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The statute of limitations is a legal issue that must be taken into account in every case.  This case from the Southern District of Texas, Laredo Division,does a good job of discussing the statute of limitations in insurance cases.  The case is styled, Gilberto Rodriguez v. State Farm Lloyds.

This is an insurance coverage dispute that arose out of a water pipe bursting in Gilberto’s home.  State Farm filed a motion for summary judgement, part of which dealt with the limitations issue.  The Court granted State Farm’s motion.

Here are relevant facts and discussion:

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Whether you are talking about life insurance claims, homeowners claims, disability claims, auto claims, or other types of first party claims, policy benefits are the basic recovery allowed for an insurance company breach of the contractual obligations.  An insurer’s refusal to pay the insured’s claim causes damages in at least the amount of the policy benefits wrongfully withheld.  This is supported in the Texas Supreme Court cases, Vail v. Texas Farm Bureau Mutual Insurance Co. and Transportation Insurance Co. v. Moriel.

In addition, the same court stated in Hernandez v. Gulf Group Lloyds, an insured should be able to recover consequential damages that are the foreseeable result of the insurer’s breach of contract.  Numerous cases hold that insurance policies are subject to the same rules as other contracts.  One of the best established rules is that:

Where two parties have made a contract which one of them has broken, the damages which the other party ought to receive in respect of such breach of contract should be such as may fairly and reasonably be considered either arising naturally; i.e., according to the usual course of things, from such breach of contract itself, or such as may reasonably be supposed to have been in the contemplation of both parties at the time they made the contract as the probable result of the breach.

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Here is a rare win in an ERISA case.  Unfortunately the win is the the 7th Circuit Court of Appeals rather than the 5th Circuit which controls most ERISA plans for readers of this blog.

The ERISA case is styled, Susan Hennen v. Metropolitan Life Insurance Company.  The case does illustrate how to win an ERISA case.

Hennen had received short term disability (STD) benefits for two years as the result of a back injury.  Hennen then applied for long term disability (LTD) benefits.  The disability plan that Hennen had contained a two year limit for neuromusculoskeletal disorder, subject to exceptions, including one for radiculopathy, a “Desease of the peripheral nerve roots supported by objective clinical findings of nerve pathology.”  After Metlife terminated Hennen’s benefits, she sued under ERISA, arguing that Metlife’s determination that she did not have radiculopathy was arbitrary and capricious.  The court hearing the case had granted summary judgment in favor or Metlife.  This appeals court reversed the ruling saying Metlife acted arbitrarily when it discounted the opinions of four doctors who diagnosed Hennen with radiculopathy in favor of one physician who ultimately disagreed, but only while recommending additional testing that Metlife declined to pursue.

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Like other contract rights, the right to insurance proceeds can be assigned, giving the assignee the right to recover under the policy.

This issue is discussed in the 1968, Texas Supreme Court opinion styled, McAllen State Bank v. Texas Bank & Trust Company, Trustee.

Texas Bank claimed proceeds of a life insurance policy as successor to the named beneficiary asserting the policy was pledged as security for a loan made to the deceased.

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If a person or entity is not a named beneficiary, can they be an intended beneficiary?

Other persons who may sue for benefits under an insurance contract are “intended beneficiaries” also known as “third party beneficiaries.”

A third party for whose benefit an insurance contract is made may enforce the insurance contract against the promissor.  As discussed in the 1985, opinion from the 14th Court of Appeals, styled, Hermann Hosp. v. Liberty Life Assur. Co., the controlling factor in determining whether a third party may enforce a contract is the intention of the contracting parties.

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An additional insured is a party protected under an insurance policy, but who is not named within the policy.  A common example of an additional insured is a person who, although not specifically named, is covered under a liability policy by a definition of “insured” that extends protection to interests, strictly according to a status, such as employees or common members of a household.  This is most commonly seen in personal automobile polices such as when a friend drives a car with the owners permission.  A party typically becomes an additional named insured pursuant to an agreement obligating the named insured to add the additional named insured to the named insured’s pre-existing insurance policy.  This is discussed in the 1997, Austin Court of Appeals opinion styled, Western Indem. Ins. Co. v. American Physicians Ins. Exch.

The Western Indemnity case is a summary judgment ruling.  In the case, the wording of the policy was discussed at length.  In making it’s ruling the court noted that both the terms “additional insured” and “additional named insured” have clear technical meanings.  An additional insured is a party protected under an insurance policy, but who is not named within the policy.  A common example of an additional insured is a person who, although not specifically named, is covered under a liability policy by a definition of “insured” that extends protection to interests, strictly according to a status, such as employees or common members of a household.  On the other hand, an additional named insured is a person or entity specifically named in the policy as an insured subsequent to the issuance of the original policy.  A party typically becomes an additional named insured pursuant to an agreement obligating the named insured to add the additional named insured to the named insured’s pre-existing insurance policy.

As in all situations where an insurance company is not promptly paying a claim for coverage, a person should seek the help of an Experienced Insurance Law Attorney.

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Insurance attorneys always have to answer the above question when looking at an insurance policy case.  This issue is discussed in the 1972 case from the Texarkana Court of Appeals styled, Doss v. Roberts.

This suit involves the division of monies received from the sale of land found not to be subject to partition in kind.  Roberts brought suit to partition 22 acres of land jointly owned with James B. Doss.  The jury found that the land was not subject to partition in kind, and the court ordered the land sold and monies divided.  The parties each owned an undivided one-half interest in the property.  The land was subject to a V.A. loan and lien.  Doss purchased insurance on his interest in the dwelling located on the land in the amount of $10,000.00 and named the V.A. as loss payee.  The improvements were destroyed.  Doss paid the remaining balance due the V.A. in the sum of $8,964.87, and thereafter collected the insurance proceeds of $10,000.00.  Roberts contended she was entitled to one-half of the insurance monies because the house was not rebuilt.

The main issue in this case is whether Roberts was entitled to one half of the proceeds from the insurance.

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Seeing if there is liability on the insurance policy is one of the first things an insurance attorney needs to do when meeting with a prospective client.

In 1996, the Texas Supreme Court stated in Liberty Nat’l Fire Ins. Co. v. Akin, that insurance coverage claims and bad faith claims are by their nature independent.  But, in most circumstances, an insured may not prevail on a bad faith claim without first showing that the insurer breached the contract.

In 1998, the Texas Supreme Court stated in Vail v. Texas Farm Bur. Mut. Ins. Co. that contractual liability is not essential to establish extracontractual liability, but it helps.  For example, an insurer that owes policy benefits under the contract may also be found to have acted unfairly in refusing to pay those benefits.

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For lawyers who handle claims related to the denial of disability policies, there is some law that they have to know to effectively represent their clients.

Probably 90 percent of disability policies involve payments spread out over a period of time.  When a claim for disability benefits is denied it can be anticipated that all future benefits are denied also.

When a insurance company who is obligated by contract to make monthly payments of money to another absolutely repudiates the obligation without just excuse, the obligee is “entitled to maintain his action in damages at once for the entire breach, and is entitled in one suit to receive in damages the present value of all that he would have received if the contract had been performed, and he is not compelled to resort to repeated suits to recover the monthly payments.  This was discussed as early as the 1937, Texas Supreme Court opinion styled, Universal Life & Accident Insurance Company v. Sanders.  As seen in the 1981, Dallas Court of Appeals opinion, Group Life and Health Insurance Company v. Turner, Repudiation is conduct that shows a fixed intention to abandon, renounce, and refuse to perform the contract.

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Whether you are an insurance lawyer in Grand Prairie, or Dallas, or Fort Worth, or anywhere else in Texas, Texas insurance law is the same.  And one good part of that law is that there are situations where an oral insurance contract is enforceable.

This is seen in the 1949, Texas Supreme Court opinion, Pacific Fire Ins. Co. v. Donald.

Paul Donald sued four insurance companies to recover for the loss of 5500 bales of hay which were destroyed by fire while stored in a building situated in Bowie, Texas.  Donald’s claim was that there was an oral contract between himself and Henry Moore, the insurance agent of the companies.  A jury trial resulted in a verdict in favor of Donald and this appeal followed.

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