Dallas Fort Worth Insurance Lawyer Blog

There are lots of people in the Fort Worth, Dallas, Grand Prairie, Arlington, and Weatherford, areas of Texas who have problems getting affordable insurance. The reasons can be many, examples are, they are young, too many tickets, too many wrecks, a DWI conviction, license suspension issues, and medical conditions.
What happens if you have insurance on your car but when you bought the insurance you signed a document called a "named driver exclusion" on your spouse because the insurance company would not cover her because she suffered from epileptic seizures. That is what happened in the case, Janie Zamora, Pete Zamora, Jesus Toe, and Gracie Vela v. Dairyland County Mutual Insurance Company. This case was decided by the Court of Appeals in Corpus Christi, Texas.
The facts are, on December 2, 1993, Gracie Vela (wife of Jesus Toe) was operating Jesus' automobile when she was involved in an accident with Pete and Janie Zamora. At the time of the accident, Gracie was named as an excluded driver in Toe's policy with Dairyland County Mutual Insurance Company. The Zamora's sued Gracie for her negligence and Jesus for negligently entrusting his car to Gracie. Dairyland denied coverage to Gracie and Jesus based on the named driver exclusion in the policy.
The arguement was that the named driver exclusion should be be held invalid by the Court as being against public policy and in violation of the Texas Motor Safety -- Responsibility Act (the Act). Previous Courts have held a family member exclusion to be invalid.
Here though, the Court drew a distinction between the invalid, "family member exclusion," and the present "named driver exclusion." The Court said there is no analogy between the two.
In a named driver exclusion the policy holder is given an option to exclude from coverage drivers who, by virtue of their driving history or other factors, are deemed high risk drivers. The Court said, by focusing on the risk involved, the named driver exclusion does not contradict the public policy underlying the Act, but instead furthers Texas public policy on two levels.
First, this exclusion furthers public policy by enabling drivers with family members having poor driving records to get insurance they can afford. Second, this exclusion deters insured drivers from entrusting their automobiles to unsafe excluded drivers, thus keeping those unfit drivers off the road.
The Court looked at the policy which read in pertinent part, "You agree that none of the insurance coverage afforded in this policy shall apply while Gracie Toe ... [The Excluded Driver] is operating your covered auto or any other motor vehicle." The Court then said, "The exclusion's purpose is to suspend coverage when a specific person, considered or known to be an unsafe driver, is operating a covered vehicle." Gracie was in fact operating the vehicle covered by the policy of insurance and the Court ruled in favor of Dairyland.

A Dallas Appeals Court upheld a lower Court ruling in an interesting case. The ruling applies to the same facts anywhere in Texas, including, Fort Worth, Arlington, Grand Prairie, or Weatherford.
This case is valid law today but was decided in 1989. The fact pattern is unique. The style of the case is United States Fire Insurance Company v. United Service Automobile Association.
The underlying liability lawsuit arose out of an accident that occurred when an Anna Milliken was riding as a passenger, with a Douglas Martin, being the driver. The car Douglas was driving was owned by his father and was covered by the United States Fire Insurance Company (U.S. Fire) policy. Anna's insurance was United Service Automobile Association. Douglas testified about some swerving and horseplay prior to the accident. Anna testified that Douglas was zigzagging the wheel back and forth and that she grabbed the wheel on two occasions prior to the accident. She was doing this to play back with Douglas. The first time she did this, Douglas did not object, and the second time was when the accident occurred causing serious injury to Douglas. Douglas sued Anna for his injuries.
The issue in this case was between the insurance companies and which one should be defending and paying on behalf of Anna. U.S. Fire argued that Anna was not using the vehicle with a reasonable belief that she was entitled to use the vehicle.
The Court got into a lengthy discussion about what it means to "use" a vehicle. They cited many acts that constitute use of a vehicle. They ruled that the fact that she was a passenger in the Martin automobile was enough by itself to constitute "use" of the automobile. The Court cited many other interesting examples of "use."
"Use" was the first issue. The second issue was, whether or not Anna had a reasonable belief that she was entitled to be operating the vehicle. This discussion was also interesting in that U.S. Fire kept argueing from the standpoint of what Douglas may have thought about this belief. However, the Court focused on whether or not Anna believed she could be doing what she did. In other words, the inquery was whether Anna had a "reasonable belief" that she was entitled to operate the automobile at the time of the accident. Stated another way, did Anna have a "reasonable belief" that she was entitled to grab the steering wheel when she did. The Court ruled that she did.
In Texas, there are many different forms for the policy's issued. A close reading of these policy's is vital to determining the rights of people making claims against those policy's. One should not hesitate to speak with an experienced Insurance Law Attorney when making a claim against an insurance company. As can be seen in this case, two insurance companies were fighting between themselves over the meaning of the policy language to determine which of them should be responsible on the claim..

A case decided in Fort Worth, Texas on June 11, 2009, is important to understand. The result of this case is the same in Weatherford, Grand Prairie, Arlington, or Dallas.
The style of this case is Garry Jenkins v. State and County Mutual Fire Insurance Company. The facts in this case are undisputed. Garry Jenkins foot was crushed when a tank skid fell off a truck driven by Mark Lemmon. The accident happened when Mark applied the brakes too quickly, causing the skid to break free and fall on Garry's foot. Both Garry and Mark were working as independent contractors for L & G Pipe. L & G Pipe was owned by two people, Deborah Grisamer and Richard Lemmon.
At the time of the accident, State and County Mutual Fire Insurance Company had a policy of insurance with Deborah as the named insured. The policy was in effect on the date of the accident and the policy listed the truck as a "covered auto." The wording in the policy is important in this case and provided as follows:
2. DUTIES IN THE EVENT OF ACCIDENT, CLAIM, SUIT OR LOSS
...
b. ... you and any other involved insured must ... immediately send us copies of any demand, notice, summons or legal paper received concerning the claim or suit and cooperate with us in the investigation, settlement or defense of the claim or suit.
3. LEGAL ACTION AGAINST US
No one may bring a legal action against us under this Coverage Form until:
a. There has been full compliance with all the terms of this Coverage Form; and
b. Under Liability Coverage, we agree in writing that the insured has an obligation to pay or until the amount of that obligation has been fully determined by judgment after trial.
Mark was also listed as a "driver" on the policy.
Garry sued Mark, Deborah, Richard, and L & G Pipe for negligence. Garry obtained service of legal process on Deborah, Richard, and L & G Pipe, but not Mark. State and County obviously knew that Mark had been sued and in fact defended Deborah, Richard, and L & G Pipe. The case went to trial and the jury placed 100% responsibility for Garry's injury on Mark.
Garry then sued State and County, seeking to collect the judgment he had obtained against Mark. It is clear that Mark had not fulfilled the policy requirements set out above. Garry argued that State and County had actual knowledge of what was happening and the fact that Mark had not handed any legal papers to State and County did not make a difference in this situation.
The Court ruled in favor of State and County. The Court's reasoning was the policy language was clear and that prior Court rulings in the State of Texas, supported the wording of the policy. The policy makes clear what is required for an insured to do before the insurance company has to defend or pay claims made. One sentence the Court said was: "Put simply, there is no duty to provide a defense absent a request for coverage."
The Court explained that notice and delivery of suit papers provisions in insurance policies serve two essential purposes: (1) they facilitate a timely and effective defense of a claim against the insured and, more fundamentally, (2) they trigger the insurer's duty to defend by notifying the insurer that a defense is expected. The Court went on to say that mere awareness of a claim or suit does not impose a duty on the insurer to defend under the policy; there is no unilateral duty to act unless and until the insured first requests a defense - a threshold duty that the insured fulfills under the policy by notifying the insurer that the insured has been served with process and the insurer is expected to answer the lawsuit on its insured's behalf. The insurer does not have to assume such.
This case is important in making one realize the duties under an insurance policy. It is vital for a party involved in issues concerning insurance policies contact an experienced Insurance Law Attorney. The attorney will understand what needs to be done to get protection under the policy at issue. And the attorney will understand other constraints that might become relevant in these situations.

The people living in Weatherford, Grand Prairie, Arlington, Dallas, or Fort Worth, is protected by the laws in Texas, against businesses that try to take advantage of them. These laws are found in the Texas Business & Commerce Code, Section 17.
To be eligible for protection under the DTPA, all you have do is prove your status as a consumer. Proving consumer status under the DTPA requires the plaintiff to prove it was a person or entity listed in Texas Business & Commerce Code, Section 17.45(4) that sought or acquired goods or services by purchase or lease. In determining the plaintiff's consumer status, the focus is on the plaintiff's relationship to the transaction, not on the plaintiff's contractual relationship with the defendant. Thus, the plaintiff does not need to prove it is in privity of contract with the defendant to have standing as a consumer. Instead of privity, the plaintiff is required to show that the defendant was "connected with" the transaction.
This Blog primarily deals with issues related to different forms of insurance issues. The importance of the DTPA is that most violations of the Texas Insurance Code are also violations of the DTPA and subject to the penalties of both sets of laws regulating the matters. Relevant Insurance Code Sections are, 541.003, and 541.051 thru 541.061.
Each state in the Union has its own sets of laws dealing with violations of the DTPA laws. But the laws between the states are very similar, as are the laws regarding insurance regulation in the various states.
The Miami Herald published an article on February 16, 2010, regarding a DTPA violation in Florida. The title of the article is "Thousands To Get Checks In Countrywide Settlement". In the article, it speaks of a lawsuit involving about 2,700 Floridians getting settlement checks from Countrywide Financial. In the lawsuit, the Florida Attorney General sued Countrywide under the Florida DTPA. Countrywide is alleged to have taken advantage of the Floridians in the way their home loans were handled. The 2,700 Floridians will be receiving checks from Countrywide for about $6,000 each.
Anytime a consumer believes they have been cheated or taken advantage of by a business the consumer should talk to an attorney who deals with DTPA claims. The consultation is usually free and the consumer has nothing to lose by talking with the attorney.

A lot of homeowners insurance policies in Texas have "appraisal" clauses written into them. So whether you live in Weatherford, Texas, or in Grand Prairie, Arlington, Fort Worth or Dallas, if you have homeowners insurance you need to be aware of these appraisal paragraphs.
An appraisal paragraph is of benefit to the insurance company. That is why they put it into the insurance policy. When the homeowner and the insurance company cannot reach an agreement on the amount of money that should be paid on a claim, the insurance company will try to invoke the appraisal clause in the insurance contract. Appraisal happens when the insurance company knows they owe the homeowner money, but there is a dispute as to how much money is owed.
The United States District Court, Southern Division, recently handled a case where the issue was whether the homeowner properly defeated the insurance company trying to invoke the appraisal process. The style of the case is, Hector Sanchez v. Property and Casualty Insurance Company of Hartford and Irene Bernardo. The courts' opinion was handed down on January 27, 2010.
In this case Sanchez made a claim for benefits on October 26, 2008. This was after Hurricane Ike struck Harris County, Texas, on September 12, 2008. The next day Property and Casualty Insurance Company of Hartford (Hartford) sent adjuster Irene Barnardo out to inspect the Sanchez home. Bernardo concluded that Sanchez had suffered a loss, but that the loss was only $150, an amount below Sanchez's deductible of $5,850.
In a letter dated October 29, 2008, Hartford refused to make a payment on his claim. Sanchez called to complain the next day. Six months later, Sanchez called Hartford complaining about their handling of the claim and then filed a lawsuit on April 29, 2009, which Hartford received on May 12, 2009.
When making a claim for insurance benefits the Texas Insurance Code, Section 541.154 provides that a person must give a 60 day written notice to the insurance company before filing a lawsuit.
Hartford, successfully had the case removed to Federal Court on June 5, 2009 and filed an answer to the lawsuit on June 29, 2009. Two months later, on August 3, 2009, Hartford filed a motion with the Court having the case abated for 60 days so that the time required for notice could be observed. The case was unsuccessfully mediated in September. Then on October 15, 2009, Hartford sent Sanchez correspondence seeking to invoke the appraisal clause in the insurance policy.
The bad thing for policy holders is that most appraisal clauses have requirements in them similar the Sanchez appraisal clause. It required Sanchez to: 1) pay for his own appraiser and, 2) bear the other expenses of the appraisal and umpire equally with the insurance company.
Without getting into more details of this case and the law associated with it, Sanchez prevailed, and did not have to submit to the appraisal process. The bottom line to his victory were the arguements his lawsuit attorney was able to make regarding the time frame that had past without Hartford invoking its right to the appraisal process.
An experienced Insurance Law Attorney would understand how this process works. It is important for a policy holder to get an attorney involved early in this process to more assure the policy holder will not get cheated by having to submit to the appraisal process.

It is always smart to purchase uninsured motorist benefits coverage because of the number of people driving around with no insurance or insufficient insurance to cover a lot of losses that occur. This is particularly true in the Grand Prairie, Arlington, and Dallas - Fort Worth areas of Texas.
Uninsured or underinsured motorist coverage is required to be provided to drivers purchasing auto coverage in Texas. This requirement is found in the Texas Insurance Code, Section 1952.101.
The Court of Appeals, Texarkana, Texas, recently ruled in a case involving underinsured coverage benefits. The style of the case is Myrtis Williams v. State Farm Mutual Insurance Company. This case was decided on February 5, 2010.
The facts of this case are important to understanding the ruling of the court. Richard Conner was the only named insured in a State Farm Mutual Insurance Company (State Farm) policy. The policy covered a 2002 Cadillac Escalade. The address listed on the insurance policy for Conner was 1903 Circle Drive in Marshall, Texas. The listed drivers were Conner and his girlfriend Rewa Hubbard. The Escalade was titled to Hubbard.
Myrtis Williams, the claimant in this lawsuit, resided with Hubbard at 2505 West Francis Street in Marshall. Williams was involved in a wreck while driving her 1998 Lincoln Town Car. The other driver, who was at fault, did not have sufficient insurance to cover the loss to Williams. Williams then made a claim against Conner's, State Farm policy. State Farm denied the claim.
The court ruled in favor of State Farm. In doing so, the court analysed the policy and the facts of the case. In analysing the policy language, the court found that a "covered person", within the definitions of the policy, must fall within one or more of these categories: (1) the named insured shown in the declarations, (2) a family member of the named insured, or (3) any other person occupying the covered vehicle.
As to number (1); Williams was clearly not the named insured, Conner was. As to number (2); Williams was not a family member of the named insured, Conner. Her family relationship was mother to Hubbard. As to (3); Williams was not occupying the covered automobile. The covered automobile was Conner's Escalade. Williams was driving her own vehicle, the Lincoln Town Car.
There were a few legal reasons that attorneys for Williams probably relied on for finding a way to get coverage for Williams. Their efforts were laudable but a little too detailed to get into here. An experienced Insurance Law Attorney is helpful in seeing if a case has merit. No one wants to waste time, money, or effort in a losing cause. For that reason it is important to have these cases looked at and analysed.
It is noteworthy that the policy at issue here was one in the form prescribed and approved of by the Texas Department of Insurance.

People living in Grand Prairie, Arlington, Dallas, Fort Worth, Weatherford, or any where in Texas or the nation have a hard time understanding how their health insurance works when it comes to paying medical providers. This is particularly true with the "out of network" medical providers involved in a health claim.
The Palm Beach Post recently published an article. The article addressed the possibility that a class action lawsuit was going to get traction against some of the larger medical insurance companies. The Palm Beach Post article is titled "Lawsuits Filed Against Blue Cross Claims Reimbursement Rates Kept "Artificially" Low".
The first line in the article starts out; "Ever wonder why your insurance company claims a procedure that cost you dearly could be gotten for a fraction of the price you paid?" An example of this is given in the article where a Palm Springs resident was charged $1,210 for an MRI. Blue Cross said the cost should have been $419. Since he had not met his deductible, it would not cover the MRI. Further, it would not allow him to claim the full amount toward his deductible.
The lawsuit, which was filed in United States District Court, claims this happens because the so-called "usual, customary and reasonable rate" most insurance companies use to determine how much they will pay are "rigged to artificially deflate" the cost of the treatment. This practice effects consumers who use doctors who do not participate in their health insurance plans and the physicians who provide so called out-of-network services.
Some of the insurers who use the same methods as Blue Cross include, United Healthcare, Aetna and Cigna. They use the same flawed ways of calculating rates as Ingenix, a Minnesota based health data company.
As the article points out, these same insurers and Ingenix last year, agreed to pay a total of $100 million to help start a nonprofit to determine how much insurance companies should reimburse patients who see out-of-network doctors. This agreement was worked out to settle lawsuits filed by the New York Attorney General office. The database that will replace Ingenix, will not be in place until later this year.

Punative damages and "exemplary" damages are essentially the same thing in Texas. The way exemplary damages works in Texas is the same regardless of whether you live in Arlington, Grand Prairie, Fort Worth, Dallas, or Weatherford.
The Texas Court of Appeals in Houston, Texas, recently dealt with the issue of how exemplary damages are handled when the claim made is a claim against a person's own insurance carrier for uninsured motorist benefits. This case was decided on February 4, 2010. The style of the case is, Sandra Gervais Laine, v. Farmers Insurance Exchange.
In this case Laine's mother was killed in an auto accident. The other driver was at fault and was intoxicated. Laine made a claim against Farmers Insurance Exchange for benefits under her uninsured motorist benefits portion of the auto policy. Farmers paid the uninsured benefits limit of $250,000. She then made a claim against her umbrella policy which provided the same benefits as the auto policy except for a higher amount. The limit under the umbrella policy was $1,000,000.
Farmers denied the claim under the umbrella policy and Laine sued Farmers. A jury found the uninsured driver at fault and assessed actual damages of $175,000. The jury then found exemplary damages in the amount of $1,500,000 as punishment against the intoxicated driver. The trial Judge overruled the jury's verdict against Farmers on the exemplary damages. The appeals court affirmed the Judge's ruling.
The Judge's looked at the policy language and public policy considerations in making their decision. The policy defined damages as "the total of damages that the insured must pay (legally or by agreement with our written consent) because of bodily injury, personal injury or property damage caused by an occurrence covered by this policy..." The policy goes on to talk about "bodily injury". The policy is silent on the issue of exemplary damages. The court held that exemplary damages are amounts in excess of actual damages. And it did not matter that the policy did not contain an exclusion for "damages which are punitive or exemplary."
As for public policy considerations, the Texas Supreme Court has rejected as against public policy, coverage under uninsured motorist policies, when the insured seeks to recover from his own insurer exemplary damages assessed against a responsible third party wrongdoer. Further, that both public policy and the language contained in the Insurance Code and the Motor Vehicle Safety Responsibility Act, limit recovery under an uninsured motorist policy to compensatory damages. Here, the court cited the Texas Insurance Code, Section 1952.001 and Texas Transportation Code, Sections 601.001 - 601.054, and stated that this policy does not support rendering damages against an insurance company since neither deterrence of wrongful conduct nor punishment ... of the wrongdoer is achieved by imposing exemplary damages upon the insurance company.
To further affirm their position, the court looked to Chapter 41 of the Civil Practice and Remedies Code as further indication that the punishment imposed through exemplary damages is to be directed at the wrongdoer. And, the Texas legislature ensured that persons injured by uninsured motorists be compensated for their actual injuries, when they enacted Section 1952.101, Texas Insurance Code.

Most insurance company's have their main offices located outside of Texas. If you live in Weatherford, Texas, Arlington, Grand Prairie, or the Dallas - Fort Worth area, and you sue an insurance company, how do you know you won't have to travel to Delaware or some other state to fight the lawsuit?
The United State District Court, Southern District, Houston Division, recently had a case dealing with this issue. The case decision was handed down on January 26, 2010, and was styled, Houston Baptist University, v. Ace American Insurance Company and York Claims Service, Inc.
Houston Baptist University (HBU) had a policy of insurance with Ace American Insurance Company (Ace). HBU suffered losses as the result of Hurricane Ike hitting the Houston area and made a claim against Ace. Ace assigned York Claims Service, Inc. (York) to adjust and inspect the claim. HBU and Ace could not reach an agreement on the value of the claim and HBU filed a lawsuit against Ace and York. The insurance policy had a policy provision that read: Any dispute arising under this policy shall be exclusively subject to the jurisdiction of the federal and state courts located in the Commonwealth of Pennsylvania.
After the lawsuit was filed in Texas, Ace and York filed a motion with the court to have the case transferred to Pennsylvania in accordance with the forum selection clause contained in the policy.
28 U.S.C. Section 1404(a) is the law that governs this area of the law and states: "For the convenience of parties and witnesses, in the interest of justice, a district court may transfer any civil action to any other district or division where it might have been brought." Under this statute, the court "must make an individualized, case-by-case consideration of convenience and fairness." The court is required to look at two issues. First, the court must determine if the transferee court is one in which the case originally could have been brought. The answer in this case is, yes.
Second, the court must determine whether the convenience of the parties and witnesses and the interest of justice require that the case be transferred. On this issue the court looked closer and said no.
Even though the court is to consider the clause in the policy contract, it is not the determining factor. Consideration is also to be given to convenience of witnesses and those public interest factors of systemic integrity and fairness under the heading of "the interest of justice." The burden of proving where the case should be litigated is on the party trying to get it moved to another location.
The law requires courts to balance private and public factors in determining if a case should be transferred. Private factors to be considered include: (1) the availability and convenience of witnesses and parties; (2) trial expenses; (3) the location of books and records; (4) the place of the alleged wrong; (5) the plaintiff's choice of forum; (6) the possibility of delay and prejudice if transfer is granted; and (7) the location of counsel. Public interest factors address broader objectives, such as the fair and efficient administration of the judicial system and the degree of local interest in the matter.
In this matter the court ultimately ruled against allowing the case to be transferred. In making it's decision the court stated, "Everything related to this case, the witnesses, experts, documents, physical evidence, and the damaged building itself are all located in Houston. The case is governed by Texas law. The city of Houston and the State of Texas have strong interest in this case; Pennsylvania has none."

A decision in a Dallas, Texas, case was handed down on January 22, 2010. The results should have been the same in Fort Worth, Grand Prairie, Arlington, or Weatherford. This case was decided by the United States District Court, Northern District, Dallas Division.
The style of the case is Gemini Insurance Company v. Trident Roofing Company, L.L.C. The lawsuit arises from an incident where the Roman Catholic Diocese of Dallas and Our Lady of the Lake Catholic Church hired Trident Roofing Company, L.L.C., to perform roofing work on a Church building. In doing the roof work, Trident performed "torch down roofing". "Torch down roofing" is defined in the insurance policy as "the use of any roofing system that requires the applying of a direct flame (torch) to asphalt/modified bitumen or in the application of any other roofing material." The Church sued Trident after a fire started while Trident was using this roofing method.
Trident looked to their insurance policy with Gemini Insurance Company and demanded that Geminin protect them in the lawsuit including paying for defense costs and indemnity costs. Gemini denied coverage citing an exclusion in the insurance contract for work performed using "torch down roofing". The specific language in the policy states: "It is agreed no coverage is afforded for any liability or claim that arise(s) out of, is related to, or connected with the following: TORCH DOWN ROOFING."
When an insurance company denies coverage relying on the policy's exclusions to deny coverage, the insurer bears the burden of proving that the exclusions apply. Thus, in determining whether Gemini has a duty to defend or indemnify Trident, the Court has to compare the allegations in the lawsuit to see if the allegations fall within the scope of the policy's exclusions.
Here, Texas law applies, and Texas Courts construe the phrase "arise out of", broadly in the context of insurance exclusions. The Court stated "The Texas Supreme Court has held that "arise out of" means that there is simply a "casual connection or relation," which means that there is but-for causation, though not necessarily direct or proximate causation. That is, if it were not for the existence of the underlying event or circumstance, the damage could have existed without the damage ever occurring. A claim need only bear an incidental relationship to the described conduct to "arise out of" that conduct. Furthermore, the Fifth Circuit of Appeals had broadly construed language identical or similar to the phrase "arising in connection herewith" contained in indemnity agreements to "unambiguously encompass all activities reasonbly incident to or anticipated by the principle activity of the contract."
The Court decided the case in favor of the insurance company, Gemini. There were many allegations made against Trident in the lawsuit, all of which, Trident pointed out as being reasons why Gemini should be defending and paying the claim. The Court concluded by stating that the damage caused to parts of the Church's building and structure were caused by Trident's presence on the Church's site, and thus "arose out of" or are "connected with" Trident's torch down roofing job. Therefore, Gemini does not owe a duty to defend or to indemnify Trident in the lawsuit.

If a Grand Prairie resident buys a new home, 95% of the time he is also going to be required to purchase a title insurance policy. This would be the same for a resident of Arlington, Dallas, Fort Worth, or Weatherford.
The Texas Supreme Court decided a case in 1994 that is relavent to home buyers and purchasers of title insurance policies. The case is styled, Chicago Title Insurance Company v. Jerry E. McDaniel and Christina W. McDaniel.
This case involves a claim against Chicago Title Insurance Company for violations of the Texas Deceptive Trade Practices Act (DTPA). The McDaniels purchased a title insurance policy issued by Chicago Title. The policy guaranteed the McDaniels had good and indefeasible title to the estate or interest in land described in the policy, which was the home they had purchased. This was in 1983.
In December 1988, the McDaniels received notice from the bankruptcy trustee of Couch Mortgage that their property was subject to a preexisting lien that had been properly filed and recorded. There were later federal bankruptcy court actions.
The McDaniels brought the lawsuit seeking damages under the DTPA, based on Chicago Title's representations. Chicago Title then secured the release of the preexisting lien.
Chicago Title asserted that it had discharged its obligations under the title insurance policy, and that it cannot be liable under the DTPA because it had made no representations regarding the status of the title to the McDaniels' property.
The Supreme Courts' ruling was that "A title insurance policy is a contract of indemnity. In other words, the only duty imposed by a title insurance policy is the duty to indemnify the insured against losses caused by defects in title." Thus, Chicago Title's issuance of a policy did not constitute a representation regarding the status of the property's title; rather it constituted an agreement to indemnify the McDaniels against losses caused by any defects.
The Court further ruled that a title insurer may be liable under the DTPA for an affirmative representation that is the producing cause of damages to the insured. But, in the present case, there is no allegation of any such affirmative representation. Nor is there any allegation that Chicago Title breached its duty under the contract, or that it may be liable to the McDaniels in any other respect apart from the DTPA.
It appears in this case that the lawsuit was limited in the matters that were sued upon. An experienced Insurance Law Attorney may have been able to assert other causes of action or been more expansive in the DTPA claims. Title companies usually do a good job in making sure title to property is properly researched. Most of the time the property is somebody's home. At the least, the property would be a big investment for somebody. On the occassions that a problem is encountered it is important to seek legal help to insure your rights are protected.

Insurance policies have different forms of coverage depending on what it is that the policyholder purchases. In Texas, a homeowners policy purchased in Grand Praire, Arlington, Dallas, Fort Worth, or Weatherford, is going to have the same basic coverage. Parts of this coverage is for losses such as water damage, hail, fire, wind, and others. But most homeowners insurance policies also have liability coverage.
Liability coverage is coverage that protects and pays on behalf of the policyholder for injuries to others caused by the negligent acts of the policyholder. The normal homeowners policy is not going to pay or protect from acts that are voluntary or committed on purpose.
A lawsuit litigating this issue was decided by a Texas Appeals Court in Houston. The name on the case is State Farm Lloyds v. Henderson, et al. In this case, the underlying facts were that Henderson, after drinking a large amount of alcohol, punched a guy named Burnley in the face causing severe bruises and cuts and the loss of one of Burnley's teeth. Henderson was sued by Burnley. State Farm Lloyds was obligated to defend if the injuries sustained by Burnley were the result of an accident. If the injuries to Burnley were intentionally or voluntarily caused by Henderson, then State Farm did not have an obligation to defend Henderson, or to pay for any of the damages suffered by Burnley.
This case is a little complicated in the legal manuvering that occurred but the facts and issues in the above paragraph are what is relevant. The Court ultimately ruled that State Farm had no duty to defend Henderson or to pay damages to Burnley. The Court stated that Henderson acted voluntarily in becoming intoxicated and did so knowing of his propensity to loose control. The facts alleged in the lawsuit clearly established that Henderson voluntarily and intentionally caused Burnley's injuries.
An experienced Insurance Law Attorney may have made a difference in this case. The wording in a lawsuit must be very carefully drafted. This drafting must be done with an awareness of what it takes to invoke insurance coverage.

Most people think that the idea of life insurance is good. It shows you are thinking of the people in your life who are left behind. Sometimes, life insurance is purchased for business reasons. People who live in Arlington, Grand Prairie, Weatherford, or a big metropolitan area such as Dallas and Fort Worth are all going to consider life insurance at some point in their lives.
What happens when the idea of purchasing life insurance becomes a reality and after having bought the coverage, payments are missed? The Texas Court of Civil Appeals in San Antonio, decided this issue in 1962, and their decision is still good law for this question.
Merced Cantu et ux., v. Southern Life & Health Insurance Company, is a case that says, "It is not necessary for the insurance company to advise policy holders that their policy has lapsed". In this case, the Cantu's had a life insurance policy on their son. The son died and the Cantu's made a claim for benefits from Southern Life & Heath Insurance Company. Southern denied the claim stating that the policy had lapsed for non-payment of premiums.
The policy at issue provided a date that payments were due and that if the payments were not made on a timely basis that there was a four week grace period to make the payments but at the end of the four week grace period, the policy lapsed and was no longer in force and effect, unless of course the late payments were made during the four week grace period. In this case Cantu made late payments but only not enough to catch the policy all the way current.
The Court ruled that the policy had lapsed according to the wording in the policy and once it had lapsed, the policy was no longer in force and effect and thus there was no coverage when the death of the Cantu's son occurred.
It is important to realize that the policy itself and the wording within it, was notice to the policy holder of when and how the policy would terminate and the insurance company was not required to mail any sort of termination notice. It is also important to realize that sometimes there are ways of getting around the ruling made by this Court. In these situations it is necessary to seek the counsel of an experienced Insurance Law Attorney to make sure your rights under a policy of insurance are protected.

Good words of advice for any person buying insurance anywhere is: Know what you are buying. At the least, get it explained to you when purchasing some sort of insurance or warranty. This applies to the good people in the Dallas, Fort Worth, Arlington, Grand Prairie, and Weatherford areas of Texas.
The Pittsburgh Post Gazette recently published a news story where-in people were buying a pipe warranty. The title of the story is "Lawsuit Filed Over Opt-Out Waterline Insurance". The charge for this warranty was only five dollars a month, but it was worthless to the people to whom it was being sold.
The pipe warranty was sold by the Pittsburgh Water and Sewer Authority. The warranty provider is Utility Line Security, or ULS, a new, Wilkinsburg-based business that shares most of their officers with Resource Development and Management. RDM is a politically connected firm that worked closely with the water authority Executive Director.
This warranty was automatically billed to accounts. Rather than being an opt-in warranty, it was an opt-out warranty. In other words you had to pay for it unless you took the actions necessary to "opt-out".
But here is the real problem with this warranty. It's coverage was limited to such a degree that it did not provide coverage to most people who might have a problem. The warranty only applys to pipes of a certain small size, when most pipes are larger. If a person had a problem, it was only then that they would discover that the warranty did not really help them.
The lawuit was filed for violation of the "Deceptive Trade Practices Act". Apartment and building owners were finding out too late that the coverage was insufficient.
The Apartment Association of Metropolitan Pittsburgh is involved in the lawsuit.

Diminished value claims have to be looked at from two different standing points. In Texas, whether you are in Dallas, Fort Worth, Arlington, Grand Prairie, or out in Weatherford, the same rules to go by are going to apply.
Diminished value would be the difference in the value of your car after a wreck, even though it has been repaired, and the value your car would have had, if the wreck had not occurred. A good example of this is as follows: You bought a new car 3 months ago for $30,000. Let's say the car is now worth $28,000. Your have a wreck. The car is repaired. Now, because the car has been in a wreck, the car is only worth $23,500. The reason it is worth less is because anyone buying the car will not pay as much for it, knowing it has been wrecked, than they would pay if it had not been wrecked. In our example, the car should be worth $28,000. This $4,500 difference is the "diminished value".
The first standing point, when making a diminished value claim, is when you are going to make a claim against another driver / insurance company. In making the claim against someone else who caused the damage to your car, they are responsible for the diminished value of your vehicle that was harmed in an accident. There are companies whose business purpose is to help people with these claims.
The second standing point, is when making the claim against your own insurance company under your own insurance policy. Depending on the wording of the insurance policy, most of the time the insurance company is not going to have to pay diminished value.
The case that deals with this issue is, American Manufacturers Mutual Insurance Company v. Schaefer. This is a case decided in 2003 by the Texas Supreme Court.
In this case, the Court sided with American Manufacturers Mutual Insurance saying that the policy's plain and unambiguous language did not require payment for diminished market value when a vehicle had been fully and adequately repaired. The Court noted that a carrier's obligation to compensate its insured for a loss was circumscribed by the policy's "limits of liability" section, which stated in relevant part that the insurance company's liability was limited to the damaged vehicle's actual cash value or the amount needed to repair or replace the vehicle, whichever was less. The Court stated that the concept of "repair" described something tangible, like removing dents or fixing parts, this being the ordinary meaning of "repair", and did not encompass compensation for diminished market value. The Court went on to say that because the policy provided that the insured was entitled to the lesser of actual cash value or the amount necessary to repair or replace the vehicle, incorporation of diminished value into the "repair or replace" provision would render the "lesser of" wording a nullity.
Wording in an insurance policy is important. More important, is understanding the wording. An experienced Insurance Law Attorney should be consulted whenever issues arise about the meaning of the words in an insurance policy.

Anytime a person buys insurance coverage for their automobile in Texas, they are given many options. These options include choices related to collision coverage, coverage for towing, rental cars, and even life insurance, to mention a few. No matter where you buy automobile coverage in Texas, whether it is Dallas, Fort Worth, Arlington, Grand Prairie, or in Weatherford , you are also given the option to buy uninsured / underinsured beneits and personal injury protection benefits also known as PIP.
In discussing PIP coverage, one should know that this coverage is regulated in the Texas Insurance Code, Sections 1952.151 thru 1952.161.
Section 1952.151 says that PIP provides payment of all reasonable expenses that arise from an accident for: A) necessary medical care, B) lost income for a wage earner, and C) reinbursement for reasonable expenses for essential services ordinarily performed by the injured person. An example of this last one would be reinbursing an injured person for having to pay someone to mow his yard because his injuries prevented him from doing it himself.
Another important thing to realize about PIP coverage is found in Section 1952.152. This section says an insurance company must provide PIP coverage in any and all polices issued in the State of Texas. This coverage is automatic unless the named insured rejects the coverage in writing.
Section 1952.153 requires that the minimum for PIP coverage be $2500. There is not a maximum required by law. A maximum is left to the discretion of the insurance company.
Section 1952.155 is another important part of PIP law. This section says that PIP benefits are payable without regard to the fault of a person seeking coverage. Also, this section says PIP is payable without regards to whether or not there is other insurance to cover the loss. In other words, this section actually allows for a "double recovery".
Section 1952.156 deals with time limits for presenting the claim for PIP benefits and the time frame for the insurance company to pay these benefits.
Section 1952.157 provides for the penalties an insurance company faces for not promptly paying claims under PIP benefits.
Another relevant section is Section 1952.159. This section allows an offset against a liability claim. This normally applies to a situation where a passenger is injured due to an insured drivers' negligence. The passenger would normally receive PIP benefits soon after an accident, then later on settle the liability claim against the driver. When the claim against the driver is settled under the liability portion of the settlement, the insurance company can take a credit or offset against the monies paid under the PIP portion of the policy.
PIP is a valuable coverage to be able to make a recovery from. And it is important to know and understand the way PIP coverage works so as to insure an insurance company adjuster does not accidentally or deliberately handle the claim wrong. Seeking the advice of an experienced Insurance Law Attorney can insure that your claim for benefits is handled properly.

Here is a situaton where a Dallas resident had a wreck in Mesquite, but it could have been Fort Worth, Arlington, Grand Prairie, or out in Weatherford. The injured persons had two insurance policies with the same insurance company.
This happened in a 1984 case, The Travelers Indemnity Company of Rhode Island, v. Lenny and Terri Lucas. Mr. Lucas was accompanied by his wife, Ms. Lucas, in an ambulance. A drunk driver ran head-on into the ambulance causing injuries to the Lucas'. They had two separate insurance policies with Travelers Indemnity, for Personal Injury Protection benefits and underinsured motorists benefits. Travelers paid the full amount under one policy to each of the Lucas' but refused to pay under the second policy. The damages to the Lucas' exceeded the limit of both the policies combined.
The ambulance also had underinsured benefits with a policy through Aetna. Travelers tried to limit what it had to pay by citing an "Other Insurance" clause within the Travelers policy.
The court ruled that an insurance company may not reduce its underinsured liability to an amount less than the policy limit by crediting itself an amount paid under another policy. The same ruling was made regarding payments made for Personal Injury Protection benefits.
A case decided in 2007, was essentially the same. The 2007 case was Kelley v. Progressive County Mutual Insurance Company.
Here, Kelley was injured by a motorist while riding her horse and her claim exceeded $1,000,000. She received the policy limit of $100,000 from the at fault driver and then received the limit of $500,000 under a policy issued to her by Progressive. However, on a policy issued to her father by Progressive, which also named her, Progressive refused to pay. Progressive asserted a policy provision that prohibited "stacking" the policies and argued that her recovery was limited to just one of the polices.
The court noted that the policies were separate policies, with separate policy numbers and separate vehicles listed. Just because Progressive issued both policies to members of the same family did not allow Progressive to prevent a "stacking" of these policies.
There are situations where an insurance company may not have to pay where there is duplicate coverage. When there is more than one policy that may cover a claim it is important to seek the advice of an Experienced Insurance Law Attorney to insure your rights are properly protected.

It does not matter whether you live in little ole Weatherford, Texas, or some of the bigger communities like Dallas, Fort Worth, Arlington, or Grand Prairie. Health insurance is a concern of everybody.
A recent lawsuit in Colorado illustrates the anger that can be taken out against an insurance company that does one of its insureds wrong. The article is in the Denver Post. The title of the article is "Canceled Insurance Leads To $37 Million Verdict For Woman."
A jury in the city and county of Boulder returned a verdict of $37 million to a woman whose health insurance policy was canceled after she was seriously injured in a car accident.
The reason the insurance company cited for termination of the insurance coverage was that the woman failed to disclose previous medical treatment on her health insurance application. It turns out she had previously visited an emergency room for shortness of breath and she had received treatment for Time Insurance Company, which also does business as Assurant Health.
In the lawsuit, a claim was made for $7 to $8 million based on the evidence. The jury returned with one of the largest verdicts in Colorado history.
An appeal is certain to follow.

Residents of Dallas, Fort Worth, Arlington, Grand Praire, Weatherford, or any other town in Texas should be interested in a question posed by an attorney the other day on a web-site, to other attorneys who sub-scribed to the site. It was a question dealing with uninsured and underinsured (UM) automobile coverage.
In the situation, a potential client had come into the attorneys office. The potential new client had been involved in an accident where the other person did not have enough insurance coverage to fully cover the damages this potential new client had suffered. Sounds simple so far. Here was the problem: More than two years had past since the accident had occurred. The question posed was: Can I recover more money from the UM coverage on the injured persons automobile policy.
This was the issue in the case Raul C. Franco et ux., v. Allstate Insurance Company. In the Franco case, Franco sought to recover damages due to the death of their daughter in an automobile accident. The lawsuit had been filed approximately three years after the date of the accident. The applicable statute of limitations for an injury claim was two years.
In the Franco case, the lawsuit had been filed against Allstate Insurance Company because of the accident but the basis for the claim against Allstate was the policy of insurance issued by Allstate. A policy of insurance is a contract between the insurance company and the insured. The statute of limitations on a contract claim is four years.
Allstate argued, among other things, that because the two year statute of limitations had expired on the accident, that the claim against Allstate that originated out of that wreck, was also barred by the two year statute of limitations. The Texas Supreme Court disagreed with Allstate and ruled in favor of the Franco family members stating that the claim against Allstate was a contract claim and thus the four year statute of limitations applied.
What is to be learned here is two-fold. First, a claim for UM benefits under an insureds' own insurance policy is four years, not two. Second, not discussed in the case but important is the extent of the recovery.
If the other driver had insurance, for instance a liability policy of $20,000, and the injured person had underinsured coverage of $20,000, and a claim whose value was estimated to be $30,000, what would have happened? The answer would be, that because the two year statute had expired for making a claim against the other guys policy and the claim was now only against the injured persons' underinsured policy, the total recovery would be limited to $10,000. Why? Because the underinsured policy would get a credit for the $20,000 that would have been recovered from the other drivers liability policy.
This can be confusing. It illustrates though, why it is important to get an Experienced Insurance Law Attorney involved early in a case in order to fully compensate a person who is trying to make claims against an insurance company.

Lots of insurance policies are issued with arbitration agreements written into them. Almost never, will the person taking out the insurance policy be aware of, or ask about an arbitration agreement being part of the insurance policy. Residents of Dallas, Fort Worth, Arlington, Grand Prairie, Weatherford, or any any city or town in Texas can be adversely affected by these arbitration clauses in the insurance policy.
Lake Texoma Highport, LLC, v. Certain Underwriters at Lloyd's of London, et. al., is a recent case discussing arbitration clauses in insurance policy's. This case was decided on December 28, 2009, and is good reading to try and understand the way courts look at arbitration clauses.
Lake Texoma Highport, LLC ("Highport") owns a marina. In early 2005 and early 2006 and in 2007 Highport instructed defendant Houstoun, Woodward, Eason, Gentle, Tomforde and Anderson, Inc. d/b/a Insurance Alliance ("Insurance Alliance") to locate a property insurance policy. Insurance Alliance provided Highport with a property insurance agreement from defendant Certain Underwriters at Lloyd's of London ("Lloyd's"). Highport suffered damages and filed a claim under the policy. Highport then learned for the first time that CRC Insurance Services, Inc ("CRC") and Bowood Partners, Limited ("Bowood") were active participants in procurment of the insurance policy.
Highport settled against Lloyd's. CRC filed a motion with the court to compel arbitration based upon an agreement between CRC and Insurance Alliance that contained an arbitration clause.
The court discussed how the Federal Arbitration Act ("FAA") expresses a strong national policy favoring arbitration of disputes, and all doubts concerning the arbitration of claims should be resolved in favor of arbitration. The FAA, leaves no place for the exercise of discretion by a district court, but instead mandates that district courts shall direct the parties to proceed to arbitration on issues as to which an arbitration agreement has been signed.
In deciding whether or not to order the litigants to arbitration, the Court must address two questions. First, whether there is a valid agreement to arbitrate, and second, whether the dispute in question falls within the scope of the arbitration agreement.
After stating the above, the Court then began to analyse the situational facts in this case to determine what was appropriate. In the end the parties were ordered to arbitration. A reading of the case gives insight into how courts apply the laws related to arbitration agreements to the particular fact pattern in a case.
The case is a good read for trying to understand how these types of case are decided. If someone finds themselves in a situation where they discover they have an arbitration agreement in their insurance policy, the natural question would be, "What difference does it make in my situation?" For a discussion of this, an Experienced Insurance Law Attorney should be consulted.

Insurance companies prefer to have lawsuits litigated and fought in Federal Court. Attorneys who represent individuals and companies in Dallas, Fort Worth, Arlington, Grand Prairie, Weatherford, or any other community in Texas, prefer to be in the local State and County Courts. There are several reasons an insurance company prefers to be in Federal Court, but the bottom line is, it is better for them to be in Federal Court.
One fight an insurance company recently lost was in the case, Rosario Mayorga, v. Government Employees Insurance Company. The opinion on this case was issued on January 20, 2010.
The Mayorga case was originally filed in the 79th District Court of Jim Wells County. Mayorga sued Government Employees Insurance Company (GEICO) and the adjuster, Sean Hicks. GEICO is an insurance company with its headquarters located outside of Texas, which is a condition that would allow for the case to be removed to Federal Court. However, the adjuster, Hicks, was a Texas resident which would prevent removal. GEICO claimed that Hicks was improperly sued and because he was improperly sued the case should be allowed into Federal Court.
The Federal Court analysed the burden of proof for the fraudulent joinder of Hicks in the lawsuit to stand. The Court cited Texas law stating that the burden of proof is on the insurance company to prove that the joinder of Hicks was a sham to keep the case from being in Federal Court. And that this burden was a heavy burden.
Analysing the causes of action asserted against Hicks, the Court looked at the Texas Insurance Code, Section 541. In that section, Hicks met the definition of a "person" and it defined how Hicks could be personally responsible for his actions rather than just being an agent of GEICO. The law in Texas says a person may be personally liable for deceptive acts notwithstanding the fact that he acted within the scope of his employment. The only insurance company employees exempted from this personal liability in Section 541 of the Texas Insurance Code, are those employees who have no responsibility for the sale or servicing of insurance policies and no special insurance expertise, such as a clerical worker or janitor.
Next, the Court analysed whether or not there were acts committed by Hicks, whereby he could be personally liable. Mayorga asserted that Hicks failed to conduct a reasonable investigation of her claim and failed to effect a prompt resolution of her claim. In this regard, the Insurance law in Texas is clear, insurance employees that fail to properly adjust insurance claims are liable under Section 541 and can be sued individually.
The allegations do not have to be allegations that are definite winners. As the Court said, the allegations are to be taken in the light most favorable to Mayorga and when they demonstrate there is a possibility of success, that is all that is required.
The value in this case is in demonstrating to an Insurance Law Attorney, good ways of maintaining a case against an insurance company in the State Courts, rather than having a case removed to Federal Court, where the outcome for the policyholder is usually less favorable.

The United States Court of Appeals for the Fifth Circuit recently decided a case wherein the insured argued that he had an excess insurance policy. The court decided that his policy was not an excess insurance policy.
The case is styled "Danny Kirk, v. Universal Underwriters of Texas Insurance Co." In this case, Universal Underwriters of Texas Insurance Co. ("UUT"), issued to Olympic International Trucks, Inc. d/b/a Olympic Ideal Lease ("Olympic") an insurance policy. Kirk, who was injured by a tractor-trailer unit leased to Gulf Coast Building Supply ("Gulf Coast"), asserted that the policy issued to UUT was an excess policy.
The court analysed the policy. Reading Part 500 of the UUT Policy, it provided liability insurance to Olympic for injuries arising out of "garage operations" or "auto hazard." Auto hazard included coverage of "anyone else required by law to be an insured while using an auto under a lease or rental agreement, within the scope of Olympic's permission." The UUT Policy provided that it only covered Olympic's lessees if "at the time of the accident, the insurance required by the lease or rental agreement is not collectable."
The lease agreement required Gulf Coast to maintain $750,000 of liability insurance on the tractor-trailer unit and in fact Gulf Coast had coverage for $1,000,000 with Home State County Mutual Insurance Company. Home State paid the policy limits of $1,000,000. Kirk had injuries that exceeded this amount that were not fully compensated, thus the reason for Kirk bringing suit against UUT for more.
The court found that the UUT Policy only provided coverage where "the insurance required by the lease or rental agreement is not collectable," and the court found that the term "collectable" did not require UUT to show that Kirk would be fully compensated for his injuries, only that the other insurance was able to be collected.
In this case the court applied Texas law because the policy was issued in Texas and the insurance company was domiciled in Texas. The court stated "Texas's interests in governing insurance contracts entered into in Texas for the protection of Texas residents would be most seriously impaired if Texas law did not apply."
As a side note, there was an arguement about the spelling of the word "collectable" in this case. The correct spelling is collectible, whereas in the policy it was spelled "collectable." The court went to Random House Webster's Unabridged Dictionary and pointed out that "collectable" is an acceptable alternative spelling of collectible and means "capable of being collected."
The lesson from this case for the policyholder is to make sure they know what they are buying. There needs to be a discussion with the agent to clarify what is being purchased.

Most of the time when someone thinks of insurance fraud, they think about a staged accident, arson, or something else along these lines, where a person or company is trying to get money out of an insurance company that is not legitamate. Another example is lying on the insurance application. Here is a short story about a company making a false workers compensation report to the State. This case is a California incident but could just as easily have been an incident that happened with a business in the Dallas - Fort Worth area, like Arlington or Grand Prairie, or even out in Weatherford, in Parker County.
This article was found in the Los Angeles Times, in the Business Section. The title of the article is "Staffing Firm Pays $20 Million to Settle Fraud Allegation" and was reported on January 25.
The company, Staffing Services, Inc., was in the business of providing temporary workers to other businesses. They were accused of underpaying premiums to the State Compensation Insurance Fund, the state's workers' compensation carrier of last resort. Regulators filed charges against the company on November 26, 2008, accusing it of misrepresenting the number of employees and their job descriptions so it would pay smaller insurance premiums.
The California Insurance Commissioner, Steve Poizner, reached an agreement with the company whereby the business agreed to pay $20 million in restitution and penalties in the workers compensation fraud case. Poizner said, "Business owners have to realize that they have a moral and legal obligation to report the correct number and types of employees and then make sure they have adequate workers' compensation insurance for those employees. This is not a victimless crime. We all pay when a company chooses not to play by the rules as the rest of us".
The Los Angeles County district attorney's office prosecuted the case against Staffing Services, which was settled with a plea bargain on January 15.

Most people would not realize how much time and money is spent with insurance companies fighting with other insurance companies. Most of these fights result from situations where a person or company has more than one policy. An example would be where an Arlington resident buys some insurance in Grand Prairie, Dallas, Fort Worth, or maybe out in Weatherford or wherever but also buys another policy at the same time or later on from another company or agent. Next, an incident happens, the result of which is the policyholder has to file a claim or seek coverage through the policies of insurance. Then what happens is, the companies start fighting with each other about which one has to pay the claim or pay the costs of defending the claim asserted. The following case is yet another example of this type of situation.
The United States Fifth Circuit Court of Appeals handed down a decision is one of these cases on January 4, 2010. The style of the case is, Trinity Universal Insurance Company; Utica National Insurance; National American Insurance Company, Subrogees of Lacy Masonery Inc., v. Employers Mutual Casualty Company.
In this case, Employers Mutual Casualty Company (EMC) and the others issued commercial general liability insurance policies to Lacy Masonry, Inc. Lacy was sued. Trinity defended and eventually settled the case on behalf of Lacy. Utica defended and eventually settled the case on behalf of Lacy. And, finally, National defended and eventually settled the case on behalf of Lacy. EMC refused to defend or participate in the settlement.
Trinity, Utica, and National, then sued EMC for EMC's pro rata share of the settlement and defense costs. EMC claimed they did not have a duty to defend and thus no duty to pay a pro rata share of settlement monies or defense costs. The court analysed the policy language and eventually ruled that EMC should have participated in the defense of Lacy. Because of the language in the EMC policy and earlier court decisions related to the policy language, the court partially agreed with EMC, that EMC did not have to contribute to the settlement costs. However, this language did nothing to protect EMC from having to handle its pro rate share of the defense costs because EMC clearly had a duty to atleast defend Lacy in the lawsuit.
A reading of the case distinguishes and explains in an understandable manner the reasoning of the court in this matter. Each situation and policy put together have to be analysed and then applied to the insurance laws in Texas to be able to fully understand the difference between one situation and another.