State Bar of Texas
Texas Trial Lawyers Association
College of the State Bar of Texas

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What about those times that an insurance company pays a claim but the payment has been a lot later than it should have been paid?  That is an issue that is partially addressed in a January 2020, opinion from the United States District Court, Southern District of Texas, Houston Division.  The opinion is styled, Zachary Dunne v. Allstate Vehicle And Property Insurance Company.

This part of the ruling is the result of a Motion For Summary Judgment filed by Allstate.

The facts are not in dispute.  Dunne’s home was damaged in a storm that was insured by Allstate on June 20, 2018.  Dunne reported the claim on July 3, 2018.  Allstate’s adjuster determined the damage was below Dunne’s deductible despite increasing its estimate.

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Lawyers handling insurance disputes know that often times the wrongs committed in an insurance dispute are committed by the agent who sold the policy.

When it comes to the conduct of insurance agents and their relationship with the insurance company, there are two kinds of authority.  There is “actual authority” and “apparent authority.”

Our Courts have described actual authority this way:

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As has been stated many times, insurance companies prefer to litigate lawsuits in Federal Court rather than State Court.  Conversely, it is usually better for someone suing an insurance company to litigate the case in State Court rather than Federal Court.

Here is a 2019, opinion from the Southern District of Texas, Houston Division.  The opinion is styled, Antonio Diaz v. GeoVera Specialty Insurance Company.  In this case, Diaz alleges “GeoVera improperly denied and / or underpaid the claim.”  On August 22, 2019, a lawsuit was filed in State Court against GeoVera claiming violations of the Prompt Payment of Claims Act, various violations of the Texas Insurance Code, and breach of contract.  GeoVera timely removed the case to Federal Court on October 10, 2019.  Diaz timely filed a motion to remand.

Pursuant to 28 U.S.C., Section 1332(a)(1), Federal courts have original jurisdiction over all civil actions between citizens of different states where the amount in controversy exceeds $75,000, exclusive of interest and costs.

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Here is some information about ways of holding an insurance agent responsible for his actions or in-actions.

Does an agent have a duty to explain policy terms and coverages to customers?  Does an agent have a duty to offer higher limits or additional coverages?  Generally, the courts have said the answer to these questions is “NO.”  As is the case with most E&O loss exposures, however, an agent can get sued for failing to explain or offer coverages, even if there is no legal duty to do so based on previous court decisions.  That’s why loss prevention measures are so important.  An important think to realize here is that each case must be looked at for it’s individual set of facts.  When a agent is specifically asked a question about coverage, the agent has the responsibility of answering properly.

Client relationships can affect the success or failure of a client’s claim against the agency.  An established “special relationship” with an insured can affect the degree of the agent’s legal responsibility to the insured.  This has to do with “past dealings” with the customer.  In other words, what has the agent done for the customer in the past.

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Insurance agent mistakes can be a big cause of litigation.

Everyone makes mistakes, and insurance agents are not immune. The very complexity of the insurance business creates numerous opportunities for errors and omissions to creep into an agency’s operation.

An insurance agent has / serves two masters – the insured, his customer and the insurance company.

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Insurance lawyers know and understand that before suing an insurance company for denying a claim, the insurance company must be given the statutory presuit notice of the intent to file a lawsuit.  This was recently illustrated in a December 23, 2019, opinion from the Northern District of Texas, Dallas Division.  The opinion is styled, Gateway Plaza Condo v. The Travelers Indemnity Company Of America.

Travelers had denied Gateway’s claim for storm damage.  There was significant disagreement about the respective parties’ conduct in the early stages of the dispute.

Gateway alleges the property was damaged by a severe storm on June 2, 2017.  Gateway contends it cannot recall when Travelers was notified of the loss.  Gateway suggests that Travelers retained an inspector, JNT Developers, to survey the property on August 16, 2017.  Gateway alleges Travelers denied the claim but does not know exactly when the claim was denied.  The evidence indicates that Travelers sent Gateway a letter on October 6, 2017, stating Gateway’s policy does not cover damage to the roof.  Gateway asserts that Travelers must have denied the claim earlier because the letter references the parties’ “recent conversations about the claim.”

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Insurance lawyers and lawyers who practice law in Federal Court know the requirements for a case to be in Federal Court.  Most of the time, lawyers representing clients who are suing an insurance company try to stay out of Federal Court.

Pursuant to 28 U.S.C., Section 1332(a), for an insurance company to have a case be tried in Federal Court it must be proven that the parties are citizens of different states and the amount in controversy exceeds $75,000, exclusive of interest and costs.  When a case is removed premised upon diversity jurisdiction, courts determine the amount in controversy in light of “the claims in the state court petition as they existed at the time of removal.”  As a general rule, the amount in controversy alleged in the State Court petition determines the amount in controversy so long as it was pled in good faith.

This issue arose in a case in the Southern District of Texas, Houston Division.  The case is styled, Nicolas Martinez v. Liberty Insurance Corporation.

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The courts interpretation of the new rules regarding suing an insurance adjuster need special attention.  This is illustrated in the 2019, opinion from the Northern District of Texas, Wichita Falls Division.  The case is styled, Barnes Burk Self Storage, LLC v. United Fire & Casualty Company and Traci McCormick.

Barnes sued United and McCormick in State Court for claims arising from a wind and hail storm.  McCormick is a Texas resident and her presence in the lawsuit defeats diversity jurisdiction.

On December 7, 2018, Barnes sued United and McCormick in state court for violations of Texas law relating to its insurance claim.  On January 25, 2019, United informed Barnes that it had assumed any liability McCormick would have to Barnes in the case.  On February 7, 2019, United removed the case to federal court, alleging that diversity existed between Barnes and United and that this Court should disregard McCormick’s citizenship due to United’s assumption of McCormick’s liability pursuant to Texas Insurance Code, Section 542A.006.  On May 23, 2019, this Court rejected this argument and remanded the case.

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Insurance cases in Federal Court require the pleadings to be substantive.  This is seen in a 2019, decision from the Southern District of Texas, Corpus Christi Division.  The decision is styled, Alvira Blue v. Allstate Vehicle and Property Insurance Company.

Allstate filed a motion with the Court requesting that Blue’s claims for misrepresentation under Texas Insurance Code, Section 541.060(a)(1), be dismissed.

This Court granted the motion and discussed.

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Insurance property claims are a very big part of claims made against insurance companies.  As part of those property claims that get denied, it is important to properly prove the property damages by attaching a dollar value to them.  One way of proving the dollar value of these property damages is through the use of expert testimony.  Proving property damages by way of expert was a recent topic in a 2019, opinion from the Eastern District of Texas, Sherman Division.  This opinion is styled, Brandy Ventures, LLC v. Mesa Underwriters Specialty Insurance Company.

This case arises from alleged water damage resulting from a broken pipe on commercial property owed by Brandy Ventures and insured by Mesa.  Brandy alleges Mesa unfairly denied the claim and filed this lawsuit.

Brandy appointed Roy Young of YPA Public Adjusters, LLC, to testify regarding water damage.  Mesa filed a motion to strike any testimony of Young.

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