Suing The Insurance Adjuster

Most Llano insurance lawyers would prefer to stay out of Federal Court because Federal Courts tend to be more favorable to insurance companies.  Suing the insurance company adjuster is one way to stay out of Federal Court.   A Western District, Waco Division opinion shows one way to NOT sue the adjuster.  The opinion is styled, Spring Street Apts Waco, LLC v. Philadelphia Indemnity Insurance Company and Crawford & Company.

Spring Street suffered hail and wind damage.  Their insurance coverage was with Philadelphia, who hired Crawford to investigate the claim.

Spring Street filed suit in State Court for DTPA violations and Insurance Code violations and Philadelphia promptly had the case removed to Federal Court based on lack of diversity jurisdiction under 28 U.S.C. 1332, claiming that Crawford was improperly joined in the lawsuit.  Crawford filed a Rule 12(h)(2) motion to dismiss for failure to state a claim upon which relief can be granted.

Spring Streets’ pleading read in relevant part:

1. Defendants engaged in certain unfair or deceptive acts or practices including, but not limited to the following:
a. Failing to attempt, in good faith, to effectuate a prompt, fair, and equitable settlement of a claim with respect to which the insurer’s liability has become reasonably clear;
b. Failing to provide promptly to a policyholder a reasonable explanation of the basis in the policy, in relation to the facts or applicable law, for the insurer’s denial of a claim or for the offer of a compromise settlement of a claim;
c. Refusing to pay a claim without conducting a reasonable investigation with respect to the claim;
d. Forcing Plaintiff to file suit to recover amounts due under the policy by refusing to pay all benefits due;
e. Misrepresenting an insurance policy by failing to disclose any matter required by law to be disclosed, including a failure to make such disclosure in accordance with another provision of this code; and/or
f. Failing to pay a valid claim after receiving all reasonably requested and required items from the claimant.
2. Crawford adjusted Plaintiff’s claim by investigating, processing, evaluating, approving, and or denying, in whole or in part, plaintiff’s claim
3. Crawford … conducted a substandard inspection of Plaintiff’s property.
4. Crawford failed to properly inspect the Property and their related damages, failed to properly request information, failed to properly investigate the claims, failed to respond to requests for information from
Plaintiff, failed to timely evaluate the claims, failed to timely estimate the claims, and failed to timely and properly report to Philadelphia and make
recommendations to it with regard to Plaintiff’s claims.
5. Crawford failed to properly adjust the claims and the losses.
6. Defendants have further failed to affirm or deny coverage within a reasonable time.
7. As a result of the above issues, Plaintiff did not receive the coverage for which it had originally contracted with Philadelphia. Unfortunately, Plaintiff has therefore been forced to file this suit in order to recover damages arising from the above conduct, as well as from the unfair refusal to pay insurance benefits.
This Court granted Crawford’s motion to dismiss saying that Spring Street’s allegations fall short of describing the cause of the loss, such how Crawford specifically committed any of the factual above acts.  The closest Spring Street comes to making factual allegations is its statement that Crawford through its substandard inspection hired an inadequate engineer.  However, this allegation lacks factual support.
Moreover, Spring Street’s against Crawford merely track the statutory language under which Spring Street purports to bring its claims against Crawford.  A pleading offering labels and conclusions or a formulaic recitation of the elements of a cause of action will not suffice.  Nor does a complaint comply with the standard if it tenders naked assertions devoid of further factual enhancement.  Evaluating the plausibility of a claim is a context specific process that requires a court to draw on its experience and common sense.