Dallas Fort Worth Insurance Lawyer Blog

What if that Grand Prairie resident, or someone from Fort Worth, Arlington, Dallas, or out in Weatherford gets a bunch of money in an insurance settlement. That's a good thing, Right? Well maybe not. It depends on whether or not there were any subrogation interests involved and whether or not those subrogation interests were properly handled.
USLEGAL.com defines subrogation as the substitution of one person in the place of another with reference to a lawful claim or right.
Subrogation commonly occurs in insurance matters, when an insurance company which pays its insured client for injuries and losses then sues the party which the injured person contends caused the damages.
Subrogation places one party in the place of another so that the new party gains the rights of the former party regarding a claim. This is stated in the case, Hartford Casualty Insurance Company v. Albertsons Grocery Stores, a 1996, Fort Worth Court of Appeals case. In this context, the insurance company or insurer "steps into the shoes" of the insured to pursue a claim against the wrongdoer.
As explained in the case, In re Romero, in 1997, by the San Antonio Court of Appeals, the insurer's payment creates the right; the insurer acquires its subrogation rights once it pays the loss.
All of what has just been said most normally arises in the context of a personal injury claim. The injured person has their own insurance pay benefits and then goes after the insurance of the person or company who caused their injury. In Romero, a plaintiff sued a defendant in county court for damages arising out of a car wreck. Her insurer intervened in the lawsuit and alleged that it had paid all or part of her damages and was thus subrogated to her recovery against the defendant to the extent of its payments. She then refiled her case in district court, and the county court dismissed the case with an order disallowing it to be refiled. The appeals court held that the dismissal did not extinguish the insurer's subrogation claim. From the point of payment forward, the court noted, the viability of the insurer's part of the cause of action does not rise or fall with the fate of its insured's part of the cause of action.
The important thing to know about subrogation is that when a subrogation issue is present, an experienced Insurance Law Attorney must be consulted. An attorney who is used to dealing with these subrogation issues will make sure they are handled properly so that the insured does not have to worry about being buried in legal issues that would arise when the subrogation is not properly handled.

Pretend a couple in Grand Prairie, Fort Worth, Arlington, Dallas, Weatherford, or anywhere else in Texas is running a business out of their home and someone gets injured as a result of that business activity. Does a normal Texas homeowners insurance policy cover any claim that may be made?
As a general rule the answer is no. The normal Texas howeowners policy includes a "business pursuits exclusion." This means that incidents arising out the course of that business are excluded from coverage under the insurance policy. There are exceptions to this general rule mainly because the Texas Department of Insurance, several years ago started letting insurance companies write their own policies. Prior to this the policys were standard and followed recommendations from the state. Now, each company writes their own policy and so, there are differences between one policy and the other that now exist. Plus, homeowners can buy endorsements to cover their business pursuits that they are pursueing from their home.
The normal / typical homeowners policy excludes coverage for "bodily injury or property damage arising out of or in connection with a business engaged in by an insured." This is articulated in the case, State Farm Fire & Casualty Company v. Vaughan. This case was decided by the Texas Supreme Court in 1998, and is still good law. Here, State Farm Fire & Casualty Company challenged a claim being made by Vaughan and the court ruled in favor of State Farm, on this business exclusion policy language.
In another case, United Service Auto. v. Pennington, the San Antonio Court of Appeals, decided in 1991, guidelines to go by in determining whether or not the activity being conducted out of a home was a business pursuit.
"Business pursuit" for these purposes encompasses two elements:
1) continuity or regularity of the activity; and
2) a profit motive, usually as a means of livelihood, gainful employment, earning a living, procuring subsistence or financial gain, a commercial transaction or engagement.
In this case the court said that the profit need not be realized; that the issue is the expectation or anticipation of profit in the future. They explained further saying, the insured can even hope that the pursuit will succeed and eventually become profitable, but if his or her present intention and goal were not motivated by profit, then there is no business pursuit.
Anytime this question arises an experienced Insurance Law Attorney should be consulted so that the facts of any one situation can be applied to the existing law and an opinion can be discussed.
In the Pennington case, the homeowner was a car salesman but also ran a quarter horse breeding business with his father. Apart from the breeding business, he and a coworker at the car lot bought a quarter horse to experiment with a new training system to condition horses for racing. They advertised for someone to ride the horse. The woman who answered the ad was injured when the horse fell on her. The court found evidence to support the jury's finding that the ownership of the horse was not a business pursuit. With regard to the continuity element of the definition noted above, the court found that the insured had engaged in the experiment of interval training for a race horse for a month, that there was testimony that the ownership of the horse was separate from the breeding business, that there was no evidence that the homeowner intended to breed the horse or that the father held any ownership interest in the horse, and finally that there was no evidence that the undertaking was engaged in with regularity. As for the second element, profit motive, the jury heard ample evidence upon which it could find that the homeowner did not anticiplate making a profit.

What does "Stowers" mean to someone in Grand Prairie, Arlington, Fort Worth, Dallas, Weatherford, or anywhere else in Texas? This is something very important to understand.
A Stowers claim is a claim that an insurance company has handled in an improper manner. Most incorrect claims handling by an insurance company can be called "bad faith", and the Stowers claim is just a different and unique version of bad faith. This Stowers doctrine was first articulated in the case, Stowers Furniture Co. v. American Indemnity Co. This is an old case, decided in 1929, but is still good law. This case was decided by what is today, the Texas Supreme Court. In 1929, it was called the Texas Commission of Appeals. When an insurance company violates their duty under the Stowers doctrine, the insurance company can become liable for much more money than the insurance policy provides for in the insurance contract.
A Stowers action arises when the liability carrier fails to make a reasonable settlement within the policy limits, and subsequently, exposes their insured policyholder to a judgment in excess of the policy limits. This Stowers claim belongs to the insured policyholder, not the person sueing the policyholder. What usually happens when the Stowers duty is violated, is that the policyholder assigns the Stowers claim to whoever is sueing the policyholder.
The Stowers duty to an insured policyholder is triggered when the claimant makes a claim against the insurance company that is within the policy limits. There is no responsibility on the insurance company to make the offer of settlement.
The Texas Supreme Court case, Texas Farmers Insurance Co. v. Soriano, states that the Stowers doctrine creates liability only if the insurance carrier negligently rejects a demand from a claimant that is within the policy limits, or the settlement entered into is unreasonable.This Texas Farmers Insurance Co. case, involved multiple claimants with severe damages. The policyholder however, had only a minimum policy to be divided between the seriously injured and multiple claimants.
A person wanting to make a Stowers claim would need the assistance of an experienced Insurance Law Attorney. The reason is, there are legal requirements necessary to be satisfied in order to properly invoke the Stowers liability against the insurance company. One of these requirements is that the settlement offer must offer a full release of all claims in exchange for the payment of the policy limits. This is a requirement per the case, Trinity Universal Insurance Co. v. Bleeker. This is another Texas Supreme Court case, decided in 1998. Here, a release had been offered to Trinity Universal Insurance Co. but a hospital lien had attached to the claim, per Texas Property Code, Section 55.007, thus making the release insufficient to satisfy Stowers.
Another requirement is that the Stowers doctrine only applies to covered claims. An example where this requirement was not satisfied was the case, St. Paul Fire & Marine Insurance Co. v. Convalescent Services, Inc., decided in 1999, by the 5th Federal Circuit Court of Appeals. Here, the Stowers demand made against St. Paul Fire & Marine included a claim for punitive damages. Punitive damages were not covered by the insurance policy, thus Stowers was not properly invoked.
Yet another requirement is that the release being offered in the Stowers demand, be a release of the proper parties. In Home State County Mutual Insurance Co. v. Horn, decided in 2008, the release properly named the insured but not the actual driver of the insured vehicle.
These are just a few examples of where a proper Stowers demand was not made. There are other requirements that must be satisfied. When these requirements are properly satisfied, the claim can be very much larger than what it originally was, due to the insurance company's violation of the Stowers doctrine.

You live in Grand Prairie, Arlington, Fort Worth, Dallas, Weatherford, or anywhere else in Texas and your health insurance company does you wrong; does it happen to others?
The Fort Worth Star-Telegram ran an article on April 19, that highlighted a health insurer based in North Richland Hills, Texas. This North Texas insurance company has had many complaints filed against it by its' customers.
The title of the article is, "Health Insurer Based In North Richland Hills Facing Many Customer Complaints." The article is written by Dianna Hunt.
The article highlights the case of David Self, one of this companies insureds. The company is Mega Life and Health Insurance. Self and others have filed more than 150 complaints in the last two years with the Texas Department of Insurance complaining of Mega and other subsidiaries of this company known as HealthMarkets, Inc.
It appears more than 30 other states have filed complaints against this company. This company was known as UICI until it was acquired by private investors. Some of its subsidiaries are Mega, Mid-west National Life Insurance Co. of Tennessee, Chesapeake Life Insurance Co. and HealthMarkets Insurance Co.
The complaints are all similar. The policy holders pay premiums but the health insurance company is not paying bills timely or in some cases, not paying at all. The states of Alaska, Washington, Texas, and two dozen others began investigations into Mega and Mid-West alone. These investigations resulted in the company agreeing to pay a $20 million penalty in one case in 2008, and $17 million in 2009, for settlement of another case.
HealthMarkets brought in a management team in 2008, headed up by a former New York Life executive.
The company also created a new subsidiary this year called Insphere Insurance Solutions, and began selling their insurance products through independent agents.
At one time or another, all businesses including government agencies and even non-profit organizations have complaints filed against them. The government example is obvious but the Catholic Church and organizations such as the Boy Scouts of America and the YMCA, also get complaints filed. The lesson from this article is, 1) be aware that insurance companies will treat you wrong at times, and 2) check to see how often these problems occur with a company you are looking to do business with. The Texas Department of Insurance can answer lots of questions regarding complaints filed against insurance companies doing business in Texas.

Let's say a Grand Prairie business, or one in Arlington, Fort Worth, Dallas, Weatherford, or anywhere else in Texas, gets sued and a judgement is rendered against them. Does the sued business' insurance company pay the money to their insured to handle or to the person who sued their insured to resolve the judgement?
This was the issue in a lawsuit recently ruled on by The Honorable Senior District Judge, A. Joe Fish. This case, was decided on April 5, 2010, in the United States District Court, N.D. Texas, Dallas Division. The style of the case is, Mark Rotella and Mark Rotella Custom Homes, Inc. d/b/a Benchmark Custom Homes v. Mid-Continent Casualty Company.
Mark Rotella and Mark Rotella Custom Homes, Inc. d/b/a Benchmark Custom Homes (Benchmark) were sued by Joan Cutting (Cutting) for numerous reasons including, construction defects in her home, fraudulent billing practices, and breach of contract. Cutting prevailed in the underlying suit and obtained a judgement for $2,671,187.26 in actual and treble damages, $336,342.59 in attorneys' fees, and $191,189.95 in pre-judgement interest, post-judgement interest, and costs. The immediate lawsuit resulted between Benchmark and Mid-Continent Casualty Company (Casualty) over the obligations of Casualty under the policy of insurance they had with Benchmark.
While this second lawsuit was going on, (the facts get a little complicated) Casualty paid Cutting monies in exchange for Cutting signing a complete release on the judgement obtained against Benchmark. Benchmark then sued Casualty saying that Casualty should have paid the monies on the judgment to Benchmark so that Benchmark could get the release from Cutting.
Following here are some of the points the Court made in its analysis of this case. The Court stated that in a case like this, the insurance company, Casualty, had an obligation to pay damages until the judgment is satisfied. That one way a judgment can be satisfied is by obtaining a valid release from the judgment creditor, Cutting, which they did. The Court ruled that when a judgment creditor accepts money in complete satisfaction and release of his judgment, that judgment has no further force or authority. The Court found that Casualty has performed any duty it might have to indemnify Benchmark for the harm caused by Benchmark, to Cutting. And that Casualty satisfied that duty by obtaining a valid release of judgment from Cutting. Thus Benchmark no longer had an obligation to Cutting and therefore Casualty no longer had a duty to Benchmark.
This case is interesting to read and understand. It explains in an understandable manner the obligations that arise in a situation such as this, where the insurance company initially refused to defend its insured but later satisfied the judgment that was taken against their insured.

Attention residents of Grand Prairie, Arlington, Fort Worth, Dallas, Weatherford, and everywhere else in Texas. Sometimes there is a case that makes you ask, "What happened".
A case that was decided in by the Court of Appeals of Texas, Houston (14th Dist.), on March 30, 2010, makes you ask, "What happened?" This case decision was written by Justice, Jefferey V. Brown, and is styled, Joe M. Garza, Pay Phone Owners Legal Fund, LLC, and Ernest Bustos v. Terra Nova Insurance Company, LTD., Guaranty National Insurance Company, The Burlington Insurance Company, and United National Insurance Company.
In this case, Joe M. Garza, Pay Phone Owners Legal Fund, LLC, and Ernest Bustos purchased pay telephones from American Telecommunications Company, Inc. (ATC). When buying the telephones, ATC allegedly represented that it would buy back the phones after 36 months or at a reduced price before 36 months if the phones were unsatisfactory. ATC also allegedly represented that it had insured the value of the phones if it was unable to repurchase them. ATC allegedly marketed that Northern & Western Insurance Company would provide primary insurance for its "buy back program," and would provide excess insurance for the program. When requests were submitted for ATC to buy back the phones, ATC did not honor the requests. When the plaintiffs tried to collect on the insurance policies the claims were denied.
These insurance companies that denied the claim were Terra Nova Insurance Company, LTD., Guaranty National Insurance Company, The Burlington Insurance Company, and United National Insurance Company. The cited reasons for denial were that the policies only covered losses for bodily injury and property damages.
The insurance companies filed motions with the Court to; 1) have the case transfered to another Court, and 2) to have the case dismissed. The plaintiffs through their attorneys, did not file any paperwork in response to these motions. Thus, the Court examined what was before them and ruled in favor of the insurance companies, ultimately dismissing the case.
The question again is "What happened?". Without getting the attorneys for the plaintiffs to talk or the plaintiffs themselves to talk, there is no sure way of knowing. The attorneys could not talk without their clients permission otherwise they would be violating the attorney client priviledge. One can only speculate, but it may be that the plaintiffs decided with their attorneys, that the case was not a good one and that it was best to go ahead and let the case be dismissed. If this were the case then the lawsuit probably should not have been filed in the first place. Or it may be that they did not know how good the case may or may not have been until after the lawsuit was filed. One thing for sure is that the case does make you wonder and ask; What happened?"

Lightning strikes a home in Grand Prairie, or Arlington, Fort Worth, Dallas, or out in Weatherford. The lightning damages electronic equipment. The homeowner calls his insurance company to make a claim. Then the insurance company invokes an appraisal clause in the insurance contract. What does this mean?
This is what happened in the case, Steven Woodward, et al, v. Liberty Mutual Insurance Company. This case was decided by the United States District Court, N.D. Texas, Dallas Division on March 26, 2010. The Judge was the Honorable, A. Joe Fish. In this lawsuit, Liberty Mutual Insurance Company (Liberty) filed papers with the Court for an order to be issued to compel appraisal and to stay the Court actions in this matter pending the completion of appraisal. Judge Fish granted the motion and ordered the parties to complete the appraisal process.
In this case, the appraisal clause required each side to select a competent, independent appraiser, notify the other side who had been chosen and if the appraisers did not agree to choose an umpire to settle the matter.
The time sequence here was that Liberty notified the Woodwards that they were invoking the appraisal process and named an appraiser. The Woodwards then asked for the appraisers qualifications. Liberty then named a different appraiser and sent his resume. The Woodwards told Liberty that they did not believe that Liberty's appraiser was qualified and the Woodwards named their own appraiser. Liberty then withdrew the named second appraiser and attempted to name a third.
The Woodwards then had their own appraiser estimate the loss and submitted the estimate to Liberty, along with a demand for payment. Liberty refused payment and the Woodwards filed the lawsuit.
The Woodwards arguement was that Liberty had waived their right to appraisal when they withdrew the names of the appraisers they had originally named. Liberty said they had good reasons for their actions and that the appraisal process had not been completed and also pointed out that the process had not been completed yet because they had not been to the umpire.
In ruling for Liberty the Court pointed out that the Texas Supreme Court had as recently as last year, enunciated a strong policy in favor of enforcing appraisal clauses in insurance contracts. This was stated in the case, State Farm Lloyd's v. Johnson. They also stated law that said, "A completed appraisal that complies with the terms of an appraisal clause in an insurance contract is a condition precedent to bringing a suit on that contract." Citing the ruling in another case the Court said, "Indeed, if an appraisal clause is properly invoked and one party to the contract refuses to participate in the appraisal process, a court lacks discretion not to issue an order compelling that party to participate."
The Court went on to discuss issues concerning "waiver" and another legal pleading of "estoppel" and why these theories did not apply in this case. An experienced Insurance Law Attorney knows about these appaisal clauses in insurance contracts and where applicable, knows ways of defeating them. For the most part these appraisal clauses are more favorable to insurance companies and have lots more legal advantages for the insurance company than the persons insured, which is why the insurance companies put them in the insurance contracts and why they try to invoke these clauses.

A good friend of yours is a developer in Grand Prairie, or maybe Arlington, Fort Worth, Dallas, or Weatherford. He develops a property with a lake and the lake was not properly designed. This improper design causes damage to homes around the lake and the homeowners sue your friend, the developer. Will his insurance defend him?
The above situation is kinda what happened in the case, Mid-Continent Casualty Company v. Academy Development, Inc., et al. This case decision was handed down on March 24, 2010, by the Federal District Court, Southern District, Houston Division, by Judge Gray H. Miller. In this case, Academy Development, Inc., Chelsea Harbour, Ltd., Legend Classic Homes, Ltd., and Legend Home Corporation (collectively "Academy") were sued on or about May 23, 2005 by a group of plaintiff's that purchased from the defendants in the Chelsea Harbour subdivision of Fort Bend County, Texas. This property was developed as a lake front community and nearly all of the homes were constructed on lots connected to one of the lakes in the community. The plaintiff's allege that Academy knew at the time it sold the homes to the plaintiffs that the lake walls were failing and that water was leaking from the lakes onto the adjacent home sites. The plaintiffs further alleged that Academy did not disclose this information to them. As a result, the plaintiffs brought claims of negligence, negligent misrepresentation, statutory fraud, and violations of the Texas Deceptive Trade Practices Act against Academy.
The fight here was over whether or not Mid-Continent Casualty Company (Mid-Continent)had a duty defend Academy in this lawsuit brought by the plaintiffs. The plaintiffs in this case amended their lawsuit papers at least eleven times. Mid-Continent agreed that they had a responsibility to defend Academy thru the eigth amendment but they said the wording of the allegations in the lawsuit papers changed enough that they no longer had a duty to defend Academy.
At this point the Judge had to get into a discussion about insurance contract provisions, their meanings, and how they related to or caused it to become necessary for Mid-Continent to defend the lawsuit. In this case there were multiple policies in effect but the language was similar. Also, the damages allegedly caused by Academy stretched over a period of time and at one point the allegations were for potential damages that had not yet occurred. All of this relevant for the Judge in determining the responsibility of Mid-Continent in defending the lawsuit.
In this case, the changed wording in the lawsuit, used by the plaintiffs, which occurred after the ninth amendment caused the Judge to rule in favor of Mid-Continent.
This case is another interesting reading for trying to understand how Courts look at insurance policies and determining their resposibilities when a claim is made.

Commercial business owners in Grand Prairie, Arlington, Fort Worth, Weatherford, and other places in Texas need to know the coverage provided by the commercial insurance policies they purchase. A recent Court decision went against a commercial business that thought they had insurance to cover the loss they experienced.
The Fort Worth Division of the United States District Court, Northern Division, recently handed down a decision that would at the least be interesting to home builders. The decision was issed on April 1, 2010, and it was in favor of the insurance company. The Federal Judge is John McBryde.
The style of this Federal case is, David Lewis Builders, Inc. v. Mid-Continent Casualty Company. In this case, David Lewis Builders, Inc. (Lewis) sued Mid-Continent Casualty Company (Mid-Continent) for a claim made against Lewis by Gary and Malisa Blake for whom Lewis had contracted to construct a house.
Mid-Continent had issued a commercial liability policy to Lewis. Mid-Continent denied the claim of Lewis stating that the policy did not cover contract damages or damages caused by property damage caused by Lewis' defects in workmanship. These were exclusions in the policy among others.
The case is an interesting read and one of the points made by the Court is that the basis of the claim against Lewis by the Blakes, was a breach of contract claim, not a tort liability claim. That the harm to the Blakes was for property damages and their remedy was for breach of the contract they had with Lewis and the property damages arising there from. Tort obligations are, in general, obligations that are imposed by law to avoid injury to others. So, if a person's conduct - such as negligently burning down a house - occurred, there would be tort liability and in this case the Mid-Continent policy would have to provide coverage. But the harm here resulted from Lewis failing to live up to their contractual obligation to the Blakes to properly construct for them a house. Because of these facts in the case and the exclusions in the Mid-Continent policy the Court refused to impose an obligation on Mid-Continent to provide coverage to Lewis for the claims being made by the Blakes.
This case is a good example of why a commercial business needs to be sure what kind of insurance coverage they have purchased to protect against losses.

There are lots of older homes in Grand Prairie, Arlington, Fort Worth, Weatherford, and all through Texas. These homes need homeowners insurance coverage. That insurance coverage needs to be have proper limits in case a loss is suffered. The following is an example of what might happen it there are not proper limits.
The Texas Court of Appeals, Third District, handed down a decision on April 1, 2010, affirming a judgment against a homeowner and in favor of the homeowners insurance company. The style of the case is, William D. Bryce and Sarah R. Bryce v. Unitrin Preferred Insurance Company and Evans, Ewan & Brady Insurance Agency, Inc.
The Bryces' home was built in 1889 and is located in a registered historic district. The Bryces purchased the house in 1983 for $210,000 and immediately invested approximately $242,000 in renovations, bringing the total purchase and renovation cost to approximately $452,000. In April 2006, a fire destroyed the Bryces' home. As a result of the fire, Unitrin Preferred Insurance Company (Unitrin) paid the Bryces their full policy limits of $474,000 for the dwelling and $284,400 for the contents of the home. The problem here is that the home replacement value cost was approximately $1.7 million and the contents approximately $864,000. From the time of the purchase until some time after the fire, the Bryces used Evans, Ewan & Brady Insurance Agency, Inc. (EEB) as their insurance agent.
The history from the purchase date in 1983 til the fire is long and well documented regarding the value of the home and the efforts of other insurance companies and their adjusters in attempting to properly value the home and it's contents. There was also lots of evidence about efforts by the Bryces in trying to limit the amount of money they were paying for homeowners insurance.
The Bryces sued Unitrin and EEB for violations of the Texas Insurance Code and the Texas Deceptive Trade Practices Act for allegations that Unitrin and EEB failed to properly insure the Bryces' home and contents. The Texas Supreme Court has stated that "an insurance agent who undertakes to procure insurance for another owes a duty to a client to use reasonable diligence in attempting to place the requested insurance and to inform the client promptly if unable to do so." Relying on this language, the Bryces argued that by allowing their home to be insured for less than its full replacement cost, EEB failed to obtain the requested coverage and therefore should have informed them of its inability to do so. The Bryces further argued that the Supreme Court standard should apply to insurance carriers as well, so both Unitrin and EEB breached a duty to inform the Bryces that they were underinsured.
In response, this Court said the Supreme Court did not create a duty on the part of either an agent or an insurance company to monitor a homeowners policy to ensure that the requested coverage is adequate. The Court further stated that it is not necessarily the case that a replacement cost policy covering less than 100% of the replacement cost of the dwelling is inadequate, as Unitrin's expert witness testified that it is widely accepted in the insurance industry that a homeowner might choose to insure their home at less than the full replacement cost, particularly if the homeowner wants to reduce their insurance premiums, as was the case here.
The Court said that the record is clear that Unitrin did not set the Bryces' policy limit, but simply adopted the dwelling coverage amount requested by the Bryces on their application. Similarly, the Court said, the evidence reflects that Unitrin did not negligently maintain or fail to correct the replacement cost limit, as it was up to the Bryces to make any desired adjustments to their replacement cost coverage.
A final point the Court relied upon was the annual renewal letters from EEB to the Bryces, directing them to review the coverage limits on their policy and notify EEB immediately if the coverage amounts were insufficient.
This case result was hard news for the Bryces and an alert to other homeowners to make sure they have adequate coverge for the loss of their home and contents. It should be noted that all cases have their own fact pattern and issues and that whenever a loss is incurred an experienced Insurance Law Attorney should be consulted.

How about a church in Grand Prairie, Arlington, Weatherford, Fort Worth, or anywhere else in Texas who needs to sue an insurance company? How do they stay out of Federal Court? Answer is the same whether it is a church or not: Find an experienced Insurance Law Attorney.
The United States District Court, Southern District, Houston Division, recently had a case like this. The case was partialy decided on March 11, 2010, by Judge, Ewing Werlein, Jr. The style of the case is, New Bethlehem Missionary, Baptist Church v. Church Mutual Insurance Company and Eugene M. Poldrack.
New Bethlehem Missionary, Baptist Church (Church) sued Church Mutual Insurance Company (Mutual) and Poldrack for various violations of Texas Insurance Code, the Prompt Payment of Claims Act, and the Texas Deceptive Trade Practices Act. Mutual had filed papers requesting to invoke the insurance contract's appraisal process. Church claimed that Mutual's right to appraisal had been waived.
Mutual next did what all insurance companies will do if they can get away with it. They attempted to have the lawsuit removed from the State Court in which it had been filed, to the above Federal Court. An insurance company will always want to be in Federal Court because it is a more favorable place for them to fight. The opposite is true for people who find themselves in the position of having to sue an insurance company.
In this case, Church also sued the agent, Poldrack. An agent can be held responsible for his individual actions under the Texas Insurance Code. Mutual is a Wisconsin based corporation, thus not a Texas citizen under Texas laws, which is what allowed Mutual to attempt to have the case removed to Federal Court. However, the agent, Poldrack is a Texas citizen which is a fact that prevents the case from being removed to Federal Court.
Mutual essentially made two pleas to the Federal Court. The first was that Poldrack had not been served with legal papers and thus was not actually part of the lawsuit yet. The second reason was that Poldrack was not needed in the lawsuit and that Church, through its lawyers, was trying to circumvent the laws to prevent the case from being removed to Federal Court.
This case discussed some of the law related to the assertions of Mutual, which some may find interesting reading, but eventually ruled against Mutual, and ordered the case back to the State Court for further litigation.
It cannot be emphasized enough, the importance to people, including churches and other businesses, who find themselves having to sue an insurance company to be able to pursue the lawsuit in State Court rather than Federal Court. Good legal advice is vital to accomplishing this desired end.

What about a school district located in Grand Prairie, Arlington, Fort Worth, Weatherford, or somewhere else in Texas? Does that make a difference when deciding how to interpret an insurance policy? The answer is no, but here is a case involving a commercial policy purchased by a school district contractor.
The United States District Court, Northern District, Dallas Division, recently had to decide whether a commercial policy purchased by contractors of the Quinlan Independent School District (QUID) were liable in a claim made by the QISD against one of its contractors. The style of the case is Employers Mutual Casualty Company et al. v. Northern Insurance Company. This case was decided on March 11, 2010, by Senior District Judge, A. Joe Fish.
Dates are relevant in this case. In April 1998, QISD hired DalMac Construction Company (DalMac) to be the general contractor in charge of constructing Ford High School. DalMac hired C. Watts as its "dirt work" subcontractor on the project. QISD took possession of the school in August 1999. Beginning immediately and continuing over the next several years, QISD experienced problems with the building and eventually brought suit against DalMac. In turn, DalMac brought suit against various subcontractors, including C. Watts. C. Watts tendered the defense of the lawsuit to Employers Mutual Casualty Company (Employers). Employers policies went into effect on November 1, 1999. Employers agreed to defend C. Watts in the lawsuit but did so under a reservation of rights. Employers conceded they may have some liability in the lawsuit but that Northern Insurance Company (Northern), which had a policy in effect from November 1, 1998, to November 1, 1999, also had liability under their policy.
The primary issue in this case was whether or not Northern had any liability under its insurance policy on C. Watts. In this regard, the court restated existing law concerning an insurance company's obligations. Northern's obligation to defend in this lawsuit was dependent on the alligations asserted in the lawsuit. These allegations alleged plumbing problems arising from defects in dirt work and the foundation of the school. C. Watts had been the subcontractor doing the dirt work. The court then cited relevant portions of the insurance policy stating the responsibilities of Northern and how the responsibilities were relevant to the allegations in the lawsuit.
The ruling was ultimately in favor of there possibly being coverge under the Northern policy, thus they had to provide a defense for C. Watts in the lawsuit and share the costs and expenses of the lawsuit with C. Watts other insurance, Employers.
This case is yet another good read for understanding how courts decide coverage issues in insurance cases.

Most businesses in Grand Prairie, Arlington, Fort Worth, Dallas, or Weatherford, are going to have insurance policies to cover losses. In addition to the regular liability policy they will also have an "umbrella" policy. An umbrella policy is an insurance policy that covers amounts above those covered under one or more other primary policies, and which does not pay until the losses exceed a certain sum. It is sometimes also called an excess insurance policy.
The United States Court of Appeals for the Fifth Circuit, ruled on a case on March 25, 2010, that dealt with an umbrella policy. The style of the case is, Delta Seaboard Well Serv's Inc. v. American Int'l Specialty Lines Ins. Co.
Delta Seaboard Well Serv's, Inc. (Delta) is an oil and gas well serving company that plugs non-productive wells for operating companies. In 2003, Delta contracted with Fort Apache Energy, Inc. to plug a well. Sometime after plugging the well Fort Apache discovered that the gas pressure at the wellhead had not "bled off", a fact finding that would have required Delta to cease its plugging operation. Fort Apache sued Delta for negligently plugging the hole when there was still recoverable reserves in the hole.
During this time, Delta was insured by Gemini Insurance Company (Gemini). After this time, Delta had purchased an umbrella policy from American Int'l Specialty Lines Ins. Co. (American). Delta informed Gemini of the lawsuit and Gemini denied coverage. In the lawsuit against Delta, Delta was found liable for more than $2 million in damages to Fort Apache.
Delta then brought suit against American for a portion of the claim that Delta claimed was due under the umbrella policy. The facts of this case are not complicated but are extensive. The importance of the case is the reading of the Gemini policy and the reading of the American policy together to see whether or not the American policy becomes liable for any portion of the claim. The court ultimately ruled that there was no coverage under the umbrella policy.
This case demonstrates again how courts read the policies to see if there is coverage. For the company purchasing insurance it is important that they understand what it is they are buying and that they make clear to the agent they buy the insurance from, that they get the coverage they want.

When a couple in Grand Prairie, Arlington, Fort Worth, Dallas, or Weatherford, has to sue an insurance company, is there anything that they have to do first? The Texas legislature has enacted laws and the Supreme Court of Texas enforces these laws telling us what to do. The quick answer is; see an experienced Insurance Law Attorney. The longer answer follows.
Texas Insurance Code, Section 541.154(a) and (b), tells us that as a prerequisite to filing a suit seeking damages, the plaintiff must give written notice to the other person at least sixty days before filing suit. The notice must tell the other person the specific complaint, and the amount of actual damages and expenses, including attorney's fees, incurred in asserting the claim. The best way for this to work is that once a person realizes that there is, or is going to be a problem, to write down everything that is happening. Try to remember back to all that has happened and write it down and gather any documents, such as letters, e-mails, faxes, the policy, etc., and get it organized to present to an attorney. Doing this while it is freshest in your memory is better than putting it off.
Texas Insurance Code, Section 541.154(c), tells us that notice is not required if the lawsuit must be filed sooner than the sixty day notice to avoid limitations, or if the claim is asserted as a counterclaim.
Texas Insurance Code, Section 541.155, tells us the punishment for not giving the sixty day written notice. What happens is the lawsuit is abated. This means it cannot go forward until the statute is complied with and the other side is given an opportunity to take corrective action. Plus the courts may limit recovery on the lawsuit if the procedures are not followed correctly.
The reason for giving a sixty day notice is to give the other person the chance to consider making a settlement offer. This is explained in Section 541.156(a). This is encouraged in an effort to prevent litigation on cases that can be resolved. This same section of the Insurance Code says the receiving party of the notice can tender an offer of settlement during this sixty day period. Section 541.156(b) tell the parties they have a statutory right to seek mediation of the case. The statute also sets out the procedures for requesting this mediation. If such a mediation is conducted, the defendant can tender a setllement offer within twenty days after the mediation. If there is no such mediation, the defendant can tender a settlement offer within ninety days after the party's answer is due.
Texas Insurance Code, Section 541.157 requires any settlement offer to include an offer to pay an amount to settle the claim, and an amount to pay the reasonable and necessary attorney's fees.
Section 541.158(a) says an offer must be accepted within thirty days or it is considered to be rejected. When the offer is rejected, the defendant may file with the court an affidavit certifying rejection of the offer. The trial court then can compare the offer to the amount of money the plaintiff recovers. If the offer is the same as, substantially the same as, or more than the recovery, the plaintiff is limited to the lesser amount according to Sections 541.158 and 541.159(a). When the court limits the plaintiff's recovery, the court may also limit the attorney's fees according to Section 541.159(b). However, Section 541.159(c) says the plaintiff's recovery cannot be limited if the court finds the defendant could not have performed the offer or substantially misrepresented the offer's cash value.
In conclusion, to maximize a recovery in an insurance lawsuit, it is important for the Insurance Code statutes to be followed. Failure to properly follow the statutes will result in a lesser recovery. More important to most people is that when the statute is properly followed on letterhead from an attorney, the case may get resolved quickly rather than having a lawsuit that may drag out for many months or years.

You live in Grand Prairie, Texas, or Arlington, Fort Worth, Dallas, Weatherford, or anywhere else in Texas and your insurance company does you wrong. What are the remedies against the insurance company?
A prior blog at this site discusses the policy damages that can be recovered under an insurance policy. The policy damages being the actual benefits provided by the policy that the insurance company should have paid or the actual policy benefits themselves. We will discuss three other recoveries here; mental anguish damages, "treble damages" and attorney's fees.
To be able to recover mental anguish damages when an insurance company violates the Texas Insurance Code, the policyholder must show that the insurance company acted "knowingly." This is stated in the Texas Supreme Court case, State Farm Life Insurance Company v. Beaston, a 1995 case.
Once it is shown the company acting in a knowing manner, then the policyholder must show "a high degree of mental pain and distress" that is more than mere worry, anxiety, vexation, embarrassment, or anger. This is made clear in the case, Parkway Co. v. Woodruff, a 1994, Texas Supreme Court case. For a judgement for mental anguish damages to be upheld the plaintiff's must introduce into evidence the nature, duration, and severity of their mental anguish, thus establishing a substantial disruption in the plaintiff's daily routine. This evidence may come from the claimants's own testimony, testimony of third parties, or testimony of experts, and must be such as to more likely to provide the factfinder with adequate details to assess mental anguish claims. This is stated in the Texas Supreme Court case, Saenz v. Fidelity & Guarantee Insurance Underwriters, a 1996 case.
Here's "treble damages." If the fact finder finds the insurance company acted knowingly, the trier of fact can award not more than three times the amount of actual damages. This is found in Texas Insurance Code, Section 541.152(b). Lawyers commonly refer to this as treble damages. This is a throwback to the days when the DTPA and the Insurance Code both mandated automatic tripling of the plaintiff's damages. With the current law, treble damages may not be recovered unless the trier of fact finds the defendant acted knowlingly. And now, even when the trier of fact finds the defendant acted knowingly, the amount of additional damages is in the trier of facts discretion.
The other recovery in these insurance cases is attorney's fees. In the case, Arthur Andersen & Company v. Perry Equipment Corp., the Texas Supreme Court, in 1997, laid out the factors to be considered in awarding attorney's fees. In saying that fees cannot be awarded based on a percentage basis the Court said these eight factors must be considered:
1) the time and labor required, the novelty and difficulty of the questions involved, and the skill required to perform the legal service properly;
2) the likelihood that the acceptance of the particular employment will preclude other employment by the attorney;
3) the fee customarily charged in the locality for similar legal services;
4) the amount involved and the results obtained;
5) the time limitations imposed by the client or by the circumstances;
6) the nature and length of the professional relationship with the client;
7) the experience, reputation, and ability of the lawyer or lawyers performing the services; and
8) whether the fee is fixed or contingent on results obtained or uncertainty of collection before the legal services have been rendered.
Depending on the circumstances of the case there are still more types of recovery that can be made in a claim against an insurance company for its improper conduct. An experienced Insurance Law Attorney would be able to discuss these other recoveries. Each case has its own facts and circumstances that need to be looked into.

For the Grand Prairie resident or the resident in Arlington, Weatherford, Fort Worth, or Dallas, the concern is - What do I get paid if the insurance company does me wrong.
There are several types of damages to be recovered, depending on the wrong committed by the insurance company. This article will deal with "actual damages" and the recovery of policy benefits.
It makes sense that the most common actual damages are the policy benefits themselves. As a matter of law, at least in certain cases, the amount of policy benefits wrongfully withheld is an element of damages caused by the insurance companies wrongful conduct in the matter. This was stated in the Texas Supreme Court case, Vail v. Texas Farm Bureau Mutual Insurance Co. This was a 1988 court decision where the Court rejected Texas Farm Bureau's arguement that damages for an unfair settlement practice had to be something more than the amounts due under the policy. The Supreme Court said that damages for a wrongful refusal to pay are at least equal to the policy benefits, as a matter of law. The Court in its reasoning stated:
The fact that the Vails have a breach of contract action against Texas Farm does not preclude a cause of action under the DTPA and Article 21.21 of the Insurance Code. Both the DTPA and the Insurance Code provide that the statutory remedies are cumulative of other remedies ... It is well settled that persons without insurance are allowed to recover based on false representations of coverage, ... and that an insurer may be liable for damages to the insured for its refusal or failure to settle third-party claims ... It would be incongruous to bar an insured who has paid premiums and is entitled to protection under the policy from recovering damages when the insurer wrongfully refuses to pay a valid claim. Such a result would be in contravention of the remedial purposes of the DTPA and the Insurance Code.
One thing to be aware of here is that Courts construing this language from Vail have concluded that policy benefits are not always damages as a matter of law. This highlights a point that anyone finding themselves in the position of having policy benefits or coverages denied should seek the advice of an experienced Insurance Law Attorney.
In another Texas Supreme Court case, decided in 1995, Twin City Fire Insurance Company, v. Davis, the court held that policy benefits could not serve as independent tort damages resulting from the insurance company's breach of its duty of good faith and fair dealing, which were necessary to support exemplary or punitive damages. Other cases have concluded that policy benefits are not necessary damages as a matter of law. This can be seen in several cases. One example is Seneca Resources Corp. v. Marsh & McLennan, Inc., a 1995, Houston 1st District Court of Appeals case. Another case is a 1993, Austin Court of Appeals case, Beaston v. State Farm Life Insurance Company. For an attorney, the advise is, when in doubt, the best approach is to plead, prove, and get a jury finding on policy benefits as damages.

What happens if you get treated at a hospital in Grand Prairie, Arlington, Fort Worth, Dallas, Weatherford, or anywhere else in Texas and the treatment was the result of an accident that someone else caused? Guess what the lawyers answer is! It depends!
The Texas Property Code, Section 55.002, states in part that "A hospital has a lien on a cause of action or claim of an individual who receives hospital services for injuries caused by an accident that is attributed to the negligence of another person." Okay! What does this mean? This is answered by Section 55.003(a), where its states in part, the lien attaches to:
(2) a judgment of a court in this state ... brought by the injured individual ... to recover damages arising from an injury for which the injured individual is admitted to the hospital or receives emergency medical services; and
(3) the proceeds of a settlement of a cause of action or a claim by the injured individual or another person entitled to make the claim, arising from an injury for which the injured individual is admitted to the hospital or receives emergency medical services.
Let's boil this down to say that if you are injured in a car wreck that is the fault of someone else and the other person has insurance, then when the other person's insurance pays, the hospital lien has to be paid because the hospital lien attaches to the insurance proceeds.
Now let's give it a different twist. What if the other person does not have insurance? In other words they are uninsured and you have uninsured motorist coverage on your auto insurance policy? Are the insurance benefits you receive subjected to the above hospital lien statute? Answer - No!
This answer is discussed in a 1984, Texas Supreme Court case styled, Members Mutual Insurance Company v. Hermann Hospital. The exact issue in this case was whether the insurance proceeds from uninsured/underinsured motorists coverage are subject to the hospital lien statute. This court said no.
The facts were not in dispute. Dorothy Jean Hall had an automobile liability insurance policy issued by Members Mutual Insurance Company. The policy included uninsured/underinsured motorists coverage. Hall was injured in an accident caused by uninsured driver. Hall was treated at Hermann Hospital and incurred over $60,000 in medical bills. Members paid Hall by way of the uninsured portion of the policy. Hermann sued Members saying Hermann should have been paid before Members paid any money to Hall. Hermann cited the above statute.
For the most part, the insurance companys and hospitals understand how this statute works but occassionally this becomes an issue. If it happens to you, call an experienced attorney for help.

If you get treated wrongly by your insurance company and you live in Grand Prairie, Arlington, Mansfield, Weatherford, Fort Worth, or Dallas, the first thing you should do is find an Insurance Law Attorney. He will tell you some of the following:
A plaintiff who prevails against an insurance company may obtain:
a) actual damages
b) additional damages if the insurance company acted knowingly
c) court costs
d) attorney's fees
e) other monies depending on the wrongful act
This article will deal just with one potential recovery, that being, the actual damages.
In a 1997, Supreme Court case, the court set out the following principles that govern recovery of "actual damages" under the similar language that existed under the Deceptive Trade Practices Act before 1995. This case was, Arthur Andersen & Company v. Perry Equipment Corporation. The same analysis in that case should apply to the Insurance Code, Section 541.152(a)(1).
The amount of actual damages recoverable is "the total loss sustained as a result of the deceptive trade practice."
Actual damages are those damages recoverable under common law. At common law, actual damages are either "direct" or "consequential." Direct damages are the necessary and usual result of the defendant's wrongful act; they flow naturally and necessarily from the wrong. Direct damages compensate the plaintiff for the loss that is conclusively presumed to have been forseeable by the defendant from his wrongful act.
Consequential damages, on the other hand, result naturally, but not necessarily, from the defendant's wrongful acts. Under the common law, consequential damages need not be the usual result of the wrong, but must be foreseeable, and must be directly traceable to the wrongful act and result from it. Of course, foreseeability is not an element of producing cause under the DTPA. Still, if damages are too remote, too uncertain, or purely conjectural, they cannot be recovered.
Under Texas common law, direct damages for misrepresentation are measured in two ways. Out-of-pocket damages measure the difference between the value the buyer has paid and the value of what he has received; benefit-of-the-bargain damages measure the difference between the value represented and the value received. Under the DTPA, a plaintiff may recover under the damage theory that provides the greater recovery. Both measure of damages are determined at the time of sale.
Here is just one example from the 1989 case, Paramount National Life Insurance Company v. Williams. This is a Houston, 14th District, Court of Appeals case.
An insured recovered actual damages for loss of credit or injury to credit reputation based on receiving notice letters from bill collectors arising from medical expenses the insurer misrepresented would be paid.
Each situation has to be looked at on an individual basis.

What if you are a business owner in Arlington, Grand Prairie, Weatherford, Fort Worth, Dallas, or somewhere else in Texas, and your business is shut down for a while? How does your commercial policy help you with lost income?
This was the question in the case, Catlin Syndicate Limited v. Imperial Palace of Mississippi, Inc; Imperial Palace of Mississippi, LLC. This case was decided by the United States District Court for the Southern District of Mississippi. The date of its decision is March 15, 2010.
Catlin Syndicate Limited (Catlin) is an insurer. They insured the casino operator Imperial Palace of Mississippi (Imperial). As the result of damage caused by hurricane Katrina, Imperial suffered a business interruption. Imperial was shut down for several months. When Imperial reopened it made much greater revenue than before the hurricane because many of the nearby casinos remained closed, and people had fewer gambling choices. Catlin agreed to pay Imperial's claim but there was a dispute as to how the business interruption loss should be calculated.
Imperial declared a loss of $165 million based on both the pre-hurricane income and the post-hurricane revenue. Catlin believed the losses were only $65 million, based only on the pre-hurricane revenue. This discrepancy resulted from the parties' different interpretations of the policy's busines interruption provision, which states, in pertinent part:
Experience of the business -- In determining the amount of the Time Element loss as insured against by this policy, due consideration shall be given to experience of the business before the loss and the probable experience thereafter had no loss occurred.
The court looked at decisions in other cases where there was similar policy language. The court stated that "historical sales figures reflect a business's experience before the date of the damage or destruction and predict a company's probable experience had the loss not occurred," and that " the strongest and most reliable evidence of what a business would have done had the catastrophe not occurred is what it had been doing in the period just before the interruption."
Imperial tried to argue a distinction between the terms "damage destruction" and "loss". The court said this is a distinction without a difference in the context of business interruption provisions in an insurance contract. They pointed out that the Random House Webster's Unabridged Dictionary, says damage and destruction are two definitions for "loss".
This Mississippi Court ruled that in the business interruption provision in the Catlin policy, only historical sales figures should be considered when determining loss, and sales figures after reopening should not be taken into account. The Court also stated that Mississippi law and Texas law are essentially the same in this regards.
This case is not a real difficult case to understand. An Insurance Law Attorney should be able to explain this to a client relatively easily. Usually the commercial insurance cases are more complicated.

You live in Grand Prairie, Fort Worth, Arlington, Dallas, Weatherford, or anywhere else in Texas and you get treated wrong with your insurance policy - Who do you sue? The answer is not very hard.
First of all .... seek the advice of an experienced Insurance Law Attorney. Then ...
The Texas Insurance Code, Section 541.151, provides that a person who has sustained damages caused by another's engaging in unfair or deceptive insurance practices may sue the person engaging in those acts or practices. Texas Insurance Code Statute, 541.002(2) defines "person" to mean "an individual, corporation, association, partnership, reciprocal or interinsurance exchange, Lloyd's plan, fraternal benefit society, or any other legal entity engaged in the business of insurance, including an agent, broker, adjuster or life insurance counselor."
The Texas Supreme Court, in Liberty Mutual Insurance Co. v. Garrison Contractors, Inc., applied the plain language of the above statute to hold that the term "person" includes businesses and individuals "engaged in the business of insurance." But, the statute would not apply to an insurance company employee that was not engaged in the "business of insurance." This would include persons who have no responsibility for the sale or servicing of insurance policies and no special insurance expertise, such as a clerical worker or janitor. The distinction here is that the person who could be held liable under the statute is someone such as the agent whose job duties include soliciting and obtaining policy sales, explaining policy terms, and explaining premiums, - these are the persons who could be held liable under the statute.
Engaging in unfair practices in "the business of insurance" is the key to liability. Those engaged in it may be liable. Those who are not, may not be liable.
In addition to the court's holding in the above case, Liberty Mutual v. Garrison, which held that the sale of a policy is part of the business of insurance, the court also has held that those involved in the investigation and adjustment of claims and losses are also "engaged in the business of insurance." This is affirmed in the Texas Supreme Court case, Vail v. Texas Farm Bureau Mutual Insurance Company, decided in 1988. This case makes it clear that the investigators and adjusters working for the insurance company can be held liable for their actions under the Texas Insurance Code.

Is a Grand Prairie resident who purchases an auto policy a person or a consumer for purposes of Texas law? What about residents of Arlington, Fort Worth, Weatherford, or Dallas? Why does it matter?
The Texas Insurance Code allows "persons" to bring claims against insurance companies and their agents. The Deceptive Trade Practices Act (DTPA) gives this power to "consumers". The DTPA, Section 17.45(4) defines consumer as one who seeks or acquires goods or services.
Someone suing under the Insurance Code does not have to prove he is a consumer. This is told to us in the 1987, Texas Supreme Court case, Aetna Casualty & Sur. Co. v. Marshall.
Insureds and beneficiaries of insurance policies meet both definitions. This is because of the direct relationship with the insurance company, and any misconduct by the insurance company affects them directly, plus they are the ones who sought or acquired the insurance services.
Other potential plaintiffs may be "persons" but not "consumers". An example of this is the insurance agent in Crown Life Ins. Co. v. Casteel, decided in 2000. The agent could sue under the Insurance Code as a person harmed by the insurance company conduct, but not as a consumer, because he did not seek or acquire the insurance coverage. He could not sue under the DTPA since it only applies to consumers.
In the 1995 case, Transport Insurance Company v. Faircloth, another Texas Supreme Court case, the court held that third parties negotiating a settlement with an insurance company do not seek to purchase or lease any of the services of the insurance company; they only seek proceeds of the policy. Thus, they are not consumers.
This restriction applies to the following DTPA sections that expressly include the word "consumer", and those that refer to "goods and services." Texas Business & Commerce Code, Section 17.46(b)(5), (7), (9), and (23).
It should be noted that for each of the DTPA sections that apply only to "consumers" there is a prohibition in the Insurance Code that can apply to the same conduct. As an example, DTPA Section 17.46(b)(24) prohibits nondisclosures to consumers. Looking at Insurance Code Sections 541.061(2) and (3), they prohibit failing to state information, and stating information in a misleading manner, both of which may address nondisclosures. Likewise, in place of the DTPA misrepresentation sections that apply only to consumers, a person may rely on Insurance Code Sections 541.060(a)(1) and 541.061(1).
An experienced Insurance Law Attorney will be able to know which sections of the DTPA and the Texas Insurance Code apply to any given situation.
The importance here is that suing under the wrong section will end up in getting a case thrown out of court. Also, the goal would be to maximize the recovery to be allowed and by filing a lawsuit under all applicable theories under the law helps achieve that result and discourages wrong conduct on the part of the insurance companies.

A Grand Prairie man is in a wreck and the other guy's insurance company tells him to get his car fixed and where to go. Same facts, but the guy is from Arlington, Fort Worth, Dallas, Weatherford, or somewhere else in Texas. The insurance company later denies the claim for benefits. What does this mean?
It is rare for a person to be able to make a claim for benefits or sue an insurance company that is not his own insurance company. The exceptions have been pointed out in other posts and deal with situations where the person who does not have the policy was an intended beneficiary of the policy. An easy to understand example is a life insurance policy.
The general rule, or law in Texas is that a third party cannot use the Deceptive Trade Practices Act (DTPA) or the Insurance Code for sueing an insurance company or one of it's representatives or agents. But there is Texas case law that allows the third party claimant to sue when the insurance company makes misrepresentations that result in harm to the third party claimant.
In the case, Hermann Hospital v. National Standard Insurance Co., decided in 1989, the 1st District Court of Appeals, Houston, allowed the hospital to directly sue the insurance company after the insurance company falsely represented that a patient had coverage, thereby inducing the hospital to render services. It turned out there was not any coverage. In this case the court relied on the special relationship between the hospital and insurance companies as justification for allowing the lawsuit to go forward.
However, two 5th Circuit, Federal Court cases, one in 1993 and one in 1996 had an opposite result.
Another case, Jack Webb, Receiver of Employers Casualty Company and Employers National Insurance Company, et al., v. International Trucking Company, Inc., et al., decided by the Texas Appeals Court, San Antonio, in 1995, is favorable to third parties being able to maintain lawsuits against insurance companies in the right circumstances.
The facts in this case are similar to the first paragraph in this writing. A truck owed by International Trucking, Inc. (Trucking) was in a wreck with another vehicle insured by Employers Casualty Company and Employers National Insurance Company (ECC). An adjuster for ECC told Trucking that ECC would pay for repairs and for Trucking to have the truck towed to Victoria Mack Company. Another adjuster later denied the claim and Trucking brought the lawsuit against ECC for violations of the DTPA and the Insurance Code.
Earlier, two Texas Supreme Court decisions severly limited third party claims against insurance companies. But this court pointed out the following: The Supreme Court never says in these two opinions, or any other opinion, that all statutory third party actions are barred against insurance companies. If the Court had meant to say that it no doubt would have done so with a simple declarative sentence. It did not do so. We conclude there are still limited instances in which a third party plaintiff can recover against an insurance company under the joint authority of the Insurance Code and the DTPA. We also conclude this is one of them.
This San Antonio Appeals Court pointed out that Section 17.46(b)(12) was a valid claim in this case. It also pointed out that Section 17.50(a)(4) of the DTPA incorporates the Insurance Code to permit a third party recovery by one who has been injured by another's engaging in:
1) any of the practices declared to be unfair or deceptive in the Insurance Code;
2) conduct defined in rules or regulations lawfully adopted by the Board under the DTPA as unfair methods of competition and unfair or deceptive acts or practices in the business of insurance; or
3) any practice defined by Section 17.46 of the DTPA as an unlawful deceptive trade practice.
This San Antonio Appeals Court case has numerous other legal issues in it, but the parts talked about here are relevant to persons with third party claims. An experienced Insurance Law Attorney should be consulted if you find yourself in a situation where you might have a third party claim.

If a resident of Grand Prairie or Arlington or other cities such as Dallas, Fort Worth, Weatherford, and others in Texas has a policy of insurance with a limit and another policy that covers claims that go over the limit of the first insurance policy, what happens if the primary policy does not cooperate in settling the case? The Texas Supreme Court answered this question in a 1992 case.
The style of this case is long, American Centennial Insurance Company and First State Insurance v. Canal Insurance Company, Talbert, Biessel, Stone & Lyman, Giessel, Stone, Barker & Lyman, Henry P. Giessel and Richard S. Joseph. Canal Insurance Company (Canal) was the primary insurance company with coverage of $100,000. American Centennial Insurance Company (American) had coverage from $1 million to $4 million and First State Insurance (First State) had insurance from $100,000 for $1 million and were the excess insurance companies. In this case, the insured company was General Rent-A-Car International, Inc., who was sued for injuries and death allegedly resulting from a blowout of a defective tire on one its rental cars.
In the lawsuit against General, there was a $3.7 million settlement based on the claim itself and the alleged mishandling by trial counsel in the litigation. Trial counsel are the other parties named in the style of the lawsuit.
American and First State brought suit against Canal and the law firm and lawyers for negligence, gross negligence, breach of duty of good faith and fair dealing and violations of the Texas Deceptive Trade Practices Act and the Texas Insurance Code.
It is clear that Texas law vests a clear right in the insured to sue the primary carrier (Canal) for a wrongful refusal to settle a claim within the limits of the policy limits. As the Texas Supreme Court has stated, the insurance companies duty to act as an ordinarily prudent person in business management extends to claim investigation, trial defense and settlement negotiations.
The arguement by Canal was that American and First State did not have a right to assert the claims they were asserting in this case. The Court disagreed and stated, "If the excess carrier had no remedy, the primary insurer would have less incentive to settle within the policy limits." They went on further to say, "Allowing the excess insurer to enforce the primary insurer's duty to settle in good faith serves the public and judicial interests in fair and reasonable settlements of lawsuits by discouraging primary carriers from gambling with the excess carrier's money when potential judgments approach the primary insurer's policy limits." And still further they stated, "Additionally, the wrongful failure to settle would likely result in increased premiums by excess carriers."
The bottom line in this case is that the Supreme Court in Texas, allowed an excess insurance carrier the right to sue a primary carrier for violations of its duties to settle a case for policy limits rather than expose its insured or excess carriers to further liability on a claim.

Anybody with children in Grand Prairie, Arlington, Mansfield, Fort Worth, Dallas, or out in Weatherford would want to know how the new federal health bill is being interpreted by lawyers and insurance companies. This was the topic of a recent article in The New York Times.
The article is titled "Coverage Now for Sick Children? Check Fine Print." This article was published on March 28, 2010. This was right after the new federal health care law was signed into law by President Obama.
One selling point for the new law was that pre-existing conditions coverage for children would immediately go into effect. The reality is that it probably does not. The health insurance companies agree that they must cover pre-existing conditions for children already covered by a policy of insurance. That has consistently been the case. But, the health insurers argue that the new law does not require them to write new insurance for a child and it does not guarantee the "availability of coverage" for all until 2014.
The insurance company attorneys insist that the fine print in the law differs substantially from the larger political message. The companies are required to cover pre-exisiting conditions for children if a policy is sold but they are not required to sell a policy. Plus, the health insurance company could increase premiums to cover the additional cost.
As stated in the article, Senator John D. Rockefeller IV, Democrat of West Virginia and chairman of the Senate commerce committee, said: "The ink has not dried on the health care reform bill, and already some deplorable health insurance companies are trying to duck away from covering children with pre-existing conditions. This is outrageous."
Karen L. Pollitz, a research professor at the Health Policy Institute at Georgetown University, is quoted as saying, "If you have a sick kid, the individual insurance market will continue to be a scary place."
National Association of Insurance Commissioners experts, share this concern.
What happened in the past and what will probably continue to happen until 2014, when the law mandates coverage, is that a health insurance company will simply deny coverage not only for the child but the entire family, instead of refusing to cover treatment for a specific pre-existing condition.
White House spokespeople say the administration planned to issue regulations setting forth its view that "the term pre-existing applies to both a child's access to a plan and his or her benefits once he or she is in a plan." Lawyers agree the rules could be challenged in court if they went beyond the law or were inconsistent with it.
The New York Times article is a good read for pointing out a few other inconsistencies betweent the politicing and what the actual bill says.

How does someone living in Grand Prairie, Arlington, Fort Worth, Dallas, or Weatherford know whether or not they are entitled to benefits under an insurance policy? Let's see if this helps.
In the case, Palma v. Verex Assurance, Inc., a 5th Federal Circuit case, the court stated that an intended third party beneficiary may sue under the Texas Insurance Code statutes. This Federal Court reviewed Texas cases and other Fifth Circuit cases and concluded that "if the Texas Supreme Court were presented with the question before us it would hold that standing under Article 21.21 (now Chapter 541.001) 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." In this case the court set out the standards under Texas law for third-party beneficiary status:
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
3) the contracting parties intended for the claimant to benefit by the written agreement.
Using these standards, the Texas Appeals Court in San Antonio in the case, Benefit Trust Life Insurance Company v. Littles, stated in its 1994 decision, that a mortgagor-borrower was entitled to sue under the statute as a third party beneficiary of a private mortgage insurance contract.
The previous cite would be in contrast to the 1994, Texas Supreme Court decision in, Allstate Insurance Company v. Watson, where it was held that an injured driver was not an intended beneficiary of the other driver's liability policy, even though liability insurance is statutorily required for the benefit of non-negligent, injured drivers.
In 2000, the Texas Supreme Court held that an insurance agent has standing to sue the insurance company it represents under the Texas Insurance Code when the insurance company conduct causes the agent damages. This case is, Crown Life Insurance Company v. Casteel.
A distinction needs to be drawn in the above, Allstate v. Watson case. The reasoning is based atleast in part on the court's concern that creating a duty owed by the insurance company to the injured third party would conflict with the duties owed by the insurance company to their insured. As a result of the holding in the Watson case, the Texas Legislature changed the law in 1995. 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."
All of this can be confusing, even to an experienced Insurance Law Attorney. It also illustrates yet another example of why an attorney should be consulted when someone finds themelves in a position where there is a potential for claims to made against an insurance company for benefits under a policy of insurance.