Insurance Company Denies Claim And Wins At Trial – Recourse?

The vast majority of  insurance claims that get denied are settled.  Less than 2% of these cases actually result in trial.  When there is a trial, the odds are typically with the insurance company prevailing.  That is what happened in this 2021, verdict in a case from the Southern District of Texas, Houston Division.  The case is styled, Shane and Shannon Richardson v. Liberty Insurance Co.

The Richardson’s claimed damage to their roof and part of the interior of their home from a storm.  Liberty inspected the damage and denied the claim based on their assertion that the covered damages were less than the deductible.

The case was tried to a jury and the jury found in favor of Liberty on the breach of contract damages but found that Liberty engaged in “false, misleading and deceptive acts or practices in the  business of insurance in this case” and “misrepresented to the Richardsons the scope or cause of the damage from wind or hail,” in violation of the Texas Insurance Code, Section 541.001 et seq.  The jury awarded no damages for any claim, but, based on finding that Liberty’s violation of the Insurance Code was “knowing,” the jury awarded the Richardson’s $7,082.54 in “additional” damages.

Based on the verdict, the court granted Liberty’s motion for a take-nothing verdict because the jury found that there was no breach of contract, no breach of the duty of good faith and fair dealing, and no actual damages, which barred recovery of additional damages, pre- and post-judgment interest, costs of court, and attorney’s fees under Texas insurance law.

The Richardson’s moved for a new trial.

Rule 59(a)(1)(A) of the Federal Rules of Civil Procedure provides that the court may grant a new trial “after a jury trial, for any reason for which a new trial has heretofore been granted in an action at law in federal court.”  A new trial may be granted, for example, if the district court finds the verdict is against the weight of the evidence, the damages awarded are excessive, the trial was unfair, or prejudicial error was committed in its course.  A motion for a new trial should be granted when the verdict is against the great weight of the evidence, not merely against the preponderance of the evidence.

Under Texas law, an insured cannot recover any damages based on an insurer’s statutory violation unless the insured establishes a right to receive benefits under the policy or an injury independent of a right to benefits.  A finding of liability under the insurance policy is a prerequisite to recovery on breach of contract claims.  Otherwise, extracontractual claims for damages cannot succeed unless the insured shows damages independent of the alleged policy breach and the failure to pay the claim timely.  To establish injury independent of the policy claim, the plaintiffs must show their damages are truly independent of their right to receive
policy benefits.

The Richardsons presented insufficient evidence of an independent injury separate from the alleged breach of contract and claim to benefits.  While Liberty’s actions were hardly a model of clear, prompt responses to an insured’s claim, the evidence supported the jury’s finding that Liberty had not breached the insurance contract or the duty of good faith and fair dealing, and that the Richardsons had suffered no actual damages from any such breach.  The Richardsons have not
set forth a sufficient basis to find that when the court asked the jury to determine depreciation in addition to actual damages, the jury was confused about whether Liberty breached the insurance policy and whether the Richardsons suffered actual damages from such a breach.

There is no prejudicial error of law or fact, and the Richardsons have not otherwise shown that the verdict was against the weight of the evidence or that the trial was unfair.  A new trial is not warranted.

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