Insurance Claim Denial And Attorney Fees

An often asked question by insureds having a claim against their insurance company is, “Can I recover my attorney fees?”  There is not a simple straight forward answer to this question.  Many variables come into play.  “Yes” is a simple answer but does not get into the variables.

A 2022, opinion from the Northern District of Texas, Dallas Division, discusses this issue as it relates to claims under Texas Insurance Code, Section 542A.003.  The style of the opinion is, Betty Rahe v. Meridian Security Insurance Company D/B/A State Automobile Mutual Insurance Company and Larysa Santiago.

Plaintiff sued Defendant on a claim arising from wind and hail damage to her property.

On January 8, 2021, Plaintiff’s attorney provided Meridian with presuit notice as required under Section 542A.003.  On January 11, 2021, the notice letter was amended.

A week later, Plaintiff’s attorney received a letter acknowledging the claim and said the claim was being delayed due to “litigation is pending.”  Suit was filed on February 9, 2021.

Defendant asserts that Plaintiff failed to comply with Section 542A.003 in that a 60 day notice is required and as a result of not proving the 60 day notice that Plaintiff is entitled to attorney fees.

Plaintiff responds that the only penalty should be an abatement of the case.

Thus, there are two issues before the Court: 1) whether Plaintiff needed to wait the full sixty days before filing suit; and 2) what are the proper consequences for not doing so.  The Court holds that Plaintiff was required to wait sixty days prior to filing suit and that limitations on her attorney’s fees are the appropriate remedy.

a. Defendant pled and proved it was entitled to presuit notice and satisfied the
requirements to limit Plaintiff’s attorney’s fees.

b. Plaintiff was required, but failed, to wait sixty days before filing suit.

The facts do not suggest, nor does Plaintiff assert, that she could not wait the full sixty days because of any limitations period concern.  Moreover, she did not assert this claim as a counterclaim.  Thus, neither of the Legislature’s established exceptions apply to Plaintiff’s decision to file suit early.  Instead, Plaintiff asks this Court to create a third exception to the sixty-day notice requirement based on the purpose of the presuit notice and Plaintiff’s interpretation of the January 2021 letter from the Defendant.  The Court declined that invitation.  Even if Plaintiff’s
interpretation of that letter was correct, the law does not establish a Plaintiff’s belief “that [a settlement offer] was not forthcoming” as an exception to the presuit notice requirement.

Plaintiff argues in the alternative that “abatement of the action for statutory notice period is more consistent with the purpose of notice than dismissal.”  Plaintiff’s argument here presents a false choice to the Court as outright dismissal for failing to wait sixty days prior to filing suit has not been an option for nearly thirty years.

In 2017, the Legislature revised the Insurance Code to provide defendant-insurers with a choice of remedies for situations where plaintiffs fail to wait the full duration prior to filing suit, such as limiting attorney’s fees as provided in Section 542A.007(d) or abating the proceedings as provided in Section 542A.005The Defendant in this case chose to limit Plaintiff’s attorney’s fees.

For the reasons stated above, Defendant Meridian’s Opposed Motion to Deny Plaintiff’s Claim for Attorneys’ Fees is GRANTED.  It is therefore ORDERED that Plaintiff’s claims for attorney’s fees after March 9, 2021, are DENIED.

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