Dallas Fort Worth Insurance Lawyer Blog

How Are The Policy Limits Paid?

November 6, 2014 | Mark S. Humphreys

An insurance attorney in Grand Prairie will run across a situation where a loss has been the result of multiple causes. When this happens, how are the policy limits determined is a question that needs to be answered. All situations are different and each case needs to be examined on a case by case basis would be the short answer. A 2004, a United States Federal, Southern District of Texas case gets specific and gives some guidance as to how the courts look at the various situations that may arise. The style of this case is, Ramirez v. State Farm Lloyds. Here is some of the relevant information from that case.

Pedro and Paulita Ramirez purchased a homeowner’s policy from State Farm Lloyds insuring their residence against property damage with liability limits of $90,800.00 for the property damage and $54,480.00 for loss to the contents of the home. In April 2001, they notified State Farm that they had water damage in the home due to leaking appliances and wind driven rain. State Farm investigated the claim and determined that seven different water sources caused the damage and set up a separate claim for each source. The cost to repair the damage to the home exceeded the policy limit. State Farm paid the policy limit but Ramirez filed suit alleging breach of contract, breach of the duty of good faith and fair dealing, violations of the Texas Insurance Code and violations of the Prompt Payment of Claims Act, and violations of the Texas Deceptive Trade Practices Act (DTPA). State Farm filed a motion for summary judgment on all counts. The trial court granted the summary judgment in favor of State Farm.

In the holding of the court, the court found that the loss settlement provision in the Texas Homeowners Policy limits the insured’s recovery to a single policy limit as stated on the declaration page, despite the fact that seven different water sources resulted in damage to the insured residence and despite the fact separate claims were set up for each water event. Since the policy limits were paid, State Farm did not breach the contract.

Claims Denial Under Reservation Of Rights

November 4, 2014 | Mark S. Humphreys

Insurance lawyers in Saginaw and other Dallas and Fort Worth areas should be able to discuss with a client the significance of a Reservation of Rights letter from an insurance company and what it means. One aspect of this is discussed in a 2003, United States 5th Circuit Court of Appeals case. The case is styled, Esco Transportation Company v. General Insurance Company of America. Here is some of the relevant information from that case.

Esco’s loaded trailer containing a shipment of clothing for Sam’s Wholesale Club was stolen while it was left unattended on a public street. The tractor and trailer were eventually recovered, but not the cargo. The cargo of clothing was valued at $372,000. Esco submitted a claim for the loss of the cargo of clothing to General Insurance and, prior to receiving a response from General Insurance, filed for bankruptcy protection. General Insurance denied Esco’s claim under the “Unattended Trailer Exclusion” contained in the policy after concluding that there were no signs of forced entry into the trailer. In the denial letter, General Insurance expressly reserved all rights, privileges and defenses under the policy. After Esco filed suit for damages and a declaratory judgment of coverage, General Insurance also asserted that Esco failed to comply with the policy’s provisions for establishing loss. The policy provided that General Insurance would cover the loss “in accordance with the Tariff, Bill of Lading, or Shipping Receipt.” After the lawsuit was filed, Esco’s secured creditor substituted into the lawsuit as the real party in interest. Because neither Esco nor his successor were able to produce any document showing its legal liability, the value of the stolen cargo, or the cargo’s owner, the trial court granted summary judgment in favor of General Insurance. This appeal was filed.

The 5th Circuit Court of Appeals affirmed the district court’s grant of summary judgment in favor of General Insurance, rejecting Esco’s argument that by denying the claim based on the “Unattended Trailer Exclusion,” General Insurance had waived any other defenses to coverage. This appeals court found that in the denial letter, General Insurance did not deny the claim on one ground alone but specifically “reserved all rights, privileges and defenses under the policy.” Addressing the legal liability issue, the court noted that while the policy covered Esco’s legal liability for third party loss and Esco presented a conclusory affidavit indicating that it was required to reimburse Sam’s for the value of the cargo, there was no evidence establishing the basis for Esco’s legal liability. Thus, a condition precedent to the coverage had not been met by Esco’s successor in interest and the court saw no need to address the unattended trailer exclusion.

Uninsured Motorist And Vehicles Available For Regular Use

November 2, 2014 | Mark S. Humphreys

Fort Worth insurance lawyers need to know how Texas insurance law applies when presented with a certain set of facts. As it relates to Uninsured Motorist coverage, a San Antonio Court of Appeals case is important to know. It is a 1990, opinion styled, Briones v. State Farm. Here is the relevant information from the case.

Briones appealed a take nothing summary judgment granted in his suit against State Farm seeking recovery on his family automobile insurance policy under the uninsured motorists clause, for bodily injuries suffered in a one vehicle automobile accident. In one point of error Briones contended that:

The Trial Court erred in granting State Farm’s Motion for Summary Judgment because there is a genuine issue as to material facts regarding the one remaining issue to be litigated by the parties, namely whether the tractor-trailer in which Briones was a passenger at the time of his bodily injuries was furnished or available for his regular use.

Life Insurance Denial

November 1, 2014 | Mark S. Humphreys

Dallas life insurance attorneys will tell you story after story that sounds similar to the one published in the Louisiana Record on October 2, 2014. The title of that story is, “Life Insurance Company Sued By Woman Seeking Benefits After Child’s Father Is Murdered.” Here is what the article tells us.

A woman sued a life insurance company for allegedly not paying life insurance benefits after the father of her child was shot to death.

Iviane Johnson filed suit against Globe Life & Accident Insurance Company in the Orleans Parish Civil District Court on Aug. 1.

What If An Adjuster Is Negligent In Handling My Claim?

October 30, 2014 | Mark S. Humphreys

Fort Worth insurance lawyers will often times be asked the above question. The answer is that there are many things an adjuster can do wrong for which they and the insurance company can be held liable if that wrong causes harm to the insured. However, the Texas Courts do not recognize a claim for negligent claim handling. This is told to us in the 2008, Houston Court of Appeals [14th Dist.] case, Justice v. State Farm Lloyds Insurance Company and FTI Consulting. Here is the relevant information taken from that case.

A tree fell on the Justices’ house in 2000, the Justices made a claim under their State Farm homeowner’s insurance policy and State Farm paid the claim. In 2001, the Justices discovered mold in the walls of their house and reported the claim to State Farm. State Farm sent the Justices a reservation of rights letter, hired FTI to conduct an industrial hygiene evaluation, and paid the Justices over $137,000 for remediation of their home, alternative living expenses, and cleaning costs on this claim. Thereafter, the Justices filed suit against State Farm and FTI for additional mold damage. State Farm and FTI each filed a motion for summary judgment, which the trial court granted.

State Farm moved for summary judgment against the Justices’ claim for breach of contract on the ground, among others, that this claim was barred by the mold exclusion in the policy. The Justices contend that the mold exclusion is somehow overcome by a provision of the State Farm Adjuster’s Guide, purportedly stating that if the original claim is covered, such as the damage from a wind blown tree, then any loss that proximately results is therefore covered. However, the Justices’ brief provides no legal authority suggesting that a provision of the Adjusters Guide could be controlling, relevant, or even admissible concerning the meaning or scope of coverage of the policy. Nor does it indicate how such a provision, even if applicable, could overcome an express exclusion in the policy. Therefore, this contention affords no basis for relief, and the Justices’ challenge to the summary judgment against their breach of contract claim was overruled.

Lawsuits And Attorney’s Fees

October 28, 2014 | Mark S. Humphreys

Tarrant County insurance lawyers need to know how to recover attorney’s fees in an insurance and DTPA lawsuit. The 1997, Texas Supreme Court case styled, Arthur Andersen & Co. v. Perry Equipment Corp. provides some guidance in that regard. Here is some of the relevant information from that case.

Perry sued Arthur Andersen for a faulty audit which Perry relied on to purchase another company called Maloney Pipeline Systems. The audit incorrectly reported favorably Maloney’s financial condition when the company was suffering substantial losses. Within fourteen months after purchase, the company went bankrupt. Perry sued Arthur Andersen for violations of the DTPA, fraud, negligence, negligent misrepresentation, gross negligence, and breach of implied warranty. Based on the verdict returned by the jury, the trial Judge rendered judgment for Perry for the DTPA cause of action. This judgment included amounts for attorney’s fees based on a contingency fee agreement.

The judgment in favor of Perry was reversed and remanded to the trial court.

Insurance Fraud – They Will Come After You

October 26, 2014 | Mark S. Humphreys

North Richland Hills insurance lawyers can tell you that when an insurance company believes someone is filing a false claim, the insurance company will deny that claim. What a lot of people do not realize is that the insurance company will sue for any claim they have paid and in some instances will file criminal charges.

The Los Angeles Times ran an article where the insurance carrier sued. The title of the article is, “Brothers Behind Lap-Band Ads Sued.” Here is what the article says.

The nation’s largest health insurance company accused the brothers behind the 1-800-GET-THIN advertising campaign of defrauding the insurer of more than $40 million by operating a complex weight-loss surgery billing scheme.

Insurance Claims Alleging Knowingly

October 25, 2014 | Mark S. Humphreys

Dallas insurance attorneys look for cases where they can be a “knowing” violation has been committed by an insurance agent or adjuster. A 1998, Texas Supreme Court opinion helps an attorney understand some of the ways courts look at “knowingly” allegations. The style of the case is, St. Paul Surplus Lines Insurance v. Dal-Worth Tank Co. Here is some of the relevant information.

Mission Butane Gas Co., a customer of Dal-Worth, notified Dal-Worth that it intended to sue Dal-Worth for several thousand dollars in damages caused when trucks it had bought from Dal-Worth had rolled over. Dal-Worth sent this notice to St. Paul and St. Paul opened a claim file. Mission’s insurer also contacted Dal-Worth. St. Paul concluded that Dal-Worth was not liable and refused to pay. Mission sued Dal-Worth. Evidence showed these lawsuit papers were forwarded to St. Paul. St. Paul heard conflicting accounts about the lawsuit papers from Missions insurer.

Dal-Worth did not answer Mission’s lawsuit and Mission obtained a default judgment in the amount of $794,100. Dal-Worth received a copy of the judgment but did not realize it’s significance and did not sent it to St. Paul. St. Paul did not hear of the judgment until 78 days after it was signed. Mission would have settled the claim at this point for $17,000, but no settlement offers were made. Four weeks later, St. Paul denied coverage, but offered to pay an attorney to handle an appeal for Dal-Worth, which Dal-Worth accepted. St. Paul refused to supersede the judgment and Dal-Worth was forced into bankruptcy.

Uninsured Motorist Coverage And Punitive Damages

October 23, 2014 | Mark S. Humphreys

Weatherford insurance lawyers need to be able to discuss the coverages available to a client, depending on the circumstances they are dealing with as described by the client. When it comes to uninsured motorist coverage, the Houston Court of Appeals [14th Dist.] issued an opinion in 1997, that is still good law. The style of the case is, Milligan v. State Farm Mutual Automobile Insurance. Here is what the case tells us.

The facts in this case are not in dispute. Milligan was injured in an accident caused by an uninsured drunk driver. The parties agree that the driver’s conduct constituted gross negligence. At the time of the accident, Milligan was insured by State Farm under a policy providing uninsured motorist coverage. State Farm’s policy provides in relevant part as follows:

We will pay damages which a covered person is legally entitled to recover from the owner or operator of an uninsured motor vehicle because of bodily injury sustained by a covered person, or property damage caused by an accident.

Home Owners Insurance Policies

October 21, 2014 | Mark S. Humphreys

Attorneys who handle home owner insurance policy might want to share this article from the Insurance Journal regarding rates and the Texas Insurance Commission. The title of the article is, Homeowner Insurance Rates Hikes Not Challenged By Texas Commissioner. Here is what the article tells us.

The Texas insurance commissioner has allowed the three largest home insurers to impose significant rate hikes on many policyholders despite the objections of a state consumer advocate.

Insurance Commissioner Julia Rathgeber can reject any new rates that are deemed excessive and order refunds. But her office has taken no action since learning of the increases late last year, and it’s unclear whether she will do so.