Articles Posted in Claims Denial

Seeing if there is liability on the insurance policy is one of the first things an insurance attorney needs to do when meeting with a prospective client.

In 1996, the Texas Supreme Court stated in Liberty Nat’l Fire Ins. Co. v. Akin, that insurance coverage claims and bad faith claims are by their nature independent.  But, in most circumstances, an insured may not prevail on a bad faith claim without first showing that the insurer breached the contract.

In 1998, the Texas Supreme Court stated in Vail v. Texas Farm Bur. Mut. Ins. Co. that contractual liability is not essential to establish extracontractual liability, but it helps.  For example, an insurer that owes policy benefits under the contract may also be found to have acted unfairly in refusing to pay those benefits.

Whether you are an insurance lawyer in Grand Prairie, or Dallas, or Fort Worth, or anywhere else in Texas, Texas insurance law is the same.  And one good part of that law is that there are situations where an oral insurance contract is enforceable.

This is seen in the 1949, Texas Supreme Court opinion, Pacific Fire Ins. Co. v. Donald.

Paul Donald sued four insurance companies to recover for the loss of 5500 bales of hay which were destroyed by fire while stored in a building situated in Bowie, Texas.  Donald’s claim was that there was an oral contract between himself and Henry Moore, the insurance agent of the companies.  A jury trial resulted in a verdict in favor of Donald and this appeal followed.

Insurance lawyers want to help their clients as much as possible in any given case.  The U.S. District Court, Western District of Texas, San Antonio Division, issued an opinion regarding recovery of attorney fees in an insurance case.  The opinion is a 2018, opinion styled, Jesus and Margaret Agredano v. State Farm Lloyd’s.

This case will be discussed in three blogs with each blog discussing the Courts ruling regarding attorney fees in insurance cases.  This is the third blog.

The Agredanos prevailed at trial on their breach of contract claim against State Farm.  The remaining question was whether or not they were entitled to seek and recover attorney’s fees.

Insurance lawyers want to help their clients as much as possible in any given case.  The U.S. Western District Texas, San Antonio Division, issued an opinion regarding recovery of attorney fees in an insurance case.  The opinion is a 2018, opinion styled, Jesus Agredano; Margaret Agredano v. State Farm Lloyd’s.

This case will be discussed in three blogs with each blog discussing the Courts ruling regarding attorney fees in insurance cases.

The Agredanos prevailed at trial on their breach of contract claim against State Farm.  The remaining question was whether or not they were entitled to seek attorney’s fees.

Insurance lawyers will testify that one of the biggest reasons they see for denial of coverage is the insurance company allegation that there was one or more misrepresentations in the policy application.

This issue is discussed in the 1969, San Antonio Court of Appeals opinion styled, The Prudential Insurance Company of America v. Ignacia Torres et ux.

This lawsuit, a declaratory judgment action, is asking the court to rescind and cancel a policy due to misrepresentations in the policy application.

Cooperation with the insurance company investigation of a claim is required under the insurance policy.  Failure to cooperate can result in the policy being rescinded and the claim denied.

The 1994, Amarillo Court of Appeals opinion, Andy Costely and Cathy Costley v. State Farm Fire And Casualty Company, illustrates the necessity of cooperation with the insurance company investigation of a claim.

In this case, State Farm was allowed to rescind a policy based on the insured failure to cooperate.  Cathy had her truck, tractor, and other personal property destroyed by a fire while it was parked on Andy’s father’s (Robert) property.  Andy and Cathy sued Andy’s father.  Later Robert sued Andy alleging the damage was due to the negligence of Andy.

Most insurance lawyers know that one way an insurance company tries to get away with refusing to pay on an insurance policy is to rescind the policy.  According to a 1931, Amarillo Court of Appeals opinion styled, Forrester v. Southland Life Ins. Co., the general principle is, prior to a loss an insurance company has the right to rescind the policy procured through mutual mistake or fraud.

As stated by the  Texas Supreme Court in a 1980 opinion styled Mayes v. Massachusetts Mut. Life Ins. Co., an insurance company may rescind a policy based on the insured’s misrepresentation, if the insurance company pleads and proves the following elements:

  1.  the making of the misrepresentation;

A 2017, opinion styled, Carrillo Funeral Directors, Inc. v. Ohio Security Insurance Company, et al, is another example of incorrect pleadings against an adjuster.  The case is from the Northern District, Dallas Division.

Carrillo suffered hail damage and made a claim against its insurer Ohio.  There was an under payment of the claim and Carrillo sued Ohio and the adjuster John Horvath for violations of the Texas Insurance Code, in State District Court.  Ohio timely removed the case to Federal Court asserting that Horvath was improperly joined in the lawsuit in an effort by Carrillo to defeat diversity jurisdiction.

28 U.S.C. section 1441(a) permits the removal of any civil action brought in a State court of which the district courts of the United States have original jurisdiction.  But only if the action could have been originally filed in federal court.  However, the removal statute must be strictly construed because removal jurisdiction raises significant federalism concerns.  As a result, any doubt as to the propriety of removal should be resolved in favor of remand.

What if it can be proved that the insurance company was wrong in denying coverage of a claim when a third party is suing the insured?

A June 2017, Texas Supreme Court opinion addresses this issue in the case styled, Great American Insurance Co. v. Hamel.  The issue in this case was, what constitutes a full adversarial trial.

In Texas, when someone is being sued and the person being sued cannot get their insurance company to provide a defense and pay the claim, and the person being sued believes his insurance company should be providing a defense and paying the claim, then when a judgment is taken against him, he can assign the claim he has against his insurance company to the person who sued him and obtained a judgment.

Here is a summary judgment case from the Eastern District, Sherman Division, where one of the causes of action is, negligent claims handling.  The case is styled, Yoram Avneri v. Hartford Fire Insurance Company.

Here, the Court had previously denied Hartford’s motion for summary judgement but is now reconsidering the ruling.  After the reconsideration the Court withdrew its previous ruling and granted it in part and denied in part.

Avneri suffered hail and wind storm damage at his property in Denton, Texas, that was insured through a Hartford policy.  Avneri submitted the claim which was denied by Hartford based on their assertion that the damage, if any, did not exceed the policy deductible.  Avneri filed suit in State Court and Hartford removed the case to Federal Court where it filed its motion.