Dallas Fort Worth Insurance Lawyer Blog

Anti-Technicality Statute

April 22, 2014 | Mark S. Humphreys

Insurance lawyers need to know some of the more obscure areas of the Texas Insurance Code. A United States 5th Circuit of Appeals case dealt with the “Anti-Technically” Statute recently. The case is styled W.W. Rowland Trucking Company, Inc. v. Max America Insurance Company. Here is the relevant information.

Rowland transported a load of video game consoles valued at $354,000 from Marshall, Texas, to its Dallas, Texas terminal. Thieves stole the tractor/trailer loaded with the consoles while it was located at the Dallas terminal. At the time of the theft, Rowland had an insurance policy with Max America, also known as Alterra. The Policy’s section entitled “Coverage” provides for “Legal Liability Coverage,” which covers Rowland’s [L]egal liability for loss to covered property: a. while under [Rowland’s] care, custody, and control; [and] b. that [Rowland] become[s] legally obligated to pay as a common or contract carrier under a bill of lading, contract of carriage, or shipping receipt that is issued by [Rowland] or that is issued on [Rowland’s] behalf.

Under the “Property Covered” section, the Policy provides coverage for “Property in Vehicles,” defined as “direct physical loss caused by a covered peril to property of others described on the ‘schedule of coverages’ while in due course of ‘transit’ including loading and unloading.” The Policy also provides that all eight of Rowland’s terminals must be “100% fenced, gated, locked and lighted 24 hours per day, 7 days per week,” or else the “[c]overage is null and void.” The Policy had a limit of $300,000, and included a $2,500 deductible.

Delay In Paying A Claim

April 20, 2014 | Mark S. Humphreys

Fort Worth insurance attorneys need to be aware of this 5th Circuit Court of Appeals decision. The style of the case is W.W. Rowland Trucking Company, Inc. v. Max America Insurance Co. Here is the relevant information from the case.

W.W. Rowland Trucking Company, Inc.’s Dallas, Texas truck terminal, in addition to an 18% penalty. For the foregoing reasons, the judgment of the court was affirmed.

Rowland transported a load of video game consoles valued at $354,000 from Marshall, Texas, to its Dallas, Texas terminal. Thieves stole the tractor/trailer loaded with the consoles while it was located at the Dallas terminal. At the time of the theft, Rowland had an insurance policy Max America, also known as Alterra. The Policy’s section entitled “Coverage” provides for “Legal Liability Coverage,” which covers Rowland’s [L]egal liability for loss to covered property: a. while under [Rowland’s] care, custody, and control; [and] b. that [Rowland] become[s] legally obligated to pay as a common or contract carrier under a bill of lading, contract of carriage, or shipping receipt that is issued by [Rowland] or that is issued on [Rowland’s] behalf.

Life Insurance And Missed Payments

April 19, 2014 | Mark S. Humphreys

North Richland Hills Lawyers who handle life insurance claims can read this case and then tell potential clients they better hire an attorney. This case is from the United States District Court, Northern District, Fort Worth Division. The style is Doretha Hall v. Fidelity & Guaranty Life Insurance Company. Here is the relevant information.

Fidelity issued a term life insurance policy to Mr. Hall in the face amount of $75,000.00. In his application, Mr. Hall designated Doretha as the beneficiary of the policy, and no changes to that designation were ever made. Mr. Hall also requested the premium payments be drafted from his checking account. However, the payment due November 1, 2010, in the amount of $73.65, was rejected because Mr. Hall’s checking account was closed. On November 8, 2010, Fidelity sent a notice of the rejected payment to Mr. Hall’s home address. On December 3, 2010, Fidelity sent Mr. Hall a late payment notice informing him that his premium payment was past due and that the policy would lapse if the premium was not paid by the end of the grace period. When Fidelity still had not received any payment, it sent a second late payment notice on January 3, 2011, informing Mr. Hall again that his payment was past due and that his policy would lapse if the premium was not paid by the end of the grace period. On February 2, 2011, Fidelity mailed Mr. Hall a lapse notice indicating that Mr. Hall’s policy had lapsed and terminated on December 2, 2010, because Mr. Hall had failed to pay his premiums. The lapse notice expressly stated that to apply for reinstatement, Mr. Hall must complete the enclosed application for reinstatement and submit it with the past due premium amounts. On February 10, 2011, Fidelity received a check in regards to Mr. Hall’s policy in the amount of $73.65. Fidelity held the check in suspense and then refunded it to Mr. Hall on March 18, 2011, because Fidelity did not receive a reinstatement application or the remaining past-due premiums.

Doretha notified Fidelity of Mr. Hall’s death on April 17, 2011. However, Fidelity denied the claim for benefits under Mr. Hall’s policy because the policy had lapsed and terminated for nonpayment of premiums prior to Mr. Hall’s death.

Policy Exclusions – Interpretations

April 17, 2014 | Mark S. Humphreys

Arlington insurance lawyers need to be able to know how the courts interpret insurance policy exclusions. A recent finding from a United States Magistrate Judge in the Northern District of Texas is helpful. The style of the case is, The Burlington Insurance Company v. Midlothian Chamber of Commerce, et al.

The Chamber sponsored a bike-a-thon in which John Shumaker participated. Shumaker was seriously injured and later sued the Chamber in Texas district court, claiming that his personal injuries resulted from various acts of negligence at the event. Shumaker alleges that the Chamber “organized and promoted” the bike-a-thon, which was a “scenic ride and tour of historic homes as well as newer neighborhood[s]” and was “not a race.” He asserts claims in the nature of negligence.

TBIC is paying the Chamber’s defense costs in the state case but initiated this declaratory judgment, requesting that the Court find that TBIC has no duty to defend the state suit or to indemnify the Chamber for the claims that Shumaker asserts.

Insurance Claims And Punitive Damages

April 15, 2014 | Mark S. Humphreys

Insurance lawyers who seek punitive damages in bad faith cases need to be able to determine when they apply. A 1995, Beaumont Court of Appeals case is a good one to read for this issue. The style of the case is, Liberty Mutual Fire Insurance Company v. Crane. Here is some of the relevant information from this case.

A claimant seeking these damages must establish:

1. That there was an absence of a reasonable basis for denying or delaying payment of the benefits of the policy.

Breach Of The Insurance Contract By Itself Is Not Enough To Support A Bad Faith Claim

April 13, 2014 | Mark S. Humphreys

Dallas insurance lawyers need to know that when an insurance company breaks the contract it has with it’s insured, that is not enough by itself to support a claim for bad faith insurance. The 1988, Beaumont Court of Appeals case, Gulf States Underwriters v. Wilson, states this very clearly. Here is some of the relevant information from that case.

Wilson entered into an insurance contract with Gulf States effective June 29, 1979, and initially paid $85. This case has as its basis a dispute between Wilson and the insurance company over how this $85 should be classified: as a “deposit” against future premium shortfalls (according to Gulf States) or as a premium paid in advance (according to Wilson). The regular monthly premium was to be based on a percentage of cords of pulpwood Wilson’s employer produced each month. In late April 1982, Wilson paid $419 premium. Gulf States applied this payment to Wilson’s coverage from March 28, 1982, through April 29, 1982. Wilson was subsequently injured on May 1, 1982. On May 10, 1982, Gulf States mailed Wilson a notice of intention not to renew his policy. Wilson did not pay a premium on the next due date at the end of May. According to Gulf States, the letter did not actually cancel the policy, but rather, the policy lapsed for non-payment of the premium due at the end of May.

Gulf States theory at trial was that Wilson’s first payment of $85 was not the first month’s premium, but merely a “deposit” which was consideration for issuing the policy but did not effect coverage for any period of time. Following this logic, the first premium was not paid until the end of July 1979. That premium would apply retrospectively for coverage during July 1979. Gulf States thus maintains that the payment at the end of April 1982 was for insurance coverage during the month of April 1982. And, since Wilson paid no premium at the end of May, the policy lapsed as of the end of April 1982, so the injury on May 1, 1982, was not covered.

A Wrongful Denial Does Not Mean Bad Faith

April 12, 2014 | Mark S. Humphreys

All insurance cases have to looked at closely by insurance attorneys. Not every time an insurance company denied a claim means that the insurance company has breached its duty of good faith and fair dealing. The 2006, Texas Supreme Court case Minnesota Life Insurance Company v. Vasquez is a good illustration of this. Here is the relevant information on this case.

Minnesota Life issued a Mortgage Accidental Death Insurance policy to Joe and Elia Vasquez, promising to pay their home mortgage in the event either died due to an accident. In June 2000, Joe Vasquez became ill, was hospitalized, suffered a seizure, and lapsed into a coma. Twelve days later, he emerged from the coma and was transferred to a hospital room. Later that day, while no one else was present, he apparently fell, hit his head, and died.

On October 6, 2000, Elia Vasquez filed a claim with Minnesota Life requesting payment of the balance due on her mortgage (about $41,000) and submitted copies of the death certificate and autopsy report. After reviewing the documents, Minnesota Life sought advice from a medical consultant as to whether Mr. Vasquez’s death resulted from an accident “independently of all other causes,” as required by the policy. The consultant advised that he needed to see the relevant medical records.

Failure To Pay Claim And Bad Faith

April 10, 2014 | Mark S. Humphreys

Most insurance lawyers can tell a new client that the fact an insurance company refuses to pay a claim it should have paid does not make the insurance company liable for a bad faith insurance claim. The 1998, Texas Supreme Court case, Provident American Inc. v. Castanden, helps explain this.

Denise Castaneda sought damages from Provident for alleged violations of the Insurance Code and the Deceptive Trade Practices Act arising out of the denial of her claim for benefits under a health insurance policy and the manner in which her claim was handled. Because the evidence was legally insufficient to support the jury’s verdict, this court reversed and rendered judgment that Castaneda take nothing.

Denise Castaneda’s father, Guillermo Castaneda, Sr., applied for medical insurance with Provident in May 1991. He sought a policy that would cover the entire family including his daughter Denise, who was twenty-one years old at the time, her sister, and their brother Guillermo, Jr. During the application process, Guillermo Castaneda, Sr. failed to disclose that just two days before he applied for the policy, Guillermo, Jr. had received medical attention from a physician for jaundice, anemia, and suspected hepatitis. Denise had received medical treatment for jaundice and hepatitis several years prior to the date her father applied for health insurance.

Bad Faith And The Common Law

April 8, 2014 | Mark S. Humphreys

Lawyers handling “bad faith” insurance cases need to understand how bad faith is treated by Texas common law.

This blog spends a lot of space dealing with the Texas Insurance Code and how violations of those statutes is bad faith insurance. Under Texas law, there is also a common law cause of action for breach of the duty of good faith and fair dealing in cases where an insurance company has no reasonable basis for denial or delay of payment or fails to reasonably investigate its basis for denying a claim. This has been explained by the 1987, Texas Supreme Court case styled, Arnold v. National County Mutual Fire Insurance Co. The precise meaning of phrases such as “liability becomes reasonably clear” and “reasonable basis for denial” are not yet clearly defined, but they are continually being litigated in an effort to formulate more exact definitions. There are a trio of Texas Supreme Court cases dealing with this subject. This trio of cases purport to redefine the breach of the duty of good faith and fair dealing, but Texas courts have treated these cases in much the same fashion as they have for years. Under the new standard for looking at bad faith cases an unpublished Dallas Court of Appeals case observed: “Under the new standard, the insured must show that the insurer denied the claim after liability became reasonably clear. To show that liability was reasonably clear, the insured must show that the insurer had no reasonable basis for denial. As noted by a majority of justices on the Supreme Court, the change is merely semantic.”

The above should be confusing to most people. This writer would suggest that the above being confusing is ok. The reason it is ok is that insurance lawyers now have the statutes in the Texas Insurance Code that are ample ammunition for fighting wrongs committed by insurance companies.

Personal Injury Protection And Coverage

April 6, 2014 | Mark S. Humphreys

Personal injury attorneys in Dallas would want to know and understand this case. It is a 20024, Texas Supreme Court case styled, Texas Farm Bureau v. Sturrock. Here is the relevant information.

In this case, an insured was injured when his foot became entangled with his truck’s raised door facing while he was exiting the vehicle. The Court had to decide whether his injury resulted from a “motor vehicle accident” for purposes of personal injury protection (PIP) coverage under his Texas standard automobile insurance policy. This court held that a “motor vehicle accident” occurs when (1) one or more vehicles are involved with another vehicle, an object, or a person, (2) the vehicle is being used, including exit and entry, as a motor vehicle, and (3) a causal connection exists between the vehicle’s use and the injury-producing event. This court concluded that the insured’s injury here resulted from a “motor vehicle accident” within his policy’s PIP coverage. Accordingly, they affirmed the court of appeals’ judgment.

Jeff Sturrock drove his truck to work, parked, and turned off the engine. While exiting the truck, he entangled his left foot on the raised portion of the truck’s door facing. Sturrock injured his neck and shoulder in his attempt to prevent himself from falling from the vehicle. Sturrock filed a claim for PIP benefits under his vehicle’s insurance policy, issued by Texas Farm Bureau.