Insurance lawyers may not be perfect in all their actions but if a person wishes to sue an insurance company, get an insurance lawyer, don’t do it yourself.  This is illustrated in a recent Fifth Circuit opinion styled, Thomas Petty v. Great West Casualty Company.

This is an appeal resulting from the district court’s dismissal of Petty’s claim with prejudice after Petty, a commercial truck driver sued Great West pro se.

Petty contends he was involved in two accidents involving fatalities and he suffers from ongoing mental trauma that prevents him from being able to operate a commercial truck.  As a result, he seeks monetary relief for lost business earnings and mental distress/anguish.

Here is a situation not discussed before and one that rarely happens.  However, it does discuss law that may be relevant to insurance lawyers in other cases.   The case is from the Southern District of Texas, Houston Division.   It is styled, Randy Randel and Debra Randel v. Travelers Lloyds of Texas Insurance Company.

The Randels experienced a fire loss to their home and made a claim against their homeowners policy with Travelers.  Travelers paid on the claim but the Randels allege they were underpaid.  The Randels sought to have the claim appraised and Travelers refused, stating the case was closed.

The Randels filed a declaratory judgment action against Travelers seeking the Court to Order Travelers to appraise the claim.  Travelers agreed to appraisal and the Randels dismissed their lawsuit with Prejudice to refiling the claim.

Here is a case involving a plumbing leak.  What is a little unusual about this case is the insurance company is attempting to sue Texas Insurance Code, Section 542A.006(c), to have this case heard in Federal Court rather than the State Court in which the case was filed.  The style of the case is James A. Macari, et al. v. Liberty Mutual Insurance Company, et al.  The case is from the Southern District of Texas, Houston Division.

Liberty had issued a homeowners insurance policy to Macari.  Macari experienced a plumbing leak and damage from the leak.  Macari made a claim against the Liberty policy and Liberty assigned adjuster David Meaders to adjust the claim.  The claim was denied and Macari sued Liberty and Meaders.  This lawsuit was filed in State Court and then removed by Liberty to Federal Court.

After the lawsuit was filed, Liberty gave written notice pursuant to Chapter 542A of the Insurance Code assuming any liability Meaders might have to Macari.

For insurance lawyers, a favorable way to increase the odds of a win or favorable settlement is to be able to litigate a case in State Court rather than Federal Court.  Here is a win for keeping a case in State Court.  This is a 2019, opinion from the Eastern District of Texas.  The opinion is styled, Michael Hebert v. United Property & Casualty Insurance Company.

This is a lawsuit filed against United and it’s adjusters, Castro and Pharr, resulting from the way Hebert’s claim was handled.  The case was filed in State Court.  The State Court dismissed the adjusters and United then removed the case to Federal Court based on diversity of citizenship and the amount in controversy pursuant to 28 U.S.C. Sections 1441 and 1446.

This Court states that the case was  not removable on its face because Pharr, Castro, and Hebert are Texas citizens and, therefore, there was not complete diversity.  Under what is called the voluntary-involuntary rule, a case generally can become removable only by an affirmative act by the plaintiff.  This is pursuant to 28 U.S.C., Section 1446(b)(3).  United’s election of post-suit liability was an involuntary act with regard to Hebert.  Thus, the case was not removable on its face or after United’s election of liability.

Here is a strange case.  The insurance company is claiming their insured has not adequately proven he has an insurance policy with the insurer.

This opinion is from the Northern District of Texas, Fort Worth Division.  It is styled, Michael Harris v. Meridian Security Insurance Company et al.

In this case, Harris was out of town when he house was robbed.  Harris made a claim for items that were stolen and was assigned claim number PR-0000000-191439.

Insurance lawyers need to know the time lines for an insurance company to pay claims under the Texas Prompt Payment of Claims Act and they need to know the legal reasons for those time lines being extended.

Pursuant to Texas Insurance Code, Section 542.056(d), if the insurance company cannot accept or reject the claim by the initial deadline, the statute lets the insurance company notify the claimant that it cannot accept or reject a claim by the deadline.  This notification has to be sent before the original deadline, and the notice must state the reason why the insurance company needs additional time.  The insurance company then has 45 additional days to accept or reject the claim.

Pursuant to the 1997, 5th Circuit opinion, Higginbotham v. State Farm Mutual Automobile Insurance Co., the insurer’s good faith or its lack of bad faith is no defense.  In reaching this conclusion, the court noted that precedents under the predecessor statute held that an insurance company’s good faith in denying a claim did not relieve the insurer of liability for penalties.  The court concluded that an insurer  that denies a claim takes the risk that it will have to pay the additional damages allowed by the statute.

Here is a homeowners claim that has a different twist to it.  The case is from the Southern District of Texas, Corpus Christi Division, and is styled, Kenneth Stokley v. Allstate Texas Lloyds.

In this case the Plaintiff, Stokley filed a Motion to Compel Appraisal and Allstate is trying to avoid the appraisal claiming the appraisal provision in the insurance policy should not be enforced because Stokley delayed his request for appraisal and Allstate is prejudiced by the delay and Stokley already made repairs and thus, waived the appraisal.

Mere delay is not enough to find waiver; Allstate must show prejudice.  Allstate argues Stokley intentionally delayed to increase pre-judgement interest to accrue on damages.

The next question in this series related to violations of the Texas Prompt Payment of Claims Act is, what are some of the defenses the insurance company has for not making prompt payment on a claim.

The statute contains several provisions by which insurance companies may extend the deadlines.  While, technically, these are not “defenses,” they may help insurance companies avoid liability.  The following events or conditions can extend the deadlines:

a.  Texas Insurance Code, Section 542.055(a) allows eligible surplus lines insurers extra time for acknowledging claims, commencing investigation, and requests for information.

Additional remedies under the Texas Prompt Payment of Claims include attorney fees.  Attorney fees under the statute are governed by the 1997, Texas Supreme Court opinion, Arthur Andersen & Co. v. Perry Equipment Corp.  In that case, the court held that a reasonable fee must be based on eight factors set out by the disciplinary rules.  Fees cannot be awarded simply as a percentage of the recovery, but must be awarded as a dollar amount.  The jury can consider the fact that the plaintiff has agreed to a contingent fee as one factor in deciding what fee is reasonable.  This is discussed in the 1999, Tyler Court of Appeals opinion, Dunn v. Southern Farm Bur. Cas. Ins. Co.

In light of the Arthur Andersen opinion, earlier opinions allowing recovery of a percentage fee under the statute are no longer good law.

If fees an be segregated between the statutory claim and other claims, it is proper to do so, but the defendant needs to object.  Other wise an unsegregated award will be upheld according to the 1998, Waco Court of Appeals opinion, Allstate Insurance Co. v. Lincoln.

Under the 18% penalty imposed by Texas Insurance Code, Section 542.060, what is the effect if there is a finding of multiple violations?  Does the result of result of multiple violations result in multiple penalties?

In applying the Texas Prompt Payment of Claims Act and Section 542.060, the 1999, Tyler Court of Appeals opinion, Dunn v. Southern Farm Bureau, the court found four separate violations by the insurer, but did not discuss whether this made a difference in the damages.

Something to keep in mind is that arguably, an insurance company that violates the statute more than once ought to be more liable than an insurance company that violates the statute only once.  This view is consistent with liberal construction of the statute, and furthers the purpose of encouraging prompt payment of claims.