Articles Posted in Claims Denial

As is acknowledged in the following case, the federal courts are mixed as to their rulings on the timing of when an insurance company adjuster is sued and how that affects diversity cases.

This case is from the Western District of Texas, San Antonio Division.  It is styled, Bexar Diversified MF-1, LLC v. General Star Indemnity Company, Paul R. White And Company Inc.

Bexar had an insurance policy with General Star.  Bexar suffered a weather related loss and reported it to General Star.  General Star assigned White, a company, to adjust the claim.  Bexar was dissatisfied with the way the claim was handled and sued General Star and White in state court for violations of the Texas Insurance Code, Sections 541 and 542.

When insurance lawyers file a lawsuit that ends up in federal court, they have to make sure that the pleadings in the complaint will satisfy federal court pleading guidelines or they will end up being kicked out of court.  This is illustrated in a case from the Southern District of Texas, Houston Division.  It is styled, 9520 Homestead, LLC v. Westchester Surplus Lines Insurance Company.

This lawsuit arises from an allegation by 9520 that Westchester’s adjuster conducted a substandard investigation and inspection of 9520’s property after the property was damaged in a hurricane.  Based on the substandard investigation, the adjuster’s report undervalued the claim and failed to include all of the damages and thus, Westchester violated various sections of the Texas Insurance Code.

Under Rule 8 of the Federal Rules of Civil Procedure, a pleading must contain “a short and plain statement of the claim showing that the pleader is entitled to relief.”  The complaint need not contain detailed factual allegations, but it must include more than an unadorned, the-defendant-unlawfully-harmed-me accusation.

Insurance disputes involving smaller claims can properly be handled in a State or County courts if the insurance lawyer knows how to keep the case from being removed to Federal court.  This is illustrated in the 2019, opinion styled, Michael Ihekoronye v. United Property & Casualty Insurance Company.  Plaintiff, Michael Ihekoronye, filed the case in State court and United removed the case to Federal court.  Plaintiff filed a motion to remand the case back to the State court.

Pursuant to 28 U.S.C., Section 1332(a), Federal district courts have original jurisdiction over civil actions between citizens of different states where the amount in controversy exceeds $75,000, exclusive of interest and costs.  A state-court plaintiff seeking to avoid federal jurisdiction may do so by filing a binding stipulation with the original complaint that limits recovery to an amount below the jurisdictional threshold.

In this case, United argues that removal was proper because the parties are completely diverse and the amount in controversy exceeds $75,000.  Plaintiff seeks remand based on a stipulation attached as Exhibit E to the state court petition, which states that “the total sum or value in controversy in this cause of action does not exceed $75,000 exclusive of interest and costs” and that “neither Plaintiff nor his/her attorney will accept an amount that exceeds $75,000 exclusive of interest and costs.”

Insurance lawyers may not be perfect in all their actions but if a person wishes to sue an insurance company, get an insurance lawyer, don’t do it yourself.  This is illustrated in a recent Fifth Circuit opinion styled, Thomas Petty v. Great West Casualty Company.

This is an appeal resulting from the district court’s dismissal of Petty’s claim with prejudice after Petty, a commercial truck driver sued Great West pro se.

Petty contends he was involved in two accidents involving fatalities and he suffers from ongoing mental trauma that prevents him from being able to operate a commercial truck.  As a result, he seeks monetary relief for lost business earnings and mental distress/anguish.

Here is a situation not discussed before and one that rarely happens.  However, it does discuss law that may be relevant to insurance lawyers in other cases.   The case is from the Southern District of Texas, Houston Division.   It is styled, Randy Randel and Debra Randel v. Travelers Lloyds of Texas Insurance Company.

The Randels experienced a fire loss to their home and made a claim against their homeowners policy with Travelers.  Travelers paid on the claim but the Randels allege they were underpaid.  The Randels sought to have the claim appraised and Travelers refused, stating the case was closed.

The Randels filed a declaratory judgment action against Travelers seeking the Court to Order Travelers to appraise the claim.  Travelers agreed to appraisal and the Randels dismissed their lawsuit with Prejudice to refiling the claim.

Here is a case involving a plumbing leak.  What is a little unusual about this case is the insurance company is attempting to sue Texas Insurance Code, Section 542A.006(c), to have this case heard in Federal Court rather than the State Court in which the case was filed.  The style of the case is James A. Macari, et al. v. Liberty Mutual Insurance Company, et al.  The case is from the Southern District of Texas, Houston Division.

Liberty had issued a homeowners insurance policy to Macari.  Macari experienced a plumbing leak and damage from the leak.  Macari made a claim against the Liberty policy and Liberty assigned adjuster David Meaders to adjust the claim.  The claim was denied and Macari sued Liberty and Meaders.  This lawsuit was filed in State Court and then removed by Liberty to Federal Court.

After the lawsuit was filed, Liberty gave written notice pursuant to Chapter 542A of the Insurance Code assuming any liability Meaders might have to Macari.

For insurance lawyers, a favorable way to increase the odds of a win or favorable settlement is to be able to litigate a case in State Court rather than Federal Court.  Here is a win for keeping a case in State Court.  This is a 2019, opinion from the Eastern District of Texas.  The opinion is styled, Michael Hebert v. United Property & Casualty Insurance Company.

This is a lawsuit filed against United and it’s adjusters, Castro and Pharr, resulting from the way Hebert’s claim was handled.  The case was filed in State Court.  The State Court dismissed the adjusters and United then removed the case to Federal Court based on diversity of citizenship and the amount in controversy pursuant to 28 U.S.C. Sections 1441 and 1446.

This Court states that the case was  not removable on its face because Pharr, Castro, and Hebert are Texas citizens and, therefore, there was not complete diversity.  Under what is called the voluntary-involuntary rule, a case generally can become removable only by an affirmative act by the plaintiff.  This is pursuant to 28 U.S.C., Section 1446(b)(3).  United’s election of post-suit liability was an involuntary act with regard to Hebert.  Thus, the case was not removable on its face or after United’s election of liability.

Here is a strange case.  The insurance company is claiming their insured has not adequately proven he has an insurance policy with the insurer.

This opinion is from the Northern District of Texas, Fort Worth Division.  It is styled, Michael Harris v. Meridian Security Insurance Company et al.

In this case, Harris was out of town when he house was robbed.  Harris made a claim for items that were stolen and was assigned claim number PR-0000000-191439.

Insurance lawyers can generally get better out-comes for their clients when a case is litigated in a State or County Court versus in Federal Court.  There are ways of staying out of Federal Court but the way tried in this September 2019, opinion from the Southern District of Texas, Houston Division, seems unusual.  The opinion is styled, Phan VM Holding, LLC v. Evanston Insurance Company.

Phan sued Evanston in County Court and Evanston removed the case to Federal Court citing 28 U.S.C., Section 1332(a)(1), i.e., that the parties were diverse and that the amount in controversy exceeds $75,000, exclusive or interest and costs.  Phan filed a motion to remand arguing that the amount in controversy does not exceed $75,000.  When a defendant can show the amount in controversy exceeds the jurisdictional amount, then the burden is on the plaintiff to show that, as a matter of law, it is certain that he will not be able to recover more than the damages for which he has prayed.  This can be shown by Phan filing a binding stipulation or affidavit with the complaint that limits recovery to an amount below the jurisdictional threshold.  The law is clear that any ambiguities are construed against removal because the removal statute should be strictly construed in favor or remand.

In this case, Evanston claims the actual amount in controversy is Phan’s estimate of $848,972.11 which Phan seeks to be determined by appraisal.  Evanston says that Phan’s binding stipulation is misleading because Phan’s pleadings do not bar an appraisal award within the constraints of the stipulation.  The Court points out that a statement in the that Phan and counsel will neither seek nor accept more than $75,000 in state court after remand establishes to a legal certainty that Phan will not be able to recover more than $75,000.  In this case, Phan’s stipulation contains both such provisions.  Thus, Phan’s binding stipulation contains both such provisions and the case was remanded.

Lawyers who handle lawsuits against insurance companies know that it is not uncommon for an insurance company to file a counter-suit for their court costs and attorney fees.  So, the question is, if an loses his lawsuit against the insurance company, will the insurance company win in its counter-claim against its customer.  This issue was addressed in a Northern District of Texas, Dallas Division, opinion in September, 2019.  The opinion is styled, Arizpe v. Principal Life Insurance Company.

In this case, Arizpe had sued his insurance company for benefits.  Principal filed a counter-claim for attorney fees.  Principal filed a motion for summary judgment on Arizpe’s claims which the court granted in favor of Principal.  The Court next addressed the issue of whether or not Principal was entitled to be awarded court costs and attorney fees on its counter-claim.

Principal argued that pursuant to Texas Insurance Code, Section 541.153, that they are entitled to recover its reasonable and necessary attorney’s fees and court costs since the claims of Arizpe were groundless and brought in bad faith or for the purpose of harassment.  Also, Principal points out that Section 17.50(c) of the Texas Deceptive Trade Practices Act (DTPA) allows recovery of these expenses.