Articles Posted in Claims Denial

Insurance lawyers seem to have a lot of confusion regarding insurance contracts with appraisal provisions contained within them and how to interpret and handle them.  This issue was addressed in a January 2020 opinion from a Southern District of Texas, Houston Division.  The opinion is styled, William A. Linnus and Sarah J. Linnus v. Metropolitan Lloyds Insurance Company of Texas.

Texas insurance policies frequently include provisions requiring or allowing appraisal to resolve disputes about loss amounts.  An appraisal clause binds the parties to have the extent or amount of the loss determined in a particular way.  An appraiser must decide the amount of loss, not to construe the policy or decide whether the insurer should pay.  Unless the amount of loss will never be needed appraisals should generally go forward without preemptive intervention by the courts.

The contractual right to appraisal may be waived.  The Texas Supreme Court in the opinion styled, In re Universal Underwriters of Texas Insurance Co., explained that: to constitute waiver of the right to appraisal the acts relied on must be reasonably calculated to induce the assured to believe that compliance by him with the terms and requirements of the policy is not desired, or would be of no effect if performed.  The acts relied on must amount to a denial of liability, or a refusal to pay the loss.  As the Court more recently concluded, waiver requires intent, either the intentional relinquishment of a known right or intentional conduct inconsistent with claiming that right.

Failure to follow the rules related to Insurance Law can have bad consequences.  This is seen in a September 2019, opinion from the Southern District of Texas, Corpus Christi Division.  The opinion is styled, Libardo Taboada v. State Farm Lloyds.

This case was dismissed by the Court for Libardo’s failure to follow rules set out in the Texas Insurance Code, Sections 542A.003 and 541.154.

First there was non-compliance with the pre-suit notice which was sent on August 21, 2018.

As has been stated many times, insurance companies prefer to litigate lawsuits in Federal Court rather than State Court.  Conversely, it is usually better for someone suing an insurance company to litigate the case in State Court rather than Federal Court.

Here is a 2019, opinion from the Southern District of Texas, Houston Division.  The opinion is styled, Antonio Diaz v. GeoVera Specialty Insurance Company.  In this case, Diaz alleges “GeoVera improperly denied and / or underpaid the claim.”  On August 22, 2019, a lawsuit was filed in State Court against GeoVera claiming violations of the Prompt Payment of Claims Act, various violations of the Texas Insurance Code, and breach of contract.  GeoVera timely removed the case to Federal Court on October 10, 2019.  Diaz timely filed a motion to remand.

Pursuant to 28 U.S.C., Section 1332(a)(1), Federal courts have original jurisdiction over all civil actions between citizens of different states where the amount in controversy exceeds $75,000, exclusive of interest and costs.

Insurance lawyers know and understand that before suing an insurance company for denying a claim, the insurance company must be given the statutory presuit notice of the intent to file a lawsuit.  This was recently illustrated in a December 23, 2019, opinion from the Northern District of Texas, Dallas Division.  The opinion is styled, Gateway Plaza Condo v. The Travelers Indemnity Company Of America.

Travelers had denied Gateway’s claim for storm damage.  There was significant disagreement about the respective parties’ conduct in the early stages of the dispute.

Gateway alleges the property was damaged by a severe storm on June 2, 2017.  Gateway contends it cannot recall when Travelers was notified of the loss.  Gateway suggests that Travelers retained an inspector, JNT Developers, to survey the property on August 16, 2017.  Gateway alleges Travelers denied the claim but does not know exactly when the claim was denied.  The evidence indicates that Travelers sent Gateway a letter on October 6, 2017, stating Gateway’s policy does not cover damage to the roof.  Gateway asserts that Travelers must have denied the claim earlier because the letter references the parties’ “recent conversations about the claim.”

Insurance lawyers and lawyers who practice law in Federal Court know the requirements for a case to be in Federal Court.  Most of the time, lawyers representing clients who are suing an insurance company try to stay out of Federal Court.

Pursuant to 28 U.S.C., Section 1332(a), for an insurance company to have a case be tried in Federal Court it must be proven that the parties are citizens of different states and the amount in controversy exceeds $75,000, exclusive of interest and costs.  When a case is removed premised upon diversity jurisdiction, courts determine the amount in controversy in light of “the claims in the state court petition as they existed at the time of removal.”  As a general rule, the amount in controversy alleged in the State Court petition determines the amount in controversy so long as it was pled in good faith.

This issue arose in a case in the Southern District of Texas, Houston Division.  The case is styled, Nicolas Martinez v. Liberty Insurance Corporation.

Insurance property claims are a very big part of claims made against insurance companies.  As part of those property claims that get denied, it is important to properly prove the property damages by attaching a dollar value to them.  One way of proving the dollar value of these property damages is through the use of expert testimony.  Proving property damages by way of expert was a recent topic in a 2019, opinion from the Eastern District of Texas, Sherman Division.  This opinion is styled, Brandy Ventures, LLC v. Mesa Underwriters Specialty Insurance Company.

This case arises from alleged water damage resulting from a broken pipe on commercial property owed by Brandy Ventures and insured by Mesa.  Brandy alleges Mesa unfairly denied the claim and filed this lawsuit.

Brandy appointed Roy Young of YPA Public Adjusters, LLC, to testify regarding water damage.  Mesa filed a motion to strike any testimony of Young.

Here is another case wherein there was a failure to properly stipulate to the amount of damages involved in the case and thus, ended up having to litigate his case in Federal Court, rather than the State Court in which the lawsuit was filed.

The case is from the Southern District of Texas, Houston Division, and is styled, Olga Rodriguez v. State Farm Lloyds.

Olga filed her claim against State Farm in State District Court and State Farm timely removed the case to Federal Court.

As stated before, insurance companies prefer to litigate cases in federal court, whereas, lawyers suing insurance companies prefer to litigate in state court.  The laws are such that the insurance companies get their way most of the time.  However, one of the ways to keep a case in state court involves properly stipulating to the amount of damages at issue in the case.

This issue is discussed in the 2019, Southern District of Texas, Houston Division, opinion styled, Osiel Rubio v. State Farm Lloyds.

Rubio filed suit arising out of an insurance claim against State Farm in state court.  State Farm timely removed the case to federal court.  Rubio filed a Motion to Remand which was denied.

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.

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