Insurance Claims Denial Law Firms – Hail Damage Claims

Insurance lawyers who handle hail damage claims will need to read this opinion from the Western District of Texas, San Antonio Division.  It is styled, Mazhar Footsteps, LLC v. Amguard Insurance Company and Michael Clayton Hepburn.

This lawsuit arises from damages incurred by a hailstorm.  Based on the way the claim was handled, Mazhar sued Amguard and the adjuster, Hepburn.  The lawsuit was filed in State District Court.  Amguard timely removed the case to Federal District Court based on diversity jurisdiction and in its notice of removal, Amguard elected under Texas Insurance Code, Section 542A.006, to accept whatever responsibility Hepburn might have to Mazhar for Hepburn’s acts or omissions related to the claim.

Mazhar timely filed this Motion To Remand.

A party may move to remand a previously removed case.  Because removal raises significant federalism concerns, the removal statute is strictly construed and any doubt as to the propriety of removal should be resolved in favor of remand.  Any ambiguities are construed against removal and in favor of remand to state court.  The removing party has the burden to show that federal jurisdiction exists and that removal was proper.

AmGuard removed this case solely on the basis of diversity jurisdiction.  No party raises a dispute about the jurisdictional amount required for diversity jurisdiction, but they disagree as to whether Hepburn remains properly joined after AmGuard’s election under Tex. Ins. Code, Section 542A.006.

Mazhar’s claims against Hepburn are grounded in Hepburn’s role as an adjuster assigned by AmGuard to investigate his insurance claim.  While insurance adjusters are subject to liability under Chapter 541 of the Texas Insurance Code, on September 1, 2017, a new provision of the Code took effect.  This provision allows insurers, in any action to which Chapter 542A applies, to accept any liability found against its “agent” by providing written notice to the claimant.  Notice may be given prior to suit or after a suit is filed.  Whether an insurer makes an election prior to suit or after suit is filed, “the court shall dismiss”the action against the “agent” with prejudice.   The only difference between a pre-suit and post-suit election is that when the election is made prior to suit, “no cause of action exists” against the agent.  Once the election is made, an insurer may not revoke the election and a court may not nullify it.

In this case, AmGuard made its election to accept whatever liability Hepburn has to Plaintiff for Hepburn’s acts or omissions related to the claim in its notice of removal and via email in a letter to Plaintiff’s counsel dated August 14, 2020, the same day AmGuard filed its notice of removal.  Section 542A.006 therefore demands that Hepburn be dismissed from the suit.  Dismissing Hepburn does not prevent Plaintiff from asserting claims under Chapter 541 of the Texas Insurance Code.  Nor does Hepburn’s dismissal preclude Plaintiff from implicating Hepburn in those claims, deposing Hepburn, or presenting evidence of his acts or omissions.

AmGuard elected to accept whatever liability Hepburn has to Plaintiff for Hepburn’s acts or omissions related to the claim in its notice of removal and via email in a letter dated August 14, 2020.  Under Section 542A.006 of the Texas Insurance Code, this election is irrevocable and requires the dismissal of the action against Hepburn.

The Court DENIES Plaintiff’s Opposed Motion to Remand.  All claims against Defendant Hepburn are dismissed without prejudice.  Evidence of Michael Clayton Hepburn’s acts or omissions may be offered at trial pursuant to Tex. Ins. Code § 542A.0006(g).

It is important to understand that as of the date of this opinion, December 24, 2020, that other Federal District Courts were deciding the case differently based on similar facts.  This is an issue that will ultimately be decided by the Fifth Circuit Court of Appeals.

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