Articles Posted in Insurance Adjusters

Insurance lawyers time and time again have a difficult time properly suing insurance adjusters when their case is in Federal Court.  This is illustrated in a June 16, 2021, opinion from the Northern District of Texas, Dallas Division.  The opinion is styled, Thomas Paredes and Kerry Paredes v. The Cincinnati Insurance Company and John Schuster.

The Paredes had their property insured through Cincinnati.  They incurred a hail storm loss properly reported it.  Cincinnati assigned adjuster, Schuster to the claim.  The Paredes were dissatisfied with the way the claim was handled and filed the present suit.  The lawsuit was timely removed to Federal Court on the basis that Schuster (the Adjuster) was improperly joined and that without the Adjuster, diversity jurisdiction existed.  The Paredes filed a motion to remand which is the subject of this opinion.

Cincinnati says the Adjuster was improperly joined in the lawsuit because the Paredes have not stated a cause of action against him.

Insurance lawyers keeping up with the relatively new Insurance Code Section, 542A.006 election need to read this well reasoned case from the Northern District of Texas, Fort Worth Division.  The opinion is styled, Leonard D. Morgan, et al. v. Chubb Lloyds Insurance Company of Texas.

In this a homeowner’s claim for damage due to a storm.  Plaintiff’s sued their insurance company, Chubb, and the adjuster handling the claim.  The lawsuit was filed in State Court wherein a claim was made against the insurer and the adjuster.  At the time the lawsuit was filed in State Court, Chubb had not exercised the 542A.006 election, to take responsibility for it’s adjuster.

After the lawsuit was filed, Chubb moved to accept responsibility for the adjuster and have the adjuster dismissed from the lawsuit.  The State Court allowed the election and once this was complete, Chubb removed the case to Federal Court and this motion to remand was filed by Plaintiffs.

Yet another case after the passage of Texas Insurance Code, Section 542A.006, dealing with suing the adjuster in storm damage claims.  This is an issue that will eventually be addressed by the 5th Circuit.  For now, this case is from the Northern District of Texas, Dallas Division, and is styled, Grant Stowell v. United Property & Casualty Insurance Company and Samantha Jenkins.

Stowell has a policy of insurance with United Property (UPC).  Stowell suffered property damage after a hail storm and filed a claim with UPC.  UPC assigned the claim to Jenkins.  Stowell was not happy with the way the claim was handled in sued UPC and Jenkins in State Court for various violations of the Texas Insurance Code.

After the lawsuit was filed, UPC filed it’s election of responsibility, pursuant to Section 542A.006(c), in the State Court.  UPC then removed the case to this Federal Court.  Both Stowell and Jenkins are Texas citizens and thus, the joinder of Jenkins in the lawsuit beats diversity jurisdiction and thus, renders a lack of jurisdiction for this Federal Court.

Texas Insurance Code, Section 542A.006(c), is being a source of frequent litigation in Texas since it was en-acted.  The various Federal Courts are treating it differently.  Here is a case from the Western District of Texas, Austin Division, dealing with this issue.  The case is styled, Shiv Partners LTD and Shiv Host, LLC D/B/A La Quinta Inn & Suites v. The Ohio Casualty Insurance Company and Kevin M. Witt.

La Quinta had suffered a loss as the result of storm damage.  The insurer, Ohio, assigned the claim to Witt.  Ohio is not a Texas resident but Witt is.  La Quinta was displeased with the way the claim was handled and sued Ohio and Witt in State Court.  La Quinta removed the case to Federal Court asserting that Witt had been improperly joined in the lawsuit thus, diversity existed between the parties giving the Federal Court jurisdiction of the lawsuit.

La Quinta failed to provide Ohio or Witt with pre-suit notification of 61 days prior to filing as required by Texas Insurance Code, Section 541.154 and 542A.003.  The first notice of the lawsuit was when it was received by Ohio and Witt.  Ohio then made immediate election of responsibility for Witt as allowed by Section 542A.006(c).

Here is another of the cases where the insured is suing the insurance adjuster and the insurance company is arguing the new law found in the Texas Insurance Code, Chapter 542A governs the case.  The case is from the Southern District of Texas, Houston Division.  It is styled, D.U.R. Properties LLC v. Amrisc LLC et al.

This case arises out of a storm damage claim.  DUR had insurance coverage with Certain Underwrites at Lloyd’s London (Lloyd’s).  DUR made a claim with Lloyd’s.  Amrisc adjusted the claim for Lloyd’s and DUR alleges that Amrisc did a poor job adjusting the claim.  DUR sued Lloyd’s and Amrisc in State Court and Lloyd’s had the case removed to Federeal Court based on the assertion that Amrisc, a Texas resident, was improperly joined and thus, diversity jurisdiction exists between Lloyd’s and DUR.

Fraudulent joinder – a heavy burden – requires the moving party to show either: (1) actual fraud in the jurisdictional pleadings of the facts; or (2) the plaintiff is unable to establish a claim against the non-diverse party in state court.  Lloyd’s does not assert actual fraud and instead agrees that DUR and Amrisc are Texas citizens.  Thus, the Court turns to whether Lloyd’s can show DUR is unable to establish a claim against Amrisc in State Court.

As most insurance lawyers know by now, an insurance company can accept responsibility for the conduct of it’s adjusters when the claim is caused mother-nature and by doing so will defeat diversity jurisdiction and allow a lawsuit to be litigated in a Federal Court rather than a State Court.  The law dealing with this issue is found in the Texas Insurance Code, Section 542A.006.

Another interpretation of this law was at issue in a May 2020, opinion from the Western District of Texas, El Paso Division.  The opinion is styled, Project Vida and P.V. Community Development Corporation v. Philadelphia Indemnity Insurance Company and Robert L. Betts.

Plaintiff sued Philadelphia and Betts in State Court after a dispute arose concerning the handling of Plaintiffs claim after a hail storm.  Plaintiffs allege that Philadelphia and the adjuster, Betts, mishandled the claim.  Philadelphia and Betts removed the case to Federal Court based on diversity jurisdiction and the assertion that Betts was improperly joined in the lawsuit in an effort to defeat diversity and in response Plaintiffs filed a Motion to Remand asserting that Betts was properly joined in the lawsuit..

Insurance lawyers know the insurance laws change every year and know that they have to keep up with those changes.  One significant change was when Texas Insurance Code, Section 542A was added.  While this change is to the advantage of the insurance company, there are times when the insurance company does not properly take advantage of the change.

This happened in a 2020 case in the Southern District of Texas, Houston Division, styled, Mohammad Shenavari v. Allstate Vehicle and Property Insurance Company, et al.

Shenavari, a homeowner with insurance through Allstate suffered storm damage and made a claim with Allstate.  Allstate assigned adjuster Idolina Stockert to the claim.  Stockert made an offer to Shenavari that was unacceptable and a lawsuit being filed in State Court suing Allstate and Stockert resulted.

Insurance lawyers know that suing an adjuster when it can be done, is preferable to not suing the adjuster.  There are reasons for this that have been discussed in previous blogs.  The Southern District of Texas, Brownsville Division, had a case dealing with this issue in February 2020.  The style of the case is, Faith Pleases God Church Corporation v. Philadelphia Indemnity Insurance Company, et al.

Church sued Philadelphia and VeriClaim, Inc. and adjuster John Adame stemming from underpayment of the Church’s claim for property damage resulting form a storm.  Church filed a claim with Philadelphia who assigned VeriClaim to the claim and Adame is their employee who investigated the claim.

Church alleges VeriClaim and Adame prepared an undervalued damages report allowing Philadelphia to underpay the claim.

Asserting a claim against an insurance adjuster must be done properly if the goal is to keep the adjuster in the case.

Often times suing the insurance company for the acts of the adjuster is good enough to properly maintain a lawsuit.  Other times the adjuster needs to be brought into the lawsuit.  This is particularly important when the insured wishes to maintain the case in State Court rather than litigating the case in Federal Court.

One example of properly suing the adjuster was discussed in the 2020 opinion, Hill Country Villas Townhome Owners’ Association, Inc. v. Everest Indemnity Insurance Company, et al.  This opinion is from the Western District of Texas, San Antonio Division.

The courts interpretation of the new rules regarding suing an insurance adjuster need special attention.  This is illustrated in the 2019, opinion from the Northern District of Texas, Wichita Falls Division.  The case is styled, Barnes Burk Self Storage, LLC v. United Fire & Casualty Company and Traci McCormick.

Barnes sued United and McCormick in State Court for claims arising from a wind and hail storm.  McCormick is a Texas resident and her presence in the lawsuit defeats diversity jurisdiction.

On December 7, 2018, Barnes sued United and McCormick in state court for violations of Texas law relating to its insurance claim.  On January 25, 2019, United informed Barnes that it had assumed any liability McCormick would have to Barnes in the case.  On February 7, 2019, United removed the case to federal court, alleging that diversity existed between Barnes and United and that this Court should disregard McCormick’s citizenship due to United’s assumption of McCormick’s liability pursuant to Texas Insurance Code, Section 542A.006.  On May 23, 2019, this Court rejected this argument and remanded the case.

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