Dallas Fort Worth Insurance Lawyer Blog

Interpreting An Incontestability Clause

September 9, 2018 | Mark S. Humphreys

Most people would agree that reading legal papers can be confusing. As it relates to life insurance policies the law in favor of the insured. This is illustrated in the Houston [14th Dist.] Court of Appeals opinion, Parchman v. United Liberty Life Insurance Co., a 1982 opinion.

The Parchman case stands for the proposition that an incontestability clause cannot be more onerous than the clause that is prescribed by the Insurance Code, Section 1131.104 and 705.104. These statutes do not specify whether the policy date or the effective date is considered its date; this creates an ambiguity that must be construed against the insurer. And an insurer may not place a more onerous incontestability clause in the policy than the one prescribed by statute, although in may provide a shorter period than that prescribed.

In the Parchman case, the policy date in question was October 10, 1977, and the effective date was either July 20, 1977, or August 6, 1977, depending on whether a medical examination was required and completed. Using the policy date of October 10 as the date that the clause began to run provided for a longer period than using the effective date of July 20 or August 6. Thus, the policy’s incontestability clause was more onerous than the one prescribed by statute, so the statute prevailed, and the policy date in the incontestability clause was construed to mean the effective date. In the case, the two year period began running on the earlier effective date rather than on the later policy date.

Incontestability Clauses In Life Insurance Policies

September 8, 2018 | Mark S. Humphreys

One of the issues confronted by life insurance lawyers deals with situations where the life insurance company is claiming misrepresentation in the policy application and as a result of the misrepresentation, coverage is denied. A 1972 opinion from the Texas Supreme Court is language and law that life insurance lawyers need to know and understand. The case is styled, The Minnesota Mutual Life Insurance Company v. Ethel C. Morse, Executrix et al.

This case was tried under an agreed statement of facts by which it was agreed that James K. Morse was neither able to perform, nor expected to resume, the usual duties of his livelihood at any time after October 29, 1962. However, it has been held that Minnesota Mutual is liable to the extent of the deposits and loans made subsequent to the original issuance of these policies because the incontestability clauses in those policies bar the company from raising the disability defense.

The incontestability clause in policy no. 4666–W states: ‘This policy shall be incontestable two years from its date of issue.’ Policy no. 4666–G provides: ‘The validity of the policy shall not be contested, except for nonpayment of premiums, after it has been in force for two years from its date of issue . . ..’ All premiums, computed on the increased balances, have been paid on these policies up to the date of Morse’s death. Both policies had been in effect for more than two years when he died in 1967. Petitioner did not contest coverage of the deceased prior to his death.

Correct Parties To A Lawsuit Against Insurance Company

September 6, 2018 | Mark S. Humphreys

Attorneys who handle insurance cases in Fort Worth and around Texas will want to read this 2018, opinion from the U.S. District Court, Eastern Texas, Sherman Division. It is styled, Bradley Sanson v. Allstate Texas Lloyd’s.

This situation deals with property that was substantially destroyed in a storm. Allstate was the insurer. The insureds were Bradley and Vicki Sanson. Bradley submitted a claim and after attempts to settle the claim were unresolved, Bradley filed a suit alleging breach of contract, and violations of the Texas Insurance Code among other causes of action.

Allstate filed a Rule 12(b)(7) motion to dismiss based on Bradley failing to join a party under Rule 19 . Under a Rule 12(b)(7) motion to dismiss the Court makes two inquiries under Rule 19. The Court must first determine under Rule 19(a) whether a person should be joined in the lawsuit. If joinder is warranted, then the person will be brought into the lawsuit. But if such joinder would destroy the court’s jurisdiction, then the court must determine under Rule 19(b) whether to press forward without the person or to dismiss the litigation. Allstate has the burden of showing that Vicki Sanson is a necessary and required party as they allege.

Eight Corners Rule

September 4, 2018 | Mark S. Humphreys

Dallas insurance attorneys will want to read this 2018, opinion from the San Antonio Court of Appeals. It is styled, Avalos v. Loya Insurance Company.

The case discusses in depth the “eight corners rule” and how courts look at this rule in determining whether or not an insurer has a duty to defend a lawsuit. The rule takes its name from the fact that only two documents – the insurance policy and pleading – are relevant to the determination of the duty to defend. Under the eight-corners rule, an insurer’s duty to defend is determined by the third-party plaintiff’s pleadings, considered in light of the policy provisions, without regard to the truth or falsity of those allegations.

When applying the eight-corners rule, the court is tasked with resolving all doubts regarding the duty to defend in favor of the existence of a duty and liberally construe the allegations in the petition in favor of the insured. Even if the allegations in the petition are groundless, false, or fraudulent, an insurer is obligated to defend. The duty to defend is not affected by facts that may be ascertained before suit or developed during the course of the litigation. Thus, according to the 2009, Texas Supreme Court opinion styled, Pine Oak Builders, Inc. v. Great Am. Lloyds Ins. Co., facts outside the pleadings are not material to the determination of the duty to defend even if those facts directly contradict the allegations in the underlying petition.

Recovery Of Attorney Fees In Insurance Cases – Winning

September 2, 2018 | Mark S. Humphreys

Insurance lawyers want to help their clients as much as possible in any given case. The U.S. District Court, Western District of Texas, San Antonio Division, issued an opinion regarding recovery of attorney fees in an insurance case. The opinion is a 2018, opinion styled, Jesus and Margaret Agredano v. State Farm Lloyd’s.

This case will be discussed in three blogs with each blog discussing the Courts ruling regarding attorney fees in insurance cases. This is the third blog.

The Agredanos prevailed at trial on their breach of contract claim against State Farm. The remaining question was whether or not they were entitled to seek and recover attorney’s fees.

Recovery Of Attorney Fees??

September 1, 2018 | Mark S. Humphreys

Insurance lawyers want to help their clients as much as possible in any given case. The United States District Court, Western Division Texas, San Antonio Division, issued an opinion regarding recovery of attorney fees in an insurance case. The opinion is a 2018, opinion styled, Jesus Agredano and Margaret Agredano v. State Farm Lloyd’s.

This case will be discussed in three blogs with each blog discussing the Courts ruling regarding attorney fees in insurance cases. This is the second one.

The Agredanos prevailed at trial on their breach of contract claim against State Farm. The remaining question was whether or not they were entitled to seek and recover attorney’s fees.

Recovery Of Attorney Fees In Insurance Cases

August 30, 2018 | Mark S. Humphreys

Insurance lawyers want to help their clients as much as possible in any given case. The U.S. Western District Texas, San Antonio Division, issued an opinion regarding recovery of attorney fees in an insurance case. The opinion is a 2018, opinion styled, Jesus Agredano; Margaret Agredano v. State Farm Lloyd’s.

This case will be discussed in three blogs with each blog discussing the Courts ruling regarding attorney fees in insurance cases.

The Agredanos prevailed at trial on their breach of contract claim against State Farm. The remaining question was whether or not they were entitled to seek attorney’s fees.

Facts Needed To Sue An Insurance Adjuster

August 28, 2018 | Mark S. Humphreys

When suing an insurance adjuster, it is necessary to articulate facts that show an adjuster did something wrong. This is illustrated in this 2018, U.S. District Court, Northern District, Dallas Division, opinion styled, Recovery Resource Counsel v. ACE American Insurance Company, et al.

Recovery Resource Counsel (RRC) alleges it suffered wind and hail damage to its insurer ACE. ACE hired Kirn to investigate the claim, who in turn hired Douglas Structure repair. Douglas Structure subsequently issued a report that RRC’s property had not sustained any damage and the claim was denied. RRC sued for breach of contract and various violations of the Texas Insurance Code.

The lawsuit was filed in State Court and ACE had the case removed to Federal Court where ACE claimed the case against Kirn was sued for the purposes of defeating diversity jurisdiction and was thus, an improper joinder.

Using Drones For Insurance Claims

August 26, 2018 | Mark S. Humphreys

The use of drones for evaluating insurance claims has become normal.

The Claims Journal published an article on July 19, 2018, titled, Insurers’ Drone Use Picks Up After 2017 Hurricane Season.

The article says that Insurers’ use of drones to inspect property claims came into full swing in 2017, after the FAA began issuing permission allowing commercial firms to operate unmanned aerial vehicles in designated U.S. airspace.

Life Insurance – Who Gets Paid

August 25, 2018 | Mark S. Humphreys

Here is an interesting case form the U.S. Northern District, Dallas Division, regarding payment on a life insurance policy. The case is styled, Metropolitan Life Insurance Company v. Michael Wayne Battle II.

Metlife offers life insurance to federal employees through a program referred to here as FEGLI. The Office of Personnel Management (OPM) administers the program. Metlife is required to pay FEGLI benefits when a beneficiary establishes a valid claim under FEGLI. FEGLI payments are prioritized thus: first, to the employee’s designated beneficiary; second, if there is no designated beneficiary, to the employee’s surviving spouse; and, third, if neither is present, to the employee’s child or children. This is pursuant to 5 U.S.C. Section 8705.

Battles’ father, Michael Battle (Michael), was covered under the plan and had coverage totaling $475,000 at the time of his death. Michael had not designated a beneficiary.