Dallas Fort Worth Insurance Lawyer Blog

Insurance Brokers And Insurance Law

January 29, 2017 | Mark S. Humphreys

Many people get their insurance through a broker. Can a broker be liable the same as an agent. The short answer is “yes.” A 1995, Houston Court of Appeals [1st Dist.] discusses an issue with a broker. The opinion is styled, Seneca Resources Corp. v. Marsh & McLennan, Inc.

Marsh & McLennan (M&M) brokered insurance for Seneca, an oil and gas company. As part of its services, M&M provided summaries of insurance policies. Seneca suffered a loss when a hurricane toppled a submersible drilling rig in the Gulf of Mexico.

The insurance summaries provided by M&M to Seneca indicated that Seneca had purchased “operator’s extra expense” named peril coverage which would have covered the cost of re-drilling the well. However, the applicable policy did not, in fact, include named peril re-drill coverage as indicated by the summaries.

Who Is An Insurance Agent

January 28, 2017 | Mark S. Humphreys

For most lawyers practicing insurance law, the above question may be obvious. But there are situations where it is not so obvious and even though one may assert the act of agency, it is not. A Houston Court of Appeals [14th Dist.] opinion illustrates a situation where the alleged agent was held by the court, to not be an agent. The case is styled, Harrison V. Wells Fargo Bank Texas, N.A.

Harrison was the beneficiary of a Section 142 trust established after she sustained a brain injury in a car accident. Later, Harrison was the driver of the car in another accident in which her passenger was severely injured. The passenger settled his claims against Harrison for her $100,000 auto liability policy, which had been obtained by the bank, plus $300,000 from Harrison’s trust. Harrison sued the bank for Insurance Code violations, breach of fiduciary duty, negligence, and DTPA violations for alleged failure to obtain adequate limits of liability insurance for her. The bank was granted a summary judgment on the Insurance Code violations. The remaining claims were tried and the bank was found not liable. Harrison appealed the findings.

This Houston Court of Appeals affirmed the findings of the trial court. The evidence showed that after Harrison acquired automobile insurance, her mother sent the bill for the premium to the bank and the bank then forwarded the payment to the insurance company. Insurance Code Section 4001.051 lists various acts performed in the ordinary course of providing insurance and states that any person who performs these acts shall be the agent of the company for which the act is done. “Performing an act described in Section 4001.051, such as transmitting an insurance premium, subjects a party to liability as an agent there under only if the act is performed (a) in the course of providing insurance and (b) on an insurance company’s behalf.” The evidence established that the bank was not engaged in the business of providing insurance and that its payment of premium was made solely pursuant to its role as a Trustee of the Section 142 trust. The payment was not transmitted in the course of providing insurance or on any insurance company’s behalf. Therefore, the payment did not render the bank an agent of the insurance company under Section 4001.051.

When Is An Agent Liable?

January 26, 2017 | Mark S. Humphreys

An insurance lawyer wants to be able to know when an agent can be held liable for his actions in selling an insurance policy. A Houston Court of Appeals [1st Dist.] looked at this issue in 2003. The style of the case is, Vecellio Insurance Agency v. Underwriters Insurance Company.

A man and woman were kidnapped, taken to a vacant house where the woman was raped and the man was murdered. The property owner was sued and the insurer initially denied coverage because the agent failed to add the property to the homeowner’s policy as purportedly requested by the insured. The insurer subsequently provided a defense under a reservation of rights and ultimately settled the lawsuit. The insurer then brought a common law indemnification claim against the agent for the money spent defending and settling the underlying lawsuit. The jury found in favor of the insurer, awarding almost $560,000. The agent appealed asserting that the trial court erred by failing to require the jury to first find that the agent committed a tort for which the insurer could be liable for addressing the indemnification issue.

In a case of first impression for Texas jurisprudence, the Houston First Court of Appeals reversed the trial court’s ruling and remanded, agreeing with the agent that the insurer must first have the jury establish that the agent committed a tort for which the insurer could be held vicariously liable. The court noted that the availability of causes of action based on common law indemnity were very limited in Texas and “there is no right of indemnity against a defendant who is not liable to the plaintiff.” The jury charge submitted over the agent’s objection sought to have the jury determine whether the insurer had a duty to defend due to the “misconduct” of the agent, without defining what it meant by misconduct, or without first having the jury determine that the agent herself was liable to the insured, before addressing the insurer’s vicariously liability for the agent’s actions.

Definition Of Residence Premises In Homeowners Policy

January 24, 2017 | Mark S. Humphreys

For lawyers handling homeowners claims, a 14th Court of Appeals opinion needs to be read. The case is styled, American Risk Insurance Company, Inc. v. Veronika Serpikova.

Veronika purchased a house in Houston (the Property). She purchased a policy to insure the house from American. At first, Veronika and her husband lived in the house but in May 2012, they moved to another location. They leased the Property to two tenants, and did not move back into the Property.

On September 6, 2012, a renewal homeowner’s insurance policy became effective. American issued the policy and Veronika was the named insured. In November 2012, a fire severely damaged the Property. Veronika made a claim and it was denied. The denial was based on the fact that Veronika did not reside at the Property at the time of the loss and thus, the Property did not fall within the Policy’s definition of “residence premises” as required for dwelling coverage under the Policy.

Federal Court And Suing The Adjuster

January 22, 2017 | Mark S. Humphreys

Any insurance lawyer who has filed very many lawsuits knows that one key to helping their client have a good result is to be able to keep their case out of Federal Court. One way of doing this is by properly suing the claim adjuster. One successful way of doing this is illustrated in a Northern District of Texas, Amarillo Division opinion. The opinion is styled, Sparky’s Storage Solutions Ltd. v. Lexington Insurance Company, et al.

Sparky’ sued Lexington and their adjuster, Tim Fitzgerald for violations of the Texas Deceptive Trade Practices Act (DTPA) and Insurance Code violations. The suit was filed in State District Court. Lexington and Fitzgerald had the case removed to Federal Court due to the amount in controversy and alleging that Fitzgerald was improperly joined in the lawsuit in order to prevent diversity of citizenship which is required pursuant to 28 U.S.C. 1332(a).

Sparky’s filed a motion to remand the case back to the State District Court asserting that the joinder of Fitzgerald was proper.

Uninsured Claim And Extra-Contractual Damages

January 21, 2017 | Mark S. Humphreys

Most insurance lawyers already know the law regarding uninsured (UIM) claims and extra-contractual damages. A Dallas Court of Appeals opinion restates it. The opinion is, In Re Geico Advantage Insurance Company and Celia Stefl.

This is a mandamus proceeding wherein the real party in interest, Marion Thorpe, sued Geico and Stefl to recover uninsured motorist benefits and extra-contractual damages following a motor vehicle accident. The trial court denied Geico’s request for a bifurcated trial and this mandamus action resulted.

Mandamus relief is appropriate when a trial court abuses its discretion in denying a motion to sever and abate extra-contractual claims in an UIM case.

ERISA – Is It Or Not?

January 19, 2017 | Mark S. Humphreys

Whether an insurance plan falls under ERISA (Employee Retirement Income Security Act) or not, is a question routinely asked. However, it is not a question easily answered. A Southern District, Galveston Division opinion helps. The opinion is styled, Kirstin Walker v. Regence Blue Cross Blue Shield of Texas.

The is a summary judgment opinion dealing with the issue of whether or not the Blue Cross is an ERISA plan.

ERISA applies to any employee benefit plan if it is established or maintained (1) by an employer …; or (2) by an employee organization …; or (3) by both an employer and an employee organization according to 29 U.S.C 1003(a). Section 1102 defines an employee welfare benefit plan as any plan, fund, or program established or maintained by an employer or by an employee organization, or by both, for the purpose of providing its participants or their beneficiaries with certain benefits through the purchase of insurance or otherwise.

ERISA – Lawyers Fees

January 17, 2017 | Mark S. Humphreys

Lawyers who handle ERISA (Employee Retirement Income Security Act) claims need to read this opinion from the U. S. Western District, Austin Division. The opinion is styled, Genevie Ilene Maley, et al. v. Minnesota Life Insurance Co.

In this case, the insured had, at various times named two beneficiaries. When the insured died, both the beneficiaries sought benefits. They eventually agreed to split the policy proceeds and entered into an agreement with Minnesota for them to be paid half each. Later, Minnesota then asserted a policy defense of suicide and refused to pay. The insureds sued for breach of contract. In the breach of contract claim, the Court ruled in favor of Minnesota. Minnesota then sued for attorney fees under 29 U.S.C. 1132(g)(1).

ERISA provides that: in any action under this subchapter … by a participant, beneficiary, or fiduciary, the court in its discretion may allow reasonable attorney’s fees and costs of action to either party. Any party who achieves some degree of success on the merits may request attorney’s fees, not merely the prevailing party. This success cannot be merely trivial success on the merits or a purely procedural victory. Instead, the party satisfies this standard when the court can fairly call the outcome of the litigation some success on the merits without conducting a lengthy inquiry into the question whether the particular party’s success was established or occurred on a central issue. Here, the parties agree that the judgement qualifies as some degree of success on the merits for Minnesota.

Concurrent Cause

January 15, 2017 | Mark S. Humphreys

Lawyers who handle hail damage claims understand all too well that in Texas the law regarding concurrent cause is against home owners. But there may be light at the end of the tunnel. An article in The National Law Review is encouraging. The article is titled “Florida Property Insurers Must Pay All Losses If Any Concurrent Cause Is Covered.”

In the latest of a string of recent decisions adverse to insurers, the Florida Supreme Court (not Texas – yet) held that, where a residential property incurs damage due to the cumulative or combined effects of multiple “concurrent” causes, any of which a homeowners policy covers, the insurer must pay the entire loss even if its policy expressly excludes the other causes. The same rule will presumably be applied to other property lines and by analogy to liability policies also.

A homeowner’s luxury home was insured for over $8 million under a manuscript “all risk” policy with various exclusions. The exclusion for loss due to “design, specifications, workmanship, repair, construction” and materials so used became crucial to the dispute. Soon after purchase, the house suffered numerous rainstorm leaks; a few months later, a hurricane damaged it more; and eventually it was demolished. The policy covered rain damage. Neither the Supreme Court nor intermediate appellate opinion state whether it covered windstorm, but that seems likely. After the insured settled litigation against the seller, architect, and builder, he prevailed at trial in a declaratory action against the insurer, which had denied coverage beyond $50,000 for mold.

Allstate And Warranties

January 14, 2017 | Mark S. Humphreys

Insurance attorneys have to have an understanding of how warranties work. Sometimes it is hard to tell the difference between insurance and a warranty. An article in the Insurance Journal about Allstate purchasing a warranty company shows how the two can be connected. The title of the article is “Allstate to Pay $1.4 Billion for SquareTrade, Seller of Warranties for Mobile Devises, Appliances.”

The Allstate Corp. agreed to acquire SquareTrade, a consumer electronics and appliance protection plan provider that distributes through many of America’s major retailers.

SquareTrade’s plans protect mobile devices, laptops and tablets, and other consumer electronics and appliances from malfunctions, accidental damage and mishaps. It promises that its technology delivers “a zero hassle claims process.”