Liability Of Insurance Adjusters

Insurance attorneys representing the insureds would prefer to fight cases in State Court.  One way of doing this is to successfully plead a case against the insurance adjuster.  Insurance companies would prefer to fight in Federal Court.

Here is a case wherein the case was filed in State Court against the insurer and the adjuster and removed to Federal Court by the insurance company.  The insurance company successfully kept the case in Federal court but expressly allowed the insured to replead the case against the adjuster.

The case was replead and now the insured is seeking to have the case remanded to the State Court.  This 2018, opinion is from the Northern District of Texas, Dallas Division and is styled, William W. Caruth, III, et al. v. Chubb Lloyd’s Insurance Company of Texas, et al.

After the repleading and several other motions, not relevant here, the only remaining question before the court is whether any of the Caruth’s repleaded claims against the adjuster are sufficient under the federal pleading standard.  If even one of the Caruth’s repleaded claims against the adjuster is sufficient to survive a Rule 12(b)(6) motion, the court must remand the entire case.

Because Texas law recognizes claims against adjusters like in their individual capacities, the relevant inquiry is whether the Caruths have properly stated a claim against the adjuster for her conduct as an individual adjuster. In making this determination, the question before the court is whether there is no reasonable basis for the district court to predict that the Caruths might be able to recover against the adjuster, the non-diverse, in-state defendant, for violations of Chapter 541 of the Texas Insurance Code or the Texas DTPA.
Texas Insurance Code, Section 541.060(a)(1) provides the following:  “It is an unfair method of competition or deceptive act or practice in the business of insurance to engage in the following unfair settlement practices with respect to a claim by an insured or beneficiary. (1) misrepresenting to a claimant a material fact or policy provision relating to coverage at issue ….”
Rather than merely reciting the statutory provisions, the Caruths assert that one of their Section 541.060(a)(1) claims against the adjuster (Morgan) is based on the following alleged misconduct: “After receiving the assignment of Plaintiffs’ claim, Morgan inspected the Property on or about August 25, 2015 and represented to Plaintiffs that certain damaged interior areas of the Property would be covered by the Policy.  However, Morgan subsequently denied payment to Plaintiffs to repair the very damage she had previously represented would be covered.”  Specifically, the Caruths assert that in her “First Report,” Morgan noted that while “there is an exclusion for the rotted wood and maintenance issues,” the “ensuing water damage is covered.”  Despite this initial representation — and a second representation by Morgan at a meeting attended by a number of individuals including a public claims adjuster — the Caruths contend that Morgan subsequently “wholly failed and refused to pay Plaintiffs for the ensuing water damage to their home.”  And according to the Caruths, they relied upon this and other misrepresentations to their detriment.
Applying the federal pleading standard to the allegations in this case, the court concludes that, taking the well pleaded facts as true, the Caruths have now pleaded factual content that allows the court to draw the reasonable inference that the adjuster may be liable for the misconduct alleged.