Dallas Fort Worth Insurance Lawyer Blog

Penalties For Delay In Paying Claim

August 10, 2014 | Mark S. Humphreys

Arlington insurance lawyers will usually know the penalties for insurance companies that do not promptly pay a claim. A 1997, United States 5th Circuit Court of Appeals case illustrates the penalties. The style of the case is, Higginbotham v. State Farm Automobile Insurance Company. Here is what the case tells us.

Higginbotham’s Porsche was stolen on June 8, 1993, from an unsecured parking lot next to his residence. The car was recovered later that day but had been stripped of its top, seats, interior and exterior trim but was not damaged or destroyed with regard to mechanical connections, wiring harnesses or the engine. Higginbotham reported the theft to State Farm on June 9, 1993. State Farm denied his claim five months later on November 19, 1993.

Higginbotham filed suit for breach of contract, violations of the DTPA, violations of the Texas Insurance Code, negligence, breach of duty of good faith and fair dealing, and violation of the Prompt Payment of Claims Act which imposes an 18% penalty on the carrier under certain circumstances. At trial, the jury returned a verdict in favor of Higginbotham for $30,000.00, the amount of his coverage, but the Court directed a verdict in favor of State FArm on the bad faith and extracontractual claims under the DTPA and Insurance Code. Higginbotham appealed.

Insurance Claims And Breach Of Contract

August 9, 2014 | Mark S. Humphreys

Insurance lawyers in Texas must know how to assert bad faith claims. A 2005, Waco Court of Appeals case styled, United States Fire Insurance Company v. Fugate, is good reading for understanding how to properly assert a bad faith claim. Here is what the case tells us.

The insured and her family were injured in a collision with another vehicle. After the insured filed suit against the driver of the other vehicle, the parties settled. The insured then sued her employer’s insurer, United States Fire Insurance Company (US Fire), alleging breach of the insurance contract seeking to recover underinsured and uninsured motorist (UIM) benefits under the employer provided insurance policy. The insured did not assert any bad faith claim against US Fire in her breach of the insurance contract lawsuit. After a jury trial and judgment in favor of the employee on the breach of the insurance contract claim, the insured filed a second lawsuit against US Fire asserting a claim under the bad faith statutes and seeking statutory penalties and attorney’s fees on the ground that US Fire did not timely acknowledge her UIM claim. US Fire sought summary judgment in the bad faith cause of action, asserting that the claim was barred by res judicata because it could have been litigated in the first suit. The trial court granted Fugate’s motion for summary judgment and awarded her statutory penalties and attorney’s fees and this appeal followed.

The Waco Court of Appeals reversed and rendered judgment in favor of US Fire on its res judicata defense. The court held that the bad faith statutes of the Texas Insurance Code must be asserted contemporaneously with a breach of the insurance contract claim or be barred by res judicata. Finding that the second lawsuit for bad faith damages involved the same parties was premised upon the same claims as the breach of the insurance contract action and that the bad faith claims could have been raised in the first action because the claim for untimely acknowledgement of a UIM claim related to the breach of the insurance contract claim for UIM benefits, the court concluded that the second suit based solely on bad faith was therefore barred by res judicata.

Insurance Company Backs Down

August 7, 2014 | Mark S. Humphreys

Parker County insurance attorneys need to keep up with events happening in the insurance legal world. An article from The Texas Tribune titled, “Insurer Drops Suit Against Tyler Widow” is worth knowing about. Here is what the article tells us.

Crystal Davis, a stay-at-home mom from Tyler, got some welcome news in her battle against an insurance company that sued to cut off the workers’ compensation benefits she got after her husband was killed on the job.

Davis’ lawyer called to inform her early Thursday evening that ACE American Insurance had dropped its lawsuit against her and her children. Davis’ story was featured in The Texas Tribune’s four-part series published this week, Hurting for Work, about the struggles people face after they or their loved ones are hurt or killed on the job in Texas.

Death Benefits Denied

August 5, 2014 | Mark S. Humphreys

A Fort Worth life insurance attorney will want to know the best way to handle a situation where death benefits are denied a beneficiary. The Texas Tribune ran an article that shows how bad some situations can be. Here is what the article says.

Crystal Davis was headed to the grocery store when the text message popped up on her phone. It was from her next-door neighbor.

“Can you come home?” it said. “Something has happened.”

Accidents And Tragic Situations

August 3, 2014 | Mark S. Humphreys

Fort Worth insurance lawyers will see some pretty tragic situations where a person is ill treated by an insurance carrier. The Texas Tribune ran a story talking about tragic situations in July 2014. The title of the story is, “After Catastrophic Fall, The Fight Of One Worker’s Life.” Here is what it tells us.

Along a street lined with warehouses on the east side of Houston, nine Mexican laborers working about 20 feet off the ground are tearing up a concrete roof with hand-made pick axes.

They are chiseling it out, one mattress-sized panel at a time, then shoving the debris onto the floor below. There’s a giant pile of rubble down there, a jumble of dirty insulation, tar-covered roof decking and fire-suppression water pipes ripped from the building’s interior.

Life Insurance And Tragic Situations

August 2, 2014 | Mark S. Humphreys

Dallas life insurance attorneys will run across tragic situations in their legal practice. The Texas Tribune has published an article describing some of these situations. It is titled, “Behind Texas Miracle, A Broken System For Workers.” Here is what it tells us.

Drive almost anywhere in the vast Lone Star State and you will see evidence of the “Texas miracle” economy that policymakers like Gov. Rick Perry can’t quit talking about.

From the largest U.S. refinery in Port Arthur to the storied Permian Basin in West Texas, Big Oil is back. In formerly depressed South Texas, gas flares from the fracking boom can be seen from outer space.

Loss Of Use – Another Opinion

July 31, 2014 | Mark S. Humphreys

Attorneys handling insurance cases will run into situations dealing with “loss of use” claims. The Waco Court of Appeals issued an opinion in June of 2014, that is worth reading. The style of the case is, American Alternative Insurance Corporation v. Robert Davis and J & D Towing, LLC. Here is relevant information from that case.

The crux of this case involves whether a chattel owner should be compensated for measurable loss-of-use damages suffered when the owner’s chattel is totally destroyed and the owner is unable to replace the chattel or obtain a substitute immediately. The dispute arises from an automobile accident between Robert Davis and Cassandra Brueland that occurred in Huntsville, Texas on December 29, 2011. At the time of the accident, Davis was driving a wrecker owned by his business, J & D. It is undisputed that Brueland was at fault for the accident and that the wrecker was rendered a total loss and unusable as a result of the accident. The only issue submitted to the jury pertained to J & D’s damages for the loss of use of its wrecker.

At trial, Davis testified that the wrecker in question was a 2002 Dodge 3500 with an 806 Vulcan wheel-lift unit on the rear. Davis stated that this was J & D’s only wrecker. Davis did not replace the wrecker until the second week of March 2012 because he claimed that he was financially unable to purchase a replacement wrecker.

Homeowners Policy And Fire

July 29, 2014 | Mark S. Humphreys

Insurance law attorneys will one day see a claim wherein the insurance company is denying a fire loss by asserting that the fire was the result of arson by the homeowner. The Houston Court of Appeals [14th Dist.] issued an opinion in a case wherein that denial occurred. The style of the case is, American Risk Insurance Company, Inc. v. Ahmad Abousway and Ibrahim Abousway. Here is the relevant information from that case.

Ahmad and Ibrahim Abousway had a homeowner insurance policy with American Risk Insurance Company, Inc., insuring a home the two brothers bought together in early 2008. The policy included coverage for fire loss. Following a 2010 fire that rendered the home uninhabitable, the Abousways submitted a claim for losses under the policy. American Risk hired a fire expert to investigate the fire. Based on his findings, American Risk refused payment of the claim until further investigation had concluded.

The Abousways sued American Risk, asserting claims for breach of contract and violations of chapters 541 and 542 of the Texas Insurance Code. American Risk answered the suit, asserting that the fire was an act of arson, thereby voiding the policy. The case was tried to the bench.

Prompt Payment Penalty Calculation

July 27, 2014 | Mark S. Humphreys

Texas insurance law lawyers need to be able to calculate how the Prompt Payment Act when calculating damages. A 2008, Fort Worth Court of Appeals case is good to read for guidance. The style of the case is, GuideOne Lloyds Insurance Company v. First Baptist Church of Bedford. Here is some of the relevant information.

First Baptist brought suit against GuideOne for hail damage to the roof of its church building. GuideOne’s engineer concluded the roof had to be replaced and could not be repaired. GuideOne solicited an estimate to repair the roof anyway, and the church obtained an estimate for the replacement cost, including a statutorily required insulation upgrade. GuideOne agreed to pay only its repair estimate and did not include any cost for the required insulation upgrade. The jury awarded the church approximately $286,000 for the covered losses, $60,000 in damages on the church’s bad faith claim, and $30,000 in compensatory and $55,000 in exemplary damages for a knowing violation, along with $100,000 in attorneys’ fees, and $188,000 based on the 18% interest penalty under the Prompt Pay Act for untimely payment of claims. The jury found that GuideOne had made an unconditional tender of $155,000 to the church after the church had filed suit. GuideOne argued that the trial court erred in disregarding the jury’s finding regarding its unconditional offer and that the interest penalty should not have been calculated without subtracting the $155,000 that the jury found it had unconditionally offered after the suit was filed. GuideOne also challenged certain questions on the jury charge as erroneous.

This appeals court held the trial court erred in disregarding the jury’s finding that GuideOne had unconditionally offered $155,000 to settle the claim because there was some evidence to support the jury’s finding. In applying the offer to arrive at a new interest calculation, the court applied the $155,000 tender first to the accrued prejudgment interest on the amount of the coverage with the balance applied the principle coverage amount owed, and then use the adjusted principle to calculate the 18% interest penalty for untimely payment. The court rejected GuideOne’s argument that First Baptist had not received a finding on the accrual date for its Prompt Pay claim because the accrual date was undisputed and need not be submitted to the jury.

Insurance Kickbacks To Banks

July 26, 2014 | Mark S. Humphreys

Texas insurance law attorneys need to keep up with what is happening in the world of insurance. The Washington Examiner ran an article in June 2014 that is interesting. The article is titled “US Weighs Lawsuits On Alleged Insurance Kickbacks.” Here is what the article tells us.

The government is considering suing banks and other mortgage servicers over alleged insurance kickbacks that may have cost government-controlled mortgage companies Fannie Mae and Freddie Mac hundreds of millions, according to an internal federal report.

The agency responsible for guarding the mortgage giants’ finances told its inspector general’s office that it will decide over the next year whether to sue.