Claim Denial Attorneys And Giving Pre-Suit Notice

Claim denial attorneys know that a prerequisite to filing a lawsuit against an insurance company for a first party claim is to give a pre-suit notice letter.  Failure to do so will result in a loss of potential causes of action.  This is illustrated in a 2020, opinion from the Southern District of Texas, Houston Division.  The opinion is styled, Nexxt Holding, Inc. v. Travelers Cas. Ins. Co. of Am.

Nexxt Holding sued Travelers in 2020, alleging that Travelers failed to pay repair costs due under the insurance policy  after a August 2017 storm.  Nexxt asserted Texas statutory and common-law claims and sought actual, consequential, and statutory damages, as well as attorneys’ fees.  Travelers answered the lawsuit and filed a verified plea of lack of presuit notice under Texas Insurance Code, Section 542A.003.

Texas Insurance Code, Section 542A.007(d) states that, if an insured plaintiff asserts a first-party claim for storm damage against its property insurer and the defendant insurer “pleads and proves” that it “was entitled to but was not given a presuit notice stating the specific amount alleged to be owed . . . under Section 542A.003(b)(2) at least 61 days before the date the action was filed . . . the court may not award to the [plaintiff] any attorney’s fees incurred after the date the defendant files the pleading with the court.”

Travelers moves for an order barring Nexxt from recovering fees in this action because Travelers was entitled to, but was not given, the statutory presuit notice.  Travelers presented competent evidence that it was entitled to the notice, did not receive it, and timely filed a verified pleading asserting the lack of notice.

Nexxt filed a verified response in opposition to the verified plea.  Nexxt asserts that an exception to the presuit notice requirement applies.  That exception provides that presuit notice is not required “if giving notice is impracticable because . . . the claimant has a reasonable basis for believing there is insufficient time to give the presuit notice before the limitations period will expire.”  Nexxt asserts that its counsel conducted “a conservative calculation of the relevant statute of limitations period,” which led to the determination that it was possible that the limitations period could end between August 18 and September 4, 2019.  Nexxt asserts that its September 4, 2019, filing was premised on a reasonable belief that there was insufficient time to send presuit notice before the limitations period expired.

The statute of limitations under Texas law for claims under the Texas Insurance Code and claims for bad faith is two years from the date that the coverage under the Policy was denied.  Pursuant to Texas Civil Practice & Remedies Code, Section 16.051, the statute of limitations for a Texas breach-of-contract claim is four years.  At the earliest, Travelers denied coverage and breached the insurance contract on October 17, 2017.  The statutory claim statute of limitations would expire on October 17, 2019.  Nexxt hired legal counsel on July 11, 2019, over 90 days before October 17.  Nexxt’s counsel contacted Travelers on August 7, 2019, over 70 days before October 17.  Nexxt had ample time to submit a presuit notice to Travelers.  Its assertion of a calculation error is insufficient under Section 542A.003(d)(1).

This Court found the record sufficient to meet Traveler’s burden to plead and prove the basis to preclude an award of attorneys’ fees to Nexxt.

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