Articles Posted in Home Owners Policies

Insurance lawyers know that one of the more common claims arise from homeowners claims.  Trying to keep the case in State or County Court is most favorable for the homeowner.  However, doing that is more and more difficult.  This is illustrated in the 2017, Northern District, Fort Worth Division opinion, William Mauldin v. Allstate Insurance, et al.

After damages were suffered to the residence of William, he made a claim against his homeowner’s policy with Allstate.  A lawsuit was eventually filed against Allstate and the adjuster Mayella Gonzalez for violations of the Texas Insurance Code and the Texas DTPA.

Allstate and Gonzalez removed the case to Federal Court under 28 U.S.C. Section 1441(a), alleging that the adjuster Gonzalez was improperly joined in an effort to defeat diversity.  When improper joinder is alleged, the Court does a Rule 12(b)(6) type of analysis to determine whether there is a chance of recovery against Gonzalez.

Fort Worth lawyers who end up in Federal Court need to read this opinion from the Northern District, Fort Worth Division, Judge McBride.  The opinion is styled, Antonio Perez v. Allstate Vehicle and Property Insurance Company, et al.

Perez initiated this action by filing a lawsuit in State District Court.  Allstate removed the action to Federal Court, alleging diversity of citizenship and the required amount in controversy.  This Court Ordered Perez to replead so that his pleadings complied  Federal Court pleading standards found in Rule 8(a) and 9(b) of the Federal Rules of Civil Procedure, and directed Perez to file an amended complaint that complied with those requirements.

Perez filed his amended complaint.  Despite the warning provided in the order for repleading, Perez’s complaint as amended was, with few exceptions, basically a repeat of his state court pleadings, alleging, in a conclusory way, violations of sections of the Texas Insurance Code, fraud, and conspiracy to commit fraud, breach of contract, and breach of the duty of good faith and fair dealing.

The San Antonio Division, Western District, issued an opinion dealing with rebuild costs under a homeowners policy that insurance attorneys need to read.  It is styled, Kirk McClelland and Tamre McClelland v. Chubb Lloyd’s Insurance Company of Texas, and Robert Lynn Pritchard.

This is a dispute over coverage and the conduct of Chubb in its payments totaling $145,290.72 to the McClellands.  The McClellands assert they are entitled to greater amounts and sued Chubb and its adjuster for breach of contract and various violations of the Texas Insurance Code and the Texas Deceptive Trade Practices Act.  The Court granted summary judgment in favor of Chubb and the McClellands seek to alter that judgment.  The course refused to alter the judgment.

The background facts are summarized as follows.  The McClellands garage apartment was destroyed by fire.  Chubb insured the property under a “Texas Standard Homeowners Endorsement” as well as a “Texas Platinum Homeowner’s Endorsement.”  Their extended policy limits allowed for “reconstruction cost even if this amount exceeds the limit of liability for your dwelling or other structures as shown on the declarations page.”  The Platinum Endorsement defined “reconstruction cost”:

A recent case filed in Tarrant County was removed to Federal Court, Northern District, Fort Worth Division.  One issue dealt with the appraisal provision in the insurance contract.  The style of the case is, Reese Hallak v. Allstate Vehicle and Property Insurance Company.

Hallak sued Allstate for breach of contract and violations of the Texas Insurance Code.  Hallak’s petition alleges Allstate mishandled and underpaid him for two separate property damage claims.  After removal to Federal Court, Allstate filed a Motion To Abate Pending Appraisal, arguing that, pursuant to the terms of the insurance contract between the parties, this case should be abated until conclusion of the appraisal process.

There is no specific federal statute or rule which expressly authorizes a motion to abate.  The court’s decision to do so is largely a matter of judicial discretion.

Insurance attorneys with much experience learn real quick that the insurance companies prefer to litigate cases in Federal Court.  The reason is that Federal Court is much less forgiving of mistakes and the Federal Courts look for reasons to dispose of a case.  This authors opinion is that many of the Federal Courts put a priority on technical rules rather than substance.  This authors opinion is bolstered by the fact that an insurance company will always attempt to get a lawsuit against them in State Court, removed to Federal Court.

This is illustrated in a 2017, opinion from the Southern District of Texas, McAllen Division.  The case is styled, Maria Abdon v. State Farm Lloyds.

In this case, the court is considering State Farm’s motion for partial dismissal on the pleadings, as well as Abdon’s response and alternative motion for leave to amend.  The Court granted State Farm’s motion for partial dismissal and denied Abdon’s motion for leave to amend.

Lawsuits need to be specific when claiming what an insurance company, adjuster, or agent did that caused harm to their insured.  This is illustrated in an Eastern District opinion styled, Scott Jengemuhle and Ty Properties, LLC v. Acceptance Indemnity Insurance Company and Robert Saucier.

This case relates to an insurance claim for storm related damages to Plaintiffs’ business and property.  Plaintiffs file suit in State Court and Defendants removed the case to Federal Court.  Plaintiffs allege that Acceptance did not provide coverage sufficient to complete necessary repairs to the property.  Saucier is the adjuster assigned to the claim.  Acceptance asserts that Saucier was improperly joined in the lawsuit and thus, his joinder should be disregarded for purposes of diversity.  Plaintiff asserts that he has sufficiently alleged causes of action against Saucier to maintain the claim against him.

To establish fraud in joining a non-diverse defendant, the removing party must establish the plaintiffs’ inability to establish a cause of action against the non-diverse party in state court.  The Court must decide whether there is a reasonable basis for predicting that Plaintiffs might be able to establish liability on the pleaded claims in state court.

The Houston Chronicle ran a story of September 20, 2017, that all homeowners need to read.  It is titled “Flooded Houston Homeowners Might Have Been Spared Ruin — But Only If They Read The Fine Print.”

25 words of a public document that could have spared thousands of homeowners from losing everything sat tucked away in a Fort Bend county clerk’s office for the past 20 years.

“This subdivision is adjacent to the Barker Reservoir and is subject to extended controlled inundation under the management of the U.S. Army Corps of Engineers.”  These 25 words, in the finest of fine print were of public record.

As it relates to homeowner’s policies, the Texas courts have adopted a rigid rule for when a loss occurs.  The Texas Supreme Court in, Don’s Building Supply, Inc. v. OneBeacon Ins. Co. has emphasized that the applicable rule for when a loss occurs depends upon the language in the policy.

In Don’s Building Supply, the Court interpreted a policy that provided coverage for “bodily injury” or “property damage” that was “caused by an ‘occurrence’ that takes place in the ‘covered territory;'” and “occurs during the policy period.”  The policy defined “property damage” to mean “Physical injury to tangible property, including all resulting loss of use of that property.  All such loss of use shall be deemed to occur at the time of the physical injury that caused it,” or “Loss of use of tangible property that is not physically injured.  All such loss shall be deemed to occur at the time of the ‘occurrence’ that caused it.  Based on this language, the court determined that “property damage under this policy occurred when actual physical damage to the property occurred.”

In Don’s Building Supply, the Court stressed that it was not attempting to fashion a universally applicable rule.  Accordingly, the actual injury or injury-in-fact rule may not apply in all situations.  For example, other cases have determined that a “loss” occurs when the physical damage first manifests itself or becomes apparent.

Insurance lawyers who handle home owners claims need to read this opinion from the 14th Court of Appeals.  It is styled, Ron Pounds v. Liberty Lloyds of Texas Insurance Company.

This case concerns whether an insurer waived appraisal of a homeowner’s insurance claim by denying it.  A summary judgment in favor of Liberty was granted by the trial court.

The facts in this case are undisputed.  Pounds purchased a home insurance policy from Liberty.  The policy covered damage caused by wind and or hail.

Texas insurance lawyers need to know what an insured’s duties are after a loss.  One of the most common homeowners policies for Texas home owners is an HOB policy.  The HOB policy requires that the insured cooperate with the insurer’s investigation of the claim by promptly submitting notice of the claim, completing an inventory of the damaged property, providing access to the damaged property and records, and signing a sworn proof of loss form.  These requirements on the insured constitute a condition precedent to coverage under the policy according to our 5th Circuit in the 1999 opinion styled, Griggs v. State Farm Lloyds.

In Griggs, the court stated that absent the insured’s compliance with the conditions precedent to coverage, the insurance company has no duty to provide benefits under the contract.

HOB Policy language is this: