Insurance Adjusters And Chapter 541 – Federal Court

The United States District Court, Northern District, Dallas Division, issued an opinion in April 2018, titled, Grand Hotel Hospitality LLC d/b/a Grand Hotel Dallas v. Certain Underwriters at Lloyd’s of London et al.

This is a breach of contract case where Grand Hotel suffered a fire damage and sued Lloyd’s and the adjuster assigned to handle the claim.  There were allegations for violation of the Texas Insurance Code, Section 541.060, made against the adjuster, Brandon Weir.

The lawsuit was filed in State Court and the Defendants caused the case to be removed to Federal Court alleging the joinder of Weir was fraudulent in order to beat diversity jurisdiction under 28 U.S.C. Section 1332.

The defendants assert there is no reasonable basis for the district court to predict that Grand Hotel will be able to recover against Weir.

Rule 12(b)(6) authorizes a court to dismiss a plaintiff’s complaint for failure to state a claim upon which relief can be granted.

A complaint has facial plausibility when the pleadings allow the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.

Grand Hotel is alleging that Weir violated Section 541.060(a)(2)(A), which creates liability for 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.

The U.S. 5th Circuit has stated that an adjuster who services insurance policies engages in the business of insurance and is subject to the Texas Insurance Code.

To support its Section 541.060 claim, Grand Hotel pleads that Weir “failed to properly determine the correct value of the property and made a determination,” which affected the application of a co-insurance penalty and led to a lower payment amount for Grand Hotel’s claim.  This allegation is less than detailed, but is sufficient enough to state a claim against Weir.  When accepted as true, Grand Hotel’s allegation that Weir caused it to receive less than it was entitled suggests Weir failed to effectuate a fair and equitable settlement of the claim.

Grand Hotel’s motion to remand the case back to State Court was granted.