Articles Posted in Deceptive Trade Practices Act

Texas insurance lawyers need to understand the ways the Texas DTPA can help with insurance claims.

Texas Insurance Code, Section 541.151(2) cross-references and prohibits conduct defined in the Texas Business & Commerce Code, Section 17.46(b), commonly known as the Deceptive Trade Practices Act. This latter statute applies to all types of consumer transactions, not just insurance, so many of the provisions are not directly relevant. The most relevant subsections prohibit:

* Causing confusion or misunderstanding as to the source, sponsorship, approval, or certification of goods or services.

Mesquite insurance lawyers know that violations of Texas insurance laws are also violations of the Texas Deceptive Trade Practices Act (DTPA). They also know that a notice letter is required prior to pursuing a lawsuit under either category of statutes. A 1992, Texas Supreme Court case illustrates this point. The style of the case is, Hines v. Hash.

Dutch Hines sued C.W. Hash, Jr. for damages under the DTPA, complaining that the roof Hash had installed on his home leaked. In his original petition Hines alleged that notice of his claim had been sent to Hash by certified mail, return receipt requested, and had been returned unclaimed. In his original answer, Hash asserted as an affirmative defense that he had never received any notice of Hines’ complaint until he was served with suit papers, and therefore had not been able to tender Hines a settlement offer. However, Hash never requested the trial court to abate the suit so that he could make such an offer, nor does it appear that he was prevented from making a settlement offer even without the abatement. The evidence at trial concerning notice was undisputed. The notice letter to Hash and the envelope in which it was sent were admitted into evidence, showing three unsuccessful attempts at delivery before it was returned to Hines. Hash did not dispute that the envelope was accurately addressed to him. In fact, he testified he knew at the time that he had a certified letter at the post office but did not pick it up because he was leaving town each morning before the post office opened to work in another city and was not returning home until after the post office closed. He also testified that it was not convenient for him to arrange to have someone else pick up the letter. Hines did not challenge Hash’s explanation for not having received the letter. Hash moved for an instructed verdict after Hines rested and again at the close of all the evidence, urging lack of notice as a complete bar to Hines’ claim. The trial court denied Hash’s motions and refused Hash’s requested jury question on the issue of notice. The jury found that Hash knowingly violated the DTPA in several particulars and assessed Hines’ actual damages at $9,249.00. The trial court rendered judgment on the verdict for a total of $35,822.67, which included actual damages, twice that sum in statutory damages, prejudgment interest of $4,225.67, and attorney fees of $3,850.00.

The notice requirement of the DTPA is clearly mandatory.

Experienced Grand Prairie insurance lawyers can tell you how the Texas Insurance Code and the Texas Deceptive Trade Practices Act (DTPA) interact. A 1996, San Antonio Court of Appeals opinion also shows this interaction or lack thereof as it related to the case. The case is styled, Saunders v. Commonwealth Lloyd’s Insurance Company. Here is some of the relevant information from the opinion.

This is an appeal from the granting of a summary judgment in an insurance bad faith case. Jan Saunders, the insured, sued Commonwealth alleging several instances of improper claims handling including failure to promptly pay a fire loss that completely destroyed Saunders’ home in 1988.

Jan and Dan Saunders’ house was completely burned down by a fire in 1988. The Saunders made a claim on their policy. The insurance company investigated the claim and concluded that Dan Saunders was responsible for setting the fire. Saunders was convicted of the felony of conspiring to burn the house down. The insurance company then denied the claim. This court reversed that conviction. Saunders was acquitted of the charge following a retrial.

Dallas insurance and Deceptive Trade Practices Act (DTPA) lawyers will tell you a DTPA claim cannot be assigned. If you don’t believe them, you can believe the Texas Supreme Court. The Texas Supreme Court issued an opinion in 2004 that discusses the assignability of a DTPA claim. The style of the case is, PPG Industries, Inc. v. JMB/Houston Centers Partners Ltd. Partnes. Here is the relevant information from that case to help understand why these claims cannot be assigned.
Houston Center Corporation contracted for and constructed the One Houston Center in April 1978. It subsequently sold the building to JMB in 1989 on an “as is” basis. In 1982, some seven years prior to the sale of the building, it had become apparent that the windows manufactured and installed by PPG were defective and about one quarter of the windows had to be replaced. As part of the sale, HVV assigned its warranties to JMB and JMB, in turn, waived its potential DTPA claims against HCC. When more window problems appeared in 1991, JMB sued PPG for breach of warranty and DTPA violations. A jury found for JMB and awarded damages of $4,745,037, and trebled the damages in accordance with the DTPA. The jury also awarded attorney fees in the amount of $1,716,181.00. The Fourteenth District Court of Appeals in Houston affirmed the judgment of the trial court. PPG appealed to the Texas Supreme Court.
It was held by the Texas Supreme Court that DTPA claims are not assignable. While the Texas legislature failed to specify within the language of the DTPA whether claims were assignable, the purpose of the statute argues against assignability. The Texas Supreme Court noted that if it allowed the assignment of DTPA claims, it could well result in a market whereby third-parties purchased a claim from a consumer for less than its full value, thus enabling the third-party to bring the claim and obtain treble damages. In other words, the Court wished to avoid creating a secondary market similar to the one that exists for the purchase of structured settlements. The Court also held that JMB was not restricted in bringing its breach of warranty claim against PPG, thus allowing the court to sustain the jury award for breach of warranty and attorney’s fees.

Duncanville insurance attorneys need to know how the Texas Insurance Code and the Texas Deceptive Trade Practices Act (DTPA) interact. A United States 5th Circuit Court of Appeals case from 2008 discusses this a little bit. The style of the case is, National Union Fire Insurance Company v. Puget Plastics Corp. Here is some of the relevant information to try and understand.

In the underlying lawsuit, a jury found that Puget Plastics Corp. and Puget Plastics Corp. SA DE CV (Puget) knowingly violated the Texas DTPA in their business dealings with Intervenor, Microtherm, Inc. After the trial, both parties and the primary insurance carrier mediated the case and reached a settlement. The insured assigned its rights against National Union as part of the settlement.

National Union filed a declaratory judgement action in federal court. On cross motions for summary judgment, the trial court found against National Union. National Union appealed.

Arlington insurance lawyers need to know the cases where an insured can sue under an insurance policy and where they cannot. It is not always easy to do. A 1996, Beaumont Court of Appeals opinion is a good case to read. The style of the case is, Rumley v. Allstate. Here is some of the relevant information.

Joyce Rumlet, (Wife) sustained personal injuries in a one car vehicle accident in which her husband, Wilburn Rumley, was the driver. Mrs. Rumley filed a claim for benefits under their policy with Allstate. Allstate paid Personal Injury Protection benefits but refused to pay liability because the policy contained a family member exclusion. At the time, the Texas Supreme Court was reviewing a case on this issue but had not yet issued an opinion. In that decision, the Texas Supreme Court invalidated the family member exclusion. Wife sued Allstate and Ted Pate, a senior staff claims representative for Allstate, for breach of duty of good faith and fair dealing, violations of the Texas Insurance Code, Section 541.060 and violations of the Texas Deceptive Trade Practices Act, Section 17.46.

Allstate filed a Motion for Summary Judgment on the grounds that Wife’s claim was a third party claim for which Allstate owed no duty of good faith and fair dealing; there was a reasonable basis for denying the claim in that the family member exclusion was an unsettled issue of law; and there was no special or contractual privity between Pate and Rumley. The trial court granted summary judgment. Wife appealed.

Palo Pinto County insurance lawyers will find this article interesting. It is from the Insurance Journal. Here is what it says.

Nationwide Mutual Insurance Co.’s use of the slogan “On Your Side” constitutes false and deceptive advertising because the insurer does not represent insureds as the slogan implies, according to the Tennessee adjuster who is in a trademark battle with the giant insurer over the slogan.

Jeremy Snyder, owner of On Your Side Adjusters Inc., says that his firm, unlike Nationwide, represents the insured policyholder in a claim and his firm’s name, license and contracts reflect this.

Insurance attorneys in Irving and Dallas need to know the remedies when an insurance agent makes a misrepresentation about a policy. The United States District Court, Southern District of Texas, Houston Division, issued an opinion that is worth reading. The style of the case is Changiz M. Khoei, et al., vs. Stonebridge Life Insurance Company. Here is the relevant information.

Khoei sued Stonebridge alleging wrongful denial of benefits. Khoei claimed benefits for injuries sustained while they were sitting in a car. Stonebridge denied the claim on the grounds that the policy was for death and dismemberment, covering loss of life, loss of one or both hands or feet, and loss of the sight in one or both eyes. Khoel sued for violations of the Texas Insurance Code and the Texas Deceptive Trade Practices Act. (DTPA)

In August 1992, a telemarkerter contacted Khoei about purchasing insurance and allegedly told Khoei that he could purchase a comprehensive policy that would cover accidents and risks not already covered by his auto and health policies. The telemarketer “implied” that the policy would cover accidents up to the policy limits. The telemarketer did not say the policy covered only loss of life or of a foot, hand, or sight of an eye.

Dallas insurance lawyers know the ways insurance agents can be held liable for the misrepresentations they make to insureds. A 1994, El Paso Court of Appeals case is good to review. It is styled Hart v. Berko. Here is some of the relevant information.

This is a suit brought under provisions of the Texas Deceptive Trade Practices Act and the Texas Insurance Code by the policy owner against its insurance agent for damages arising out of a dispute over alleged representations concerning the amount of fire insurance coverage in effect at the time of a substantial fire loss.

In January of 1990, Berko, Inc. d/b/a El Encanto (Berko), through its Vice President, Sara Blaugrund (Blaugrund), requested that Phil Hart (Hart), employed by D.J. Enterprises, Inc. d/b/a Associated Insurance Agency (D.J.), increase the amount of insurance coverage on its building from $242,000 to $650,000. According to Blaugrund, Hart represented to her that he had obtained fire coverage of $600,000 on the building. On February 27, 1990, the building was completely destroyed by a fire. On the day after the fire, Hart notified Blaugrund that the building had only $242,000 coverage.

Tarrant County insurance attorneys will find the following case useful on many claims they encounter. The case is a 1984 Texas Supreme Court case styled, Luna v. North Star Dodge Sales, Inc. Here is some of the relevant information.

In March 1980 Luna sought to purchase a 1980 Dodge Omni from North Star. A 30-day/1,000 mile “money back guarantee” was offered to new car purchasers. If a purchaser was not satisfied with the car, then the purchase price would be refunded if the car was returned prior to the expiration of 30 days from the purchase date or before the 1000-mile limitation occurred. Luna took delivery of the car and while driving it home noticed a constant vibration and rattling with the steering wheel.

Two days later Luna took the car back to North Star and asked salesman Lewis to refund her purchase money. North Star never told Luna they would not refund the purchase money, nor did North Star ever say they would. Luna claimed North Star told her the refund decision was up to someone who was not available at that time. North Star offered to fix the car. Luna claimed it was never fixed. Luna returned to North Star several times with the car. Luna testified she requested the purchase money back each time she brought the car back. Luna felt she had no choice but to let North Star attempt to repair the car because she was unable to obtain the purchase money refund she requested. Luna thought that if North Star did not fix the car, then she would still get her purchase money back.