Sueing An Insurance Company

Someone in Grand Prairie, Arlington. Fort Worth, Keller, Hurst, Euless, Bedford, Richland Hills, Saginaw, Lake Worth, Benbrook, or anywhere else in the Tarrant County area would only be normal to think about sueing an insurance company someday. Particularly if they are doing you wrong.
Here is a case where a business that works with one insurance company got screwed around by apparently not sueing the insurance company correctly. One way to lessen the chances of this happening is to work with an experienced Insurance Law Attorney.
Here is some of the background of the case.
The case is styled, Gamma Group, Inc. v. Home State County Mutual Insurance Company, and the opinion from the Dallas Court of Appeals was issued in May 2011.
The case involves a 1995 agreement between Home State, an insurance company, and Gamma Group, Home State’s agent for binding and adjusting policies. The agreement provided Gamma Group would produce policies, collect premiums, and adjust liability claims of Home State’s insureds. Gamma Group used the collected premiums to pay its commission and to pay Home State and its reinsurer, Transatlantic Reinsurance Co. (TRC).
Home State had disagreements with Gamma Group over its performance as agent, and withdrew from the agreement and terminated the agency agreement effective January 1, 1999. Following termination of the agreement, Gamma Group could no longer write new business on Home State policies, but Gamma Group remained responsible for adjusting claims made on policies issued during the term of the agency agreement (the run-off claims). In 2002, Home State terminated Gamma Group’s servicing of run-off claims and hired Marshall Contrat Adjustors to service those claims. Home State and TRC paid over $4 million on the run-off claims.
Later Home State and TRC sued Gamma Group In the 191st District Court alleging breach of the agency agreement by failing to pay the claims adjusted by Marshall out of premiums Gamma Group had collected. Because Gamma Group had not paid the claims but had retained the premiums, Home State and TRC were required to pay the claims out of their own funds. Home State and TRC sought recovery of the premiums Gamma Group improperly retained. Gamma Group filed a counterclaim against Home State alleging that under paragraph 6.2 of the agency agreement, Home State was liable to Gamma Group for any amounts Gamma Group owed TRC relating to the claims adjusted by Marshall.
Without getting into all the details the trial court eventually made a determination on that lawsuit.
Gamma Group then filed the lawsuit this appeal was about against Home State seeking indemnity under section 13.2 of the agency agreement for the unreasonable amounts of any settlements on the runoff claims adjusted by Marshall that Gamma Group was required to pay out of the premiums it had collected.
Here is what is noteworthy – Home State moved for summary judgment on several grounds, the primary being that Gamma Group’s lawsuit was barred by res judicata.
Res judicata precludes relitigation of claims that have been finally adjudicated, or that arise out of the same subjecdt matter and that could have been litigated in the prior action. In determining what constitutes “the same subject matter,” Texas courts follow the “transactional” approach to res judicata set forth in the Restatement(Second) of Judgments. The Restatement “provides that a final judgment on an action extinguishes the right to bring suit on the transaction, or series of connected transactions, out of which the actioin arose.” The court then got into a discussion of how this is properly reviewed to reach a proper result based on the facts in any particular case. Ultimately, this court ruled that these claims in the second lawsuit arose out of the same subject matter as the first lawsuit that had already been resolved.
What needs to be learned or realized here is that when filing a lawsuit against an insurance company, or for that matter anybody, the lawsuit must encompass all possible claims.
The Texas judicial system will not allow a person to bring claims that are related in a piece meal fashion.