The Northern District of Texas, Fort Worth Division, decided a case in 2021 wherein the lawyer for insured did a good job of pleading his case.  The strange thing about this case is that it was filed in 2021, well after the new section of the Insurance Code was in effect, that being section 542A.  In section 542A, suing the adjuster has essentially been made something of the past, with rare exceptions.  However, it is not the issue in this case but the case still serves as a good example on how to name the insurance adjuster in such a way as to keep the case in State Court rather than being removed to Federal Court.

The style of the case is, Paradise Villas HOA, Inc. v. Amguard Insurance Company and Todd Anthony Gilmore.  Paradise is the insured, Amguard is the insurer, and Gilmore is the adjuster.

Paradise suffered alleged hail damage and properly reported the claim to Amguard.  Gilmore, a Texas Citizen, was assigned to adjust the claim and according to Paradise, Gilmore greatly under estimated the value of the claim.  A lawsuit was filed in State Court and Amguard caused the case to be removed to Federal Court alleging that Gilmore was improperly named in an effort to defeat diversity jurisdiction and asserting that the causes of action asserted against Gilmore could not stand.  Paradise filed a motion to remand which is the cause of this opinion.

Here is an interesting case dealing with hail damage.  This is a 2021, case from the San Antonio Court of Appeals.  It is styled, Allstate Vehicle And Property Insurance Company v. Peter Reininger.  The opinion is an appeal from a jury trial in favor of Reininger.

The opinion is lengthy and discusses several legal issues.  However, the facts of the case are pointed out here because the facts are similar to situations many other homeowners face themselves.

Reininger’s home had previously been covered by a policy issued by Liberty Mutual and that policy covered cosmetic hail damage to his metal roof.  When Reininger began looking for a new policy in 2015, he contacted Justin Losoya, an Allstate agent.  Reininger told Losoya he wanted a policy that was “apples to apples” with his Liberty Mutual policy, and Losoya stated Allstate could provide that. Reininger also asked Losoya, “If I have any bad weather, hail or any type of hail and it damaged my roof, am I covered?”  Losoya answered, “Yes, sir, Mr. Reininger, you are.  You pay a 1 percent deductible.”  Losoya did not mention any exclusions on coverage for the roof, and Reininger did not make any further inquiries about exclusions.

Here is a 2021, case from Southern District of Texas, McAllen Division, that discusses how courts are to review motions for summary judgment.  The opinion is styled, Saul Cantu v. United Property And Casualty Insurance Company.

The dispute revolves around a homeowners claim where Cantu suffered alleged damage to his property and then made a claim against his insurance company, United Property.  United Property subsequently denied the claim and eventually filed a motion for summary judgment.

Reading the opinion will set up the facts of this case, however, the focus here is the analysis by the court in this summary judgment opinion.

The Employee Retirement Income Security Act of 1974, (ERISA) applies to a majority of employer provided insurance plans.  These plans include, life, disability, and health.  What is important to understand about ERISA plans is that it is rare in the extreme that a court will over-turn a decision by an ERISA plan administrator.  This is seen again in a 2021 opinion from the Western District of Texas, Austin Division, styled, Marc Worob, individually and as next friend of M.W. v. Blue Cross And Blue Shield Of Texas, A Division Of Health Care Service Corporation.

This case is decided in favor of the insurance company plan administrator on competing motions for summary judgment.

The Plan provides coverage for five categories of Eligible Expenses: (1) Inpatient Hospital Expenses; (2) MedicalSurgical Expenses; (3) Extended Care Expenses; (4) special provisions expenses; and (5) pharmacy expenses.  The first category, Inpatient Hospital Expenses, includes “Medically Necessary services for Serious Mental Illness in a Psychiatric Day Treatment Facility, a Crisis Stabilization Unit or Facility, a Residential Treatment Center for Children and Adolescents, or a Residential Treatment Center in lieu of hospitalization.”  The Plan defines a Residential Treatment Center as a:

Insurance lawyers keeping up with the relatively new Insurance Code Section, 542A.006 election need to read this well reasoned case from the Northern District of Texas, Fort Worth Division.  The opinion is styled, Leonard D. Morgan, et al. v. Chubb Lloyds Insurance Company of Texas.

In this a homeowner’s claim for damage due to a storm.  Plaintiff’s sued their insurance company, Chubb, and the adjuster handling the claim.  The lawsuit was filed in State Court wherein a claim was made against the insurer and the adjuster.  At the time the lawsuit was filed in State Court, Chubb had not exercised the 542A.006 election, to take responsibility for it’s adjuster.

After the lawsuit was filed, Chubb moved to accept responsibility for the adjuster and have the adjuster dismissed from the lawsuit.  The State Court allowed the election and once this was complete, Chubb removed the case to Federal Court and this motion to remand was filed by Plaintiffs.

Fortunately, most insurance claims do not require expert testimony to prove a claim.  However, in those situations where an expert is required, a 2021 opinion from the Southern District of Texas, Houston Division, is a good case for guidance on experts.  The opinion is styled, Roy P. Labourdette Jr. v. State Farm Lloyds.

In this case, State Farm insured Roy’s home.  Roy had made a claim for hail storm damage to State Farm and State Farm denied the claim and asserted the damage to Roy’s roof was the result of wear, tear, and deterioration, rather than a covered cause of loss.  Roy filed a lawsuit in State Court and State Farm had the case removed to Federal Court.

Roy had hired an expert roofer to testify about the roof damage.  State Farm in response filed papers with the Court to have the testimony of the expert excluded.  After considering the motion and response from Roy, this Court denied State Farms motion.  The Court then explained it’s ruling.

Insurance Companies are supposed to promptly make payment of claims made by an insured.  A May 2021, case from the Fifth Circuit Court of Appeals confirms this.  The style of the opinion is Hyewon Shin v. Allstate Texas Lloyd’s.

In this case, the insured, Hyewon Shin asserted a claim for penalties under the Texas Prompt Payment of Claims Act.  The relevant statutes are Sections 542.058 and 542.060.  The lower level court granted summary judgment in favor of Allstate, concluding that Allstate’s pre-appraisal payment to Shin was both timely and reasonable as a matter of law notwithstanding that the final appraisal amount, $25,944.94 was 5.6 times greater than the pre-appraisal payment of $4,616.63.

This opinion is based on the Texas Supreme Court ruling in Hinojos v. State Farm Lloyds, et al.  The Texas Supreme Court said in relevant part:

Insurance Lawsuits, like many other claims, result in other persons or entity’s being added to the lawsuit.  The relevance here is that often times an adjuster or the agent who sold the policy may need to be part of the lawsuit.

A 2021, opinion from the Northern District of Texas, Dallas Division, analysis how this is done.  The opinion is styled, Nova Casualty Company v. Jose E. Guzman and Rito Sosa.

For the facts that occurred in this case, the opinion should be read.  Here is the legal aspect of the case.

There are a few statutes in the Texas Insurance Code that are specific to life insurance policies.  These statutes are found in Sections 705.001 through 705.105.

For an insurance company to deny coverage on a life insurance policy based on a misrepresentation in an application, the insurance company has traditionally been required to establish misrepresentation by the insured that will support a defense in coverage by pleading and proving five elements.  These elements are:

  1. the making of a misrepresentation;

Life Insurance claims attorneys need to understand the important distinction between statements by the insured that are considered to be representations and those considered to be conditions precedent.  If the insured’s statement is considered a representation, a false statement alone will not let the insurer avoid coverage.  Each of the elements required by the 1980, Texas Supreme Court opinion styled, Mayes v. Massachusetts Mutual Life Insurance Co., must be shown.  In contrast, if the insured’s statement is considered a condition precedent, then falsity alone will allow the insurer to avoid coverage.

It may seem confusing but this representation versus warranty issue is well developed under Texas law.  If the statements are considered representations, then to avoid liability under the policy the insurance company must plead and prove: 1) the making of the representation, 2) the falsity of the representation, 3) reliance thereon by the insurance company, 4) the intent to deceive by the insured in making the same, and 5) the materiality of the representation.  This is discussed in the 2003, Tyler Court of Appeals opinion styled, Protective Life Insurance Co. v. Russell, the 1996, Austin Court of Appeals opinion styled, American National Insurance Co. v. Paul, and the 1983, 1st District Court of Appeals opinion styled, Cartusciello v. Allied Life Insurance Co.

The same cases recognize that if the language of the policy expressly provides that coverage does not take effect unless the applicant is in good health, the provision is enforceable as a condition precedent.  When the language states that answers in the application are true and correct at the time of delivery of the policy, such a requirement is merely a representation.  Also, when the language of an insurance policy is susceptible to more than one construction, the policy should be construed in favor of the insured to avoid exclusion of coverage.  As was explained by the U. S. 5th Circuit in the 1997, opinion styled, Riner v. Allstate Life Insurance Co., “Short of inserting an unambiguous “good health” warranty demonstrating that the parties intended the contract to rise or fall on the literal truth of an insured’s general certification of good health, Texas has not allowed an insurer to change that result by contracting to make truthful application answers a condition precedent to coverage.”  The same Riner court added that “a warranty is a statement made by the insured, which is susceptible to no construction other than that the parties mutually intended that the policy should not be binding unless such statement be literally true.”

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