Insurance Lawsuits Can Be A Lot Work For The Insured

There is lots of information available about actions to be taken before a lawsuit is filed.  There is also a lot of information available about the potential wrongs of an insurance company, it’s agents and adjusters.  What is rarely discussed is the work an insured has to do in a lawsuit.  When we say”insured” we are speaking of the person, not the person’s lawyer.

This issue can be seen in a 2022 opinion from the Austin Court of Appeals.  The style of the opinion is Michael V. Wright and Phyllis F. Wright v. State Farm Lloyds.

In this case, the Wrights sued State Farm for breach of contract and various violations of the Texas Insurance Code.  The lawsuit arose out of the way the Wrights were treated after they made a claim for benefits after a fire loss.

The lawsuit alleges that although State Farm paid the policy limit for structural repairs after a 2013 fire, it had failed to pay for certain “code compliance related repairs,” which amounted t o $21,250.  The Wrights later added additional claims for damages related to a 2015 fire at the same residence.  State Farm’s affirmative defenses included an allegation that the Wrights had intentionally set the fires.

Here is where the work the Wrights had to do came into play.

During the course of the litigation, State Farm directed numerous discovery
requests to the Wrights seeking certain of their financial records in connection with its affirmative defense of arson.  The Wrights repeatedly failed to produce the requested documents, claiming that all such records had been destroyed in the fires.  When State Farm sought to obtain the records from the Wrights’ banks and credit-card issuers, the Wrights refused to sign the necessary authorization forms.  Initially the trial court issued an order abating the Wrights’ action until they produced the requested documents and information.  The court later extended
the abatement due to the Wrights’ failure to comply with its earlier order.  The court subsequently lifted the abatement to allow State Farm to seek judicial remedies for the Wrights’ failure to comply with the two earlier orders.  The court then granted State Farm’s motion to compel, ordering the Wrights to comply with State Farm’s discovery requests.  Three days before a scheduled hearing on State Farm’s motion for summary judgment and sanctions, the Wrights nonsuited their claims related to the 2015 fire but later refiled the same suit.  The trial court consolidated the two suits.

In June 2017 the court ordered the Wrights to produce documents regarding
additional living expenses incurred in connection with the 2013 fire that were not paid by State Farm.  When the Wrights failed to produce those documents, the court sanctioned them by denying them a right to an independent appraisal for such additional living expenses.  When the Wrights filed objections to State Farm’s discovery requests, the trial court overruled the objections and ordered them to produce all requested documents.  After the Wrights again failed
to produce the documents, State Farm filed its Amended Motion for Sanctions seeking dismissal of the Wrights’ claims.  The trial court granted State Farm’s motion and dismissed all of the Wrights’ claims with prejudice.  The Wrights perfected this appeal.  This Court affirmed the trial court decision.

A reading of this opinion will give some insight into the work required for an insured when the litigation begins.  All too often an insured believes and attorney will take care of everything, without realizing it is they who have to do much of the work and the attorney, while assisting, is putting the information together in a form that is satisfactory to the Court.

The bottom line is that often times there is much required of an insured in litigting a claim denial.

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