Dallas Fort Worth Insurance Lawyer Blog

Removal To Federal Court Can Be Exacting For Insurance Companies Also

March 13, 2019 | Mark S. Humphreys

When a Plaintiff sues an insurance company in State Court, the insurance company is usually going to do everything it can to have the case removed to Federal Court. Plaintiffs normally lose this fight over which court the case will be litigated.

Here is a case where the Plaintiff won the fight and primarily because of mistakes the insurance company lawyers made. The case is from the Southern District of Texas, Houston Division. It is styled, Jade Freeman v. State Farm Mutual Automobile Insurance Company ….

Freeman filed the case in State Court on February 21, 2018, suing State Farm. On October 9, 2018, plaintiff filed her first amended petition adding Progressive as an additional defendant. The lawsuit arose out of an auto accident and State Farm and Progressive were sued for breach of contract and violations of the Texas Insurance Code. On November 20, 2018, Progressive filed its Removal Petition in this Court. Freeman timely filed its Motion to Remand.

Press Release # 3

March 12, 2019 | Mark S. Humphreys

Mark Humphreys law offices announce a recent settlement in two ERISA (Employee Retirement Income Security Act) cases in favor of clients. The laws of ERISA are governed by Federal Law rather than State Insurance Law. The laws are drastically in favor of the insurers.

One case involved a claim for Short Term Disability (STD) benefits and the other was for Long Term Disability (LTD) benefits.

The disability benefits were purchased by the employees through payroll deduction. These benefits, part of employee benefits packages, can also include health coverage and life insurance coverage.

Removal And 542A.006

March 10, 2019 | Mark S. Humphreys

Here is a case to watch closely. The case is from the Eastern District of Texas, Sherman Division, and is styled, Charlotte Stephens v. Safeco Insurance Company of Indiana and Damon Edward Baker.

Stephens sued Safeco and Safeco’s adjuster, Baker, after a hail storm claim which resulted in a lawsuit being filed in State Court. Safeco removed the case to Federal Court and invoked Texas Insurance Code, Section 542A.006.

542A.006 authorizes an insurer to elect to accept full responsibility of an adjuster’s acts or omissions and mandates that the adjuster be thereafter dismissed from any action to which they are a party. This amendment spawns a novel question regarding removal based on diversity of citizenship under 28 U.S.C., Sections 1332(a), 1441(a), and 1446. Namely, whether an action instituted in state court against a diverse insurer and a non-diverse adjuster — nonremovable to federal court due to the lack of diversity of citizenship — becomes removable upon, and solely because of, the diverse insurer’s election to accept complete liability of the nondiverse adjuster. This Court found it did Not and remanded the case to State Court. In this case, the Court found that the original joinder of the adjuster was proper. Had the original joinder been improper the result would have been different.

Amending A Complaint To Join Non-Diverse Defendants

March 9, 2019 | Mark S. Humphreys

Insurance attorneys will find this Northern District, Dallas Division opinion helpful for seeing how the courts analyze situations where a complaint is trying to be amended in Federal court to add non-diverse defendants. The case is styled, Charity Ogunro v. Allstate Vehicle And Property Insurance Company.

Ogunro filed this home insurance dispute in March 2018, naming Allstate and two adjusters. Allstate elected legal responsibility for the adjusters and the adjusters were dismissed with prejudice, thus, giving diversity jurisdiction.

Ogunro then attempted to amend her complaint by alleging causes of action against the insurance agents who sold the policy. By allowing the amendment, Ogunro would be able to defeat diversity jurisdiction because the agents are Texas residents and thus, this case would be remanded back to State Court.

Properly Pleading The Wrongs Of The Adjuster

March 6, 2019 | Mark S. Humphreys

For an insurance attorney to know the insurance adjuster did something wrong when it comes to a lawsuit is not good enough. When filing a lawsuit, the allegations of wrongdoing by the adjuster must be properly alleged in the lawsuit papers. This is illustrated in the Southern District, Corpus Christi Division, opinion styled, Esteban Cruz v. State Farm Lloyds.

This case was filed against State Farm in State Court and State Farm caused the case to be removed to Federal Court based on diversity jurisdiction.

State Farm seeks dismissal of the extra-contractual claims for “failure to state a claim upon which relief can be granted” pursuant to Rule 12(b)(6). Rule 8(a)(2) requires a short and plain statement of the claim showing that the pleader is entitled to relief. This includes sufficient factual allegations to indicate that the claim is plausible.

Tough Pleading Standards In Insurance Cases

March 3, 2019 | Mark S. Humphreys

As has been said many times and will be said many more times, the insurance companies prefer to have their cases in Federal Court. The rules of procedure, in the opinion or most lawyers, are more favorable to insurance companies.

The pleading standards are illustrated yet again in a Western District, El Paso Division opinion styled, Shiana Corporation v. Depositors Insurance Company and David Morgan.

Shiana suffered a loss from a wind and hail storm. The insurance company, Depositors, hired adjuster Morgan to adjust the loss. Morgan came back with an estimate of $49,268.48. Shiana hired a public adjuster who adjusted the loss at $519,459.86. A lawsuit resulted and was filed in State Court where it was promptly removed to Federal Court by Depositors who alleges that Morgan was improperly joined in an effort to defeat diversity jurisdiction.

Press Release No. 2

March 2, 2019 | Mark S. Humphreys

The Law Offices of Mark S. Humphreys announces the settlement of another Credit Life & Disability policy.

In this case, Mark’s client purchased an automobile and as part of the purchase Mark’s client was offered the opportunity to purchase a ”’Credit Life & Disability” policy which would pay off his car in the event of his death or make the car payments in the event he became disabled and was unable to work. The client accepted the offer and purchased the policy.

Mark’s client suffered a disabling condition within a year and made a claim for benefits. The benefits were that the insurance company was to make the car payments until the disabling event ended. The insurance company denied the claim asserting that Mark’s client had made misrepresentations regarding his health at the time the policy was taken out.

Suing An Insurance Company – Federal Or State Court?

March 2, 2019 | Mark S. Humphreys

It is well known among insurance lawyers that an insurance company always wants to have its lawsuit contested in Federal Court.

The U.S. Southern District, Corpus Christi Division, issued an opinion in 2018, that deals with the subject of which court a case should be litigated. The style is, La Mirage Homeowners Association, Inc. v. Colony Insurance Company, et al.

La Mirage sustained hurricane damage and eventually sued its insurance companies, Colony and AXIS Surplus Insurance Company in State Court. The insurers removed the case to Federal Court and La Mirage promptly filed a motion to remand back to the State Court arguing that diversity of citizenship did not exist.

Insurance Policies Are Contracts

February 27, 2019 | Mark S. Humphreys

National Law Review published an article dated January 17,2019, titled “Some Thoughts On Proving An Insurance Contract In Court.”

The article tell us insurance companies often have their backs against the wall in any dispute. Typically, in a coverage or premium action brought by the insurance company, it bears the burden of proving its insurance contract and any exclusionary endorsements. In inter-company disputes that may be a bit easier and the rules may be a bit looser, but in court, the policy has to be proven by the best evidence available.

Even if the dispute is about just one aspect of the policy, most courts require that the entire policy be proven, including all endorsements and other addenda. That can be problematic when the “original” policy was issued through a broker or agent and delivered to the insured. Often times, the “home office” copy may not contain all the pieces of the actual policy issued to the insured.

Bad Faith Insurance – Misrepresentation Regarding Policy Issues

February 24, 2019 | Mark S. Humphreys

A 1994, Texas Supreme Court opinion styled, Chicago Title Ins. Co. v. McDaniel, is a case that says title insurance is different than your normal insurance.

This is a summary judgment case in favor of the insurer. This Court affirmed the finding in favor of Chicago Title.

In September 1983, the McDaniel’s purchased on home from Couch Mortgage Company and at closing the McDaniel’s also purchased a title policy from Chicago Title. In relevant part the title policy reads, that Chicago Title “for value does hereby guarantee to the Insured … that as of the date hereof, the Insured has good and indefeasible title to the estate or interest in the land described or referred to in this policy.”