Dallas Fort Worth Insurance Lawyer Blog

No matter where you live, Grand Prairie, Arlington, Mansfield, Fort Worth, De Soto, Hurst, Duncanville, Weatherford, Aledo, Azle, or anywhere else in Texas, you like most anybody else, are always looking for ways to save a few dollars and hopefully make life a little easier to manage.
The Palm Beach Post ran an article on June 22, 2010, that showed how one business was taking unfair advantage of this desire to save a little money that most of us have. This article was written by Susan Salisbury. The title of the article is, "Lawsuit says Fort Lauderdale auto group engaged in deceptive practices."
She reported that, Auto Relief Group, a Fort Lauderdale based firm owned by a John J. Boyle, from Fort Lauderdale and his son John J. Boyle, from Boca Raton, are being sued for allegedly engaging in deceptive and unfair practices related to automobile loan modifications. These accusations are from the Florida Attorney General's Office.
In a civil complaint filed by the Florida Attorney General's Office, it is alleged that Auto Relief Group, its subsidiaries and owners falsely represented in national television and radio advertisements that they could reduce consumers' car payments by up to 50 percent. The Attorney General's Office was granted an injunction in Broward County Circuit Court to freeze the company's assets and appoint a receiver to take possession and control of the company.
Representatives of Auto Relief Group allegedly told undercover investigators that they qualified for loan modifications that would reduce their monthly auto loan payment up to 50 percent for up front payments ranging from $299 to $375.
It is reported that the Attorney General's Office is working to locate victims. The investigation indicates the company may have collected several hundred thousand dollars in up front fees from consumers each month.
The on-line posting of this article by The Palm Beach Post had many posts following the article, of victims who had been taken in by this scheme. The only comfort is knowing there are agencies who pursue these illegal activities. In Texas, the Texas Attorney General has essentially the same rules and laws under the Texas Deceptive Trade Practices Act, to pursue these wrongdoers. In addition to shutting these businesses down there are rules for pursuing the owners of these businesses in civil court and in the right situation to criminally prosecute the wrongdoers.

Home owners in Grand Prairie, Arlington, Mansfield, Colleyville, Keller, Aledo, Bedford, and all through the State of Texas should be comforted about a recent case. This case was in Florida, but will help home owners all over the United States, including Texas.
On June 19, 2010, The Miami Herald reported on a story concerning a lawsuit over the Chinese drywall that has been in the news the last few years. The author of the story is Nirvi Shah. The reporter tells us that after two and a half years, a Miami couple was awarded $2.5 million in damages and expenses, after blaming odors and corrosion problems on defective Chinese drywall.
The article, the title of which is, "Chinese drywall verdict is in: $2.5 million," tells us that Armin and Lisa Seifart sued Miami-based Banner Supply after the drywall that the company provided corroded copper pipes and fixtures, ruined their air conditioner and other appliances and made their home stink.
This case was the first jury trial in the United States, over Chinese drywall. It could set a precedent for other lawsuits. Plus, Banner has dozens of cases pending over this same issue.
An interesting note in this case is that it was discovered that a 2007 agreement between Banner and Knauf Plasterboard Tianjin existed, wherein they were allowed to replace the Chinese drywall with a domestic product. It turned out that Banner only replaced Chinese drywall it had supplied to select builders and installers who had complained about a smell. In this light, it is important to realize that Banner knew of problems and could have prevented other homes from being affected by the drywall had they gone public with the complaints years ago.
In this case, Banner conceded that the drywall was defective, but the company wanted only to pay for actual expenses -- not for negligence or any stigma the home will carry.
It is important to realize that the Seifarts did not move into their home until more than a year after the confidential agreement mentioned above had been signed. In other words, they could have been warned about these problems. They ended up moving out less than a year later.
Also assigned blame in this case was the importer La Suprema and China based exporter, Rothchilt International.
Prior to this case, a federal Judge in Louisiana awarded $2.6 million to seven Virginia homeowners, finding drywall manufacturer Taishan Gypsum Company liable for damage.
Repairs on the Seifart home, which was essentially gutted and rebuilt, will not be complete until atleast January.

How does someone living in Grand Prairie, Arlington, Mansfield, Fort Worth, Keller, Bedford, Hurst, Euless, Irving, De Soto, Duncanville, Burleson, Granbury, or anywhere else in Texas, know when an unlisted driver on an insurance policy is covered if an accident occurs? This is the third of three posts in a row on this subject. The following is what happened in a third case addressing this topic.
In 1989, the Texas Supreme Court, in the case, United States Fire Insurance Company v. United Service Automobile Association, discussed the issue of permissive driver coverage. This case involved a dispute between insurance companies over which had the duty to defend Anna Milliken, a passenger in an automobile, who allegedly caused an accident by grabbing the steering wheel of a moving vehicle. One policy was issued by United States Fire Insurance Company (Fire) and covered the automobile involved in the accident. The other was issued by United Service Automobile Association and insured the father of the passenger, Anna Milliken. The courts ruled that Fire had responsibility in this case.
The claim arose out of an accident that occurred when Anna was riding back with Douglas Martin from a church sponsored retreat. The car Douglas was driving was owned by his father and was covered by the Fire policy. Douglas testified that there was some swerving and horseplay prior to the accident. Anna testified that Douglas was zigzagging the wheel back and forth prior to the accident and that she grabbed the wheel on two occasions prior to the accident in an effort to play back with him. The first time Douglas did not object, and the second time was immediately prior to the accident. Anna testified that she and Douglas were "just kind of playing around."
The issue in this case was whether or not Anna was a permissive user of the automobile and thus covered under the policy of insurance.
First, the court considered whether Anna was a user of the automobile. The court conclude that at the time of the accident, it was undisputed that Anna was riding as a passenger in the automobile and this fact alone constitutes a "use" of the automobile. Thus, she was a user.
Next, the court looked to see if she was "operating" the automobile. They concluded that Anna was also "operating" the vehicle when she grabbed the steering wheel. By grabbing the wheel and exerting a force on it, she obtained control of the vehicle, even though for only an instant.
The final issue was whether or not Anna had permission to be operating the automobile. The issue on this point was not whether or not Douglas considered her to have permission. The focus by the court was whether or not Anna had a reasonable belief that she was entitled to grab the steering wheel when she did. In light of the testimony to facts in this case the court concluded that she did believe she had permission to act as she did and thus she became a covered driver under the policy of insurance.
These cases are fact specific and when someone finds themselves in a position having to argue this one way or the other, it is vital that an experienced Insurance Law Attorney be consulted.

If you are a business owner in Grand Prairie, Arlington, Mansfield, Hurst, Euless, Bedford, Keller, Colleyville, Plano, Fort Worth, Burleson, or anywhere else in Texas and one of your employees is involved in an accident in a company vehicle, will your insurance provide coverage for him? This is the second of three posts on this related subject. Read on to find out what happened in one case.
The Texas Supreme Court, in 1979, issued an opinion in the case, Betty Coronado v. Employers' National Insurance Company et al.
The issue before the court in this case was whether an employee who was driving a company owned vehicle on a purely personal mission after working hours was operating the vehicle with the permission of the company so as to be insured under the company's automobile liability policy. The jury said yes. The first appeal court said no and the Texas Supreme Court agreed with the decision of no.
The facts were as follows. On August 23, 1974, Fernando Sotelo was one of five operators for White Well Service and, as such, he was in charge of a crew of three other men. He was assigned a company truck for use in the performance of his duties. The company yard was located in Wickett which is a small town a few miles west of Monahans where Sotelo and his crew lived. Sotelo used the pickup to transport his crew to and from their homes to the company yard each day as well as from the company yard to the different well locations where their work was to be performed. On August 23, he and his crew left the company yard about 4 or 4:30 p.m. after completing their work for the day. Sotelo drove east on Highway 80 towards Monohans and the homes of all crew members. All of the crew lived on the east side of Monahans near the highway. He testified that just before they reached the intersection of Loop 464, which is on the western edge of Monahans, they decided to go to Wally's Bar and have a beer. They stayed there for three or four hours and then went to Rose Gardens, which is another bar located some distance west of Wally's Bar. He left Rose Gardens sometime after midnight, apparently many beers after leaving the company yard. Shortly thereafter, he was involved in a collision with another vehicle and, as a result thereof, Reynoldo Coronado lost his life.
Betty Coronado, the surviving wife of Reynaldo, subsequently brought suit against Sotelo and the jury found in her favor. She then sued White Well Service and Employers National Insurance Company, who had issued the auto policy.
It was not contended in this case that Sotelo had express permission to use the vehicle for the purpose it was being used at the time and place he was involved in the fatal accident. In fact, Sotelo testified that such a use was prohibited by his employer. It was urged, however, that his employer had impliedly granted him permission for such use by acquiescence or lack of objection to similar use on prior occasions.
Since the uncontradicted evidence established that Sotelo was permitted to use the vehicle for business purposes only, the precise question before the court was whether his deviation for personal pleasure at the time and place of the accident was such as to avoid coverage under the policy.
The court discussed that there are three different approaches to the problem of deviation in the United States; 1) the "strict" or "conversion" rule, 2) the "liberal" rule, and 3) the "minor deviation" rule. Under the "strict" rule, the actual use at the time of the accident must be within the time limits and geographical area specified or contemplated by the parties, otherwise permission cannot be found to exist. Under the "liberal" rule, coverage is extended so long as the vehicle was originally entrusted by the named insured to the person operating it at the time of the accident. The only essential thing is that permission be given for use of the vehicle in the first instance and coverage remains afforded irrespective of how gross the deviation from the original use. The third position is somewhat between these two extremes and the courts applying this rule modify the strict rule to the extent that protection will be afforded if the use is not a material or gross violation of the terms of the initial permission. Under this rule, the court must determine in each instance taking into account the extent of deviation in actual distance or time, the purposes for which the vehicle was given, and other factors whether the deviation was "minor' or "material."
Based on the evidence in the case and the prior paragraph guidance on these issues the court found there was no coverage in this instance. Each of these cases are fact specific and have to be examined on an individual basis.

If you live in Grand Prairie, Arlington, Fort Worth, Mansfield, Duncanville, De Soto, Hurst, Euless, Bedford, Aledo, Azle, Weatherford, or anywhere else in Texas and a friend or acquaintance uses your car and has a wreck is there coverage? This posting and the two following will show what has happened in three previous cases.
In 1966, the Texas Supreme Court, in the case, Royal Endemnity Company v. H.E. Abbott & Sons, Inc., had this question before them in a case.
In this case, a 1961 pickup truck owned by Jack Herring and driven by George K. Landers ran into and damaged a building owned by H.E. Abbott & Sons, Inc. The truck was insured by a liability policy issued by Royal Indemnity Company. The insurance policy with Royal had a clause extending coverage to anyone operating the truck with Herring's implied permission. In the lawsuit, Abbott obtained a judgment against Landers then sued Royal to enforce its judgment.
The case turns upon whether Landers was using the truck with the permission of Herring. There is no alligation that Landers had express permission to use the truck, but the jury found that Landers had Herring's implied permission to be using the truck.
The relevant facts are that Landers was hired by Herring on April 18, 1963, to work on Herring's ranch which was located some 14 miles from the city of Ballinger, Texas. Landers had a drivers license. Landers was paid monthly, plus his room and board, and lived in a small house on the ranch. Originally, Landers was to prepare his own meals but he soon began eating with the Herring family in the main ranch house. He often prepared his meals there when the Herrings were not at home.
Herring owned three vehicles: a ranch truck, which was unlicensed and intended for use on the ranch only, the 1961 pickup truck, and a passenger vehicle. Landers had permission to use the ranch truck, but only on the ranch. Herring always drove the 1961 pickup truck. Landers had permission to use the 1961 truck only if the ranch truck was being prepared and Herring was not using it. The keys were always left in both vehicles.
On the day of the wreck Herring and Landers had made a trip, with Herring driving, in the 1961 pickup. At the end of the day, Herring and his family left the ranch to spend the night. Landers had told Herring that a friend was coming to get Landers and the two were going to go to San Angelo. This plan did not materialize and Landers ended up leaving the ranch in the 1961 pickup and the wreck eventually occurred.
Upon learning of the wreck, Herring went to see Landers and threatened to "beat the stuffing" out of him. Plus he threatened to file charges against Landers.
On three or four previous occassions prior to the accident, Landers had driven one of the vehicles off the ranch to pick up the Herring children at a school bus stop some five miles from the ranch house. These were the only times Landers had driven off the ranch, and on each occassion he was expressly instructed by Herring to pick up the children. Herring had never told him to use the vehicles off the ranch. Landers had no car of his own, and Herring always took him to town whenever Landers wanted to go.
In this case, the jury hearing the case decided that Landers had the implied permission of Herring to use the vehicle at the time of the wreck. The Texas Supreme Court decided that the weight of the evidence was against such a finding and reversed the decision of the jury, ruling that the great weight of the evidence was against such a finding.
Here is what the court stated in making the above finding:
"In the present case the evidence shows neither a relationship nor a prior course of conduct from which implied permission might fairly be inferred. Landers was employed as a ranch hand. He had never driven one of the vehicles off the ranch except when specifically instructed to do so, and had never used any of them for a personal errand. His employer had always driven him to town whenever he wanted to go, and had no reason to believe that he intended or might need to use one of the vehicles on the evening of the accident. In view of these undisputed facts, the limited privileges Landers was allowed in the Herring house, his occassional pleasure trips with Herring, the availability of the vehicles, his use of the same on the ranch, Herring's inquiry about his driver's license, and the absence of any prior instruction not to take the vehicles off the ranch, afford no basis for concluding that Landers had implied permission to use the truck for a trip to San Angelo on a personal mission."
These types of cases are fact driven and have to be looked at on an individual basis.

What can someone in Grand Prairie, Arlington, Mansfield, Bedford, Hurst, Euless, De Soto, Duncanville, Fort Worth, or anywhere else in Texas do when they are being "jerked around" by an insurance company? Answer number one - Find an experienced Insurance Law Attorney to consult with. Answer number two - file a complaint.
Seeking the aid of an experienced Insurance Law Attorney is sometimes hard to do. There are a lot of attorneys that help victims of accidents. These attorneys are usually referred to as Personal Injury Attorneys. These types of claims are called third party claims. The other type of claim is called a first party claim. This is a claim against your own insurance company. There are not that many attorneys that have experience in handling these types of claims. These attorneys are usually referred to as Insurance Law Attorneys.
The majority of the time an attorney is going to be able to get you the money you are entitled to plus more depending on how wrong the conduct of the insurance company has been in handling the claim. Consultations are usually free and there is nothing to lose by having an attorney look at your situation.
As to "answer number two", filing a complaint, the Texas Department of Insurance has a website that a consumer can go to for filing a complaint. After studying the complaint, the consumer protection division sends the insurance company a copy and asks for a detailed written response to the complaint. The Texas Department of Insurance is understaffed for properly supervising insurance companies but one way for an insurance company to get their attention is to not respond to the complaint. As a result a response is almost gauranteed. The problem is that once the response is received, very little else is done. As you could assume, the insurance company response is going to be self serving.
What next happens is the Texas Department of Insurance staff determines if the claim or any other issue was handled properly under the policy. Again, the response from the insurance company is self serving and there is little ever done.
The Texas Department of Insurance staff also reviews the file to assess whether laws were violated. Most these laws are found in the Texas Insurance Code. If violations are found, the department institutes an enforcement action that can result in sanctions ranging from a fine and restitution to revocation of the insurance company's state license.
As previously stated, usually nothing is done as long as the insurance company files a response. Failing to file a response results in an investigator going to the insurance company. Based on the response received, the normal outcome is that the department communicates with the person complaining saying that there seems to be an honest dispute between the person and the insurance company and that the person complaining should seek an attorney. Thus, we are back to answer number one.
It should be remembered that filing complaints is still important. If legal action by an attorney is commenced against an insurance company it sure helps the case for the attorney to be able to get his hands on copies of the complaints filed against the insurance company.

It would be fair to say that most residents of Grand Prairie, Arlington, Mansfield, Coppell, De Soto, Duncanville, Fort Worth, Weatherford, and all other places in Texas, are responsible and conduct themselves in fair and proper ways in their dealings with others. Unfortunately that is not the way insurance companies always conduct their affairs.
The Dallas Morning News recently ran an article showing misconduct by two insurance companies doing business in Texas. The article is titled, "2 Texas auto insurers top complaints list, face investigation." This article ran on June 5, 2010, and was authored by Terrence Stutz. Almost any experienced Insurance Law Attorney could tell you the names of the insurance companies that treat people right most of the time and the ones that treat people wrong most of the time. Further, even the "good" companies will do people wrong too many times.
In the article, Terrence Stutz gives some examples that are typical problems with the two companies named. The insurance companies are Loya Insurance and Old American County Mutual. These two companies were at the top of the list after an analysis of the Texas Department of Insurance figures showed that 10 of the 25 largest auto insurers in the state had worse than average customer service records. The above companies were at the top of the list.
One example cites where a driver, Larry Randal, was in an accident that was not his fault. His vehicle was sideswiped and forced off the road. The driver at fault had tried to flee the scene. Randal's damages were $1,700, but the insurance company, Loya Insurance, offered to pay only $270.
Another example cited in the article involved a hospital administrator who was offered a low ball figure for damages to her car that was more than a $1,000 less than was what was needed to fix her car even though the other driver admitted fault.
A third example showed a Loya insured driver running a stop sign and broadsiding a lady named Arlene Gillespie and her three year old daughter. The driver was suspected of drinking and ran from the scene, but dropped his wallet and cell phone allowing the police to determine his identity. She got the run-around from Loya who eventually compensated her for her car but still had not taken care of the leg injuries that were sustained in this broadside collision.
Other examples are cited in the article. All the examples are situations where the insurance company should just take care of the claim and allow the not at fault drivers to get on with their lives.
Complaints to the Texas Department of Insurance should not be discouraged but rarely will anything be done. The Texas Department of Insurance cannot make or force a company to pay a disputed claim if there is no violation of the law nor can they decide who is at fault. The only positive outcome to filing a complaint is that records are kept and this information is then available to other prople and sometimes can be used in litigation against these companies.
It is companies like this, conducting their business with total disregard of the consequences to those who are harmed by their conduct, that force victims to seek legal help in situations that should be worked out without the need of seeking an attorney.

What if you live in Grand Prairie, Arlington, Mansfield, Weatherford, Fort Worth, or anywhere else in Texas and you do not have the insurance coverage you think you have? Can the insurance company still be liable for bad faith?
Different courts have said that because the absence of coverage provides a reasonable basis to deny the claim, the general rule is that the absence of coverage also negates liability for breach of the duty of good faith and fair dealing. This was stated by the Texas Supreme Court in 1995, in the case, Republic Insurance Company v. Stoker, and again in 1996, by the Texas Appeals Court in Houston [1st Dist.], in the case, North American Shipbuilding, Inc. v. Southern Marine & Aviation Underwriting, Inc.
But there are other important rulings where the courts have stated that the absence of coverage, does not necessarily excuse the insurance companies failure to investigate. This raises the possibility that an insurance company may be liable for breach of its duty of good faith and fair dealing, even though the claim is not covered. In the case, First Texas Savings Association v. Reliance Insurance Company, a 1992 case, decided by the Federal 5th Circuit Court of Appeals, the court remanded the case to the trial court to determine whether the duty had been breached, even though the court found no coverage. Later cases have continued to recognize the possibility of bad faith liability without coverage. One was another 5th Circuit case, Burditt v. West American Insurance Company, decided in 1996. Another was Jimenez v. State Farm Lloyds, a 1997 case decided by the Federal Court in the Western District of Texas.
Some courts have limited this possibility to cases where the insurance company commits "some extreme act that causes injury independent of the policy claim and arises to the level of bad faith." This was stated by the Dallas Court of Appeals in 1996, in the case, Howard v. INA County Mutual Insurance Company. This was also stated by the San Antonio Court of Appeals in 1996, in the case Tivoli Corp. v. Jewelers Mutual Insurance Company. Also interesting is the case, Toonen v. United Service Automobile Association, another San Antonio Court of Appeals, case decided in 1996. In Toonen the court found there was no breach of the duty of good faith and fair dealing absent breach of contract, without evidence of an extreme act act causing injury independent of the policy claim, or failure to timely investigate the insured's claims.
These types of cases are further examples why an experienced Insurance Law Attorney needs to be consulted. There is no way of being sure of whether or not the insurance company has breached its duty of good faith and fair dealing without a complete investigation and review by an attorney who handles these matters.

An earlier question on this blog was, How does someone in Grand Prairie, Dallas, Fort Worth, Arlington, Keller, Azle, Coppell, Sasche, Bedford, or anywhere else in Texas know if they are experiencing conduct of bad faith by their insurance company? Let's look at the current standard for judging this issue.
In 1997, the Texas Supreme Court, issued an opinion in the case, The Universal Life Insurance Company, AIA Services Corporation, and AIA Insurance, Inc. v. Ida M. Giles. In this case the court adopted as the liability standard the statutory language in Article 21.21, Section 4(10) of the Texas Insurance Code. (The current version is Texas Insurance Code, Section 541.060(a)(2)(A)). Under that standard, an insurance company breaches its duty of good faith and fair dealing by "failing to attempt in good faith to effectuate a prompt, fair, and equitable settlement of a claim with respect to which the insurer's liability has become reasonably clear."
This statutory standard adopted in the Giles case takes the place of the common-law standard for unreasonable denying a claim or unreasonably delaying payment. The court's analysis in the Giles case also supports adopting the statutory standard for failing to conduct a reasonable investigation. That standard is found in the Texas Insurance Code, Section 541.060(a)(7), which prohibits "refusing to pay a claim without conducting a reasonable investigation with respect to the claim."
Section 541.060 of the Texas Insurance Code is titled, "Unfair Settlement Practices" and any violation of the provisions found within this statute are probably violations of the insurance companys duty of good faith and fair dealing to the people and businesses it insures.
The same arguement can be made regarding Section 541.061, which is titled, Misrepresentation of Insurance Policy.
Furthermore, violations of Subchapter A, titled, "Unfair Settlement Practices", lists lots of actions and inactions that can get an insurance company in trouble. These statutes start at 542.001.
Another section of the Insurance Code, that when violated by an insurance company can be considered bad faith, is Subchapter B, titled, Prompt Payment of Claims Act, and starts at Section 542.051 and goes through 542.061.
A reading of the Giles case and scanning the statutes listed above will give someone a small understanding of how the laws related to the duty of good faith and fair dealing works in Texas. But the only way to be sure is to consult with an experienced Insurance Law Attorney. As in almost all matters legal in nature, a good understanding of the facts in a particular situation have to be looked at along with a careful reading of the applicable statutes and case law in order to properly advise someone on a course of action.

How does someone in Grand Prairie, Dallas, Fort Worth, Arlington, Mansfield, Keller, Azle, Coppell, Sasche, Bedford, or anywhere else in Texas know when the insurance company is acting in "bad faith"? The answer is not easy, but to understand, it helps to know the history a little.
When reviewing the theory of the duty of good faith and fair dealing, understanding the history aids in understanding its current form. But first, when in a situation where you suspect something "ain't right", you should consult an experienced Insurance Law Attorney. Even experienced attorneys will argue over this theory and how it applies to the facts of a particular situation.
The Texas Supreme Court, in 1983, in the case, English v. Fischer, is where the development of the common-law duty of good faith and fair dealing in Texas began. There, the plaintiff's asked the court to recognize an implied covenant, or promise, of good faith and fair dealing that would require the insurance policy proceeds to be paid contrary to the terms of the contract. The court declined. But, the justices on the court pointed out that in other circumstances a duty of good faith and fair dealing arises from a special relationship between the parties. Insurance was one area where such a duty had been recognized.
After the ruling above, some lower courts then recognized this common-law duty of good faith and fair dealing. This happened in the case, Aetna Cas. & Sur. Co. v. Marshall, which is a 1987, Court of Appeals, Houston [1st Dist.] case.
Eventually, in Arnold v. National County Mutual Fire Insurance Co., the Texas Supreme Court held there is a duty of good faith and fair dealing, which is breached, or broken, when the insurance company denies or delays payment of a claim with no reasonable basis or fails to determine whether there is a reasonable basis. The basis for recognizing this duty was stated this way:
In the insurance context a special relationship arises out of the parties' unequal bargaining power and the nature of insurance contracts which would allow unscrupulous insurers to take advantage of their insureds' misfortunes in bargaining for settlement or resolution of claims. In addition, without such a cause of action insurance companies can arbitrarily deny coverage and delay payment of a claim with no more penalty than interest on the amount owed. An insurance company has exclusive control over the evaluation, processing and denial of claims. For these reasons a duty is imposed that "an indemnity company is held to that degree of care and diligence which a man of ordinary care and prudence would exercise in the management of his own business."...
Later, in 1988, the Texas Supreme Court, in the case, Aranda v. Insurance Company of North America, restated the above elements to recognize a cause of action when there is no reasonable basis for denying benefits and the insurance company knew or should have known that there was not a reasonable basis for denying or delaying payment of the claim.
In 1994, in Union Bankers Insurance Company v. Shelton, the Texas Supreme Court expanded the duty to include liability for canceling a policy without a reasonable basis for doing so.
Over the following years, the courts struggled with how to look at and review these cases. When reviewing courts found any evidence of a reasonable basis for denying the claim, a jury verdict finding a breach of the duty of good faith and fair dealing would be reveresed. This happened in the case, Lyons v. Millers Casualty Insurance Co., a 1993 case.
Finally, in 1997, the court reevaluated the theory in the case, Universal Life Insurance Company v. Giles. Read about this more on Saturday.

If you have an insurance agent in Grand Prairie, Arlington, Mansfield, De Soto, Aledo, Duncanville, Bedford, Fort Worth, Weatherford, or anywhere else in Texas, you might wonder if the guy was being completely honest with you when he sold you the insurance policy on your car or auto.
Lawyers.com defines false representation as an untrue or incorrect representation regarding a material fact that is made with knowledge or belief of its inaccuracy.
In the Texas Supreme Court case, DeSantis v. Wackenhut Corp., a 1990 case, the court said a false representation must involve an existing or past material fact, rather than a statement of opinion, judgment, probability, or expectation in order to constitute actionable fraud. Statements concerning future events, sales talk, "puffing," and other similar statements are not considered actionable misrepresentations. This was stated by the Texas Court of Appeals in Tyler, in 1978, in the case, Hicks v. Wright. Similarly, representations concerning future events are not actionable unless at the time the statement or promise was made, the person making it did not intend to perform. This was stated by the Dallas Court of Appeals in 1976, in the case, Stone v. Enstam.
The Texas Insurance Code has a statute dealing with misrepresentations of insurance policies. Texas Insurance Code, Section 541.061, is titled "Misrepresentation of Insurance Policy." It says:
It is an unfair method of competition or an unfair or deceptive act or practice in the business of insurance to misrepresent an insurance policy by:
(1) making an untrue statement of material fact;
(2) failing to state a material fact necessary to make other statements made not misleading, considering the circumstances under which the statements were made;
(3) making a statement in a manner that would mislead a reasonably prudent person to a false conclusion of a material fact;
(4) making a material misstatement of law; or
(5) failing to disclose a matter required by law to be disclosed, including failing to make a disclosure in accordance with another provision of this code.
So now, what happens if false representations are discovered?
The 1977, Corpus Christi Court of Appeals case, Neuhaus v. Kain, says, anyone may sue for damages who has suffered injury in reliance on a misrepresentation made to them.
Next, the Fort Worth Court of Appeals, in 1960, in R.O. McDonnell Dev. Co. v. Schlueter, said that all persons who commit fraud are liable for the consequences of such fraud.
With regard to a principle - agency relationship, a principle may be held liable for the fraudulent representations of an agent if an agency relationship existed and if the acts committed by the agent were within the scope of the agent's authority. This was spelled out in a 1970, Houston [14th] Court of Appeals case, Pasadena Assoc. v. Connor. This means that not only is an insurance agent liable for his misrepresentations but so is the insurance company.
The best thing to do is seek the assistance of an experienced Insurance Law Attorney when you feel like you have had false representations made to you. All these situations are fact specific in determining whether or not there is a case worth pursuing.

How does a person in Grand Prairie, Arlington, Mansfield, Aledo, Burleson, Bedford, Euless, Lancaster, Hurst, Fort Worth, or any other city in Texas know when their insurance company or agent is committing fraud? The problem with fraud is that a person usually does not know when it happens.
USLegal defines fraud as an intentional misrepresentation of material existing fact made by one person to another with knowledge of its falsity and for the purpose of inducing the other person to act, and upon which the other person relies with resulting injury or damage. Fraud may also be made by an omission or purposeful failure to state material facts, which nondisclosure makes other statements misleading.
The Texas Supreme Court, in 1977, defined fraud in the case, Stone v. Lawyers Title Insurance Corp., saying:
A fraud cause of action requires proof of the following elements:
(1) a material representation was made;
(2) the representation was false;
(3) the speaker knew it was false or made it recklessly without any knowledge of the truth and as a positive assertion;
(4) the speaker made it with the intention that it should be acted on by the party;
(5) the party acts in reliance upon it; and
(6) the party suffered injury.
In Stone, the purchaser of a tract of land sued Lawyers Title Insurance Corp. on an owner's policy covering the tract for damages sustained due to the failure of the policy to show pipeline easements as exceptions. The Court held the title-agency president's statement that "everything was squared away" constituted some evidence that he represented that there were no easements on the property. As a result, the Court found evidence of actionable fraud against the title agency and its president.
Another example of fraud is found in, Pankow v. Colonial Life Insurance Co. of Texas. This is a 1996, Amarillo Court of Appeals case.
In Pankow, Pankow sued Colonial Life Insurance Co. of Texas, a credit life insurer, after it failed to pay policy proceeds on grounds that the policy had not been reinstated before the insured's husband died. Pankow alleged that employees of Colonial misrepresented that the policy would be reinstated and that they would secure the transfer of monies from an escrow account to pay outstanding premiums. These were actionable representations, as they involved misrepresentations of a future act which could be performed in compliance with policy terms.
Celestino v. Mid-American Indemnity Co., is an example of a case where the court said there was not any fraud. This is a 1994, Corpus Christi Court of Appeals case.
In Celestino, an employer's excess policy contained an exclusion for punitive damages. The declaration page, which specified that the umbrella policy conferred one million dollars in excess employer's liabiity coverage, did not amount to a fraudulent misrepresentation merely because the Mid-American Indemnity Co. policy contained the punitive damages exclusion. Celestino alleged that, by virtue of the exclusion, the policy in essence provided no employer's liability coverage at all. But the court stated that it could not isolate a general provision within a contract and label it a misrepresentation merely because subsequent exceptions preclude the effect of that provision. Furthermore, the language of the exclusion was plain, and its placement was prominent.
With the examples given above, it can be seen that each case is fact specific and has to be looked at closely to see if the allegation of fraud applies.

How does a person in Grand Prairie, Arlington, Mansfield, Hurst, Euless, Bedford, Fort Worth, Burleson, or anywhere else in Texas know when their insurance agent or insurance company has committed an act of negligence? This is a fair question and maybe this article will give you something to think about.
Insurance companies and insurance agents do not have a general duty to obtain coverage or to make sure the coverge they get for you is adequate. On the other hand though, courts have found insurance companies and insurance agents liable for affirmative misrepresentations, and the courts have stated that an insurance agent who undertakes to procure insurance for someone 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. This was discussed in the Texas Supreme Court case, May v. United Services Association of America, in 1992. Also, this issue was discussed by the Court of Appeals in Houston, in the 1999 case, Frazer v. Texas Farm Bureau Mutual Insurance Company. In Frazier the court allowed Frazier to go forward with his claim against Texas Farm Bureau Insurance Company and his agent where it is alleged he asked his agent to raise his coverage limits and the agent failed to do so.
The Texas Supreme Court in the case, Kitching v. Zamora, in 1985, stated an agent has a duty to keep the customer informed about the insurance policy's expiration date when the agent receives information pertaining to the expiration date that is intended for the customer. This was restated by the Texas Court of Appeals of Amarillo, in 1992, in the case Horn v. Hedgecoke Insurance Agency.
The courts in Texas have suggested an insurance agent could be found negligent if an explicit agreement or course of conduct showed the agent undertook to determine the customer's insurance needs and counseled the customer as to how they could be met and then failed in this understanding.
Even a seven year relationship between a customer and an insurance agent was not enough to create such a special relationship where, even though the customer sought advice on the types of coverage available, the customer alone decided the total dollar amounts of insurance he wanted. This was the ruling in McCall v. Marshall, decided by the Supreme Court in 1965. Likewise, in Pickens v. Texas Farm Bureau Ins Co., the court stated the insurance agent for Texas Farm Bureau was not liable for failing to sugggest higher liability limits. The court stated there was no course of dealing and no history of taking care of the customer's needs. There, the customer purchased insurance over the phone from the secretary in the office, did not seek advice from the agent on how much coverage they should get, the customer did not question the amount of coverge and did not inquire about the possible coverage available, and the customer had previously called and raised another type of coverage.
In the May case above, the court suggested that an agent may be held liable for his negligence in obtaining an adequate policy where the adequacy of the policy can be "assessed by some objective measure." For this proposition the May court cited, McAlvain v. General Insurance Co. of America, a 1976, Idaho case. There, the agent for McAlvain, was held liable after McAlvain requested sufficient insurance to cover his business, including inventory, fully, and furnished to the agent for General Insurance Co. of America, an appraisal showing that the inventory was worth $45,000, and the agent procured a policy with only a $30,000 limit.
Most these cases, where there is a possible claim of negligence against an insurance agent or an insurance company need to be reviewed by an experience Insurance Law Attorney. Each of these situations need to be looked at on a case by case basis.
In the Kitching case cited above, the court upheld the jury's finding that the agent negligently failed to notify the insureds about information he had received pertaining to the expiration date of their flood insurance. The agent had received copies of two policy renewal forms before the policy expired and did not notify the insureds about his having received such information. In addition, he received a "speed letter" from the insureds' mortgage company requesting the agent to look into the insureds' lack of payment of the renewal premium, but he disregarded the instructions. Thus, the insureds did not pay their premium and their policy expired.

Business people in Bedford, Colleyville, Grand Prairie, Arlington, Hurst, Euless, Fort Worth, or anywhere else in Texas will sometimes have mistakes in their commercial insurance policy. How do courts look at these situations?
The United States District Court, Northern District of Texas, Dallas Division, issued an opinion on a case May 26, 2010, where this was the issue. The opinion was issued by Judge Ed Kinkeade. The style of the case is Park Place Motorcars Mid Cities Ltd., and Park Place Motorcars of Texas, Inc. v. Affiliated FM Insurance Company.
The facts in this case are this: Park Place Motorcars Mid Cities Ltd. and Park Place Motorcars of Texas, Inc. (Park Place) operate a Mercedes dealership in Bedford, Texas, selling new and used vehicles. Park Place insured its motor vehicle inventory through two policies -- a "dealer open lot" policy and a "floored" policy, both of which were provided by other insurance companies. Affiliated FM Insurance Company (FM) provided coverage to Park Place for physical loss or damage to insured property and for business interruption loss for such insured property, subject to all policy terms, conditions, limitations and exclusions (the "Policy").
Park Place's property was damaged by a hail storm on April 13, 2007. Hail damaged some of Park Place's real property insured under the Policy, including a small portion of the roof and exterior siding, awnings, and sunshade tents. Hail also damaged approximately 244 of Park Place's motor vehicles. The damage to Park Place's motor vehicles was paid by its motor vehicle insurance companies. FM paid Park Place for the damage to Park Place's real property.
Park Place also submitted a claim to FM to recover under the Policy for lost business income directly resulting from hail damage to the motor vehicles. Park Place supported its claim with language from the Policy appearing to extend coverage to motor vehicles. Specifically, Section D of the Policy is titled "Extensions of Coverage" and according to the Policy's Declarations the following was added to Section D:
3. Motor Vehicles Exclusion
Section D., Property Excluded, Item 6., is amended to:
6. Motor vehicles licensed or unlicensed for highway use or owned by officers a
and employees of the Insured; satelites [sic], aircraft and watercraft except
while on land and in the process of being manufactured including storage of
aircraft or watercraft prior to being sold.
Park Place determined that because this Declaration involving motor vehicles falls under Section D-- "Exclusions of Coverage" --that motor vehicles are covered under the Policy.
But, FM denied Park Place's claim for lost business income because the Policy only provides business interruption coverage for losses "directly resulting from direct physical loss or damage insured by this policy to property not excluded." FM denied coverage on the basis that motor vehicles are excluded under the Policy and that Park Place's claim resulted from the hail damaged motor vehicles. FM reached the conclusion that motor vehicles are excluded under the Policy because of a typographical error in the Policy. The "Motor Vehicles Exclusion" in the Policy's Declarations amends Section D; however, the amendment should have been to Section E --"Property Excluded." FM also relied on the language "Motor Vehicle Exclusion" and "Property Exclusion" found in the Declarations to determine that motor vehicles are excluded under the Policy.
Park Place sued FM, seeking a declaration by the court that the Policy provides coverage for the business loss of the motor vehicles. They also alleged breach of contract, violations of the Texas Insurance Code, and bad faith.
In analysing the case, the court pointed out that under Texas law, the court's primary concern when interpreting a contract is to ascertain the parties true intentions as expressed in the instrument. To achieve this objective, the court should examine and consider the entire writing in an effort to harmonize and give effect to all the provisions of the contract so that none will be rendered meaningless. No single provision taken alone will be given controlling effect; rather, all the provisions must be considered with reference to the whole instrument. Moreover, a typographical mistake must yield to the well established doctrine that written contracts will be construed according to the intention of the parties, notwithstanding errors and omissions, by perusing the entire document and to this end, words, names, and phrases obviously intended may be supplied.
Park Place argued that because "Section D" of the Policy is the "Extensions of Coverage" Section and contains the "Motor Vehicles Exclusion" Declaration that the Parties intended for the motor vehicles to be covered, or at the very least, that there is an ambiguity in the Policy that must be construed in favor of the insured, which means motor vehicles would be covered under the Policy. But, Park Place's interpretation of the Policy is not reasonable.
The court said the only reasonable interpretation is that the Parties' true intent was to exclude motor vehicles. In the "Motor Vehicles Exclusion" Declaration, the "D" in "Section D" is a typographical error. Instead, the "D" should be an "E" which would place the Section in the "Property Excluded" Section, not the "Extensions of Coverage" Section. This is clear because the title of the Declaration is "Motor Vehicles Exclusion," which on its face can only be reasonably interpreted as excluding motor vehicles from the Policy. Moreover, the title of the proper Section --"Property Excluded" --for the "Motor Vehicles Exclusion" follows the Section letter "D" which shows that the Parties intended to clarify the Section to which the Declaration pertained. The letter "D" is a typographical error and the words "Exclusion" and "Excluded" are the Parties' unambiguous expression of intent to exclude motor vehicles from coverage.
Moreover even if the Court determined that an ambiguity exists as Park Place alleges, FM's evidence establishes that the Parties' intended to exclude motor vehicles from coverage under the Policy. McQueary Henry Bowles Troy LLP (MHBT) was Park Place's insurance broker and negotiated the Policy with FM on behalf of Park Place. MHBT arranges Park Place's commercial property insurance, as well as most of its other insurance needs. Park Place's broker, Linda Stewart at MHBT, sent applications that included a property application, a statement of values, and loss runs that only referred to Park Place's building, business personal property, and business interruption. Nothing was requested by Stewart from Park Place regarding obtaining insurance for the actual vehicles for sale. Stewart testified that she never sought coverage for motor vehicles from FM or intended to place coverage for business interruption losses with FM for damage to Park Place's vehicles.
Thus, the Court concluded the Parties intended to exclude motor vehicles under the Policy and the Court ruled in favor of FM.

What if your home is defective? If you live in Grand Prairie, Arlington, Sasche, Plano, De Soto, Azle, Aledo, or anywhere else in Texas and you have problems with your home, you may ask the same question.
The Miami Herald ran an article on May 28, 2010, reporting where a class-action lawsuit had been filed against numerous homebuilders for using Chinese drywall in the construction or remodeling of their homes. The title of this article is, Chinese Drywall Lawsuit Gets Class-action Status. As many as 152 families from three neighborhoods in Homestead, Florida, will be part of the first class-action lawsuit in the country over tainted drywall imported from China.
The drywall is made by Knauf Plasterboard Tianjin, and has been reported on extensively after it was used in repairs following hurricanes along the Gulf Coast region of the United States. These builders will be sued under the Deceptive Trade Practices Act and other causes of action including fraud and breach of contract.
The lawsuit targets homebuilder South Kendall Construction Corp., Palm Isles Holdings, Keys Gate Realty and Banner Supply and includes condo, townhome, and single-family homeowners living in the Palm Isles, Arbor Place, and Augusta Green subdivisions, in and around the Key Gates neighborhood of Homestead, Florida.
Other homeowners are being given the opportunity to join in the lawsuit. Homeowners will receive a notice in the mail asking if they would like to join the lawsuit. This is being done for judicial economy. As if stands now, these lawsuits are being brought on an individual basis as the problems are being encountered by homeowners.
The problem is, some brands of drywall imported from China have been found to emit large amounts of hydrogen sulfide, which corrodes and blackens some metals in homes and can make a house smell like rotten eggs. Many homeowners also believe the drywall is responsible for breathing problems and nosebleeds.
As the article reports, nationwide, about 3,300 homeowners have complained to the Consumer Product Safety Commission about drywall in their homes. Some homeowners have been forced to move to rental homes because the conditions in their own homes are too unbearable. Almost all the homeowners are in homes they can't sale because of the drywall nor can they get insurance because the normal insurance companies refuse to insure homes that have this Chinese drywall in them.

Commercial insurance policies are commonly issued to business people in the Dallas, Fort Worth area, and through out the state. Even business owners in Grand Praire, Arlington, or out in Weatherford, will have one of these policies. When a claim is made, there is often times a dispute as to the coverage provided in the policy.
The Court of Appeals of Texas, Houston (14th Dist.), decided a case on May 20, 2010, that does a pretty thorough job going thru an analysis of how these cases are looked at by the courts. The decision was handed down by Chief Justice, Adele Hedges. The style of the case is Essex Insurance Company v. Eldridge Land, L.L.C.
Some of the facts are that Eldridge Land L.L.C. (Eldridge) owned a vacant building. They had purchased a commercial property insurance policy from Essex Insurance Company (Essex). The policy contained a clause providing for damage "caused by or resulting from theft," and an exception to the theft damage exclusion for "damage caused by the breaking in or exiting of burglars." The relevant language was:
A. COVERED CAUSES OF LOSS
When Basic is shown in the Declarations, Covered Causes of Loss means the following:
....
8. Vandalism, meaning willful and malicious damage to, or destruction of the described property.
We will not pay for loss or damage:
a.....
b. Caused by or resulting from theft, except for building damage caused by the breaking in or exiting of burglars.
On March, 28,2006, Eldridge's property sustained considerable damage. Some intruders apparently forced their way into the building and damaged sheetrock, ceiling tiles, electrical conduit boxes, and wall coverings. They also removed copper wiring and copper pipe from the building. Eldridge thereafter filed a claim with Essex seeking coverage. Essex denied the claim based primarily on the policy exclusion for loss or damage caused by or resulting from theft. Essex admitted some of the claim was covered but that the amount did not exceed the $5,000 deductible.
The issue in this case was one of policy interpretation. The court stated, "Whether policy language is ambiguous is a question of law. Ambiguity does not arise simply because the parties offer conflicting interpretations; rather, ambiguity exists only when the contract is susceptible of two or more reasonble interpretations. Usually, if language in an insurance policy is deemed susceptible to more than one reasonable interpretation, the reasonable construction most favorable to the insured will be imposed. Consequently, we construe an ambiguous insurance policy strictly against the insurer and liberally in favor of the insured."
The court next went into more than a three page analysis of the facts in this case and the policy and the law. The reading is interesting, but ultimately illustrates why an experienced Insurance Law Attorney is needed in these cases.
In this case, the court concluded that the evidence established that all damage above the policy deductible were caused by or resulting from theft. As a result, there was no coverage above the deductible.

Let's say a guy in Grand Prairie, Arlington, De Soto, Mansfield, Fort Worth, or any other place in Texas hires a contractor to reroof his property. Next, someone gets injured. Is there coverage for the injured person's injuries?
The answer is the typical "it depends." In the case, Atlantice Casualty Insurance Company v. PV Roofing Corp., et al. Horatio Gonzalez (Horatio) was injured when a ladder he was moving hit an electrical line. This case was decided by Stephen Wm. Smith, United States Magistrate Judge, U.S. District Court, S.D. Texas, Houston Division, on May 20, 2010.
In this case, PV Roofing was the roofing contractor on the job site. PV hired an independent contractor, Bernardo Mejia, to complete the roofing job. On the day of the incident, Mejia went to the job site to do a final inspection and took Horatio with him. Horatio was not paid by either PV or Mejia for any servies in connection with the roofing job.
PV had a commercial general liability policy with Atlantic Casualty Insurance Company (Atlantic). The Atlantic policy had an exclusion in the policy excluding liabilty for "employees, contractors and employees of contractors." It also excluded claims "arising out of" actions or inactions by an independent contractor or subcontractor.
PV, Horatio, and Mejia, claimed that Horatio should be covered since he was not one of the above.
Atlantic pointed out that the policy endorsement defined "employee."
"Employee" shall include, but is not limited to, any person or persons hired, loaned, leased, contracted, or volunteering for the purpose of providing services to or on behalf of any insured, whether or not paid for such services and whether or not an independent contractor.
In the case, the uncontroverted facts are that Horatio went with Mejia to the job site on the day of the accident. They were the only persons at the job site. While Mejia was performing his final inspection, he noticed that some shingles needed repair. He climbed a ladder and made one repair. He needed to move the ladder to make another repair and asked Horatio to move the ladder. Horatio was injured when the ladder came in contact with high voltage lines. The court stated that these facts are sufficient to bring Horatio within the very broad definition of "employee" contained in the policy exclusion and thus, there was no coverage.

What if someone in Grand Prairie, Arlington, Duncanville, Mansfield, Burleson, Weatherford, Fort Worth, or some other city in Texas is involved in an accident, as an employee, with an underinsured driver? Does the employers underinsured portion of their insurance policy provide coverage?
This was the issue in a May 12, 2010 case decided by District Judge, T. John Ward, of the United States District Court, E.D. Texas, Marshall Division. The style of the case is, Dean and Parwana Amanzoui, Individually and as next friends of Fahim Amanzoui and Sabrina Amanzoui v. Universal Underwriters Insurance Company.
In this case, Parwana Amanzoui (Parwana) was riding in an automobile driven by her husband, Dean Amanzoui, and owned by her husband's employer, the Huffines Automotive Group (Huffines). At the time of the accident, Huffines carried its insurance with Universal Underwriters Insurance Group (Universal) pursuant to a multiple coverage policy. Coverage under the policy for underinsured motorist (UIM) was limited. "Insureds" for purposes of UIM coverage was expressly limited to three categories of persons: (1) persons designated on the declarations as subject to the UIM policy, (2) family members of persons designated in the UIM policy, and (3) persons occupying vehicles driven by someone falling within category no. 1 or no. 2. It was uncontested that Parwana was not included in this list.
Texas Insurance Code, Section 1952.101, was relied on by both sides of this case.
The material facts in this case were not in dispute. The sole issue was whether the policy language above provided coverage to Parwana.
Citing Section 1952.101, Parwana argued that Texas law does not allow Huffines to accept liability coverage for its "friends and family" while excluding occupants of otherwise covered vehicles and individuals who are otherwise "insured" under the policy. Thus, Universal's efforts to impose restrictions not found in the statute are improper and ineffective as attempts to void or narrow the scope of insurance coverage specified by the Texas legislature in drafting the statute.
The finding of this Court was that the policy was clear and unambiguous that Parwana was not entitled to recover UIM benefits. The Court explained by saying that Parwana can only be an insured if she qualified as an individual designated in the declarations, a family member of such individual, or a passenger in a covered auto driven by these individuals. She did not qualify.
The Court found that if Huffines had the legal right to reject the UIM coverage in toto per Section 1952.101, that it had the right to restrict UIM coverage to selected individuals. Further, the Texas Supreme Court, in a 1997 case, Grain Dealers Mutual Insurance Company v. McKee, has held that it is not against public policy to limit UIM insureds to certain individuals.
The important point in this case was the ruling by the Court that certain persons can, pursuant to the insurance contract, be covered by UIM coverage while others are excluded from the same coverage.
Whenever this isssue comes up, it is important to carefully read the policy.