Articles Posted in Claims Handling Process

Here is another Federal opinion discussing Texas Insurance Code, Section 542A.  The opinion is from the Eastern District of Texas and is styled, John McAdams v. Palomar Specialty Insurance Company, Wellington Claim Service, Inc. and Nicholas Abdallah.

McAdams had a homeowners insurance policy with Palomar when he suffered damages alleged to have been caused by Hurricane Harvey.  Palomar assigned Wellington to investigate the claim and Wellington assigned adjuster Nicholas to inspect the claim.

The claim was not sufficiently covered according to McAdams and he eventually filed suit against Palomar, an out of state defendant, and against Wellington and Nicholas, both in-state defendants.  McAdams alleged wrongs committed in the claims handling process.

Texas Insurance Code, Section 542A, is being used regularly now by insurance companies to prevent Plaintiffs from defeating diversity jurisdiction.

This Insurance Code Section was discussed by a court in the Southern District of Texas, Houston Division, in a case styled, Robert Ewell v. Centauri Specialty Insurance Company, et al.

Ewell filed a claim with Centauri, who insured Ewell’s home, for property damage alleged to have occurred during a severe storm on August 25, 2017.  Steven Wiley is the adjuster assigned to investigate the claim.  Centauri is alleged to have failed to pay the full amount of the claim.

Like it or not, an insured suing his insurance company has a much better chance of getting a favorable or more favorable result in State Court versus Federal Court.  And, the insurance companies know this.  As a result, an insurance company is always seeking to have a case heard / litigated in the Federal Court.

Here is a case wherein the insured was able to defeat the efforts of the insurance company to have the case heard in Federal Court.  We don’t know whether this was the best way of doing it without knowing more about the Facts in the case but at the least the insured was successful in being able to litigate his case in State Court.

The case is from the Southern District of Texas, Galveston Division, and is styled, Ronald Mason v. Evanston Insurance Company.

Insurance lawyers always want to remove cases filed by insured’s to the Federal Courts.  In most instances they are successful in these efforts.  Here is a situation where the insurance lawyers were too late in getting the case removed to Federal Court.

This case is from the Southern District of Texas, Houston Division.  It is styled, Solaiha Enterprises LLC v. Amguard Insurance Company.

Amguard was the insurer for Solaiha when Solaiha made a claim for property damage.  Amguard refused to pay the claim and Solaiha sued Amguard and Ronnie Patel, the agent who sold the policy.  The lawsuit was filed on May 4, 2017, in State Court.  Solaiha dismissed its claim against Patel in late February of 2019.  Amguard filed a Notice of Removal on March 14, 2019, and Solaiha promptly filed this Motion to Remand arguing that Amguard was untimely in filing its Notice of Removal.

Here is an opinion issued by a Magistrate Judge from the Western District, Austin Division, which says that the insurer was too late in accepting responsibility for the acts of its agent, the adjuster, when the company accepted responsibility the day before removal was filed.  The case is styled, Robbins Place West Campus, LLC v. Mid-Century Ins. Co. and Jillian Meghan Sherman.

In this case, Robbins had commercial insurance coverage with Mid-Century when Robbins suffered wind and hail damage.  Robbins was unhappy with the way the claim was handled by the adjuster, Sherman, and sued Sherman and Mid-Century in State District Court for various violations of the Texas Insurance Code and breach of contract.

Pursuant to Texas Insurance Code, Section 542A.006, Mid-Century made an election to legal responsibility for Sherman.  The next day, Mid-Century removed the case to this Federal Court.

The Texas Insurance Code, Section 542A, became the law in Texas in September 2017.  The cases involving this law are working their way through the Court system.  This law was recently discussed in a U.S. Southern District, Houston Division opinion styled, Greatland Investment, Inc., a/b/a Southwest Plaza v. Mt. Hawley Insurance Company and Kevin Wilson Mayfield.

Greatland had property insurance with Mt. Hawley when it’s property was damaged in a storm.  Greatland assigned Mayfield to inspect and adjust the claim.  Mayfield found the claim did not fall within Greatland’s policy and Mt. Hawley refused to pay the claim.

On December 3, 2018, Greatland sent a demand letter to Mt. Hawley stating its intent to sue Mt. Hawley and Mayfield and others.  On January 15, 2019, Mt. Hawley responded and notified Greatland that Mt. Hawley was electing to accept liability for all its employees and the adjuster pursuant Texas Insurance Code, Section 542A.006.  On March 1, 2019, Greatland sued Mt. Hawley and Mayfield in Texas state court for breach of contract and Texas Insurance Code violations.

For Insurance Attorneys, here is a case that is important to know and understand.  The case is from the Western District of Texas, San Antonio Division.  It deals with segregation of damages when required under an insurance policy.  The case is styled, Mark Sadovsky v. Nationwide Property and Casualty Insurance Company.

Sadovsky had a home owners policy with Nationwide on April 12, 2016, when he suffered alleged hail and wind storm damage to his home.  On April 20, 2016, he submitted a claim and Nationwide eventually paid the claim and closed the claim.

In the spring of 2017, Sadovsky noticed several neighbors having their roofs repaired.  A neighbors contractor inspected the roof and informed Sadovsky of unrepaired hail damage and informed Sadovsky that the costs of repair would be $68,372.89.

Insurance attorneys know that a requirement of most insurance policies is that an insured give prompt notice to their insurance company of any claim.  This is illustrated in a recent Western District of Texas, San Antonio Division opinion styled, Mark Sadovshy v. Nationwide Property and Casualty Insurance Company.

This lawsuit arises out of a hail and wind damage claim filed by Sadovshy against Nationwide.  Sadovsky sued Nationwide for violations of the Texas Insurance Code and Breach of Contract.  This case is being decided now on a Motion For Summary Judgment filed by Nationwide.

Nationwide claims it is entitled to summary judgment because Sadovsky failed to perform under the insurance contract by timely notifying Nationwide of his claim for damages.

The “Offer of Settlement Rule” is relatively new to Texas law and is codified in the Texas Civil Practice & Remedies Code, Section 42.002.  This rule was discussed to a small degree in a case from the Corpus Christi Court of Appeals.  The case is styled, Israel Salinas and Hilda Salinas v. State Farm Lloyds and Truman Dale Crews.

In June of 2014 the Salinas filed suit against State Farm alleging multiple cause of action resulting from hail storm damage to their home.  On September 14, 2014, State Farm offered the Salinas $29,500 under the Offer of Settlement Rule and the Salinas did not respond to the offer.

The case went to trial.  The jury found that State Farm breached the contract with the Salinas and awarded the Salinas $10,500 for breach of contract and $10,500 as punishment due to the knowing and intentional conduct of State Farm.  The Judge signed a judgment awarding those amounts plus, $9,066.82 as prejudgment interest, $10,500 for attorney fees, and $8,097.05 for costs of court, for a total of $38,163.87.

One of the responsibilities for an insured who has a claim is to promptly report the claim to his insurance company.  This is illustrated in this 2019, Southern District of Texas, Houston Division, opinion styled, Bobwhite Rentals, LLC v. National Liability & Fire Insurance Company.

This is a summary judgment case in favor of National.

One of Bobwhite’s customers had property destroyed by a fire on March 6, 2015, while the property was on Bobwhite’s premises.  Bobwhite reported the fire to its insurance broker the same day.On April 30, 2015, Bobwhite paid $50,000 to settle the customer’s claim.  Over a year later, the fire and the damage to the customer’s property was reported to National.  National issued a reservation of rights letter on July 14, 2016 and began its investigation of the claim and on November 1, 2017, denied the claim saying: