Dallas Fort Worth Insurance Lawyer Blog

Standard For Punitive Damages In An Insurance Claim

October 14, 2014 | Mark S. Humphreys

Arlington insurance lawyers need to know what to look for in a case to determine how likely it is to achieve punitive damages. A 1998, Texas Supreme Court opinion sheds some light on how the court looks at punitive damages evidence. The style of the case is, State Farm Fire & Casualty Company v. Simmons. Here is some of the relevant evidence in the case.

The plaintiff in this case, Simmons, had purchased his first home by financing through a VA loan. Simmons was a construction supervisor who fell on hard times when his work slowed down. Simmons arranged a repayment program with the VA that substantially lowered his monthly payments. The same month he worked out this refinance program, his home was burglarized. The burglary occurred in the day and none of Simmons neighbors saw any wrong acts around Simmons home. Simmons began his own investigation and followed some wheel barrow tracks through the woods around his house to the home of Mattix, who later confessed to the police that he had committed the burglary of Simmons home. State Farm paid Simmons for this loss. Simmons then experienced a rash of vandalism to his property. Simmons then left to take his children to Louisiana for the summer. He planned to return right away because he had to work the next day. Soon after he left, someone noticed smoke from Simmons home. His home was completely destroyed by fire. State Farm denied the fire loss claim.

At trial, the jury made a finding that Simmons did not burn his own home, then found that State Farm had breached its duty of good faith and fair dealing in handling the claim and for knowingly violating the DTPA. The jury also determined State Farm acted with conscious indifference in determining whether there was a reasonable basis to deny Simmons claim. Based on these findings, Simmons was awarded $275,000 for actual damages and $2 million in punitive damages.

When Are Punitive Damages Available

October 12, 2014 | Mark S. Humphreys

Fort Worth insurance lawyers need to be able to discuss with clients, the situations wherein punitive damages may be part of a claim. A 2008, 5th Circuit Court of Appeals opinion discusses one aspect of these punitive damages. The style of the case is, American International Specialty Lines Inc. Co. v. Res-Care, Inc. Here is the necessary information.

American sought reimbursement from Res-Care under a non-waiver agreement for the uncovered claims included in its $9 million settlement of the underlying claim, asking the district court to apportion the settlement costs among covered and non-covered claims. The court determined that the non-waiver agreement satisfied the conditions set forth by the Texas Supreme Court for reimbursement. Turning to the merits, the court determined the district court properly considered all evidence relevant to the settlement decision, and was not limited to considering only the evidence admissible in the underlying suit. Res-Care sought to defeat American’s coverage claims by asserting waiver and estoppel because American waited 18 months after coverage issues were apparent before raising a coverage question. The court further held Res-Care waived the defense by entering into the non-waiver agreement, and the court found no merit in Res-Care’s contention that it was “forced” to enter into the non-waiver agreement.

In making its ruling in this case, the court found Texas public policy did not provide coverage for punitive damages in this instance given the egregious circumstances and nature of the avoidable conduct that caused the injuries. The 5th Circuit stated that “we conclude that the extreme circumstances which gave pause in another related court decision were present in this case. The plaintiff’s complaint in the underlying case is rife with allegations of gross negligence for which the responsibility should not be shifted from the defendants to their insurance company. The complaint alleged that all defendants including Res-Care, were grossly negligent in their actions, not only for direct participation in the bleach incident on April 12, 1998, but also for failure to take reasonable steps to prevent the situation from occurring, and for failure to alleviate the harm immediately afterward.” The circumstances of the decedent’s injury and death, were so extreme that the purposes of punishment and deterrence of conscious indifference outweigh the normally strong public policy of permitting the right to contract between the insurance company and the insured.

Mental Anguish Claim And Worry

October 11, 2014 | Mark S. Humphreys

Any Dallas insurance attorney can tell you that mental anguish can be a part of an insurance bad faith claim. The key to keep in mind is the evidence necessary to show a person eligible to recover for mental anguish.

This was explained in part by the 1996, Texas Supreme Court case styled, Saenz v. Fidelity & Guaranty Insurance Underwriters.

In Saenz, Corina Saenz sued her employer’s workers compensation insurance company for wrongfully inducing her to settle her claim. Saenz recovered actual damages for future medical costs, damages for mental anguish, and punitive damages.

Treble Damages

October 9, 2014 | Mark S. Humphreys

Dallas insurance lawyers have to know when treble damages are available in a case. A 1998, Dallas Court of Appeals helps to understand factors that will get those damages. The style of the case is, State Farm Lloyds v. Johns.

Johns house was built in 1964. Johns moved in in 1972. In the summer of 1990, Johns noticed evidence of extensive foundation problems including door misalignment, cracks in walls, and a slopping floor. Repairmen discovered two plumbing leaks under the house. Johns filed a claim with State Farm. State Farm concluded the foundation problems were caused by natural soil movement. The State Farm policy excluded damage cause by ordinary settlement and denied the claim.

Johns filed suit for violations of the DTPA and Texas Insurance Code. Johns won at trial and State Farm appealed.

Dallas Insurance Lawyers Need To Know This

October 7, 2014 | Mark S. Humphreys

A 1997, Texas Supreme Court case is important for insurance law attorneys to know. The style of the case is, Trinity Universal Insurance Company v. Cowan.

Here are some of the facts to know about in the case.

A male, Gage, was working at an HEB photo shop. He developed a roll of revealing pictures of Cowan. He made extra prints for himself. He shared these prints with friends. This eventually got back to Cowan. Cowan sued Gage and HEB alleging negligence and gross negligence, among other allegations. Cowan alleged she had suffered severe mental pain, loss of privacy, humiliation, embarrassment, fear, frustration, mental anguish, etc. She did not allege any physical manifestation of these injuries. Gage notified his parents’ homeowners insurance company, Trinity. Trinity initially defended Gage under a reservation of rights, but later denied coverage and withdrew the payment of defense lawyers. Cowan settled with HEB and Gage in return for a covenant not to execute against any of Gage’s assets except the Trinity insurance policy. At trial, Gage did not appear or defend. Cowan and her mother testified that she suffered mental anguish, along with headaches, stomachaches and sleeplessness. The trial Judge found Gage responsible and awarded Cowan $250,000.00.

Emotional Distress And Bodily Injury

October 5, 2014 | Mark S. Humphreys

Knowing what is covered and what is not covered under a policy is something Fort Worth insurance lawyers need to be able to discuss with clients. A 1994, United States 5th Circuit Court of Appeals case is instructive as to when emotional distress is a covered claim. The style of the case is Travelers Indemnity Company v. Holloway. It is a declaratory judgement action.

In this lawsuit, the insurance company, Travelers, contended that it had no duty to defend its insured, Wanda Holloway, against a lawsuit for intentional infliction of emotional distress, since this type of claim is not covered by the policy issued by Travelers. Holloway is the mother of a junior high school student who was competing for a cheerleader position, and allegedly plotted to kill Heath, the mother of one of her daughter’s competitors. The mother of the competitor brought a lawsuit against Holloway alleging “outrageous conduct causing severe emotional distress.” Holloway sought a defense from Travelers, however, Travelers argued that Holloway was not entitled to a defense and that there was no coverage, since (1) the conduct did not constitute an “occurrence” under the policy, (2) the conduct was excluded from coverage as intentional conduct, and (3) the conduct was not alleged to have caused “bodily injury” as that is defined in the policy.

In making its ruling, the 5th Circuit affirmed the District Court’s opinion that there was no duty to defend or coverage since there was no allegation or evidence of a bodily injury.

Value Of A Claim

October 4, 2014 | Mark S. Humphreys

North Richland Hills insurance lawyers need to know how to maximize a claim for their clients. A 1998, Texas Supreme Court opinion helps give some guidance in this regard. The style of the case is, Waite Hill Services v. World Class Metal Works. Here is what the opinion tells us.

World Class Metal Works sued Colony Insurance Company and related insurance agents, claiming breach of contract, Insurance Code violations, breach of the duty of good faith and fair dealing, and deceptive trade practices. The trial court directed a verdict for World Class on the coverage issue under the policy. The jury found that Colony engaged in false, misleading, or deceptive acts or practices and failed to comply with the duty of good faith and fair dealing. The jury awarded damages in response to two jury questions.

The defendants contend that the damages award based on both jury findings is a double recovery, and the trial court should have required the plaintiff to elect its remedy. The court of appeals affirmed the trial court’s judgment primarily on the grounds that the defendants waived error by not objecting to the charge in the trial court. This court held that defendants preserved error and that the trial court awarded a double recovery. Accordingly, this court reversed the court of appeals’ judgment and remand to the trial court to render judgment consistent with this opinion.

Credit Life Insurance And Damages

October 2, 2014 | Mark S. Humphreys

Burleson insurance attorneys will see potential new clients come in their office with issues related to “credit life” insurance. This is a type of insurance that pays off a debt in the event of the death of the insured. A 1998, Houston Court of Appeals [1st Dist.] opinion gives us something to learn about these types of policies. The style of the case is, Norman v. League City National Bank and Life of America Insurance Company. Here is what the case tell us.

Mr. Norman applied for and obtained two loans from the Bank. In connection with both loans, he applied for and obtained credit life insurance from Life of America Insurance Company. Mr. Norman died before making any payments on either loan. The Bank submitted a claim to Life of America, but the claim was denied. The Bank then filed suit against Life of America for payment under the insurance policies. The Bank also filed suit in probate court against Mr. Norman’s estate and Mrs. Norman for payment of the loans. Mrs. Norman then filed suit against the Bank and Life of America asserting claims under the Texas Insurance Code, the DTPA, and for breach of warranty. All actions by all parties were consolidated in the probate court.

The Bank and Life of America eventually settled their claims without notifying or involving Mrs. Norman. The trial court granted motions for summary judgment in part, holding that the claims asserted by Mrs. Norman were without merit as a matter of law, but the court also found Mrs. Norman was a “prevailing party” under the DTPA and was therefore entitled to recover reasonable attorney’s fees. All parties appealed.

Surplus Lines Insurance – Beware

September 30, 2014 | Mark S. Humphreys

De Soto insurance lawyers who know, will tell you to be aware of surplus lines insurance. These policies often have exclusions to such a degree as to make the insurance meaningless. A 2014, opinion issued by the Dallas Court of Appeals certainly left one insured feeling they had been ripped-off. The style of the case is, Simon v. Tudor Insurance. Here is some of the relevant information.

This is an insurance coverage dispute.

In December 2007, Simon d/b/a Sherlock Pest signed and submitted to Hines, an insurance agent, an application for insurance entitled “Termite & Pest Control General Liability Application.” The application stated “WDI excluded.” Simon also signed an accompanying “Absolute WDI Exclusion” that read:

Insurance Prompt Pay Problems With PIP

September 28, 2014 | Mark S. Humphreys

Lake Worth insurance lawyers handling Personal Injury Protection (PIP) coverage may find this Texas Supreme Court case interesting. The opinion was issued in 2001, and the style of the case is, Allstate Insurance Company v. Bonner. Here is some of the relevant information from the case.

Rhonda Bonner was covered by an auto insurance policy issued by Allstate. Bonner was injured in an accident caused by an uninsured motorist. This policy included a non-duplication-of-benefits provision. Bonner reported a claim for medical costs resulting from her injury to Allstate, and received $1,619 in personal injury protection benefits. After receiving this, Bonner filed an uninsured motorist claim, which Allstate received on December 15, 1997. Allstate did not acknowledge receipt of the claim until, January 16, 1998, and eventually rejected the claim.

Bonner filed suit against Allstate seeking payment of uninsured motorist benefits. Bonner also sought attorneys’ fees and costs, relying to the Prompt Payment of Claims statute, which requires insurance companies to acknowledge receipt of claims within 15 days. The jury awarded compensatory damages to Bonner of $1,000 and fees and costs totaling $7,500. The trial judge however, rendered a take-nothing judgment after trial. The court of appeals upheld the take-nothing judgment with respect to compensatory damages, as Bonner had already been compensated under the personal injury benefit, but assessed costs and fees against Allstate. The court of appeals held that an insurance company must comply with the Prompt Payment of Claims Act every time the insured presents a claim. Allstate sought review from the Supreme Court of Texas, asserting that Bonner did not present a claim for which it was liable (because of the no-nduplication of benefits provision). Allstate distinguished this case from earlier cases in which insureds had valid claims above and beyond what they had already been paid by Allstate.