Dallas Fort Worth Insurance Lawyer Blog

Adjusters in Grand Prairie, Dallas, Irving, Richardson, Garland, Mesquite, Carrolton, Farmers Branch, Duncanville, or anywhere else in Texas, who make a mistake in their job that costs an insurance customer money, can be sued for what he cost the insurance customer. The tricky thing is doing it in the most advantageous manner.
Usually the individual adjuster does not have to be sued. Suing his employer, the insurance company, is often times just as good. But sometimes there is a legal advantage to suing the adjuster and the company. Often times, if just the company is sued, the case can be removed from the State Court in which it was filed, to a Federal Court. There are advantages to the insurance company for doing a removal. That is why they do it.
One way of defeating the attempt at removal is by suing the insurance adjuster and not just the insurance company. However, doing it this way must be done correctly.
The United States District Court, Southern District, Houston Division, issued an opinion on July 25, 2011, dealing with this issue. The style of the case is Emma Gonzales v. Homeland Insurance Company of New York, et al.
In this case, the lawsuit was filed in State Court and then Homeland had the case removed to Federal Court. Here is some background:
This is an insurance case where Ms. Gonzales alleges her house sustained roof and water damage as a result of Hurricane Ike. Her house was covered by an insurance policy issued by Homeland. She submitted a claim and Homeland assigned its employee adjuster, defendant Ball, to adjust the claim. The adjuster then hired an adjusting firm, defendant Precise, who assigned defendant Murphy, to inspect the damage. Gonzales alleged in the lawsuit that:
Defendant Murphy conducted a substandard inspection of Plaintiff's property. Murphy spent a mere twenty minutes inspecting Plaintiff's entire property for hurricane damages. This is evident in his report, which failed to include all of Plaintiff's Hurricane Ike damages noted upon inspection. Moreover, the damages that defendant Murphy actually included in his report were grossly undervalued. Defendant Ball also actively participated in the investigation of Plaintiff's claim. Specifically, she corresponded with Plaintiff regarding her claim in a letter dated October 24, 2008. Ball's letter shows that she failed to thoroughly review Murphy's assessment of the claim and ultimately approved Murphy's inaccurate report of the damages. As a result of these defendants' unreasonable investigation, Plaintiff was considerably underpaid on her claim and has suffered damages.
In discussing this case, the court stated the law wherein, after removal a plaintiff may move to remand and, if "it appears that the district court lacks subject matter jurisdiction, the case shall be remanded." This is found at 28 U.S.C. Section 1447(c). But removal statutes are construed strictly against removal and for remand. All doubts regarding whether removal jurisdiction is proper should be resolved against federal jurisdiction. This means that once a motion to remand has been filed, the burden is on the removing party to establish that federal jurisdiction exists. This means that, "All factual allegations are evaluated in the light most favorable to the plaintiff."
The United State 5th Circuit Court of Appeals recognizes two ways to establish improper joinder when, as here, the defendant alleges that the adjuster was brought into the case for the sole purpose of defeating removal to federal court. First, that there is actual fraud in the pleading of jurisdictional facts, or second, the inability of the plaintiff to establish a cause of action against the non-diverse party in state court. Under the second test, the defendant prevails only when it establishes "that there is no reasonable basis for the district court to predict that the plaintiff might be able to recover against an in-state defendant." A reasonable basis for state liability requires that there be a reasonable possibility of recovery, not merely a theoretical one.
In ruling against the remand and allowing this case to be removed to Federal Court the court said:
"The question here is whether there is no reasonable basis for the district court to predict that the plaintiff might be able to recover against Precise or Murphy, the instate defendants. Defendants urge that Gonzales cannot recover from Precise or Murphy because she has failed to allege viable claims against the adjuster defendants .... Gonzales argues that defendant Murphy created a wholly deficient report as a result of his substandard inspection of the claim, which was in part, the cause of much of Plaintiff's damages complained about in this suit. Nowhere, however, does Gonzales plead any specific facts, or explain the what, where, when, and how, to support these allegations."
This writer believes the court made an incorrect ruling in this case. Maybe the decision will be reversed if it is appealed. One thing is certain. An experience Insurance Law Attorney should be consulted when contesting a denial of benefits on an insurance claim. There are many strategies to ponder in deciding the best way to proceed.

When an adjuster in Grand Prairie, Arlington, Fort Worth, Burleson, Crowley, Lake Worth, Grandview, Benbrook, Britton, Joshua, or anywhere else in Texas commits a wrong, can the insurance company be held responsible?
That question was answered in 1936, by the Beaumont Court of Appeals in the case, Love et al. v. Aetna Casualty & Surety Co. et al. Here are some facts in the case.
Tom Love, Victoria Houston, and Cora Davis were a brother and sisters of Orange Love, deceased. They brought this lawsuit to recover damages for the mutilation and unlawful dissection and autopsy performed without there knowledge or consent in and upon the dead body of their brother, Orange Love.
When Orange Love died, his sister Cora Davis sent his body to Carter & Sutton, undertakers, for burial. While the body was in the possession and charge of Carter & Sutton, it was taken possession of by Drs. Goodson and Stout and an autopsy was performed upon the corpse in which the body was thoroughly explored by opening same and taking out the heart, kidneys, liver, spleen, and bowels, and these were cut into, portions denuded therefrom and never returned, but carried off for chemical investigation. All this without the permission of his relatives, and without their knowledge and consent. After learning of he autopsy, the body was buried and this suit followed.
Prior to his death, Orange Love had been an employee of and worked for the San Antonio Compress Company, which carried compensation insurance covering its employees with Aetna Insurance Company. Love had complained that he had suffered an injury to his abdomen while handling a bale of cotton, and had made claim to the compensation board for compensation under the insurance carried by Aetna. Pending his claim before the board, he died. His relatives continued the claim. Aetna filed notice of denial of the claim and filed with the board a copy of the report on the autopsy held on the body of Love.
C. E. Klein, with an office in San Antonio, was the claim adjuster for Aetna, and received and handled the claim of Love for compensation because of his alleged injury. Klein, as the claim adjuster, went to the local Justice of the Peace to get the authority to conduct the autopsy.
Klein testified to the actions he took in investigating the claim of Love. He testified that he was taking his actions in the course of his work. That he gave the Judge the information needed to sign off on the autopsy. He arranged for payment of the bills for the autopsy by Aetna.
In this appeal, Aetna insisted that if the autopsy was illegally performed, that Klein was operating outside his scope of authority, was not within his scope of employment, and had neither express or implied authority to seek a wrongful autopsy.
Further testimony by Klein revealed that he had complete authority to make complete settlements in a case. That he was in charge of the Adjustment Department, and that his adjustments are final, unless they were submitted to the Home Office. He also testified that Aetna gave him no instructions in this case.
At the trial court level, the trial Judge allowed Aetna to get out of the case. This appeals court said that was wrong and reversed that opinion and put Aetna back in the case and remanded this case to the trial court for further disposition with Aetna.
In its ruling the court stated, "We think it plainly appears that Klein in procuring the autopsy was acting as the fully authorized agent of [Aetna], within the scope of his employment, and in the exercise of his discretion given him in the investigation of and approval or rejection of claims against his company. But if not, still [Aetna] is liable because after the autopsy was had, it approved Klein's acts and paid the doctors for their services in performing the autopsy, and accepted the benefits of same by receiving the report of the autopsy from the doctors and filing a copy of same with the Industrial Accident Board where the claim for compensation for the death of Orange Love was then pending, and which was later refused."
In this case, the autopsy had been illegally obtained and Aetna tried to distance itself from the illegal acts of their adjuster. They were unsuccessful. It is vital to get with an experienced Insurance Law Attorney when an adjuster does an act in investigating a claim that is illegal or improper.

If someone in Hurst, Euless, Bedford, Fort Worth, Cedar Hill, Crowley, Burleson, Irving, Grand Prairie, Arlington, Mansfield, or anywhere else in Texas, has to file a lawsuit because their homeowners insurance company is denying their claim, one thing they want for sure is a successful outcome. The best outcome is usually going to occur in a State or County court, not in a Federal Court. As a result of this knowledge among insurance company attorneys, they will always try to get a case moved to Federal court if there is any way possible of doing so.
This was attempted in the case styled, James N. Wofford, et al v. Allstate Texas Lloyd's and Randy Paul Johnson. The opinion in this case was signed on June 9, 2010, By Federal Judge, Kenneth M. Hoyt, a Judge in the United States District Court, S. D. Texas, Houston Division.
In this case, the homeowner, James Wofford, had a policy of insurance with Allstate Texas Lloyd's. Wofford's home was damaged by Hurricane Ike. Wofford filed a claim with Allstate and Allstate assigned adjuster Randy Paul Johnson, to handle the claim. Johnson was named as one of the defendants in the lawsuit. This case was filed in the 11th Judicial District Court of Harris County, Texas, and Allstate immediately filed papers to have the case removed to federal court.
Allstate is a business with its headquarters located outside the state of Texas. When a person or business who resides outside the state is sued in a state court the person or business sued has a right under Federal laws, to have the case removed to a Federal court. This is what Allstate was attempting to do. But these same laws say that if more than one person or business is sued and one or more of those sued is a resident of the state of Texas, then the case must remain in the District or County court in which it is filed and cannot be removed to Federal court.
What was being alleged by Allstate in this case was that the adjuster, Johnson, was improperly sued by Wofford and that the only reason Wofford sued Johnson was not because Johnson had really committed any wrong but because Wofford was just trying to keep the case in a state or county court. Allstate contended that Wofford failed to make the required "factual fit" between his asserted theories of recovery and his allegations. As a consequence, Allstate argued that there is no reasonable possibility of recovery against Johnson. Based on this arguement by Allstate, Wofford had to articulate the reasons why the allegations against Johnson were allegations that were particular to Johnson and could have been brought against Johnson by himself without the joiner of Allstate.
In response, Wofford set out the pertinent parts of Texas Insurance Code, Section 541.060 that Johnson violated as an adjuster.
Summarizing the allegations against Johnson the Federal court stated, "the plaintiff's allege in their petition that: (1) their property was damaged as a result of Hurrican Ike; (2) their property was insured at all material times hereto under a Policy issued by Allstate; (3) Allstate assigned Johnson to adjust their claim and inspect their property; and (4) Johnson allegedly mishandled their claim, by inter alia, failing to fulfill his duties in the manner prescribed by the Texas Insurance Code, including misrepresenting the extent of the Policy's coverage, failing to attempt a fair settlement, failing to explain Allstate's reasons for offering an inadequate settlement and/or denying payment. Based on these allegations, the plaintiffs allege that Johnson's conduct amounts to violations of the Texas Insurance Code for which he can be held personally liable."
Thus, Allstate's attempt to have the case removed from the State District court to the Federal Court was denied.
An experienced Insurance Law Attorney will understand what an insurance company is going to attempt prior to filing the lawsuit. Knowing this, the attorney will draft paperwork to defeat the attempts by the insurance company if there is any way possible of doing so.

There are many times where the insurance adjuster himself, commits a wrong against a policy holder. This is an important issue. Here is why. When an Insurance Law Attorney is representing a client in a claim there are a lot of strategies. One important strategy is to file a lawsuit in a court that is most favorable to achieving a favorable result. In that regard, State Court is almost always a better place to fight the insurance company than is Federal Court. Most insurance companies have home bases located out-of-state whereas 99% of adjusters will live in-state. This matters because the Federal Rules of Civil Procedure require that out-of-state defendants in a lawsuit be allowed to defend themselves in Federal Court unless there is more than one defendant and atleast one of the other defendants is an in-state resident.

For the reason explained in the first paragraph, it is important to be able to articulate a particular wrong that the in-state adjuster committed. The adjuster will be defended by an insurance company, usually the employer, thus a lawsuit against the adjuster in his individual capacity is not a futile act. Insurance company attorneys are going to always want to get the lawsuit removed to Federal Court if there is any way possible to do so. Repeating what was just said, this is because Federal Court is usually more favorable to the insurance company.

A case decided on October 27, 2009, discusses this issue. The case, Lakewood Chiropractic Clinic v. Travelers Lloyds Insurance Company and Sonja R. Victor, was a claim for benefits resulting from hurricane damages. Lakewood alleged that the adjuster, Sonja, violated several insurance statutes. Lakewood also alleged these same violations of Travelers. The problem here is that there was not a distinction made between what Sonja did and what Travelers did, that was wrong.

This is an example of where a full understanding of how the Texas Insurance Code allows for claims against an adjuster in her individual capacity. Texas Insurance Code, Section 541.151 gives guidance in this regard and points to other relevant areas in the Insurance Code and the Texas Business & Commerce Code, Section 17.46(b), that are helpful.

A failure to fully draw a distinction between the acts committed by an adjuster which are actionable in Texas, and the acts of the insurance company, will result in the case being tried in Federal Court. The advantage then will be in favor of the insurance company.

The above is just another example for why an experienced Insurance Law Attorney should be involved in any claims being made against an insurance company. Early involvement by an experienced Insurance Law Attorney is more likely to insure a favorable outcome to the policy holder.