Articles Posted in Value of Claim

Being able to discuss the potential recovery when an insurance company wrongfully denies a claim is a topic any Dallas or Fort Worth insurance lawyer needs to be able to discuss with a client.

Policy benefits are the basic recovery allowed for an insurer’s breach of its contractual obligations.  An insurer’s refusal to pay the insured’s claim causes damages at least in the amount of the policy benefits wrongfully withheld, according to the 1988, Texas Supreme Court case, Vail v. Texas Farm Bureau Mutual Insurance Company.  The same Court in a 1996, opinion said that breach of contract allows recovery of benefit of the bargain damages, according to the case styled, Transportation Insurance Company v. Moriel.

In addition, an insured should be able to recover consequential damages that are the foreseeable result of the insurer’s breach of contract.  Numerous cases hold that insurance policies are subject to the same rules as other contracts.  This is exemplified in Hernandez v. Gulf Group Lloyds, a 1994 opinion.  It says one of the best established rules is that:

A Texas Hill Country Insurance Lawyer will need to be able to discuss the value of a claim with a new client.  This discussion needs to be had along with a discussion of what court the case will be fought.  The Eastern District, Sherman Division, issued an opinion on how Federal Courts look at the value of a claim.  The opinion is styled, Tommy Wilson v. Allstate Insurance Company.

Tommy Wilson (Plaintiff) sued Allstate (Defendant) in County Court for losses under a homeowners policy.  Defendant caused the case to be removed to Federal Court based on diversity and the amount in controversy, stating the amount in controversy exceeds $75,000.00, which is the Federal Court minimal jurisdictional limits pursuant to 28 U.S.C., Section 1332(a).

Plaintiff argued that the amount in controversy was less than $75,000.00 and points to the following allegations regarding the amount in controversy alleged in his petition:

There probably is not any insurance lawyer that can specifically tell a client exactly what the value of a claim is.  But there are issues, legal and otherwise, to consider when trying to determine the value of a claim.  A 14th Court of Appeals opinion offers so guidance.  The opinion is a 2017, opinion and is styled, In Re State Farm Lloyds.

This case is a dispute between insureds and their insurer under an appraisal clause in the insurance contract.  It is a mandamus proceeding seeking to have the trial judge enforce the appraisal clause.

After a claimed loss sustained under the policy, State Farm’s adjuster agreed that there was a loss but valued the loss at $432 which was less than the $8,000 deductible.  The insured had hired a public adjuster who valued the loss at $73,000.  The insured’s sued State Farm for breach of contract and various violations of the Texas Insurance Code.

Lawyers handling property damage claims will find this article interesting.  The article is from the Claims Journal.  It was published in September 2016, and is titled, Damage To Property Without Market Value.

The amount and dollar value of insurance claims relating to property loss alone dwarf all other lines of insurance.  Water losses in the U.S. result in more than $9 billion in property damage annually.  Fire losses result in more than $12 billion in annual damage.  Hailstorms cause over $1 billion in damage.  Homeowners’ and commercial property policies often provide that the insurer is not required to pay more than the actual cash value (ACV) of the damaged property.  Increasingly, however, policies may provide for replacement cost value (RCV) once the insured has replaced the damaged policy in such first-party claims.

When the insurer attempts to subrogate such property losses, there is a big disconnect between the damages recoverable by the insured in a first-party claim and the damages the insurer can recover when it subrogates the claim against the third-party tortfeasor responsible for causing the loss.  First-party claim payments are governed by applicable policy language.  Third-party property damage recovery is governed by applicable state tort damage laws.  First-party replacement value insurance claim payments cannot be recovered in third-party subrogation cases because the default rule for measuring direct damages from partial destruction of personal property is the difference in the market value immediately before and immediately after the damage to such property at the place where the damage was occasioned.  “Replacement cost insurance” is optional additional coverage that may be purchased for casualty insurance to insure against the possibility that the improvements will cost more than the ACV and that the insured cannot afford to pay the difference.  Unlike standard indemnity, replacement cost coverage places the insured in a better position than he or she was in before the loss and any purported windfall to the insured that purchases replacement cost insurance is precisely what the insured contracted to receive in the event of a loss.

A 1998, Dallas Court of Appeals case is a good read for lawyers wanting to recover mental anguish damages in bad faith insurance cases. The case is styled, State Farm Lloyds v Johns.

Johns house was built in 1964. Johns moved in to her house in 1972. In the summer of 1990, Johns noticed evidence of extensive foundation problems including door misalignment, significant cracks in the interior walls and a slope on the floor. Repairmen later discovered two plumbing leaks under the house. Johns made a claim for foundation damage alleging that the plumbing leaks caused the soil underneath the house to expand resulting in upheaval of the foundation, thereby damaging the structure. State Farm concluded that John’s foundation problems were not cause by the plumbing leaks, but rather asserted that the damage occurred from natural soil movement common to north Texas. State Farm’s homeowners policy excludes damage caused by ordinary settlement. Based on the exclusion, State Farm denied the claim.

Johns filed suit against State Farm alleging wrongful denial of her claim, violations of the Texas Insurance Code, and violations of the Texas Deceptive Trade Practices Act. The trial court rendered judgment on the verdict in favor of Johns based on the DTPA and Insurance Code claim. State Farm appealed.

A 1998, Dallas Court of Appeals case is a good read for lawyers handling bad faith insurance cases. The case is styled, State Farm Lloyds v Johns.

Johns house was built in 1964. Johns moved in to her house in 1972. In the summer of 1990, Johns noticed evidence of extensive foundation problems including door misalignment, significant cracks in the interior walls and a slope on the floor. Repairmen later discovered two plumbing leaks under the house. Johns made a claim for foundation damage alleging that the plumbing leaks caused the soil underneath the house to expand resulting in upheaval of the foundation, thereby damaging the structure. State Farm concluded that John’s foundation problems were not cause by the plumbing leaks, but rather asserted that the damage occurred from natural soil movement common to north Texas. State Farm’s homeowners policy excludes damage caused by ordinary settlement. Based on the exclusion, State Farm denied the claim.

Johns filed suit against State Farm alleging wrongful denial of her claim, violations of the Texas Insurance Code, and violations of the Texas Deceptive Trade Practices Act. The trial court rendered judgment on the verdict in favor of Johns based on the DTPA and Insurance Code claim. State Farm appealed.

Damages and coverages available under an insurance policy will vary depending on the circumstances and policy language. As it relates to a claim for emotional distress, a 1994, 5th Circuit Court of Appeals case is a good read. The opinion is styled, Travelers Indemnity Co. v. Holloway.

In this declaratory judgment action, the insurance carrier, Travelers contended that it had no duty to defend its insured, Wanda Holloway, against a lawsuit for intentional infliction of emotional distress, since it was not covered under the policy. Holloway, the mother of a junior high school student competing for a cheerleader position, allegedly plotted to kill Heath, the mother of one of her daughter’s competitors. The mother of the competitor brought suit against Holloway alleging “outrageous conduct causing severe emotional distress” or “intentional infliction of emotional distress.” Holloway sought a defense from Travelers. Travelers argued that Holloway was not entitled to a defense and that there was no coverage, since (1) the conduct did not constitute an “occurrence” under the policy, (2) the conduct was excluded from coverage as intentional conduct, and (3) the conduct was not alleged to have caused “bodily injury” as defined by the policy.

The 5th Circuit affirmed the District Court’s opinion that there was no duty to defend or coverage since there was no allegation or evidence of a bodily injury.

Texas insurance lawyers have to read the recent Texas Supreme Court case, J&D Towing, LLC v. American Alternative Insurance Corporation. The facts are set out in the March 3 writing. This is an appeal from the Waco Court of Appeals.

The Court starts out: We begin with first principles. Compensation is the chief purpose of damages awards in tort cases. Indeed, we have long held that the basic reason underlying rules for the ascertainment of damages for any tortious act is a fair, reasonable, and proper compensation for the injury inflicted as a proximate result of the wrongful act complained of. Reasonable and proper compensation must be neither meager nor excessive, but must be sufficient to place the plaintiff in the position in which he would have been absent the defendant’s tortious act. In this way, compensation through actual-damages awards functions as an instrument of corrective justice, an effort to put the plaintiff in his or her rightful position.

Actual damages must be either direct or consequential. Direct damages compensate for a loss that is the necessary and usual result of the tortious act. By contrast, consequential damages, also known as special damages, compensate for a loss that results naturally, but not necessarily, from the tortious act. Although consequential damages need not flow from the act, they must be both forseeable and directly traceable to the act. If the purported consequential damages are too remote, too uncertain, or purely conjectural, they cannot be recovered.

Texas insurance lawyers know insurance companies always want to wage litigation in Federal Court. A recent case illustrates this. The case is from the U.S. District Court, Northern District of Texas, Dallas Division. The style of the case is Clear Vision Windshield Repair, LLC v. Allstate Fire and Casualty Insurance Company.

This lawsuit was originally filed in State District Court wherein Clear Vision alleged violations of the Texas Insurance Code, Chapters 541 and 542. Allstate caused the case to be removed to Federal Court asserting there was diversity of citizenship and the amount in controversy exceeded $75,000. Clear Vision disagreed and contended that Allstate had not shown the amount in controversy exceeded $75,000. Specifically, Clear Vision contended there were nine individuals who had windshield repairs that were not paid or not fully paid and that the individual claims cannot be segregated to meet the jurisdictional threshold for diversity jurisdiction. Allstate countered that the rule against aggregation of claims does not apply because Clear Vision is the only plaintiff and Clear Vision has stated it seeks monetary relief in excess of $100,000.

A federal court has an independent duty, at any level of the proceedings, to determine whether it properly has subject matter jurisdiction over a case. This duty must be policed by the courts on their own initiative even at the highest level.

Irving insurance lawyers need to be able to discuss with clients when offers of settlement should be accepted and how to accept the claim. A good illustration of this is found in a 2015, Houston Court of Appeals [1st. Dist.] opinion. It is styled, Kamisha Davis v. Texas Farm Bureau Insurance.

Kamisha Davis sued Farm Bureau, asserting several causes of action. The trial court granted summary judgment against Davis in favor Farm Bureau.

On August 26, 2009, Kamisha Davis was involved in a motor vehicle accident with Farm Bureau’s insured. Davis hired attorney Corey Gomel to pursue a personal injury claim arising out of the accident. On April 19, 2011, Gomel sent Farm Bureau a letter, stating that Davis would be willing to settle her personal-injury claims against Farm Bureau’s insured for $37,500. Farm Bureau, through its claims adjuster, Jody Roe, made a counter-offer of $10,000 on May 2, 2011.