Articles Posted in Claims Denial

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.

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.