Articles Posted in Claims Denial

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.

Sending a proper notice letter is the first step in a legal process against an insurance company when an insured believes the insurer has improperly handled a claim.  This is even more relevant under the new section of the Insurance Code, Section 542A.003.  This is also required in Section 541.154.  This requirement was the subject of a recent Southern District of Texas, Corpus Christi opinion styled, Libardo Taboada, et al v. State Farm Lloyds, et al.

In this case, Taboada had five opportunities to comply with the substantive requirements of notice letters.  First, he could have complied when he gave the original pre-suit notice on August 21, 2018.

Second, he could have complied after State Farm filed its verified plea in abatement as required by Section 542A.005(c).  But, Taboada did nothing.  His failure to file an affidavit in response made abatement pending the service of a new letter automatic under that Section.

Here is a case where the statute of limitations defense by the insurer did not work.  The case is from the Southern District of Texas, Houston Division.  It is styled, Arcelia Flores, et al v. Allstate Texas Lloyds.

Allstate filed a Motion for Summary Judgement based on the statute of limitations having expired before the lawsuit was filed.

The lawsuit filed by Flores arises out of alleged storm damage that occurred in August 2015.  The claim was filed on January 25, 2016.  Allstate evaluated the claim and sent a denial letter to Flores on January 28, 2016.  Flores filed this lawsuit on August 16, 2017.  Flores elected to effectuate service privately but did not serve Allstate with the summons and citation.  On February 8, 2018, Flores filed an amended petition and then on February 12, 2018, Allstate was served for the first time with the amended petition.  Allstate filed its answer to the first amended petition on November 26, 2018.  Allstate filed its Motion for Summary Judgement on June 3, 2019, based on the affirmative defense of statute of limitations.

The answer to the titled questions is partially addressed in a 2019 opinion from the Southern District of Texas, Corpus Christi.  The opinion is styled, MJ & JJ, LLC; dba Peacock Manor Apartments v. Clear Blue Specialty Insurance Company, et al.

After sustaining hurricane damage, Peacock sued Clear Blue, Madsen, Kneppers & Associates (MKA), Hylton Cruickshank, and Charles Jendrusch in State Court.  Clear Blue removed the case to this Court based on diversity jurisdiction.  Then they contend Cruickshand and Jendrusch should be dismissed.  Peacock file a motion to remand.

The parties agree Cruickshank and Jendrusch are not diverse, but the MKA defendants contend they were improperly joined, thus, removal to Federal Court was proper.

Insurance lawyers and anybody who has an insurance policy needs to know what the limitations period is in the insurance policy.  This is illustrated in the 2019, 5th Circuit Court of Appeals opinion styled, Lillian Smith v. Travelers Casualty Insurance Company of America.

Lillian sued Travelers for contractual and statutory violations that arose out of the denial of her commercial property claim for benefits.  Here are the facts.

Smith agrees that Travelers sent her an unambiguous letter, denying her claim for benefits.  She however, insists that her causes of action did not accrue until nine months later (rather than the date of the denial) because Travelers had agreed upon her request, to re-investigate her claim for damages.  After a re-investigation, Travelers affirmed they were standing by their original denial of the claim.

Claims involving property losses usually do not require expert testimony.  But, if they do require expert testimony, it is important for an insurance lawyer to know how present the expert.  This is illustrated in the 2019, opinion from the Southern District of Texas, Corpus Christi Division, styled, Mt Hawley Insurance Company v. TFP Properties III LLC.

Mt. Hawley filed this lawsuit against TFP asserting it had paid all sums owing under the commercial policy at issue.  After the lawsuit was filed, Mt. Hawley filed a motion to exclude the testimony of TFP’s property evaluation expert.

The courts are to act as gatekeepers by making preliminary assessment of whether the reasoning or methodology underlying an experts testimony can be properly applied to the facts at issue in the case.  Testimony that is based purely on the ipse dixit of the expert is not allowed.  The court’s determination regarding the admissibility of the expert evidence is subject to an abuse of discretion standard.

Have we ever mentioned that the insurance companies prefer to fight cases in federal court rather than state court?  And that insurance lawyers representing people who have a claim against their insurance company would prefer to litigate the case in state court?

Here’s a case dealing with the $75,000 pleading requirement to have a case heard in federal court.  The case is from the Southern District of Texas, Houston Division, and is styled, Fernando Abascal v. United Property & Casualty Insurance Company.

Fernando filed suit in state court against United after United partially denied his claim for damage resulting from Hurricane Harvey.  In his pleadings, Fernando stated that he “will never ask, receive, or take a judgment for any amount exceeding $75,000.  United removed the case to federal court arguing that Fernando’s statement does not qualify as a binding stipulation and that Fernando’s demonstrates that the amount in controversy exceeds $75,000.00.

The Western District of Texas, San Antonio Division, issued an opinion on July 1, 2019, discussing the handling of under-insured motorist (UIM) claims and how they are handled by the courts.  The case is styled, Laura Lee Green v. Allstate Fire And Casualty Insurance Company.

Green sued Allstate for UIM benefits under breach of contract theories of law among other causes of action and Allstate filed a motion to dismiss.

Green was involved in an accident with Shana Dorsey who was alleged to be under-insured and Green then made a claim against Allstate for UIM benefits.  It is alleged that Allstate failed to make an offer of settlement, failed to provide a reasonable explanation of the basis for denying Green’s claim, refused to affirm or deny coverage within a reasonable time, refused to pay Green’s claim without conducting a proper investigation, and refusing to pay the claim after liability had become reasonably clear.

Lawyers handling insurance claims run into situations where damages that have occurred to property have to be segregated.  This happens most often in the context of hail and wind damage to property.  The U.S. District Court Northern District of Texas, Dallas Division, issued an opinion that does a good job of discussing how the courts are to look at these situations.  The case is styled, Generation Trade, Inc. v. Ohio Security Insurance Company.

In this case, Generation bought the subject property in 2014, and had it covered by Ohio ever since.  In July 2017, Simon, the owner of the property, observed hail damage and promptly reported the damage to Ohio.  Ohio inspected the roof and acknowledged there was hail damage but after reviewing hail events over a period of time was unable to determine when the loss occurred.

This property was originally built in 1981 and was covered with a 24 gauge metal roof except for a small portion of the roof that was installed in May of 2016, that had 26 gauge roofing.