Dallas Fort Worth Insurance Lawyer Blog

Subrogation In Texas – An Important Thing To Know About

April 29, 2010 | Mark S. Humphreys

What if that Grand Prairie resident, or someone from Fort Worth, Arlington, Dallas, or out in Weatherford gets a bunch of money in an insurance settlement. That’s a good thing, Right? Well maybe not. It depends on whether or not there were any subrogation interests involved and whether or not those subrogation interests were properly handled.

USLEGAL.com defines subrogation as the substitution of one person in the place of another with reference to a lawful claim or right.

Subrogation commonly occurs in insurance matters, when an insurance company which pays its insured client for injuries and losses then sues the party which the injured person contends caused the damages.

Texas Homeowners Policy And Running A Business From Home

April 28, 2010 | Mark S. Humphreys

Pretend a couple in Grand Prairie, Fort Worth, Arlington, Dallas, Weatherford, or anywhere else in Texas is running a business out of their home and someone gets injured as a result of that business activity. Does a normal Texas homeowners insurance policy cover any claim that may be made?

As a general rule the answer is no. The normal Texas howeowners policy includes a “business pursuits exclusion.” This means that incidents arising out the course of that business are excluded from coverage under the insurance policy. There are exceptions to this general rule mainly because the Texas Department of Insurance, several years ago started letting insurance companies write their own policies. Prior to this the policys were standard and followed recommendations from the state. Now, each company writes their own policy and so, there are differences between one policy and the other that now exist. Plus, homeowners can buy endorsements to cover their business pursuits that they are pursueing from their home.

The normal / typical homeowners policy excludes coverage for “bodily injury or property damage arising out of or in connection with a business engaged in by an insured.” This is articulated in the case, State Farm Fire & Casualty Company v. Vaughan. This case was decided by the Texas Supreme Court in 1998, and is still good law. Here, State Farm Fire & Casualty Company challenged a claim being made by Vaughan and the court ruled in favor of State Farm, on this business exclusion policy language.

What Is A Stowers Claim In Texas?

April 27, 2010 | Mark S. Humphreys

What does “Stowers” mean to someone in Grand Prairie, Arlington, Fort Worth, Dallas, Weatherford, or anywhere else in Texas? This is something very important to understand.

A Stowers claim is a claim that an insurance company has handled in an improper manner. Most incorrect claims handling by an insurance company can be called “bad faith”, and the Stowers claim is just a different and unique version of bad faith. This Stowers doctrine was first articulated in the case, Stowers Furniture Co. v. American Indemnity Co. This is an old case, decided in 1929, but is still good law. This case was decided by what is today, the Texas Supreme Court. In 1929, it was called the Texas Commission of Appeals. When an insurance company violates their duty under the Stowers doctrine, the insurance company can become liable for much more money than the insurance policy provides for in the insurance contract.

A Stowers action arises when the liability carrier fails to make a reasonable settlement within the policy limits, and subsequently, exposes their insured policyholder to a judgment in excess of the policy limits. This Stowers claim belongs to the insured policyholder, not the person sueing the policyholder. What usually happens when the Stowers duty is violated, is that the policyholder assigns the Stowers claim to whoever is sueing the policyholder.

Health Insurance Company Doing Wrong

April 26, 2010 | Mark S. Humphreys

You live in Grand Prairie, Arlington, Fort Worth, Dallas, Weatherford, or anywhere else in Texas and your health insurance company does you wrong; does it happen to others?

The Fort Worth Star-Telegram ran an article on April 19, that highlighted a health insurer based in North Richland Hills, Texas. This North Texas insurance company has had many complaints filed against it by its’ customers.

The title of the article is, “Health Insurer Based In North Richland Hills Facing Many Customer Complaints.” The article is written by Dianna Hunt.

Who Gets The Insurance Money?

April 25, 2010 | Mark S. Humphreys

Let’s say a Grand Prairie business, or one in Arlington, Fort Worth, Dallas, Weatherford, or anywhere else in Texas, gets sued and a judgement is rendered against them. Does the sued business’ insurance company pay the money to their insured to handle or to the person who sued their insured to resolve the judgement?

This was the issue in a lawsuit recently ruled on by The Honorable Senior District Judge, A. Joe Fish. This case, was decided on April 5, 2010, in the United States District Court, N.D. Texas, Dallas Division. The style of the case is, Mark Rotella and Mark Rotella Custom Homes, Inc. d/b/a Benchmark Custom Homes v. Mid-Continent Casualty Company.

Mark Rotella and Mark Rotella Custom Homes, Inc. d/b/a Benchmark Custom Homes (Benchmark) were sued by Joan Cutting (Cutting) for numerous reasons including, construction defects in her home, fraudulent billing practices, and breach of contract. Cutting prevailed in the underlying suit and obtained a judgement for $2,671,187.26 in actual and treble damages, $336,342.59 in attorneys’ fees, and $191,189.95 in pre-judgement interest, post-judgement interest, and costs. The immediate lawsuit resulted between Benchmark and Mid-Continent Casualty Company (Casualty) over the obligations of Casualty under the policy of insurance they had with Benchmark.

A “What Happened” Case

April 24, 2010 | Mark S. Humphreys

Attention residents of Grand Prairie, Arlington, Fort Worth, Dallas, Weatherford, and everywhere else in Texas. Sometimes there is a case that makes you ask, “What happened”.

A case that was decided in by the Court of Appeals of Texas, Houston (14th Dist.), on March 30, 2010, makes you ask, “What happened?” This case decision was written by Justice, Jefferey V. Brown, and is styled, Joe M. Garza, Pay Phone Owners Legal Fund, LLC, and Ernest Bustos v. Terra Nova Insurance Company, LTD., Guaranty National Insurance Company, The Burlington Insurance Company, and United National Insurance Company.

In this case, Joe M. Garza, Pay Phone Owners Legal Fund, LLC, and Ernest Bustos purchased pay telephones from American Telecommunications Company, Inc. (ATC). When buying the telephones, ATC allegedly represented that it would buy back the phones after 36 months or at a reduced price before 36 months if the phones were unsatisfactory. ATC also allegedly represented that it had insured the value of the phones if it was unable to repurchase them. ATC allegedly marketed that Northern & Western Insurance Company would provide primary insurance for its “buy back program,” and would provide excess insurance for the program. When requests were submitted for ATC to buy back the phones, ATC did not honor the requests. When the plaintiffs tried to collect on the insurance policies the claims were denied.

Insurance Appraisal Clauses In Texas

April 22, 2010 | Mark S. Humphreys

Lightning strikes a home in Grand Prairie, or Arlington, Fort Worth, Dallas, or out in Weatherford. The lightning damages electronic equipment. The homeowner calls his insurance company to make a claim. Then the insurance company invokes an appraisal clause in the insurance contract. What does this mean?

This is what happened in the case, Steven Woodward, et al, v. Liberty Mutual Insurance Company. This case was decided by the United States District Court, N.D. Texas, Dallas Division on March 26, 2010. The Judge was the Honorable, A. Joe Fish. In this lawsuit, Liberty Mutual Insurance Company (Liberty) filed papers with the Court for an order to be issued to compel appraisal and to stay the Court actions in this matter pending the completion of appraisal. Judge Fish granted the motion and ordered the parties to complete the appraisal process.

In this case, the appraisal clause required each side to select a competent, independent appraiser, notify the other side who had been chosen and if the appraisers did not agree to choose an umpire to settle the matter.

Legal Concerns For Policy Coverage

April 20, 2010 | Mark S. Humphreys

A good friend of yours is a developer in Grand Prairie, or maybe Arlington, Fort Worth, Dallas, or Weatherford. He develops a property with a lake and the lake was not properly designed. This improper design causes damage to homes around the lake and the homeowners sue your friend, the developer. Will his insurance defend him?

The above situation is kinda what happened in the case, Mid-Continent Casualty Company v. Academy Development, Inc., et al. This case decision was handed down on March 24, 2010, by the Federal District Court, Southern District, Houston Division, by Judge Gray H. Miller. In this case, Academy Development, Inc., Chelsea Harbour, Ltd., Legend Classic Homes, Ltd., and Legend Home Corporation (collectively “Academy”) were sued on or about May 23, 2005 by a group of plaintiff’s that purchased from the defendants in the Chelsea Harbour subdivision of Fort Bend County, Texas. This property was developed as a lake front community and nearly all of the homes were constructed on lots connected to one of the lakes in the community. The plaintiff’s allege that Academy knew at the time it sold the homes to the plaintiffs that the lake walls were failing and that water was leaking from the lakes onto the adjacent home sites. The plaintiffs further alleged that Academy did not disclose this information to them. As a result, the plaintiffs brought claims of negligence, negligent misrepresentation, statutory fraud, and violations of the Texas Deceptive Trade Practices Act against Academy.

The fight here was over whether or not Mid-Continent Casualty Company (Mid-Continent)had a duty defend Academy in this lawsuit brought by the plaintiffs. The plaintiffs in this case amended their lawsuit papers at least eleven times. Mid-Continent agreed that they had a responsibility to defend Academy thru the eigth amendment but they said the wording of the allegations in the lawsuit papers changed enough that they no longer had a duty to defend Academy.

Commercial Policy Coverage Denied In Texas

April 18, 2010 | Mark S. Humphreys

Commercial business owners in Grand Prairie, Arlington, Fort Worth, Weatherford, and other places in Texas need to know the coverage provided by the commercial insurance policies they purchase. A recent Court decision went against a commercial business that thought they had insurance to cover the loss they experienced.

The Fort Worth Division of the United States District Court, Northern Division, recently handed down a decision that would at the least be interesting to home builders. The decision was issed on April 1, 2010, and it was in favor of the insurance company. The Federal Judge is John McBryde.

The style of this Federal case is, David Lewis Builders, Inc. v. Mid-Continent Casualty Company. In this case, David Lewis Builders, Inc. (Lewis) sued Mid-Continent Casualty Company (Mid-Continent) for a claim made against Lewis by Gary and Malisa Blake for whom Lewis had contracted to construct a house.

A Must Read For Texas HomeOwners

April 17, 2010 | Mark S. Humphreys

There are lots of older homes in Grand Prairie, Arlington, Fort Worth, Weatherford, and all through Texas. These homes need homeowners insurance coverage. That insurance coverage needs to be have proper limits in case a loss is suffered. The following is an example of what might happen it there are not proper limits.

The Texas Court of Appeals, Third District, handed down a decision on April 1, 2010, affirming a judgment against a homeowner and in favor of the homeowners insurance company. The style of the case is, William D. Bryce and Sarah R. Bryce v. Unitrin Preferred Insurance Company and Evans, Ewan & Brady Insurance Agency, Inc.

The Bryces’ home was built in 1889 and is located in a registered historic district. The Bryces purchased the house in 1983 for $210,000 and immediately invested approximately $242,000 in renovations, bringing the total purchase and renovation cost to approximately $452,000. In April 2006, a fire destroyed the Bryces’ home. As a result of the fire, Unitrin Preferred Insurance Company (Unitrin) paid the Bryces their full policy limits of $474,000 for the dwelling and $284,400 for the contents of the home. The problem here is that the home replacement value cost was approximately $1.7 million and the contents approximately $864,000. From the time of the purchase until some time after the fire, the Bryces used Evans, Ewan & Brady Insurance Agency, Inc. (EEB) as their insurance agent.