Attorney Fees In Insurance Lawsuits

When can a person recover attorney fees in an insurance lawsuit?  There is not an easy answer to that question.  It is dependent on the facts of the case and the theories of law being alleged against the insurance company.
A 2024 opinion from the Southern District of Texas, Houston Division, addresses this issue when the claim is filed invoking Texas Insurance Code, Section 542A.003(a) and 542A.007(d).  The style of this opinion is, Ashley and Walter Burke v. Liberty Mutual Insurance Company.
The Burks (Plaintiffs) filed this action against Liberty for breach of contract, common law bad faith, violations sections 541 of the Texas Insurance Code, and violations of the Texas DTPA.  Plaintiffs allege that they sent a presuit letter to Liberty on January 24, 2022, outlining Plaintiffs’ alleged damages and expenses pursuant to Section 542A.003.
Liberty alleges that “Plaintiffs failed to provide proper notice of their claim for personal property and additional living expenses as required by Section 542A …”  As such, Liberty contends that Plaintiffs are precluded from recovering attorneys’ fees.
This Court then goes into an analysis of Section 542A and the facts of this case, specifically the notice letter of January 24, 2022.
Plaintiffs’ presuit notice to Liberty must have included “the specific damount alleged to be owed by the insurer on the claim for damage to or loss of covered property” in order to defeat Liberty’s Motion to Preclude Attorney’s Fees.  The letter stated:
Based on the Information now available to us, and for purposes of this notice, we estimate the damages and expenses are as follows:
1)  $112,497.51 for the estimated replacement cost of repairs to the loss including incurred water mitigation work, less any deductibles, prior payments, or policy provisions limiting payment of replacement cost:
2)  $13,499.70 in Interest that applies to this loss as per Texas Insurance Code;
3)  We will also be seeking extra-contractual damages including mental anguish caused by your company’s actions.
4)  $1,700.00 as reasonable and necessary attorney’s fees for time expended to date in assisting our client in this matter.
We reserve the right to adjust these amounts to conform to the information and evidence that may be available to us at the time of trial if litigation becomes necessary.
Plaintiff were required to “state the specific amount alleged to be owed,” and Plaintiffs did that in the January 24, 2022 letter.  “That the specific amount alleged was not necessarily the final amount owed may affect the merits arguments at a later juncture in the lawsuit, but did not deprive Liberty of the statutory notice owed to it under Section 542A.007(d).
The Court noted that the letter fulfills the purpose of requiring a sixty-one-day presuit notice.  The purpose of the statute is to discourage litigation and encourage settlements of consumer complaints.  That was the intent of Plaintiffs’ letter.  The letter stated that “at this time, we trust that this matter can be resolved in a prompt, fair, and equitable manner … we intend to refrain from serving you with a lawsuit for the statutory notice period unless we are able to resolve this matter during this period of time.
The Court found the letter substantially complied with the requirements of Section 542A.007(d) and fulfilled the purpose of the presuit notice.
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