family residential use,” or water “approved and/or certified by the appropriate State of Texas and federal authorities.” The Allens also alleged that the water received was of “unpalatable quality,” “unfit for human consumption and/or use,” and that the water was contaminated.

St. Paul, an insurer of Tawakoni, denied coverage and refused to provide a defense for Tawakoni. St. Paul based its denial of coverage on pollution exclusions. Following a bench trial, a judgment of $17,326,174 was rendered in favor of the Allens.

Notice Of Claim

January 29, 2015 | Mark S. Humphreys

Arlington insurance lawyers will tell a client that a claim needs to be made to the insurance company as soon as the client knows of the claim. This is illustrated in a 1998, United States, Northern District of Texas case. The style of the opinion is, Chicago Insurance Company v. Western World Insurance Company. Here is some of the relevant information from that case.

Two residents of Avalon Place, a nursing home, were injured during their stay there. The residents left Avalon Place before May, 1995. They sued Avalon Place. Avalon Place gave notice to Chicago Insurance on September 7, 1995. Avalon Place did not notify Western World until May 8, 1996, eleven months later. The Chicago Insurance policy was an “occurrence” policy covering claims arising from occurrences during the period between June 28, 1995 and June 28, 1996. The Western World policy was a “claims made” policy that covered claims made against Avalon Place during the period from June 28, 1994 to June 28, 1995. This policy required Avalon to notify Western World “as soon as practicable” of any “occurrence” that could result in a claim and to notify Western World “as soon as practicable” of any claim made against it. Chicago Insurance and Western World settled the underlying claims and reserved their rights to litigate coverage between themselves. They each filed a declaratory judgment action seeking this Court to declare whether their policies covered liability incurred by a mutual insured and whether the parties were liable to one another for costs incurred in defending and settling that liability.

The Court ruled that Western World’s “claims made” policy does not cover the claims at issue because the insured did not give notice “as soon as practicable.” The Chicago Insurance policy does not cover the claims because they occurred before the effective date of the Chicago Insurance policy. Therefore, Western World has no right to seek reimbursement from Chicago Insurance, and Chicago Insurance has no right to seek reimbursement from Western World.

Misrepresentation In Health Insurance Policy Application

January 27, 2015 | Mark S. Humphreys

Fort Worth insurance lawyers will find the 1995, case, Darby v. Jefferson Life, useful in their insurance law practice. It is from the Houston Court of Appeals [1 Dist.].

On October 5, 1987, Jefferson Life’s agent, Charles Sharp, interviewed Darby in her home after she applied for a major medical insurance policy. Sharp read questions from the application and recorded Darby’s answers on the policy application. In one section of the document, Darby’s recorded answers showed one doctor’s visit and one hospital confinement in the previous 24 months but also showed a denial of past health problems. In another section, Darby’s recorded answers indicated she had a complete checkup during the previous month, a blood clot earlier that year, and was on medication for arthritis. Darby signed the application in two places, affirming that each answer was full, true, and complete, and agreeing that any false statement materially affecting Jefferson Life’s acceptance of the risk would render the policy void.

At trial, Darby testified that she also told Sharp, although the application did not so reflect, that she had a computerized axial tomography (CAT) scan and a magnetic resonance image (MRI) the month before her application; she had been hospitalized for a blood clot and continued to see a physician three times a week; and she had rheumatoid arthritis, which was controlled with medication. She also may have told Sharp she saw a physician once a month.

Life Insurance Beneficiary

January 25, 2015 | Mark S. Humphreys

Arlington insurance attorneys need to know when someone can collect on a life insurance policy as a beneficiary. A 1995, Eastland Court of Appeals opinion is worth reading. The style of the case is, Maris v. McCraw. Here is some information from the case.

The controlling issue in this circumstantial evidence case is whether there is sufficient evidence to show that the insured, a federal employee, filed before her death a signed beneficiary designation form with her employer. The policy provides that the life insurance proceeds are to be paid to the beneficiary designated by the employee in a signed and witnessed writing received before death “in the employing office.” If there is no designated beneficiary, the proceeds are to be paid to the widow or widower of the employee.

Donna Ann Maris died in 1987. Her personnel file did not contain a written beneficiary designation form signed by Maris designating any person as the beneficiary of her life insurance proceeds. Maris was survived by her husband, Jimmie Maris, and by her two children from a prior marriage, Tracy and Kristina. The children filed a declaratory judgment suit against the husband contending that they were entitled to the insurance proceeds because their mother signed and filed the appropriate form with the employing office designating them as beneficiaries and because the beneficiary designation form was subsequently lost. The husband counterclaimed asserting that he was entitled to the life insurance proceeds.

Stowers Claims

January 24, 2015 | Mark S. Humphreys

Every Dallas and Fort Worth insurance lawyer has to have an understanding of “Stowers” claims.

Under Texas law, a demand for policy limits is generally referred to as a Stowers demand and can give rise to a suit against the insurance company to collect any excess judgment under the Stowers doctrine. Under the Stowers doctrine, an insurance company owes an implied duty of ordinary care to its insured/customer to accept a reasonable settlement demand that is within policy limits. This is from a case every law school student learns about in law school. The style of the case is G.A. Stowers Furniture Co. v. Am. Indem. Co. It is a Texas Supreme Court case from1929, holding that an insurance company “is held to that degree of care and diligence which a man of ordinary care and diligence would exercise in the management of his own business.” Physicians Ins. Exchange v. Garcia, is a 1994, Texas Supreme Court case that further supported the Stowers ruling. The Stowers duty is not activated by a settlement demand unless three prerequisites are met: (1) the claim against the insured is within the scope of coverage, (2) the demand is within the policy limits, and (3) the terms of the demand are such that an ordinarily prudent insurer would accept it, considering the likelihood and degree of the insured’s potential exposure to an excess judgment.

Another case, the case of Bramlett v. the Medical Protective Company of Fort Wayne, Indiana, which was written by one of the most respected and conservative Republican federal judges in Texas, the Hon. Sidney Fitzwater, contains key holdings which are particularly instructive as to insurance company’s duties in response to this demand and essentially negates any potential defenses that could be asserted in our future Stowers doctrine case. Bramlett also addresses the common Stowers defendant insurance company plea that they should not be liable because they did not have sufficient knowledge of the case at the time the demand was made. The Bramlett Court held: “There is no per se requirement that an insurer know all, or even most, of the facts of the case in order to have a Stowers duty. Indeed, early settlement is encouraged.” Here, there is ample evidence to support our negligence claim against a defendant such that te insurance company must either accept the demand or assume the risk that it will not be able to do so later. If a claimant makes such a settlement demand early in the negotiations, the insurance company must either accept the demand or assume the risk that it will not be able to do so later. In cases presenting a real potential for an excess judgment, insurance companies have a strong incentive to accept.

Allstate Sues Medical Providers For Fraud

January 22, 2015 | Mark S. Humphreys

Most Fort Worth insurance lawyers will be aware of this case. It is a Houston Court of Appeals [14th Dist.] case styled, Allstate v. Rehab Alliance of Texas. This Court upheld the trial Court summary judgment in favor of Rehab Alliance. The opinion is long but here is a little of what it says.

Rehab Alliance is a chiropractic clinic which provided services including chiropractic care, orthopedic and pain management, epidural steroid injections, and radiologists’ services to persons injured in car accidents. As part of its services, Rehab Alliance also provided reports to attorneys outlining injuries and treatment plans for its patients in order to facilitate settlements of their claims for damages.

Allstate claims that Rehab Alliance solicited referrals from attorneys representing such claimants. In those situations, Rehab Alliance would treat the injured parties under a “letter of protection” with the patients’ attorneys. According to Allstate, these letters provided that Rehab Alliance would seek to recover payment of its bills from its patients only if there were a recovery reached by way of settlement or judgment; that is, the patients were released from financial responsibility for health care services if there was no settlement or judgment with an insurer. Allstate alleged these “letters of protection” were concealed from it because they were not included as a part of the settlement packages that attorneys for the various claimants presented to Allstate.

Life Insurance ERISA Plan

January 20, 2015 | Mark S. Humphreys

Life Insurance attorneys in the Dallas and Fort Worth area will see life insurance policies that are ERISA plans. They learn quickly that ERISA plans are different from other types of life insurance plans. This is illustrated in a 5th Circuit Court of Appeals case styled, Ellis v. Reliance Standard Life Insurance. Here is what that case says.

In this life insurance benefit dispute Patricia Ellis appeals the district court’s grant of summary judgment in favor of her deceased husband’s life insurance provider, Reliance Standard Life Insurance Company (“RSL”). The district court held that RSL did not abuse its discretion as a plan administrator when it calculated the death benefit paid to Mrs. Ellis following her husband’s death using his 2009, as opposed to his 2010, income.

The late Randolph Ellis was employed by Taylor Morrison Inc., a homebuilding company, as a commissioned real estate salesman starting in 2005. Taylor Morrison offered life insurance to its employees. The insurance was underwritten and administered through RSL. The policy is governed by the Employee Retirement Income Security Act (“ERISA”), 29 U.S.C. § 1001 et seq.

Insurance Coverage When Driving Company Vehicle

January 18, 2015 | Mark S. Humphreys

Dallas insurance attorneys can tell you that some insurance companies refuse to cover people who are involved in a wreck while driving a company vehicle. Yet the company says the drivers personal insurance should be the coverage. What to do???

Forbes published an article that talks about this issue. Here is what is learned from the article.

In the last year, car-service app startups Uber and Lyft have made major progress toward fixing their drivers’ insurance issues, gradually taking more responsibility for accidents that happen to on-duty drivers. But one sticky problem persists: drivers often lie to their personal insurance about their work, which can lead to confusion and, in some extreme cases, insurance fraud.

Farm And Ranch Owners Insurance Policy

January 17, 2015 | Mark S. Humphreys

Parker County insurance lawyers will deal with clients who have Farm and Ranch insurance policies. Here is a case that deals with one of those policies. It is a 2014 case styled, Texas Farm Bureau Underwriters v. Terry Graham, and is out of the Texarkana Court of Appeals. Here is some of the relevant information.

Terry Graham shot and killed would-be burglar, Chambers, at Graham’s ranch house. In successfully defending the resulting wrongful death lawsuit by Chambers’ family members, Graham incurred $130,841.43 in defense costs, which Graham sought to recover from Texas Farm Bureau Underwriters (Underwriters), the issuer of Graham’s Texas Farm and Ranch Owner’s Insurance Policy. From competing motions for summary judgment, contesting the question of whether Underwriters had the duty to defend Graham in the Chambers lawsuit, the trial court awarded Graham judgment. Underwriters appealed. Because, under the terms of the policy, there was no duty to defend the Chambers lawsuit, this curt reversed the trial court’s judgment and render a take-nothing judgment in favor of Underwriters.

Underwriters filed a legal denial based on the governing “eight corners rule,” which provides that an insurer is entitled to rely solely on the factual allegations contained in the four corners of the complaint in conjunction with the four corners of the liability policy to determine whether it has a duty to defend. In its answer, Underwriters argued that the eight corners rule precluded recovery because (1) the Chambers family’s petition established that the incident was not a covered occurrence and (2) the policy expressly excluded coverage for bodily injury caused by an intentional act of the insured. Underwriters filed a traditional motion for summary judgment on its legal defense. In response, Graham filed a cross-motion for summary judgment, arguing (1) that Underwriters’ duty to defend was established by the jury’s finding of no wrongdoing on Graham’s part and (2) that the policy’s exclusion for intentional acts did not apply to the Chambers family’s allegations of negligence and gross negligence.

Who Do You Sue?

January 15, 2015 | Mark S. Humphreys

Most Dallas insurance attorneys can give a quick answer to the above question. A November 2014, Texas Supreme Court opinion helps with the answer. The style of the case is, In re Essex Insurance Company. Here is relevant information from that case.

Rafael Zuniga sued San Diego Tortilla (SDT) for personal injuries and then added a declaratory judgment claim against SDT’s liability insurer, Essex Insurance Company, seeking a declaration that Essex must indemnify SDT for its liability to Zuniga. The trial court denied Essex’s motions to dismiss, and the court of appeals denied Essex’s petition for writ of mandamus. In Texas, the general rule . . . is that an injured party cannot sue the tortfeasor’s insurer directly until the tortfeasor’s liability has been finally determined by agreement or judgment.

Zuniga sued SDT after he lost his hand while operating a tortilla machine at SDT’s facility. Essex, which had issued a commercial general liability policy insuring SDT, investigated the accident and concluded that the policy does not cover Zuniga’s claims because Zuniga was an SDT employee at the time of the accident. Zuniga and SDT denied that Zuniga was an employee and asserted instead that he was working at SDT as an independent contractor. While maintaining its position that Zuniga was an employee, Essex nevertheless agreed to defend SDT under a reservation of its right to refuse to indemnify SDT against any judgment, based on the policy’s employee exclusion.