Dallas Fort Worth Insurance Lawyer Blog

Insurance Law And Federal Pleading Standards

October 5, 2020 | Mark S. Humphreys

Insurance lawyers who have cases that could potentially end up in Federal Court need to know and understand Federal pleading standards. This is illustrated in a 2020, opinion from the Eastern District, Sherman Division. The case is styled, Angelina’s Restaurant v. Allied Insurance Company of America and Mary Keefer.

Angelina’s suffered wind and hail damage and eventually made a claim against their insurance company, Allied. Allied assigned adjuster Keefer to handle the claim. An impasse resulted from the claim and Angelina’s filed suit in State Court against Allied and Keefer for their handling of the claim. Allied and Keefer had the case removed to Federal Court alleging Keefer had been improperly joined to defeat diversity jurisdiction. Angelina’s filed a Motion to Remand.

A party seeking removal based on improper joinder bears a heavy burden of proving that the joinder of the in-state party was improper. The removing party must prove that there is absolutely no possibility that the plaintiff will be able to establish a cause of action against the in-state defendant in state court, or that there has been outright fraud in the plaintiff’s pleading of jurisdictional facts. In deciding whether a party was improperly joined, we resolve all contested factual issues and ambiguities of state law in favor of the plaintiff. Any doubt about the propriety of removal must be resolved in favor of remand.

What If You Did Not Purchase The Insurance Policy – Can You Still Sue?

October 3, 2020 | Mark S. Humphreys

Being the person or entity that purchased the insurance policy does not mean that you cannot still make a claim under the policy and thus, sue if necessary.

The Texas Insurance Code grants standing to “persons”, the Texas Deceptive Trade Practices Act (DTPA) gives standing to “consumers.” A consumer is one who seeks or acquires goods or services according to the DTPA, Section 17.45(a).

Pursuant to the 1987, Texas Supreme Court opinion styled, Aetna Casualty & Surity Company v. Marshall, a person suing under the Insurance Code does not have to prove he is a consumer.

Who Are Those Who Can Sue Under An Insurance Policy

September 28, 2020 | Mark S. Humphreys

To answer the question above, let’s first look at third parties. In the 1994, Texas Supreme Court opinion styled, Allstate Insurance Company v. Watson, the Court declined to let a third party tort claimant sue the tortfeasor’s liability insurer. The Court held that the third party could not sue as a “person” under the statute. This conclusion was in part based on the court’s construction of the statute, and in part based on the Court’s concern that creating a duty owed by the insurer to the injured third party would conflict with the duties owed by the insurer to the insured.

In 1995, the Texas Legislature codified the holding in Watson. The unfair settlement practices prohibition, in Texas Insurance Code, Section 541.060(b), now specifically states that it “does not provide a cause of action to a third party asserting one or more claims against an insured covered under a liability insurance policy.”

What about persons who rely on representations made by the insurance company?

Who Are Less Obvious Beneficiaries Of An Insurance Policy

September 26, 2020 | Mark S. Humphreys

An intended beneficiary of an insurance policy may sue under the Texas Insurance Code for any resulting harm. This is made clear in the 1996, 5th Circuit Court of Appeals opinion styled, Palma v. Verex Assurance , Inc. After reviewing Texas cases and other Fifth Circuit cases, the court concluded that “if the Texas Supreme Court were presented with the question before us it would hold that standing under Article 21.21 is satisfied by not only those who can establish privity of contract or reliance on a representation of the insurer, but also by those who can establish that they were an intended third party beneficiary of the insurance contract.” The court set out the standards under Texas law for third-party beneficiary status this way:

1) the claimant was not privy to the written agreement between the insured and insurer;

2) the contract was made at least in part for the claimant’s benefit; and

Insurance Companies – Who Can Sue Them?

September 21, 2020 | Mark S. Humphreys

Who can sue insurance companies is sometimes obvious to much people but just in case it is not obvious, here is what the laws tell us.

Texas Insurance Code, Section 541.151 grants a cause of action to a person who sustains actual damages caused by another person engaging in any unfair insurance practice or deceptive trade practices.

To assert a cause of action the plaintiff must be: (1) a “person” as defined by the statute; and (2) injured by another’s unfair or deceptive acts. This is shown in the 2000, Texas Supreme Court opinion styled, Crown Life Insurance Company v. Casteel.

Interpreting Insurance Laws

September 19, 2020 | Mark S. Humphreys

Lawyers who handle insurance claims need to know how insurance and other related laws are interpreted by the Courts.

The Texas Supreme Court made clear in its 1995 opinion styled, State Farm Life Insurance Co. v. Beaston, that the Insurance Code sections the Texas Deceptive Trade Practices Act (DTPA) were adopted together in 1973 as part of a package to reform legislation, are interrelated, and incorporate each other.

The Insurance Code provisions are to be be liberally construed and applied to promote the underlying purposes to define and prohibit unfair and deceptive insurance practices, according to the 1988, Texas Supreme Court opinion styled, Vail v. Texas Farm Bureau Mutual Insurance Co. This is also made clear in Insurance Code, Section 541.008.

Insurance Code And The Texas Deceptive Trade Practices Act

September 14, 2020 | Mark S. Humphreys

Insurance lawyers should understand the interaction between the Texas Insurance Code and the Texas Deceptive Trade Practices Act (DTPA).

Texas Insurance Code, Section 541.151(2) cross references and prohibits conduct defined in Section 17.46(b) of the DTPA. The DTPA statute applies to all types of consumer transactions, not just insurance, so many of the provisions are not directly relevant. The most relevant subsections prohibit:

DTPA, Section 17.46(b)(2) – causing confusion or misunderstanding as to the source , sponsorship, approval, or certification of goods or services,

Insurance Company Misrepresentations

September 12, 2020 | Mark S. Humphreys

What are examples of misrepresentations made by insurance companies that they can be held liable for making?

Different types of misrepresentation are prohibited by the Texas Insurance Code. Misrepresentations are also unlawful under the incorporated DTPA, Section 17.46(a). These misrepresentations also include non-disclosure.

Section 541.051 broadly prohibits making any statement misrepresenting the terms of a policy, or the benefits, advantages, or dividends of a policy, making misrepresentations about the financial condition of an insurer, misrepresenting the true nature of any policy or class of policies, or making any misrepresentation to a policy holder for the purpose of inducing or intending to induce the policy holder to allow an existing policy holder to lapse, forfeit, or surrender his insurance. This provision is sometimes referred to as the “anti-twisting” provision, because the latter portion is aimed at preventing one insurer stealing away the insureds of another insurer by making misrepresentations.

What Is “Bad Faith” Insurance As It Relates To Settlements?

September 7, 2020 | Mark S. Humphreys

In an answer to the above question, one attorney said, “It’s hard to define but I know it when I see it.” That response is fine but what a regular insured person thinks is clearly “bad faith,” the Courts look at differently.

The Texas Insurance Code, Section 541.060, sets forth specific acts that can be considered bad faith in context of settling a claim. The statute prohibits engaging in any of the following unfair settlement practices with respect to a claim by an insured or beneficiary:

misrepresenting to a claimant a material fact or policy provision relating to coverage at issue;

Actionable Conduct Against An Insurance Company

September 5, 2020 | Mark S. Humphreys

Let’s list some of the conduct that is actionable against an insurance company.

The Texas Insurance Code, Chapter 541, defines and prohibits unfair and deceptive insurance practices. The Sections include Sections 541.001 to 541.061, 541.151 to 541.162, and 541.453. Prior to April 1, 2005, the statute appeared as Article 21.21, so most authorities cite that version of the statute.

Section 541.151 allows a private cause of action by any person who has sustained actual damages caused by another’s engaging in any act or practice that is defined as an unfair method of compensation or unfair or deceptive practice in the business of insurance, or defined as an unlawful deceptive trade practice. The definitions of unfair and deceptive practices are found in two places. Those two places are the Texas Insurance Code, Sections 541.051 to 541.061 and the Texas Business & Commerce Code, Section 17.46(b).