Articles Posted in Claims Denial

The Northern District of Texas, Fort Worth Division, decided a case in 2021 wherein the lawyer for insured did a good job of pleading his case.  The strange thing about this case is that it was filed in 2021, well after the new section of the Insurance Code was in effect, that being section 542A.  In section 542A, suing the adjuster has essentially been made something of the past, with rare exceptions.  However, it is not the issue in this case but the case still serves as a good example on how to name the insurance adjuster in such a way as to keep the case in State Court rather than being removed to Federal Court.

The style of the case is, Paradise Villas HOA, Inc. v. Amguard Insurance Company and Todd Anthony Gilmore.  Paradise is the insured, Amguard is the insurer, and Gilmore is the adjuster.

Paradise suffered alleged hail damage and properly reported the claim to Amguard.  Gilmore, a Texas Citizen, was assigned to adjust the claim and according to Paradise, Gilmore greatly under estimated the value of the claim.  A lawsuit was filed in State Court and Amguard caused the case to be removed to Federal Court alleging that Gilmore was improperly named in an effort to defeat diversity jurisdiction and asserting that the causes of action asserted against Gilmore could not stand.  Paradise filed a motion to remand which is the cause of this opinion.

Here is a 2021, case from Southern District of Texas, McAllen Division, that discusses how courts are to review motions for summary judgment.  The opinion is styled, Saul Cantu v. United Property And Casualty Insurance Company.

The dispute revolves around a homeowners claim where Cantu suffered alleged damage to his property and then made a claim against his insurance company, United Property.  United Property subsequently denied the claim and eventually filed a motion for summary judgment.

Reading the opinion will set up the facts of this case, however, the focus here is the analysis by the court in this summary judgment opinion.

Insurance lawyers keeping up with the relatively new Insurance Code Section, 542A.006 election need to read this well reasoned case from the Northern District of Texas, Fort Worth Division.  The opinion is styled, Leonard D. Morgan, et al. v. Chubb Lloyds Insurance Company of Texas.

In this a homeowner’s claim for damage due to a storm.  Plaintiff’s sued their insurance company, Chubb, and the adjuster handling the claim.  The lawsuit was filed in State Court wherein a claim was made against the insurer and the adjuster.  At the time the lawsuit was filed in State Court, Chubb had not exercised the 542A.006 election, to take responsibility for it’s adjuster.

After the lawsuit was filed, Chubb moved to accept responsibility for the adjuster and have the adjuster dismissed from the lawsuit.  The State Court allowed the election and once this was complete, Chubb removed the case to Federal Court and this motion to remand was filed by Plaintiffs.

Fortunately, most insurance claims do not require expert testimony to prove a claim.  However, in those situations where an expert is required, a 2021 opinion from the Southern District of Texas, Houston Division, is a good case for guidance on experts.  The opinion is styled, Roy P. Labourdette Jr. v. State Farm Lloyds.

In this case, State Farm insured Roy’s home.  Roy had made a claim for hail storm damage to State Farm and State Farm denied the claim and asserted the damage to Roy’s roof was the result of wear, tear, and deterioration, rather than a covered cause of loss.  Roy filed a lawsuit in State Court and State Farm had the case removed to Federal Court.

Roy had hired an expert roofer to testify about the roof damage.  State Farm in response filed papers with the Court to have the testimony of the expert excluded.  After considering the motion and response from Roy, this Court denied State Farms motion.  The Court then explained it’s ruling.

Insurance Lawsuits, like many other claims, result in other persons or entity’s being added to the lawsuit.  The relevance here is that often times an adjuster or the agent who sold the policy may need to be part of the lawsuit.

A 2021, opinion from the Northern District of Texas, Dallas Division, analysis how this is done.  The opinion is styled, Nova Casualty Company v. Jose E. Guzman and Rito Sosa.

For the facts that occurred in this case, the opinion should be read.  Here is the legal aspect of the case.

Life insurance lawyers deal with many situations and reasons that life insurance companies use for denying a claim for benefits.  A twist to not paying is where the insurance company does not technically deny the claim, rather the company rescinds the policy.

As a general legal principle, prior to a loss an insurance company has the right to rescind the policy procured through mutual mistake or fraud.  This was stated in a 1931, Amarillo Court of Appeals opinion styled, Forrester v. Southland Life Insurance Company.

The benchmark case on this issue was issued by the Texas Supreme Court in 1980, in an opinion styled, Mayes v. Massachusetts Mutual Life Insurance Co.  In Mayes, the court stated that an insurance company may rescind a policy based on the insured’s misrepresentation, if the insurer pleads and proves the following elements:

Here is another lawsuit litigated under Texas Insurance Code, Section 542A.006.  The opinion is from the Western District of Texas, San Antonio Division, and is styled, Farzin Tabib and Shahla Afshar v. Metropolitan Lloyds Insurance Company Of Texas and John Crouch.

The Court is asked to consider two motion.  A Motion to Dismiss with Prejudice Pursuant to Texas Insurance Code, Section 542A.006, filed by Lloyds and Plaintiffs Motion to Remand.  This Court denied the Motion to Remand and dismisses Crouch without prejudice, and finds the motion to dismiss moot.

As long as a nondiverse party, Crouch, remains joined, the only issue the court may consider is that of jurisdiction itself.  Federal courts always have jurisdiction to determine their own jurisdiction.  This limited authority permits the court to grant a motion to remand if a nondiverse party is properly joined, while also permitting the court to deny such a motion if a party is improperly joined and, in so doing, to dismiss the party that has been improperly joined.

Insurance attorneys understand that when a claim gets denied that the majority of the time, the insured will either walk away or will hire an attorney to fight the claim denial.  When the claim is denied and an attorney is hired, the case is going to end up a lawsuit.  One weapon used by insurance companies in litigation is to litigate the case up to a point and then file a motion for summary judgement.

Understanding how the courts view motions for summary judgment is vital to being able to prepare for and handle these situations.  The motion for summary judgment standard is briefly discussed in a case from the Northern District of Texas, Wichita Falls Division.  The case is styled, Great Lakes Insurance SE v. Horton Family Trust, LLC.

The facts of this case can be read in the opinion.  The focus here is the way the courts look at motions for summary judgment.

Denied insurance claims can vary greatly in value.  Factors that figure into the value of the claim include, 1) the base amount of the claim, 2) exemplary damages, 3) Prompt Payment of Claims damages, and 4) attorney fees.

The goal of insurance companies is to litigate cases in Federal Court, while attorneys representing insured would rather litigate case in the State or County Courts.

There are two main issues the Courts look to for deciding whether a case which is removed to a Federal Court by an insurance company gets to be litigated in Federal Court or whether the case gets remanded to the State or County Court.

Here is a case from the Eastern District of Texas wherein the insureds did not show that the damages they received were the result of a covered damage.  The case is styled, Tim Whatley and Sheila Whatley v. Great Lakes Insurance, SE and McClelland & Hine, Inc.

In this case, the Whatleys are suing based on their assertion that they suffered damage to their home as a result of Hurricane Harvey.  The case was in Federal Court and had been referred to a Magistrate Judge, who issued a report granting Summary Judgment in favor of Great Lakes and McClelland.  The Whatley’s sought review of the finding made by the Magistrate Judge.

The Whatleys (Plaintiffs) presented four objections to the Report regarding their breach of contract claim.  First, Plaintiffs object “to the court’s finding and recommendation that there is no genuine issue of material fact to support the damage to ther oof and interior and interior of Plaintiffs’ home was caused by the windstorm conditions of Hurricane Harvey.”  Second, Plaintiffs “object to the court’s finding and recommendation that there are no genuine issues of fact to support the roof and interior home damage was caused by a covered peril.”  Third, Plaintiffs “object to the court’s finding and recommendation that there are no genuine issues of fact supporting causation; that the damage was caused by water through an opening created by the direct force of wind and hail.”  Finally, “Plaintiffs object to the court’s finding and recommendation that expert Lester Saucier’s opinions on causation are speculation.”

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