Dallas Fort Worth Insurance Lawyer Blog

Here is a case for insureds in Grand Prairie, Weatherford, Mineral Wells, Arlington, Dallas, Fort Worth, and other places in Texas to think about.
This case was decided by the United States Court of Appeals for the Fifth Circuit, on April 13, 2011. The style of the case is, Araceli Medina Garcia v. American United Life Insurance Company. Here is some background.
In January 2006, Salvador DeReza Garcia died in a car accident. At the time of this death, Salvador was covered under a group life and accidental death insurance policy issued by American United Life Insurance Company (AUL) and subject to the Employee Retirement Income Security Act (ERISA), 29 U.S.C. Sections 1001-46. Salvador's wife, Araceli Medina Garcia, submitted a claim under this policy following his death. AUL denied her claim because Salvador was living illegally in the United States and made material misrepresentations regarding his identity during the application process. A lawsuit was filed, the district court ruled in AUL's favor. This appeal followed. This appeals court affirmed the ruling of the trial court.
Salvador's employer, Tatum Excavating, Inc. and Tatum Excavating, Inc. Employee Benefit Plan (collectively, Tatum) signed a contract for a group policy for several of its employees with AUL. The policy offered life insurance coverage in the amount of $20,000 per eligible employee. A few months after Tatum entered into this agreement, Salvador signed a group enrollment form to apply for the policy (hereinafter the enrollment form). The enrollment form reflected Salvador's alleged date of birth as August 19, 1966, and purported Social Security Number as 623-90-3634. Later, Araceli was designated as the sole beneficiary.
After Salvador's death, Tatum sent AUL a proof of death form, notifying AUL of Salvador's death, Araceli's Mexican identification card, and Salvador's death certificate, identifying his date of birth as August, 19, 1966, place of birth as Mexico City, and SSN as 623-90-3634. In order to verify eligibility, AUL requested additional documentation because, based on Salvador's place of birth, there was no indication from the documents that Tatum sent that Salvador was a US citizen. Tatum then sent AUL another copy of Araceli's alien registration card and a copy of Salvador's I-9 form, which reflected a SSN for Salvador of 623-90-3634 and Alien Resident Card number 048-931-385 with an expiration date of May 26, 2009.
AUL immediately began an eligibility investigation, seeking verification of Salvador's alien status and the SSN. The investigation reflected that the SSN did not belong to Salvador, AUL sent Araceli a letter rescinding Salvador's policy and denying Araceli's claim. Upon Araceli's appeal, a reinvestigation was initiated that confirmed the prior results. Specifically, the SSN belonged to a woman who died in 1966 and there was not a number matching Salvador's name. Further the Department of Homeland Security (DHS) had no information in their system that matched the information provided by Salvador.
One thing relevant here is that as with all ERISA claims, federal law applies rather than state law. This is relevant because in this case the ruling was against coverage whereas under state law the result would have probably been the opposite.
Under federal standards in this case, the appeals court reviewed the trial court's ruling based on an "abuse of discretion" standard.
The writing related to the enrollment form states, "the undersigned understands and agrees ... benefits under any policy will be paid only if AUL decides in its discretion the applicant is entitled to them." This gives AUL discretion to make claims determinations. According to this court, "... arguements to the contrary are unavailing."
In determining whether the claim denial was proper, the court considered three factors in its review: 1) whether the administrator gave the policy a uniform construction; 2) whether the administrator's interpretation is consistent with a fair reading of the policy; and 3) whether different interpretations of the policy will result in unanticipated costs. The court then said "An administrator's decision is 'fair and reasonable,' if the decision is supported by substantial evidence."
So, in this case, AUL had to show that the misrepresentation in Salvador's application for coverage was material. It is undisputed that the SSN was false and that Salvador was not legally in the US to work or even be present. Araceli's arguement was that this was not a material misrepresentation.
This court said Salvador's misrepresentations were clearly material and of the type that would have presented AUL from issuing the policy. A SSN is an integral part of the process by which a party's identity can be verified. Because Salvador provided a false SSN and inhibited AUL's ability to verify his identity, he not only placed AUL at risk of severe penalties, but also inhibited AUL's ability to assess the underwriting risk involved in issuing him the policy.
They then said the Department of the Treasury's Office of Foreign Assets Control (OFAC) maintains the Specially Designated Nationals List (the List), which includes the names of individuals designated, for example, as terrorists, drug dealers, and money launderers. Insurance companies are prohibited from engaging in transactions that in any way involve individuals on the List. Punishments for violations of this law can be substantial. As AUL explained in its denial letter to Araceli, "the misrepresentaion respecting Salvador's identity and his ability to work and reside in the U.S. would not permit AUL's compliance with" federal regulations, regarding the List. Thus, Salvador's misrepresentation made AUL vulnerable to substantial civil and criminal penalties, such as those enumerated in, 50 U.S.C., Section 1750.
There are a large number of people residing and working in the Texas who are here illegally. For the most part these people obey the laws, both criminal and civil. They do things like, buy life insurance. This case is relevant in understanding the laws that may affect whether a life insurance company is going to have to pay a claim. An experienced Insurance Law Attorney must be consulted in these situations. There are often times things that can be done to make sure the coverage purchased is provided when a claim is made for benefits.

Anyone in Grand Prairie, Arlington, Irving, Mansfield, Dallas, Fort Worth, Cockrell Hill, Oak Cliff, De Soto, Duncanville, Lancaster, or any other place in Texas, who has disability insurance to help in a time of need, would be interested in the following case.
The case was decided by the The United States Court of Appeals for the Fifth Circuit. It is an appeal from a summary judgment in the district court in favor of the insurance company. The case is styled, Gwendolyn Byrd v. Unum Life Insurance Company of America. The opinion was issued on April 7, 2011.
The plaintiff, Gwendolyn Byrd, filed suit challenging Unim Life Insurance Company's decision to terminate her long term disability benefits. The job of this appeals court was to review the case for an abuse of discretion by the district court. Here is some background.
Byrd was employed as a chargeback associate for Accenture LLP when, on March 26, 2003, she suffered a repetitive-trauma work related hand injury later dianosed as carpal tunnel syndrome. Her subsequent medical complaints include that she suffered from bulging discs in her lower back, lumbar radiculopathy, cervical discogenic pain, cervical spondylosis, and other associated ailments. Byrd alleged the conditions persisted at the time of trial.
Byrd participated in Accenture's group long-term disability program administered by Unum. In July 2004, Byrd applied for and received disability benefits. Unum paid Byrd benefits under the program from September 2003 through July 2008, when Unum terminated Byrd's benefits after concluding that Byrd no longer was physically unable to return to her occupation. Unum made its decision to terminate Byrd's benefits after asking at least three independent physicians and two occupational experts to review Byrd's full medical file. Those experts agreed that Byrd would be physically able to perform her former job.
After Unum's appeals were denied, she filed suit in district court under ERISA, Section 502(a), 29 U.S.C., Section 1132(a), seeking past damages including unpaid long-term disability benefits, a declaratory judgment that she was entitled to future benefits under the policy, and attorney's fees.
In arguing that Unum abused its discretion, Byrd raised two arguements. First, Byrd argued that Unum improperly failed to consider her lumbar radiculopathy. Byrd argued that Unum's decision relied on an independent medical examination performed on April 25, 2008, that did not evaluate her spine. Byrd claimed that she was diagnosed on July 3, 2007, with lumbar radiculopathy, and that she received treatment for that condition from two treating physicians, whose opinions were improperly ignored by Unum. The district court in its ruling had correctly noted, the record indicated that Byrd's cervical and lumbar conditions were reviewed thoroughly by three board certified orthopedic surgeons and considered by two vocational specialists. At least one of the doctors explicitly addressed Byrd's specific lumbar complaints and noted that her lumbar problems did not justify an "overly restrictive" work designation. A second physician, explicitly addressed Byrd's complaints and noted that those ailments would not preclude Byrd from performing an eight hour workday in a sedentary occupation. The court noted that Unum plainly considered Byrd's lumbar problems and found them insufficient to justify further benefits and thus that arguement was rejected.
Second, Byrd contended that Unum failed to consider her cervical and upper extremity impairments. The written brief of Byrd states "Byrd is limited to lifting 5 pounds and cannot do repetitive motion ...." They argued that since Unum concluded that Byrd could exert up to 10 pounds of force - or double the amount of force Byrd believes she can exert - that Unum abused its discretion. This court disagreed saying, Unum's experts reviewed Byrd's full medical records carefully, and each concluded Byrd could return to her previous sedentary occupation. At least one physician concluded Byrd could exert 20 pounds of force occasionally and 10 pounds of force frequently. Unum's decision took into account Byrd's cervical and upper extremity impairments and the courts decision is supported by substantial evidence.
Someone can never know how these cases will turn out. Many times an insurance company denies a claim without good reasons. It is sometimes just a calculated denial in hopes the claimant will disappear. Other times it is based on good reason. Each of these cases have to be looked at carefully by an experienced Insurance Law Attorney with an eye toward finding an impropriety.

Insurance purchasers in Grand Prairie, Arlington, Dallas, Fort Worth, Mansfield, Irving, Mesquite, Cockrell Hill, Oak Cliff, Richardson, or any other place in Texas need to know about the "known-loss" exclusion in an insurance policy.
One way of understanding this exclusion is by reading the case, Colony National Insurance Company v. Unique Industrial Product Company, L.P. This case was decided by the United States District Court, Southern District, Judge Lynn N. Hughes, on April 7, 2011. This is a summary judgment ruling.
Here is some background.
Unique is an importer and supplier of plumbing parts. Uponor, Incorporated, sells plumbing supplies to plumbers and individual customers. In 2002 and 2003, Unique supplied Uponor with swivel nuts and brass fittings. In June of 2004, Uponor notified Unique that the nuts it bought from Unique were failing and damaging houses.
Uponor and Unique met in 2006, and as a result of the meeting Unique agreed to pay damages to Uponor for losses incurred as a result of the defective supplies and in return Uponor agreed to continue to use Unique as a supplier.
In November of 2006, Uponor made another claim for losses and Uniques failed to honor this request. In September of 2007, Uponor sued Unique for its losses.
Here is the relevant insurance background.
Unique had been insured by American Wholesale Insurance from October 16, 2001, through October 16, 2005, when American chose not to renew the policy. On September 30, 2005, Unique requested liability coverage from Colony National Insurance Company. In its application, Unique disclosed it's knowledge of failed fittings and fifty-six pending claims against Unique, and it reported that additional claims were expected. When Unique was sued by Uponor, Unique requested that Colony provide coverage and Colony refused based on fortuity.
A critical component of insurance is fortuity. A fortuity is something that occurs by chance or accident, something that could not have been reasonably foreseen. Insurance is designed to protect against unknown risks of harm and loss. This component in an insurance policy precludes coverage of a loss that is known or in progress at the time the policy is purchased. An insured cannot seek coverage for a loss that has already begun and which is or should be known to have begun. The issue in fortuity is not liability, but the insured's knowledge of a loss before buying the policy.
The policies that Unique had purchased from Colony contained an exclusion for property damage that Unique knew of, in whole or in part, before the policy period - a known-loss exclusion. At law, Unique knows of an occurrence when it reports part of that property damage to Colony or an other insurer, when it receives a demand or claim for damages because of property damage, or when it otherwise becomes aware that property damage exists.
As the court stated and was clear from the evidence - Unique knew of the losses before buying insurance from Colony. This was in the application for insurance. Unique knew it had already paid over $300,000 to Uponor on over 56 claims. Accordingly, the occurrences described in the suits are excluded because Unique knew of the failures prior to inception of the policy and because Unique disclosed its knowldege of the failures and of the current and future claims.
This case is an easy call for the court. The language in the insurance policy is plain and the forturity rules are clear. The loss was known before coverage was purchased and that is admitted.
In this case there were a couple of other legal issues but they are not relevant to the fortuity issue but are probably the reasons this case went as far as it did in the legal system.

From Grand Prairie, Arlington, Fort Worth, Dallas, Hurst, Euless, Bedford, Pantego, Dalworthington Gardens, Mansfield, Crowley, to all over Texas, people who have their insurance with State Farm Insurance should find this interesting.
The Houston Chronicle ran a story on April 11, 2011, by writer Terrence Stutz. The title of the article is, "State Farm Is Told To Pay $350 Million."
The article tells us that State District Judge Tim Sulak found that state Commissioner Mike Geeslin acted properly when he ordered State Farm Lloyd's to reimburse an estimated 1.2 million customers for overcharges as well as penalty interest going back to 2003. The amount owed is nearly $350 million.
Judge Sulak made a ruling after listening to two hours of arguements from attorneys from State Farm, the Texas Department of Insurance and the Texas Office of Public Insurance Counsel.
State Farm has indicated it intends to appeal in this decade long debate going on in the state's insurance market.
The Insurance Department and the state public insurance counsel, who represents consumer's interests, say that State Farm continued to overcharge customers for several years despite warnings from regulators that rates were too high. Public Insurance Counsel argued that State Farm should be on the hook for nearly $1 billion.
Of course, State Farm argues that they owe nothing and that their charges were competitive charges. The dispute is over premiums charged for homeowners coverage between 2003 and 2008.
The commissioner's order for refunds was handed down in November 2009. In it, State Farm is called to either issue refund checks or provide a credit on policy renewals. Refunds for longtime customers should range between $200 and $300.
Geeslin welcomed the decision after this long battle. Of course it may not be over.
"Simply explained, the 2009 order is a function of law and evidence, and the court agreed that there was substantial evidence in support of its findings."
During arguements in front of the judge, State Farm attorney, Susan Conway, said the refund ordered by Geeslin would wipe out a third of State Farm Lloyd's capital and threaten the finances of the state's largest property insurer.
"This refund would be disastrous and irresponsible," she told the judge. "The commissioner failed to consider the impact the refunds would have on the financial stability of State Farm Lloyd's."
A new report from the Texas Department of Insurance indicates that State Farm had a very profitable year in 2010, after paying out just 52 percent of its premiums to cover property losses. The 52 percent "loss ratio" was close to the state average of 48.4 percent for the 20 largest companies and significantly better that the 60 percent loss ratio that is considered a benchmark for profitability in Texas.
It is noteworthy to realize that State Farm Lloyd's collected nearly $1.7 billion in homeowners premiums in Texas last year.
State Farm's attorney suggested that the commissioner levied about $53 million in penalty interest against State Farm because it appealed his rate decisions - including his initial finding that State Farm was overcharging customers by 12 percent.
The commissioner that State Farm had a choice in the matter - to reduce rates as the commissioner ordered or continue to charge excessive rates.
A leading consumer group, Texas Watch, said the judge's ruling in the nearly 8 year old legal battle points to one conclusion: State Farm needs to pay up.

No one in Weatherford, Mineral Wells, Aledo, Azle, Hudson Oaks, Peaster, Poolville, Millsap, Brock, Cresson, Lipan, Willow Park, or anywhere else in Texas wants to hear their insurance company deny a claim they make.
The newspaper, Boulder Daily Camera, ran a story on April 13, 2011, authored by staff writer, Vanessa Miller. The title of the story is, Fourmile Fire Victom Sues Insurance Company For Denying Coverage. It is a story where the insurance company denied a claim and placed the reason for the denial back on the shoulders of the insured.
It it certain that anyone who faces a similar story should do as the person in this story did; that is to seek the advice of an experienced Insurance Law Attorney. Here is much of the story.
A business owner lost her home in a devastating fire that occurred in the area last fall. The insurance company denied her claim for coverage on the grounds that the home wasn't listed as one of her business addresses.
According to the lawsuit filed, Debra St. Claire, who owns St. Claire's Organics, Inc., which makes organic and vegan breath mints, herbal sweets, candies and lozenges, said she obtained commercial business property insurance from Sentry Insurance in 2009.
St. Claire said she maintained "research and development facilities" for her products at 997 Dixon Road since 1999, and established production and customer shipping facilities at 2275-A West Midway Blvd. in 2009.
When purchasing the insurance, she says the only question Sentry asked regarding the location of her business was, "What is the mailing address," to which she provided the West Midway address.
St. Claire says she always believed that the "research, writings, creative work and intellectual property" stored at the Dixon Road location was covered under the insurance policy, which was renewed in May 2010 to extend through May 2011. In the policy there is a list of coverage provided, including a $500,000 limit for "property at any location," including property that is not at the address listed in the policy's description of premises.
The Dixon Road property burned to the ground during the Fourmile Fire, which was during the coverage period. Everything that St. Claire kept at the business at the Dixon Road property was lost.
St. Claire notified Sentry of her loss, expecting to be insured, but Sentry never even inspected the property and refused to meet with St. Claire. They just denied the claim. St. Claire filed a complaint with the Colorado Division of Insurance, which is the equivalent to the Texas Department of Insurance. Sentry responded to the complaint saying the claim was denied "for the sole reason that the Dixon Road location was not listed in the policy as a separate business location."
Sentry then filed a declaratory judgment lawsuit against St. Claire asking the judge to declare that the policy provided no coverage for her lost property on Dixon Road and to rescind her policy alltogether on allegations that St. Claire deliberately withheld information about a second business location.
St. Claire denies those allegations in the lawsuit she filed against Sentry, stating that the agent never asked whether she conducted business at any other locations. She says that if the agent had asked, she would have told the agent whatever the agent wanted answers to and that she was not intentionally withholding anything.
In the lawsuit, St. Claire is asking for two times the covered benefits due, plus payment for economic damages, attorney fees and court costs. In this regard, Colorado law is very much like Texas insurance law.

When someone in Grand Prairie, Fort Worth, Arlington, Dallas, Irving, Mesquite, Garland, Richardson, Carrolton, De Soto, or anywhere else in Texas leaves their house - is it vacant? What if you moved out to renovate it? What if you moved out while it was up for sale? What if you moved out while you had a temporary job out of town? What if you moved out to take care of a sick relative or friend?
When a house seems to be vacant and a loss occurs, the insurance company that insures the house will probably deny the claim under the "vacancy exclusion" in the insurance contract. Of course when this happens, an experienced Insurance Law Attorney needs to be consulted immediately. Whether the house is vacant, as that term is defined in the insurance contract and Texas courts, will determine whether or not there is coverage.
A case decided by the Court of Appeals, Waco, in 1971, is a good place to look for some guidance. The style of the case is, Germania Farm Mutual Aid Association v. Bobby D. Anderson and Lavern Anderson.
Here are some facts of the case:
The lawsuit, based on a fire insurance policy was tried to a jury on a stipulation, the effect of which was that the sole issue was whether there was evidence to support the jury finding that the building was not "vacant."
The policy defined "vacant", in relevant part as: that there is no person "living on the immediate premises continuously, as such person's main place of abode."
The Anderson's, owners of the property, were divorced after the policy was issued. The house was damaged by fire about a week after the divorce. For the last five years of the marriage Mr. Anderson's construction work required him to be absent from home except on weekends. They were permanently separated six months before the fire, and Mrs. Anderson then went to another town to work. A substantial portion of the household furnishings and personal belongings remained in the house, which was set aside to Mrs. Anderson in the divorce decree; much had also been removed, including a gas cookstove. Mrs. Anderson had electric power and gas disconnected because of lack of funds. She visited the house on her days off once each week to "see if everything was all right", but she did not sleep there. She testified she maintained the house as the home for herself and children. Mr. Anderson continued to return to the house and occupy it each week-end, and to work out of town during the week, There was testimony Mr. Anderson continued to "make his home" there, where he left his clothing and received his mail. During the week he lived in a rented house or rooms in other cities.
In this case the court noted that neither party cited any authority for the definition of "living on the premises" as the term is used in the policy. As the court noted, it is not a legal term. But they did point out that the policy itself qualifies the term by the added words: as the "main place of abode" and "continuously."
"Abode", a term of ordinary meaning, is simply a synonym for residence or dwelling. To "reside continuously" is construed to authorize "brief temporary absences where intention of returning is clear" and is not used literally as requiring one to remain at all times. Without the qualification in the contract, "vacant" means entire abandonment, deprived of contents, empty, according to other courts including the Texas Supreme Court. Also according to treatises on insurance law, including, Appleman,Insurance and Couch, Insurance.
"Continuously" as used in connection with a vacancy clause is held to authorize "more than one period of unoccupancy to exist", and does not imply that someone shall remain in the building all of the time without interruption. This is also stated by treatises on insurance law.
This court ultimately ruled that there was sufficient evidence for the jury to determine that the house was not vacant pursuant to the language of the insurance policy and affirmed a finding in favor of the Anderson's that the exclusion did not apply.

Structures owners in Weatherford, Aledo, Azle, Peaster, Hudson Oaks, Willow Park, Cresson, Mineral Wells, Millsap, Brock, Peaster, Springtown, and other places in Texas should know how insurance works when it comes to structures that are not "always" occupied.
The Houston Court of Appeals [1 Dist], decided a case in 1992, styled, Balram R. Jerry v. Kentucky Central Insurance Company. This case dealt with the trial court's ruling in favor of the Kentucky Central Insurance Company (Kentucky). Here is some background.
In November 1985, Jerry and his wife, Valerie, moved to Utah for employment reasons. They retained ownership of their house in Harris County (the property). In April 1986, Valerie returned to the property and discovered it broken into and vandalized. Most of their property was taken or damaged. Six months later, Valerie's parents visited the property and discovered it destroyed by fire. On November 11, 1986, Jerry reported the fire to Kentucky.
Kentucky sent a notice cancelling the policy because the property had been vacated. By the terms of the policy, Kentucky was not liable if the house was vacant for more than 90 days. The policy provided, however, that a "building in the course of construction shall not be deemed to be vacant."
In discussing this case, the court said the term"vacant" means an entire abandonment, deprived of contents, empty, that is, without contents of substantial utility.
The Jerry's gave Kentucky's investigator, Lamb, a statement saying they left for Utah in 1985, that they had cut-off the utilities, and that the house was not occupied by anyone from the time they left for Utah through the time the fire occurred in October 1986. A letter dated February 1987, was introduced into evidence wherein Jerry stated, "Everything of value was taken when the house was burglarized."
Valerie's brother, testified that in March or April 1986, he went to the property to cut the grass. A man fixing the house let him in. While there, he saw living room furniture, a folded out sofa, wicker furniture, a bedroom suite, show cases, lumber, and building materials. He also stated that a portion of the bathroom floor had been repaired.
A repairman testified that he had been performing general repairs and was last on the property two to three weeks before the fire. He testified the house was furnished and had a bedroom suite, a living room sofa, end tables, a dining room table with chairs, pictures on the walls, and clothes. He had also stored building materials in the house.
Lamb testified that in his investigation, he found the home contained no refrigerator, stove, pots and pans, or light meter. There was no evidence of furniture in the master bedroom or living room. He saw an unburned mattress in the yard of the home, indicating that it had been abandoned before the fire. He testified that neighbors told him the doors of the house had been open for months before the fire.
For this appeals court to reverse the decision of the trial court, there had to be no evidence of probative force giving credence to the evidence favorable to the finding of the trial court.
This court looked at Webster's Third New International Dictionary, for the definition of "repair" and it is defined as "to restore by replacing a part or putting together what is torn or broken." Blacks Law Dictionary defined "construction" as the act of putting parts together to form a complete integrated object, or as the "creation of something new, as distinguished from the repair or improvement of something already existing."
This court then ruled in Kentucky's favor saying, "The record supports the finding that the repairman was engaged in restoring the damaged property or in 'repair,' rather than creating something new, as one engaged in 'construction.'"
Here the court focused on the "construction" issue as it relates to the insurance policy and found that since there was no construction based on the definition of that word that the house was vacant and thus no coverage. An experienced Insurance Law Attorney needs to be involved in these types of cases early so as to best advise a client how to proceed with a claim. It appears the attorney for Jerry focused on the "construction" language in the insurance policy instead of focusing on it "and" the the vacancy issue. Maybe it would have made a differrence.

Property owners in Grand Prairie, Arlington, Pantego, Dalworthington Gardens, Crowley, Burleson, Lake Worth, Fort Worth, Weatherford, and other places in Texas who own homes and other building should know about the "vancancy clause" in their insurance policy.
Here is a 1969, case dealing with the vacancy clause in a homeowners insurance policy. It was decided by the Houston Court of Appeals and is styled, John J. Knoff et al. v. United States Fidelity and Guaranty Co.
Here are some facts of the case. Knoff and others sued United States Fidelity and Guaranty Co. (Fidelity) for money under a fire insurance policy. The policy excluded coverage when the house had been vacant beyond a period of thirty consecutive days. A fire occurred May 19, 1966, destroying the home. Here is some of the trial testimony.
Mrs. Segal, a daughter of Mrs. Laughlin, the original owner of the house, lived with her mother for many years at the insured home. She was living there when her mother died in November, 1963. Her testimony is not entirely clear as to all specific dates with regard to her relationship to the property after her mother's death. She testified that after her mother's death she lived there over a year. She was asked by her counsel, "Now you were not living there at the time this alleged fire occurred, were you?" She answered, "No sir. I was in the process of moving over to my sister's house." Her sister, to whom she referred, was Mrs. Simmons who died May 1, 1965. She stated she left the home after Mrs. Simmons died. When asked how long prior to the fire it was since she lived at her mother's house, she answered, "Well, I really hadn't moved out altogether." She stated she was in the process of moving over a period of months because she had to do all the moving herself. When asked on cross examination whether she had been to the house since she moved out in 1964, she stated she was over there nearly every week. When asked if she had lived there since 1964 when she moved out, she answered, "Oh, I have spent many a night over there." She made her sister's home hers after her sister died. She didn't remember when they put the house up for sale because she wasn't good at remembering dates. They put it up for sale after she was in the process of moving out. She had no intention of going back and that is the reason they put it up for sale.
She listed the contents of the house as two tables and a desk in the living room. She said there were two beds upstairs. There was a small table in the kitchen. In one bedroom was a rug and chair. In another room was an end of a bed. There were draperies and lots of clothes that she did not intend to take with her. There was another bed and two mattresses. An upstairs apartment had a table and four chairs.
An insurance company investigator took pictures showing a stove and a Frigidaire, and a gas range.
In this case the trial judge ruled that as a matter of law the house was vacant and would not let the issue of whether or not the house was vacant per the insurance contract go to the jury. He based this on the part of the policy that said:
Unless otherwise provided in writing added hereto, this Company shall not be liable for loss occurring ....:
(b) while a described building, whether intended for occupancy by owner or tenant, is vacant beyond a period of thirty consecutive days; ....
This appeals court stated, "It will be noted that the term 'unoccupied' is not used but only the term 'vacant'. The terms are not synonymous. The term vacant means 'entire abandonment, deprived of contents, empty.'"
This court then discussed what other courts in Texas and other states have interpreted these insurance clauses to mean. In so doing, this court ruled that the trial judge was in error to rule that as "a matter of law" the house was vacant. This court was of the opinion that the trial judge should have let the jury determine whether or not the evidence was sufficient for them to decide the issue.
An insurance company will always conduct an investigation. They immediately start taking statements from the owners and neighbors when a house is vandalized or burned. They are looking for reasons that may justifiy a denial of policy benefits. This is just another reason to get an experienced Insurance Law Attorney involved early when an insurance claim needs to be made.

Insured people in places like Grand Prairie, Arlington, Fort Worth, Dallas, Mansfield, Burleson, Crowley, Joshua, Keene, Alvarado, and other places in Texas would know very little about Texas Insurance Law or the Texas Deceptive Trade Practices Act. The two are connected and maybe this article will help to make that clear.
A large part of this information is taken from a lawyer resource called, Texas Practice Guide - Insurance Litigation.
The Texas Insurance Code, Section 541.151(2) cross-references and prohibits conduct defined in the Texas Business & Commerce Code, Section 17.46(b). This 17.46 is part of what is commonly called the Deceptive Trade Practices Act (DTPA). the DTPA applies to all types of consumer transactions, not just insurance, so many of the provisions are not directly relevant. The most relevant provisions prohibit:
1) causing confusion or misunderstanding as to the source, sponsorship, approval, or certification of goods or services. This DTPA language is similar to that found in the Texas Insurance Code, Section 541.051.
2) representing that services have ... benefits, ... which they do not have or that a person has a sponsorship, approval, status, affiliation, or connection which it does not. This is similar to Section 541.052.
3) representing that an agreement confers or involves rights, remedies, or obligations which it does not have or involve, or which are prohibited by law. This is similar to Section 541.051.
4) the failure to disclose information concerning goods or services which was known at the time of the transaction if such failure to disclose such information was intended to induce the consumer into a transaction into which the consumer would not have entered had the information been disclosed. This is similar to Section 541.051.
Lawyers will tell you that Section 17.46(b) is referred to as the "laundry list" of things companies cannot legally do to consumers. Insurance transactions fit within these prohibitions because courts have held that insurance is a "service."
Insurance Code, Section 541.151(2) tells us that a consumer can sue for violations of the acts prohibited by the insurance code as long as the person can show they relied on the illegal act or practice to their detriment.
The Texas Supreme Court, in 1987, in the case styled, "Aetna Cas. & Sur. Co. v. Marshall, " ruled that the insurance company's breach of its contractual promise to pay future medical benefits was precisely the sort of conduct forbidden, citing the DTPA, Section 17.46(b)(5), which prohibits misrepresenting "benefits."
In 1979, the same court in, Royal Globe Ins. Co. v. Bar Consultants, Inc., ruled that by misrepresenting that the policy affords coverage it does not have violates, Section 17.46(b)(12) of the "laundry list" items.
It is important to keep in mind that an experienced Insurance Law Attorney should be consulted in cases where there seems to be improper conduct. Strategy becomes important in deciding what is the best way to pursue a remedy when a wrong is committed. By looking at a 2000, case, decided by the Corpus Christi Court of Appeals, it is important to realize that although the Insurance Code and DTPA provisions both prohibit misrepresentations and nondisclosures, it can be important for an insured to carefully choose the prohibition that best fits the evidence or that has an easier burden of proof. For example, in this case, the insured was able to prove the insurance company violated the Insurance Code, Section 541.061 by failing to disclose information, but could not prove a violation of DTPA, Section 17.46(b)(24), because there was no evidence that the insurance company withheld the information with the intent to induce the insured to buy the coverage.

Everybody in Grand Prairie, Weatherford, Parker County, Tarrant County, Fort Worth, Arlington, Mansfield, Cleburne, Mineral Wells, or any other place in Texas has a property line associated with his property. Title to land (property lines) is part of the coverage in a title insurance policy. As a result, the following case should be of some interest to all property owners.
The case deals with an opinion handed down by the Court of Appeals, Fort Worth. It was delivered on March 24, 2011. The style of the case is Jimmy D. Hand v. Old Republic Title Insurance Company. Here is some background.
Hand's neighbor, Glen Jones, sued Hand over a rock wall that Hand built along the border separating their properties. Specifically, Jones claims that the rock wall "fails to follow the true boundary line and encroaches upon the boundary of his property." Jones sued for trespass to try title and adverse possession.
Hand filed a claim with his insurance company, Old Republic, and requested that it intervene and defend the lawsuit. Old Republic denied the claim on the basis that Hand's policy explicitly excludes coverage for "any discrepancies, conflicts, or shortages in area or boundary lines, or any encroachments, or any overlapping of improvements" and "rights of parties in possession." Hand subsequently filed a third party petition against Old Republic in the underlying case and asserted claims based on Old Republic's denial of coverage including breach of contract and violation of the Texas Deceptive Trade Practices Act.
The trial court granted judgment in favor of Old Republic and then this appeals court affirmed the judgment.
Old Republic argued two issues. One, that because Jones never made a claim to title to any portion of Hand's lot, coverage under Hand's policy was not invoked. Two, that even if Jones were making a claim to Hand's property, all of Jone's claims were based on the location of the boundary line between the two lots and therefore were specifically excluded under the policy. Hand argued that Jones was making a claim to Hand's property, but he did not address the exclusion in his arguements.
In this case, because Hand did not appeal or present evidence about one of the reason's that the trial court granted judgment in favor of Old Republic, then the appeals court could affirm the trial court based on the appeal point that was not addressed.
This court got into a couple pages long discussion as to the legal reasons they had to affirm the finding of the lower court when one of the points for the ruling was not properly presented in the trial court or properly addressed on appeal.
There are a couple of points to realize from this case.
One is that like this case, most title insurance policies are going to have language in them that specifically exclude coverage for boundary line disputes. What that means is that if your neighbor sues you for encroaching upon your neighbors property that you are going to have to defend the lawsuit with your own money. In other words, your title insurance company is not going to provide attorneys or pay for the expenses of the lawsuit or pay for any damages in the event that you lose the lawsuit. Something else to know is that your homeowners policy is not likely to provide coverage for this type of claim.
The second point to keep in mind is to quickly seek the advice of an experienced Insurance Law Attorney if you find yourself in a situation like the one above. Some more facts about the case is that the property was water front property and dealt with the location of a boat dock in addition to the rock wall. Only the persons involved and the attorneys know what other eveidence did or did not exist as it relates to the second point argued by Old Republic above.

Mortgage holders in Grand Prairie, Weatherford, Arlington, Aledo, Azle, Fort Worth, Dallas, Irving, Hurst, Euless, Bedford, Pantego, and other places in Texas would find an interest in the case discussed below.
The United States Court of Appeals for the Fifth Circuit, issued an opinion on March 18, 2011, styled, Brenda LeMeilleur v. Monumental Life Insurance Company: Trustees of the National Homeowners Group Insurance Trust, c/o Countrywide Insurance Services, Incorporated. This case is an appeal from the district court where a ruling was handed down in favor of the insurance company. That ruling was affirmed by this appeals court.
Here are some facts:
Mrs. LeMeilleur sued the insurance company to recover an accidental death benefit from a Group Mortgage Accidental Death Policy ("Policy") which her deceased husband held.
Mrs. LeMeilleur and her husband purchased the Policy from Monumental. If Mr. or Mrs. LeMeilleur suffered an accidental death, the Policy states it would pay off the balance of the couple's home mortgage. The Policy also states that Monumental will pay the accidental death benefit when they "receive proof that the Insured died as a result of an Injury. The Policy defines an "Injury" as a "bodily Injury caused by an accident, independently of all other causes" and further stipulates that the "Injury must be the sole and direct cause of death." In September 2005, Mr. LeMeilleur fell and broke his hip, which required surgery. In July 2006, he died. According to Mr. LeMeilleur's death certificate, his death was due to a heart attack with hypertension as an underlying cause. Mrs. LeMeilleur submitted a claim for a death benefit for Mr. LeMeilleur's death, which Monumental denied. In court, Mrs. LeMeilleur argued that she was entitled to the death benefit because her husband's death was due to an insured accident - the fall. Mrs. LeMeilleur supported her contention with testimony from Dr. Milton Shaw, Mr. LeMeilleur's attending physician.
In its discussion of the case the court said, "all parts of the contract are to be taken together, and such meaning shall be given to them as will carry out and effectuate to the fullest extent the intention of the parties." "It is well established that a contract is to be construed in accordance with its plain language." They also said that policy language that is susceptible to more than one construction should be interpreted strictly against the insurer and liberally in favor of the insured. In an accidental death benefit claim, the combination of an accident and pre-existing conditions are insufficient for recovery. An accident must be more than a "proximate cause" of death, it must be the "sole proximate cause."
In this case, Mr. LeMeilleur had pre-exisiting conditions and the policy had language accepting these pre-existing conditions. Mrs. LeMeilleur claimed this kept Monumental from denying the claim. But as the court pointed out in its discussion of the case, Monumental did not deny the claim because of pre-existing illnesses or conditions. Monumental denied the claim because the accident in question, Mr. LeMeilleur's fall, was not the sole cause of death. Rather, he died due to heart failure and hypertension.
Mr. LeMeilleur's death certificate did not reference the fall and lists a heart attack as the immediate cause of death. And, Mrs. LeMeilleur's own expert, Dr. Shaw, testified that the fall was merely a contributing factor to Mr. LeMeilleur's death, not the sole cause of death. The connection between the fall and the death claim failed because there was no evidence to support her contention that the fall was the sole cause of death.
This case, or at least what appears in the written decision, does not appear to have been a hard call for the appeals court.
One thing an experienced Insurance Law Attorney would want to know more about is the language in the policy that talked about pre-existing conditions. This is brought up in the discussion of the case but is not discussed in much detail. A footnote in the case alludes to this not being adequately discussed at the trial level and thus was not subject to review by the appeals court.

Someone with uninsured and underinsured coverage in Grand Prairie, Arlington, Dallas, Fort Worth, Mansfield, Irving, Pantego, Dalworthington Gardens, or anywhere else in Texas would probably have a hard time understanding when it becomes too late to file a claim for benefits under these coverages. Maybe this will help.
A Texas Supreme Court case decided in 1974, is still good law and a reference point for answering this question. The case is styled, "Raul C. Franco et us. v. Allstate Insurance Company.
In this case, Franco and his wife sought to recover from Allstate Insurance Company, under the uninsured motorist provision of their insurance policy, for the death of their daughter and personal injuries to Franco, arising out of an accident alleged to have been caused by the negligence of an uninsured motorist. Their suit was filed approximately three years after the date of the accident and death. The question is whether the two or four year statute of limitations is applicable to either or both of the claims asserted.
The Texas Supreme Court ruled that the four year statute of limitations applied. Here is further information.
Allstate contended that the claims arose out of a tort action and thus are subject to the two year statute of limitations.
On the other hand, the Francos contended that the suit is based upon a written contract, i.e., an insurance policy issued to them by Allstate providing protection to the extent of $10,000.00 per person because of 'bodily injury, sickness or disease, including death,' resulting from the negligence of owners or operators of uninsured motorist vehicles. Therefore, the four year statute relating to suits on contracts is applicable.
Citing a 1942 case, this court stated, "the general rule is well established that similar claims for indemnity or losses under other insurance policies are based upon contracts in writing within the meaning of the four year statute of limitations."
The reasoning of the courts and texts on this issue is that, although ultimate recovery in these types of actions depends upon the proof of damges due to the tort of an uninsured third party, the cause of action against the insurance company arises by reason of the written contract.
The case above and many others make clear that a four year statute of limitations applies on these insurance policy claims. And it is important to draw the distinction between the "third party" claim against the person who caused the wreck which is subject to a two year statute of limitations and a "first party" claim by the policy holder against his own insurance company for benefits under his own policy.
The Texas Insurance Code, Section 541.162, updated this law in 2003 and 2005 making clear what the above case stands for. This statute reads in part,
(a) A person must bring an action under this chapter before the second anniversary of the following:
(1) the date the unfair method of competition or unfair or deceptive act or practice occurred; or
(2) the date the person discovered or, by the exercise of reasonable diligence, should have discovered that the unfair method of competition or unfair and deceptive act or practice occurrred.
Part (2) above can be a little tricky even for an experienced Insurance Law Attorney. This same statute tells where the applicable statute of limitations can be extended an additional 180 days. The best advice is too "not wait" but to seek advice as soon as possible when a situation arises where an insurance claim needs to be. And don't just rely on what the insurance company agent or adjuster says.

Do people in Weatherford, Aledo, Azle, Springtown, Peaster, Hudson Oaks, Willow Park, Mineral Wells, Poolville, Whitt, or any other place in Texas remember several years ago when Farmers Insurance quit writing homeowners insurance policies in Texas? Remember the uproar and complaints by homeowners to the insurance company and to elected representatives? Do you remember why this was happening?
Here is what this writer has heard mixed with what was on the TV and radio news and in the papers. Farmers was alleging too many lawsuits and too many mold claims were causing costs to rise far beyond what they should and as a result they were forced to raise rates. However, this rate increase was put in place without approval by the state regulatory boards and agencies who oversee these matters. This battle, some could say a public relations battle, went on for months.
The truth was there, but for some reason it was never made real clear and to catch on to what was going on, someone would have to be paying very close attention. Here are a couple of things that were clear:
1) Farmers was in trouble for raising rates without proper authority;
2) Farmers was blaming trial lawyers and mold claims for driving the rate increases;
3) Farmers quit renewing homeowners policies:
4) Farmers ultimately paid some very heavy fines as part of a settlement with the State;
and what happened as part of the settlement which was not mentioned very much is this:
As part of the settlement, the State Attorney General's office agreed to not criminally prosecute Farmers!!!
That didn't make sense at first, because there would not be anything criminal about the unauthorized rate increase. That is only a civil penalty.
Well here is what this author heard from people inside Farmers.
Farmers was doing "Enron" accounting. They were using Texas premiums money to pay for California earthquake claims. Then making the books look like the money was being used to pay Texas mold claims to justify a rate increase in Texas. This would have been a criminal act for which upper level Farmers people could go to jail.
Here are a couple of other stories.
The Insurance Journal published a story on March 23, 2011, titled, "Tom Hanks, Rita Wilson File Lawsuit Against Former Insurance Broker."
This story tells us that actor Tom Hanks and his wife, Rita Wilson, filed a lawsuit seeking unspecified damages from their former insurance broker.
According to celebrity gossip Web site TMZ, which discovered the lawsuit, Hanks and Wilson worked with the J.B. Goldman Insurance Agency for more than 20 years to secure various insurance coverages.
The lawsuit claims that when they switched brokers, the new broker discovered they were insured mulitiple times for the same things, and were being overcharged hundreds of thousands, if not millions, of dollars.
The other story from Bloomberg News, was published on March 21, 2011, and written by David Voreacos. It is titled, "AIG, Three Others Will Pay $27 Million in Antitrust Suit."
According to the article, American International Group, Inc., is one of four insurance companies that will pay a total of $27 million to resolve a lawsuit claiming they improperly sold excess casualty policies.
AIG, Liberty Mutual Holding Co., Travelers Cos., Inc. and XL Group Plc. agreed to settle the case with buyers of insurance policies sold from 1998 through 2004. Five other insurers agreed to settle a related set of claims over non-excess casualty policies.
The case was inspired by a 2004 regulatory probe by Eliot Spitzer, then the New York attorney general, of a conspiracy by brokers and insurers to stifle competition.
The company used faked quotes to steer clients to favored insurers in exchange for hidden fees according to the lawsuit.
The intent of this article is not to say there is anything wrong with these companies as a whole, but to point out that individuals within these otherwise good companies will break civil and criminal laws when they think they can get away with doing so. These stories also serve as examples why an experienced Insurance Law Attorney should be consulted when someone thinks that something their insurance company is doing, does not seem right.

Here is one for the insured in Grand Prairie, Fort Worth, Arlington, Dallas, Mansfield, Lancaster, De Soto, Duncanville, Cedar Hill, Pantego, or any other city and town in Texas.
What happens when you are in an accident that is your fault, the other person, who is injured makes a claim against your insurance company for an amount of money that is within your policy limits, the insurance company refuses to pay, the injured person sues you and gets a judgment in excess of your policy limits; Are you liable for the amount of money above what the insurance policy pays?
Answer: It depends! Don't you just hate it.
The issue here involves what is called the "Stowers Doctrine" which is discussed in more depth in other blogs at this site.
On March 24, 2011, the Texas Court of Appeals, 1st District, issued an opinion where the Stowers Doctrine was at issue. The style of the case is, Edward McDonald v. Home State County Mutual Insurance Company, Paragon Insurance Company, and Paragon Insurance Group. This is an appeal from a district court finding that the insurance companies involved did not do anything wrong and this appeals court affirmed that finding.
On August 4, 2001, McDonald was struck by a vehicle owned and operated by Francisco Rangel while he was walking in the grass along a service road. As a result McDonald suffered serious injuries and was taken directly to Memorial Hermann Hospital for treatment.
Memorial filed a "Notice of Hospital Lien" stating that the accident occurred on August 5, 2001. and McDonald was admitted to the hospital not later than 72 hours after the accident.
Rangel was insured by the Home State and Paragon administered the claim. McDonld's attorney wrote a settlement demand letter dated June 5, 2002, to Paragon, demanding a stated deadline of June 14, 2002 for Paragon to pay and settle the injury claim. The front page of this demand letter included the following notice:
NOTICE
THIS CORRESPONDENCE CONTAINS A SETTLEMENT OFFER WITH RESPECT TO THE ABOVE-REFERENCED CLAIM. PLEASE BE ADVISED, PURSUANT TO THE TERMS HEREIN, THERE IS A TIME LIMIT WITHIN WHICH PARAGON INSURANCE GROUP MAY ACCEPT THIS SETTLEMENT OFFER. THE SETTLEMENT OFFER EXTENDED HEREIN IS THE TYPE WHICH IS COMMONLY KNOWN AS A "STOWERS" OFFER. (it then cites the Stowers case and another related case) PLEASE TAKE NOTICE, IN THE EVENT THAT PARAGON INSURANCE GROUP FAILS TO ACCEPT THIS SETTLEMENT OFFER BY 5:00 P.M. ON FRIDAY JUNE 14, 2002, THIS SETTLEMENT OFFER WILL BE DEEMED TO HAVE BEEN REJECTED BY PARAGON INSURANCE GROUP. FURTHERMORE, ANY COUNTER-OFFER SUBMITTED ON BEHALF OF PARAGON INSURANCE GROUP'S INSURED WILL BE DEEMED AS A REJECTION OF THIS SETTLEMENT OFFER.
After explaining the basis for the demand, the letter stated that full and final settlement of McDonald's claims could be made "in exchange for payment to Edward McDonald" of the "total amount of liability insurance available to cover your insured in this matter." The demand specified that the payment to McDonald was to be made "care of the undersigned attorney."
Upon investigation the adjuster for Paragon learned of the above mentioned hospital lien. Paragon offered to settle for the policy limits but made a condition of the settlement that McDonald would take care of the hospital lien. McDonald refused, the case went to trial and McDonald took a judgment against Rangel for over a million dollars. McDonald then obtained an order turning over Rangel's right to sue his insurers for failure to settle with McDonald, including any Stowers claim and this lawsuit resulted.
In Texas, insurers have a duty to exercise ordinary care in the settlement of claims to protect their insureds against excess judgments. The Stowers doctrine shifts the risk of an excess judgment from the insured to the insurer by subjecting an insurer to liability for the wrongful refusal to settle a claim against the insured within policy limits. Shifting this risk of an excess judgment onto the insurer is not appropriate unless there is proof that the insurer was presented with a reasonable opportunity to settle within policy limits. Thus a settlement demand triggers an insurer's Stowers duty to respond if: (1) the claim against the insured is within the scope of coverage; (2) the demand is within policy limits; and (3) the terms of the demand are such that an ordinarily prudent insurer would accept it, considering the likelihood and degree of the insured's potential exposure to an excess judgment. As a threshold matter, a settlement demand must propose to release the insured fully in exchange for a stated sum of money.
The court cited another court in stating, "Given the tactical considerations inherent in settlement negotiations, an insurer should not be held liable for failing to accept an offer when the offer's terms and scope are unclear or are the subject of dispute."
The court went on and pointed out that insurers in Texas have a statutory duty "to attempt in good faith" to effectuate "prompt, fair, and equitable settlement" of claims for which the insurer's liability has become reasonable clear.
Also relevant here is the lien filed by Hermann Hospital. Since 1933, the Texas Hospital Lien Law has provided a mechanism for hospitals to recover costs incurred in treating people injured in an accident. Per Texas Property Code, Section 55.002(a), "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." In this regard, a release of a cause of action to which a hospital lien has attached is not valid unless:
(1) the charges of the hospital ... claiming the lien were paid in full before execution and delivery of the release;
(2) the charges of the hospital ... were paid before the execution and delivery of the release to the extent of any full and true consideration paid to the injured individual by or on behalf of the other parties to the release; or
(3) the hospital ... is a party to the release.
This is found in Section 55.007.
Per Texas common law a hospital has a cause of action against those who pay or receive money in derogation of the hsopital's rights under the statute.
In this case, McDonald argued that the release of the hospital lien was implicit in the demand letter. He also argued that the wrong date on the hospital lien made it invalid.
The insurers rely on the 1998, Texas Supreme Court case, Trinity Universal Ins. Co. v. Bleeker, which says an offer to settle is not a sufficient Stowers demand unless it expressly acknowledges existing hospital liens and offers the insured a release from them. Here, the settlement demand did not explicitly offer to release any potential claims against Rangel, nor did it make any reference to the resolution of hospital liens. Plus, Memorial could not have been a payee on a check in acceptance of the settlement offer because the demand specifically required payment to be made directly to McDonald and that any counteroffer would constitute a rejection of the opportunity to settle. These express instructions in the settlement demand subjected the insurer to a risk that a settlement on the offered terms would not be a full one.
In this case, because there was not a settlement demand that complied with Texas law for a proper Stowers demand the insurance company was not responsible for the excess judgment.

Title insurance policy holders in Grand Prairie, Arlington, Fort Worth, Dallas, Weatherford, Garland, Mesquite, Richardson, Irving, Grapevine, Colleyville, and other places in Texas know very little about the laws dealing with title insurance policies.
The United States Court of Apeals for the Firth Circuit issued an opinion on March 23, 2011, that dealt with title insurance policies and one of the laws that deal with those policies. The style of the case is, Emma Benavides, individually and on behalf of all others similarly situated v. Chicago Title Insurance Co.
The primary reason this case was in the court of appeals was because the district court had refused to allow the case to go forward as a class action lawsuit. The court spends a good amount of time discussing the class action laws but that is not the purpose of this article. The basis of the lawsuit is what is kinda interesting.
Here are some of the underlying facts of the case. Benavides sued Chicago Title on behalf of a purported class for refusing to give her a title insurance premium discount mandated by Texas law.
Benavides filed a Complaint in district court on August 22, 2007, against Chicago Title, alleging that she and others similarly situated were denied a mandatory title insurance discount when she purchased a title insurance policy from Chicago Title. Specifically, Texas Insurance Code Rate Rule 8 ("R-8") entitles a mortgage borrower to a discount on a title insurance policy issued on a loan to fully take-up, renew, extend, or satisfy an old mortgage when the new loan is issued within seven years of the initial mortgage and the initial mortgage was also covered by a title insurance policy. Benavides alleges she was entitled to a discount of $370.40 after she refinanced her mortgage within two years after taking out the initial mortgage loan. Benavides alleged violations of the Real Estate Settlement Procedures Act ("RESPA"), 12 U.S.C. Section 2607(b), and state law causes of action for unjust enrichment, money had and received, and breach of implied contract.
Chicago Title, like other title insurance companies, had a policy of giving the discount when the borrower's file contained certain circumstantial evidence that the prior mortgage was insured. Benavides alleges that, regardless of Chicago Title's ad hoc policies, it routinely fails to give the discount when required. Chicago Title admits that, regardless of the circumstantial evidence in the borrower's file, the discount is mandatory for all borrowers who qualify.
In this opinion there is not a decision reached as to whether or not Chicago Title actually did anything wrong. Again, the issue on this appeal dealt with whether or not the claim of Benavides was the same type of claim that thousand's of other people might have. If it was that type of claim then it would classify as a class action lawsuit.
The purpose of this article is to point out to readers that there are laws associated with title insurance policies that few people are going to know about. This lack of knowledge is just a further example of why people should take the time to consult with an experienced Insurance Law Attorney on all matters related to insurance. On this particular issue Real Estate Attorneys should have some knowledge.
This is probably a good place to point out a little about class action lawsuits.
Class action lawsuits are lawsuits where there is usually a very small amount of money involved for any one person in a claim they may have. However, the company against whom the claim is asserted is usually facing multi-millions of dollars in claims for the same reason. The problem for the one individual is that the small amount of money for the one person does not justify the time and expense of getting an attorney involved. Yet the company is illegally benefitting millions of dollars for the reason that the individual claimants don't have the time or money to pursue such small claims. The case above is a good example. Each policy involved in the case involves a claim of only a few hundred dollars. Too small an amount to justify thousands of dollars in court costs and legal fees. Yet the company by cheating each policy purchaser out of a few hundred dollars is benefitting by multi-millions of dollars. Thus the need to be able to bring a class action lawsuit to protect all of the people who are being cheated by the company and to prevent a company from unjustly benefitting from their violation of the laws and to deter other companies from doing the same to other members of the public.

Here is one for people in Weatherford, Grand Prairie, Fort Worth, Dallas, Aledo, Richardson, Garland, Mesquite, Irving, and anywhere else in Texas to know. It regards insurance settlements and hospital liens.
This is an opnion issued on March 17, 2011, by the Texas Court of Appeals, First District, Houston. The style of the case is, Memorial Hermann Hospital System v. Progressive County Mutual Insurance Company.
In this case, Progressive settled a claim brought against one of its insureds arising out of injuries in a car accident. Memorial filed a hospital lien for the cost of medical treatment to the injured person half an hour before Progressive issued the settlement check. Under the Texas Hospital Lien Law, 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 attibuted to the negligence of another person." Texas Property Coce, Section 55.002. To secure the lien, Section 55.005 requires the hospital file notice with the county clerk before payments to the entitled party. The statute also declares that the county clerk "shall index the record in the name of the injured individual."
A hospital lien usually attaches to settlement proceeds, and an insurance company usually names the hospital lienholder as a payee on the settlement check. But in this case, because the clerk had not yet indexed the lien, Progressive maintains that it was unaware of the lien and, therefore, it did not name Memorial as a payee.
In this case Memorial contends that the lien is secured on filing, and thus it was entitled to allocation of the settlement proceeds. The court agreed.
Progressive had issued the check at 3:23 PM on December 12, 2007. Thirty minutes before, Memorial had filed its notice of lien with the Harris County Clerk's Office. Before issuing the check, Progressive conducted a lien search on the county clerk's website. It had conducted two searches, one at 2:25 PM and the other at 3:30 PM.
According to the county clerk, the process of recording and indexing the lien usually takes two business days after filing. In this case, the lien was not indexed until December 17, 2007.
This case concerns the proper reading of the hospital lien statute. In interpreting the statute, the court, according to the Texas Government Code, Section 311.023, is to consider the legislatures intent in: the object sought to be obtained; the circumstances of the statute's enactment; the legislative history; the common law or former statutory provisions, including laws on the same or similar subjects; the consequences of a particular construction; administrative construction of the statute; and the title, preamble, and emergency provision. Per Section 311.021, the court also presumes that the legislature intended a just and reasonable result; a result feasible of execution; the entire statute to be effective; and the public interest to be favored over any private interest.
The court stated, "We read the plain language of Section 55.005 as providing that a lien is secured when the lienholder properly files with the county clerk a written notice of lien that complies with the statutory requirements." The court then further discusses what the language of Section 55.005 means.
They tell us that, "Subsection (c) requires the county clerk to index the lien, but does not set any deadline." Progressive argued that Section 13.002 of the Property Code, which declares that a properly recorded instrument is "notice to all persons of its existence" and "subject to inspection by the public," is evidence that the legislature intended that proper recordation be necessary to provide the public notice. According to Progressive, the provision's emphasis on recording, rather than filing, supports the conclusion that the lien is not effective until it is properly recorded.
This court says, "The Propery Code, however, specifies that the duty of proper recordation belongs to the county clerk. Section 11004(a)." This section gives the clerk "within a reasonable time after delivery" as leeway in getting the document filed.
In this writer's opinion, the court got this case completely wrong. The purpose of having a lien filed is to put the world on notice of the lien. All the world had to do is search the county records. Yet if the clerk has not filed the lien, how does the world know of it's existence.
There are remedies to this situation, but to work it out, an experienced Insurance Law Attorney is needed.

Someone in Grand Prairie, Weatherford, Dallas, Fort Worth, or anywhere else in the metroplex area who has a title insurance policy may be interested in the following case.
The Texas Fourteenth Court of Appeals, Houston, issued an opinion on March 17, 2011, where a lawsuit was filed concerning issues that dealt with title policies.
The style of the case is, Windsor Village, Ltd. and Jackob Elbaz v. Stewart Title Insurance Company. This is an appeal from the 113th District Court, Harris County, Texas.
Here is some background:
A fire broke out on November 20, 2002, in a condominium in the Villages of Fondren Southwest Condominium project, damaging common areas and several units. Ritchmond Construction, Inc. contracted with the it's homeowners Association to repair the damage. When Ritchmond was not paid for its work, it filed, on October 29, 2004, a mechanic's and materialmen's lien on the Villages of Fondren and a lawsuit against the Association, seeking to enforce a statutory and constitutional lien (the "Richmond" lien). Windsor purchased a majority of the units at the Villages of Fondren from Fatima Investments, Inc.
In April 2006, Windsor sold the units it had purchased from Fatima and additional units it had acquired in foreclosure proceedings to Antonio Vallado. Stewart Title handled the closing and issued a policy of title insurance to Vallado. As part of the closing, Elbaz signed an Affidavit of Debts and Liens (the "Affidavit') in February 2006. The affidavit did not disclose Ritchmond's lien on the Villages of Fondron.
Richmond's attorney later notified Stewart Title that a lien had been filed on the Villages of Fondren, and the lien obligation on the units Vallado purchased had not been satisfied prior to the closing. Stewart Title paid Richmond $55,000, obtained a release of all claims against the units purchased by Vallado, and entered a subrogation and joint representation agreement with Richmond.
On January 22, 2007, Stewart Title filed a petition in intervention in the case pending between Ritchmond and the Association, seeking damages in the amount of $55,000 on claims against appellants for fraud for failing to disclose the Richmond lien and indemnity. Stewart Title subsequently supplemented its petition with claims for statutory fraud, negligent misrepresentation, and conspiracy. Ritchmond and the Association settled the portion of the lien claim not covered by the release as to the units purchased by Vallado.
At the trial on this matter, the court awarded Stewart Title demages for fraud and indemnity in the amount of $55,000 and attorney's fees against appellants jointly and severally. They appealed on four points.
In their first issue, Windsor contended that Richmond's statutory lien is not valid because it does not meet the requirements of the Texas Property Code and thus was not a valid lien. The court pointed out that the validity of the lien was not relevant to these proceedings. Instead the issue was whether they failed to disclose the existence of the Ritchmond lien to Stewart Title. Thus, this court overruled the alleged first point of error.
In their second issue, they argued that the Affidavit is not relevant to the Ritchmond lien because the lien was not created during the time Windsor owned any of the units of Villages of Fondren. The Court disagreed saying, "A review of the Affidavit reveals that its scope is not limited to the existence of liens created during Windsor's ownership of its units at the Villages of Fondren." Rather, they represented that "there are ... to the best of Seller's knowledge, no loans or liens (including federal or state liens and judgments liens) of any kind on such property during Seller's ownership." This was the common law fraud allegation and fraud by ommission.
The court said that by providing a sworn affidavit, Windsor and Elbaz had a duty to disclose the existence of the Richmond lien. That they knew of the existence of the lien. That they knew Stewart Title did not know of the lien. That due to their failure to disclose the lien, Stewart Title paid $55,000 to have the lien released as to the units purchased by Vallado. This court thus overruled this second issue.
In the third issue, they asserted that Stewart Title did not present proof of the $55,000 in damages sought. The court pointed out the case evidence and overruled this third issue.
The fourth issue was the contention that Stewart Title was not entitled to recover attorney's fees. The Court stated, "Attorney's fees are not recoverable in Texas, unless allowed by statute or by contract. Attorney's fees are not recoverable on tort claims." Stewart Title pleaded for attorney's fees in connection with its claim for statutory fraud under Section 27.01, Texas Business and Commerce Code which allows recovery of reasonable and necessary attorney's fees. The Court pointed out that Section 27.01, speaks to a contract for real estate, but that here there was no contract between Stewart Title and Windsor. Thus this appeals court upheld the fourth point of appeal and reversed the part of the judgment that awarded attorney's fees in this case.
This case is unique but does show some of the issues that can come up when dealing with a title insurance policy.