Insurance Claim And Allegations Of Arson

In situations where the insurance company is denying a claim based on their allegation that the claim involves arson, Insurance Lawyers would want to be aware of this decision from the Tyler Court of Appeals.  The opinion is styled In Re: United Fire Lloyds, Relator.  This is a writ of mandamus case.

The insured, Inner Pipe Pipeline, LLC, owned a Commercial Property, Commercial Auto, and Inland Marine policy issued by Lloyds.  Inner Pipe’s property was damaged by fire and filed a claim with Lloyds.

Lloyds alleges that Inner Pipe’s owner, Edward Dailey, intentionally set the fire and had the motive, opportunity and means to set the fire, and there is substantial evidence linking Dailey to the fire, thus rendering coverage by Lloyds, void.

Lloyds also alleges Dailey failed to disclose previous fires to equipment belonging to Dailey involving losses of $80,000 in 2007, and $140,000 in 2008.  That Dailey failed to provide key documents including invoices for serious conditions to one of his pieces of equipment.  Also, making false claims in his sworn proof of loss including claims for bear mounts valued at $9,600, other mounts, a Rolex watch valued at $6,500, the loss of two F-5 Locators, valued at $10,500 each, and a Drone valued at $3,000.

Lloyds also alleges Dailey provided false testimony in his examination under oath (EUO).

Because of the above, Lloyds sought discovery of information regarding fraudulent tickets.  Information from Dailey’s former bookkeeper, Darlene Estes, asserts Dailey purchased blank tickets from Lufkin printing with the name “Far South Mining,” completed the tickets with false information and submitted the tickets for payment.  As a result, Lloyds sought to take depositions by written questions with a subpoena duces tecum of the custodians of records for various companies Dailey had dealt with in his business.  Dailey filed motions to quash which the court granted and this mandamus action resulted.

This Court looked at the evidence that was known up to this point and concluded that the requests were reasonable and necessary considering what was known at the time.  This Court then allowed the discovery to go forward.

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