Dallas Fort Worth Insurance Lawyer Blog

Arbitration And Insurance

July 10, 2014 | Mark S. Humphreys

Grand Prairie insurance lawyers will see insurance policies that contain arbitration provisions. The United States 5th Circuit issued an opinion in 2014 that should be read. The style of the case is Why Nada Cruz, L.L.C. v. Ace American Insurance Company. Here is some of the relevant information.

On August 15, 2010, the vessel “Sweet Dreams” sunk. Appellants Greg Anderson and Why Nada Cruz, L.L.C., also known as Why Not Cruise (collectively “Anderson”), sought recovery for the loss under a yachtsman policy of insurance (“Policy”) issued by Appellee ACE American Insurance Company (“ACE”). The Policy included a provision requiring disputes to be settled by binding arbitration. The Policy further provided that the “request for arbitration must be filed within one (1) year of the date of loss or damage.”

ACE advised Anderson on September 20, 2010 that it had denied his claim. On July 7, 2011, Anderson’s counsel sent ACE a letter stating:

Claims Against Insurance Agents

July 8, 2014 | Mark S. Humphreys

Dallas insurance lawyers will occasionally have a claim against an agent. With that in mind, a Houston Court of Appeals [1st Dist.], opinion is worth reading. The opinion is styled Houston v. Escalante. Here is some of the relevant case information.

Escalante’s Comida Fina, Inc. sued its former insurance agent, Houstoun, Woodard, Eason, Gentle, Tomforde and Anderson, Inc., d/b/a Insurance Alliance for breach of contract and violations of the Deceptive Trade Practices Act and the Texas Insurance Code. The breach of contract claim was based on the failure to procure an insurance policy with coverages requested by Escalante’s, and the DTPA and Insurance Code claims were for misrepresentations and non-disclosure of information about the policy and the coverage afforded thereunder. The jury returned a verdict in favor of Escalante’s, and the trial court signed a final judgment awarding $56,835 in actual damages, $75,780 in additional damages for Insurance Alliance’s “knowing” violation of the DTPA and the Insurance Code, attorney’s fees, costs, and pre- and post-judgment interest.

Between 2003 and 2008, Escalante’s owned and operated four restaurants in the Houston area. Between 2003 and 2006, the property and casualty insurance policy on the restaurants was with Ohio Casualty Group. The Ohio Casualty Policy provided, subject to certain exceptions, coverage against the loss of business income caused by an off-premises power or utilities outage. In 2005, Hurricane Rita struck Houston. Escalante’s subsequently made a claim against the policy and Ohio Casualty paid the claim.

BP Claims

July 6, 2014 | Mark S. Humphreys

Dallas and Fort Worth insurance lawyers need to keep up with events happening in the world of insurance claims. The Southeast Texas Record published an article of general interest recently. The title of the article is. “BP Files Emergency Appeal To U.S. Supreme Court To Intervene In Suspension Of Claims Payouts.” Here is what the article tells us.

BP has asked the U.S. Supreme Court to intervene after the U.S. Fifth Circuit Court Appeals disallowed maintaining a temporary stay in claims payouts following allegations of fraud within the 2010 Deepwater Horizon oil spill claims process.

BP has already paid out an estimated $3.7 billion to more than 38,000 claimants. The company successfully received a stay on the claims process in December following several revelations that businesses who were not actually harmed by the oil spill were receiving claims.

Partial Payment And Prompt Pay Insurance Law

July 5, 2014 | Mark S. Humphreys

Aledo insurance lawyers need to know how partial payment of an insurance claim works in a claim for violating the Prompt Payment of Claims Act. A 2004, Texas Supreme Court case styled, Republic Underwriters Insurance Company v. Mex-Tex, Inc. helps an insurance law attorney to understand. Here is the relevant information.

Facts: The roof atop a shopping mall was damaged by a hail storm. Before Republic agreed to pay for the replacement, Mex-Tex, owner of the mall, retained a roofer on a priority basis to replace the roof in order to avoid further injury to the tenants from future rains at a total cost of $179,000. Republic estimated the cost of replacing the roof with an identical make to be $145,460 and tendered that amount. The new roof was substantially similar in kind and quality to the old one, but the additional cost was due to the method of the roof’s attachment to the building and the high priority of the job. Republic refused to pay the balance of the claim and Tex-Mex sued. Tex- Mex sought to recover the balance of the amount owed plus a statutory 18% penalty on the entire claim. Republic argued that the penalty, if any, should be assessed only on the disputed amount, rather than on the entire claim. The trial court entered the judgment in favor of Tex-Mex and Republic appealed. The Amarillo Court of Appeals affirmed, holding that the policy did not require the replacement roof to be identical and that Republic’s tender of the amount it believed was owed on a claim did not stop the accrual of Texas Insurance Code, Prompt Payment of Claims Act penalties, or prejudgment interest, on what was later judicially determined to be the full amount of the claim. The Texas Supreme Court granted review.

The Texas Supreme Court reversed and remanded, agreeing that replacement of a damaged roof with one of “like kind and quality” fell within the policy but rejecting the lower court’s holding that the Prompt Payment of Claims Act calls for an 18% penalty of the amount of the claim, not just the amount outstanding after partial tender.

Surface Water Exclusion In Homeowners Insurance

July 3, 2014 | Mark S. Humphreys

Parker County insurance attorneys need to know the exclusions in homeowners policies and how courts interpret those exclusions. A 2007, Dallas Court of Appeals case is one worth reading. It is styled, Crocker v. American National General Insurance Co. Here is some of the relevant information.
The insureds had a homeowner’s insurance policy issued by American. The policy included a standard “surface water” exclusion. Because of improper design, the insureds’ raised patio collected water, which ran into the insured’s home. Armstrong, who represented an independent adjusting firm, was retained by one of the insurance companies to investigate the claim. After Armstrong’s report, coverage for the claim was denied under the “surface water” exclusion. The insureds’ brought suit against the insurance companies for breach of contract and for breach of common law and statutory duties of good faith, arguing that the “surface water” exclusion did not apply because the water was on the patio and never actually touched the surface of the ground. The insured’s also filed suit against Armstrong alleging negligence per se for violations of Texas Penal Code sections 22.02, 28.03, and 28.04; violations of Texas Insurance Code, Section 542.060; and for violations of the DTPA. Both carriers and Armstrong moved for summary judgment. The trial court granted summary judgment for all of the defendants, holding that the water which had fallen on the raised patio constituted “surface water” as a matter of law. Neither American nor Armstrong has addressed the “surface water” exclusion in their motion for summary judgment. The insureds’ appealed.
The Court of Appeals affirmed the trial court, holding that the plain meaning of the words “surface water” could reasonably include water that had collected on the surface of the insured’s patio, and thus, the “surface water” exclusion applied to the insureds’ claim. The court found that “surface water” is defined as water or natural precipitation diffused over the surface of the “ground” until it evaporates, is absorbed by the land, or reaches channels where water naturally flows. The court then found that to limit the term “ground” to dirt would exclude all man-made surfaces and, therefore, render the exclusion virtually meaningless in the multitude of man-made environments. The court also found that since the carriers’ had a valid exclusion they could not be liable for any bad faith claims. The court further found that the summary judgment was valid for both American and Armstrong, under the “surface water” exclusions even though they had not affirmatively pled the exclusion. The court further held that Armstrong as an independent adjuster, owed no duty to the insureds’ and, therefore, could not be liable for bad faith claims; and the insureds’ had not properly briefed the Penal Code claims against Armstrong.

Insurance Claims And Attorney Fees

July 1, 2014 | Mark S. Humphreys

Dallas area insurance attorneys will eventually try a case wherein, part of the case is won and part is lost. If this happens, does it affect an award of attorney fees? This question is answered in a Fort Worth Court of Appeals case opinion issued in 2014. The style of the case is, Farmers Group v. Poteet. The opinion is long and deals with many other issues. Here is the relevant part.

After a November 2002 discharge of smoke and soot from her heating and air-conditioning system, Poteet reported her claim to Farmers, which investigated and initially determined that the discharge of smoke and soot was caused by cracked heat exchangers in the home’s heating system and that the loss was covered under Poteet’s homeowners’ policy as “sudden and accidental damage from smoke.” Farmers paid for remediation and repair, including temporarily relocating Poteet and her daughter to a hotel during the process, cleaning and replacing furniture and carpet, repainting of the ceiling, and cleaning the home’s walls and contents.

Poteet was dissatisfied with the remediation and cleaning efforts and claimed that continued presence of soot in the air of the home was causing her and her daughter to experience respiratory problems and rendered the home uninhabitable. Poteet hired a Certified Industrial Hygienist, Robert Miller, to investigate whether soot was still present in the home. Miller determined there was still soot present in the house.

Life Insurance Beneficiary And Bad Faith

June 29, 2014 | Mark S. Humphreys

Dallas life insurance attorneys need to know about this Federal case. It is a 1996, Southern District of Texas opinion. It is styled, Bates v. Jackson National Life Insurance Company. Here is some of the relevant information.

Bates’ children sued Jackson National for proceeds of a life insurance policy issued to Bates. Plaintiffs asserted causes of action for breach of contract, bad faith, Insurance Code violations and DTPA violations.

On October 31, 1991 and November 1, 1991, Bates was diagnosed with phlebothrombosis and diabetes, respectively. On November 12, 1991, Bates submitted an application to Jackson National in which he represented he had not consulted or been treated by a physician in the last five years and that he had not submitted to an x-ray or any laboratory studies or tests. Furthermore, Bates represented in the application that he had not been told he had any disease, abnormality or diabetes. The policy was issued and the application was attached to and made a part of the policy.

Additional Insured Unable To Make First Party Claim

June 28, 2014 | Mark S. Humphreys

Arlington insurance lawyers need to know the cases where an insured can sue under an insurance policy and where they cannot. It is not always easy to do. A 1996, Beaumont Court of Appeals opinion is a good case to read. The style of the case is, Rumley v. Allstate. Here is some of the relevant information.

Joyce Rumlet, (Wife) sustained personal injuries in a one car vehicle accident in which her husband, Wilburn Rumley, was the driver. Mrs. Rumley filed a claim for benefits under their policy with Allstate. Allstate paid Personal Injury Protection benefits but refused to pay liability because the policy contained a family member exclusion. At the time, the Texas Supreme Court was reviewing a case on this issue but had not yet issued an opinion. In that decision, the Texas Supreme Court invalidated the family member exclusion. Wife sued Allstate and Ted Pate, a senior staff claims representative for Allstate, for breach of duty of good faith and fair dealing, violations of the Texas Insurance Code, Section 541.060 and violations of the Texas Deceptive Trade Practices Act, Section 17.46.

Allstate filed a Motion for Summary Judgment on the grounds that Wife’s claim was a third party claim for which Allstate owed no duty of good faith and fair dealing; there was a reasonable basis for denying the claim in that the family member exclusion was an unsettled issue of law; and there was no special or contractual privity between Pate and Rumley. The trial court granted summary judgment. Wife appealed.

Beneficiary Of Life Insurance Can Assert First Party Claims

June 26, 2014 | Mark S. Humphreys

Life insurance attorneys in Fort Worth know that a beneficiary of a life insurance policy can assert claims against an insurer that denies benefits of a life insurance claim. This is pointed out in 1996, San Antonio Court of Appeals opinion styled, Mendoza v. American National Insurance Co. Here is some of the relevant information.

Jerry Mendoza was the named insured under a $25,000 life insurance policy purchased from American National on August 1, 1991. The October premium, which was due on the first, was not paid. The policy provided for a thirty-one day grace period.

The summary judgment evidence revealed that on Friday, November 1, 1991, the last day to pay under the grace period, American National’s agent and district manager, Leon Sitka, verbally agreed to extend the grace period to Monday, November 4, 1991. This agreement or representation by Sitka was contrary to the terms of the policy, which only authorized American National’s president, vice-president or secretary to extend the time for payment of premiums.

Who Can Sue For A 1st Party Claim?

June 24, 2014 | Mark S. Humphreys

Insurance lawyers in Grand Prairie can answer the above question for you. This issue was also discussed in the 1994, Texas Supreme Court case styled, Allstate Insurance Company v. Watson. Here is brief information relevant to the opinion.

Watson was injured in a car accident. Watson brought suit against the insured under an automobile liability policy issued by Allstate and also brought suit against Allstate alleging unfair claim settlement practices under Texas Insurance Code, Section 541.060, for failing to attempt in good faith to effectuate prompt settlement where liability had become reasonably clear. Watson also brought suit under the Texas Deceptive Trade Practices Act, breach of contract, and the common law duty of good faith and fair dealing. The trial court granted Allstate’s Motion for Summary Judgment against Watson. The Court of appeals reversed and remanded the trial court, holding that Watson, as a third-party beneficiary, could bring an action under Section 541.060 without first proceeding directly against the named insured of the policy.

The Texas Supreme Court held that Section 541.060 does not confer upon third-party claimants a direct cause of action against an insurer for unfair claim settlement practices. Under Section 541.060 is an exclusive list of statutory unfair or deceptive acts or practices. However, this section does not define unfair claim settlement practices as an unfair or deceptive act or practice. It provides a private cause of action for any practice defined by Section 17,46 of the DTPA as an unlawful deceptive trade practice. However, unfair claim settlement practices is not among the enumerated items defined by Section 17.46.