Dallas Fort Worth Insurance Lawyer Blog

Agent Liability

February 22, 2015 | Mark S. Humphreys

Dallas insurance lawyers need to know this case discussing insurance agent liability. It is a 2008 opinion from the Corpus Christi Court of Appeals. The style is, Insurance Network of Texas v. Kloesel.

The Kloesel’s have owned and operated Kloesels’ Steakhouse since 1970. INT is an independent insurance agency. In 1993, the Kloesels wanted a different insurance company to safeguard their restaurant. The Kloesels approached Gary Nitsche, an insurance agent with INT, to discuss having INT procure insurance for their restaurant. When INT first procured a policy for the Kloesels, it obtained a policy that covered communicable disease claims. During the policy year, the Kloesels expressed their intent to add a horse-and-carriage operation to their restaurant. As a result, the carrier opted not to renew the Kloesels’ policy, which was set to expire in October 1994. INT notified the Kloesels of the need to change carriers and subsequently procured for them a general liability policy from Burlington, a surplus lines carrier, for the 1994-1995 policy year. The Burlington policy covered claims arising from the horse-and-carriage operation, which began in November 1994, but excluded communicable disease claims. The Kloesels paid the premiums for this policy and renewed it for the 1995-1996, 1996-1997, and 1997-1998 policy years.

During the 1997-1998 policy year, over ninety customers contracted Hepatitis A at the Kloesels’ restaurant; the Texas Department of Health concluded that this likely resulted from a food handler being infected with Hepatitis A. The Kloesels filed claims under the Burlington policy, but Burlington denied the claims based on the communicable disease exclusion. Two separate lawsuits were then filed against the Kloesels by the Simpsons and the Lairds–customers who had contracted Hepatitis A. Burlington defended the Kloesels in these two lawsuits under a reservation of rights. The Simpsons obtained a judgment in their favor worth $242,625. Eight months later the Lairds obtained a judgment in their favor worth $323,441. INT declined to cover the Kloesels for the amounts owed under the Simpson and Laird judgments.

Proving Hail Losses The Wrong Way Or Not At All

February 21, 2015 | Mark S. Humphreys

Fort Worth insurance attorneys who handle hail damage claims need to know how “not” to handle the claim. A US Northern District case from the Dallas Division is worth reading to know what courts are looking for in a lawsuit. It is a 2014 opinion styled, Stevenson v. Nationwide.

Stevenson filed a lawsuit against Nationwide. Stevenson’s claims included: (1) breach of contract; (2) violation of Section 542 of the Texas Insurance Code; (3) violation of the Deceptive Trade Practices Act; (4) violation of Section 541 of the Texas Insurance Code; (5) breach of duty of good faith and fair dealing; (6) fraud; and (7) conspiracy to commit fraud.

Stevenson contends that she is the owner of an insurance policy issued by Nationwide. She states that she owns the insured property. She states that on April 3, 2012, strong storms and tornadoes in North Texas caused severe damage to her home. She submitted a claim to Nationwide for damage, water damage, hail damage, windstorm damage, and mold damage to the Property as a result of the storm. She states that she asked Nationwide to cover the cost of repair to the Property pursuant to the Policy and any other available coverages under the Policy. She contends that Nationwide’s adjuster failed to properly adjust the claim made by her. Additionally, she contends that Nationwide has denied at least a portion of the claim without an adequate investigation. She asserts that Nationwide has failed to compensate her adequately under the terms of the Policy.

Misrepresentation By Insured

February 19, 2015 | Mark S. Humphreys

Dallas insurance lawyers know that ruling from other states are sometimes looked at by courts in Texas. One example is a 2014, opinion by the US 5th Circuit Court of Appeals. This court hears Texas cases, so knowing how they look at cases is important. The opinion is styled, Nationwide v. Baptist.

The district court held that the Baptists initially purchased a valid homeowner’s insurance policy from Nationwide, but that subsequent renewals of that policy were void ab initio because they occurred after the Baptists lost ownership of their home to foreclosure.

The parties do not dispute the relevant facts. The Baptists purchased the Nationwide policy in October 2006. Just over two years later, in November 2008, they lost their home to foreclosure. They did not inform Nationwide of the foreclosure sale, however, and they continued to occupy in the home. The Bank of New York, which had purchased the home at the foreclosure sale, sought and obtained a judgment evicting the Baptists on December 9, 2011. That should have caused the Baptists to vacate the home by January 13, 2012, but it was seriously damaged by a fire or fires on December 27 and 28, 2011. It was in conducting a post-loss investigation of the Baptists’ claims arising from these fires that Nationwide first discovered that they no longer held title to the property.

Excess Insurance

February 17, 2015 | Mark S. Humphreys

Irving insurance lawyers will see situations where someone has “excess insurance.” There are many variables that can result from these situations. A 2000, Texas Supreme Court case styled, Keck, Mahin & Cate v. National Union Fire Insurance Company, is an opinion to read to see one of the variables.

Granada Food Corp. held one million in primary insurance issued by the Insurance Company of North America as well as nine million in excess insurance issued by National Union. Wolf Point Shrimp Farm, a supplier, sued Granada and the Keck law firm was hired to defend the company. The supplier demanded $3.6 million to settle the lawsuit, but North America, National Union, and Keck were unwilling to settle.

Errors by Keck and the insurance companies compromised Granada’s defense before trial. Shortly before trial, Granada executed a release of malpractice claims against Keck in exchange for Keck’s forgiveness of Granada’s unpaid fees stemming from unrelated matters. On the first day of trial North America tendered its policy limits. National Union then took over the defense and ultimately settled for seven million.

Subrogation Settlement

February 15, 2015 | Mark S. Humphreys

Dallas insurance attorneys will sometimes run across semi-complicated subrogation issues. One of these situations arose in a 1998, Dallas Court of Appeals case styled, Universal Underwriters of Texas v. Transamerica Insurance Group, et al. Here is some of the relevant information from that case.

The case is a subrogation case between two insurance companies who settled a case. Morris was an employee of Race Promotions Management, Inc. d/b/a the Dallas Grand Prix. The Grand Prix had borrowed a 1988 Corvette owned by Young Chevrolet for promotions. Morris was involved in a single car accident which killed his passenger, Bradshaw. Morris was legally intoxicated. Bradshaw’s parents sued Morris and Young Chevrolet alleging negligence and negligence per se against Morris, and negligent entrustment and strict liability against Young Chevrolet. Young Chevrolet brought a third party action against Grand Prix as Morris’ employer. Universal insured Young Chevrolet and Transamerica insured Grand Prix. Transamerica, Universal and others settled with the Bradshaws for $695,000. Universal paid $275,000 on behalf of Young Chevrolet. Allstate paid $20,000 on behalf of Morris under his personal auto policy. Transamerica paid $400,000 in return for which the Bradshaws released Morris, Race Promotions Management, Southway Management Corporation, Grand Prix, Ronald Scott Wheeler, Darryl Snaden, Southern Sports Management, Allstate, Transamerica, and the adjuster. In all, the Bradshaws released ten individuals and entities.

After settling with the Bradshaws, Transamerica brought a declaratory judgment action against Universal asserting that Morris was insured under Universal’s policy. Transamerica’s policy provided that it was excess over any other collectable insurance. The trial court concluded that Transamerica proved that Morris was an insured under Universal’s garage policy, granted Transamerica judgment for the remainder of Universal’s policy limits of $225,000, as well as $30,000 in attorney’s fees. Universal filed this appeal.

2 Policies Covering Same Property

February 14, 2015 | Mark S. Humphreys

Arlington insurance attorneys will run across situations where a person, on purpose or by accident, has two insurance policies covering the same property. So what are some of the possible outcomes of this situation? A 2005, Fort Worth Court of Appeals opinion had this issue. The style of the opinion is, Harris v. American Protection Insurance Company. Here is some of the relevant information from that case.

This case arises from two insurance claims for successive casualty losses to the roof of a shopping mall.

On May 5, 1995, a severe hail storm damaged the roof of a vacant building known as Westridge Mall. At the time, the shopping mall was covered by two insurance policies, one issued by American and the other by Aetna Life & Casualty. Each policy effectively covered fifty percent of the loss and named Southwest Portfolio as the insured. On September 6, 1995, roofing contractor Gary Boyd discovered the hail damage during a warranty-related roof inspection. Southwest made a claim for the hail damage under the Aetna policy on October 6, 1995. Because it was unaware of the American policy, Aetna agreed to cover one hundred percent of the loss and settled the claim for $712,612.50. In accordance with the settlement agreement, Aetna paid Southwest $268,445 for the actual cash value of the loss (“ACV”) and retained $444,167.50 as the replacement cost holdback, which would be paid out as repair costs were incurred.

Stolen Vehicle

February 12, 2015 | Mark S. Humphreys

Dallas insurance lawyers will have potential clients come and ask questions dealing with their stolen vehicle and how the insurance company is handling the claim. The Dallas Court of Appeals issued a 2008, opinion that is worth knowing about. The case is styled Ysasaga v. Nationwide. Here is the relevant information from that case.

On March 2, 2002, Ysasaga reported that his 2001 Chevrolet Corvette had been stolen in Dallas and filed an insurance claim with Nationwide. Ysasaga subsequently initiated the Insurance lawsuit against Nationwide. In the Insurance Case, Ysasaga sought the recovery of damages arising out of the theft of the Corvette, including policy benefits and extra-contractual damages. Ysasaga claimed the Corvette was valued at $49,200. On March 4, 2004, the parties entered into a settlement agreement. Pursuant to the settlement, Ysasaga signed a release of all claims ” which arise out of the facts alleged and situation described in [the Insurance Case].” In consideration of the release, Nationwide paid Ysasaga $110,000. From these settlement proceeds, $34,281.09 was paid to Ysasaga and First State Bank for the release of the lien on the vehicle and $75,718.91 was paid to Ysasaga and his attorneys. As provided in the release, the Insurance Case was dismissed. Despite the payment to Ysasaga and the release of the lien, title to the vehicle was never formally transferred to Nationwide.

In June 2005, the vehicle was recovered in Mexico. Nationwide informed Ysasaga of the vehicle’s recovery and requested Ysasaga’s endorsement of the certificate of title. In response, on August 9, 2005, Ysasaga initiated a Conversion Case and asserted Nationwide had converted the vehicle.

What Happens When Insurance Company Pays Claim?

February 10, 2015 | Mark S. Humphreys

Grand Prairie insurance lawyers need to be able to explain to clients what happens when an insurance company pays a claim. There may be several things that happen. One of those things is that the insurance carrier has a subrogation claim to all amounts paid by the insurance carrier. A 2009, San Antonio Court of Appeals opinion helps explain how this sometimes works. The style of the case is, Bay Rock Operating Company v. St. Paul Surplus Lines Insurance Company. Here is some relevant information from that case.

The facts in this case are that the insured hired Bay Rock to design and drill a well. The insured had blowout insurance through St. Paul. The policy had a subrogation provision in it entitling St. Paul to contractual subrogation to all claims if it paid anything under the policy. Bay Rock performed negligently, and there was a blow out. The insured filed a claim which St. Paul eventually paid. The St. Paul brought a subrogation claim against Bay Rock. At trial, the jury found Bay Rock 51% liable. Bay Rock then filed this appeal.

On appeal, Bay Rock argued that St. Paul did not prove that the amount paid under the policy was covered by the policy and, therefore, St. Paul did not prove its entitlement to subrogation. This Court of Appeals held that St. Paul was suing under contractual, not equitable, subrogation. The Policy states in relevant part, … upon reimbursement hereunder to the Insured of any loss … St. Paul is subrogated to all the Insured’s rights of recovery against any other person … who may be liable for such loss …. Therefore, under the plain terms of the contract, St. Paul’s right to subrogation arose upon payment of any loss. Once St. Paul paid the money to insured, it had a contractual right to step into the shoes of the insured and initiate the suit against Bay Rock as subrogee of the insured. Under the law of subrogation, based on its contractual subrogation right, St. Paul stepped into the shoes of its insured, and obtained their insureds’ right to sue Bay Rock for negligently causing the blowout, subject to any defenses Bay Rock could assert against the insured. Therefore, St. Paul was correct that, upon convincing the trial court that it had a contractual subrogation right as a matter of law, it only had to prove the elements of its negligence claim to the jury. Thus, the ruling in favor of St. Paul was upheld.

Reading An Insurance Policy

February 8, 2015 | Mark S. Humphreys

Insurance lawyers in Dallas will tell you to “read the policy.” Now the reality is that very few people ever read their insurance policy. Most people rely on their insurance agent to sell them a policy they want. This expectation often makes the agent responsible for selling a person a policy that does not provide the coverage that is expected.

An insurance publication called the Insurance Journal contains lots of good information from the insurance world. Most people involved in the insurance business have ready access to this publication, including insurance company managers, agents, adjustors, and attorneys who do insurance work.

A January 5, article is worth reading. It is authored by Christopher J. Boggs and is titled “How To Read Any Insurance Policy: 12 Rules.” Here is what the article tells us.

Suing The Adjuster

February 7, 2015 | Mark S. Humphreys

Arlington insurance attorneys can tell you that it is sometimes hard to sue an adjuster. Federal Courts look at these situations really close. This is illustrated in the 2014, US Northern District Court, Dallas Division, case, One Way Investments, Inc. v. Century Surety Company, et al. Here is some information from that case.

One Way sued the insurance company and the adjuster, Mattoni. One Way asserts that its own roofing contractor and public adjusters determined, after conducting a thorough inspection of the exterior and interior, that hail had caused extensive damage requiring urgent repairs and replacement of the roof and building appurtenances, and that Mattoni under-scoped the damages during his investigation. One Way also avers that Century, VeriClaim, and Mattoni misrepresented that the damage to the property was not covered under the Policy, even though the damage was caused by a covered occurrence, thereby violating Section 541.060(a)(1); failed to make an attempt to settle One Way’s claim in a fair manner, although they were aware of their liability under the Policy, thereby violating Section 541.060(a)(2)(A); failed to affirm or deny coverage of One Way’s claim within a reasonable time, thereby violating Section 541.060(a)(4); refused to fully compensate One Way under the Policy, even though Mattoni failed to conduct a reasonable investigation, thereby violating Section 541.060(a)(7); and knowingly or recklessly made false representations as to material facts and/or knowingly concealed all or part of material information from One Way. One Way sued Mattoni under Section 541.151 based on the alleged violations of Section 541.060(a). The case was filed in State Court and the insurance company had the case removed to Federal Court.

Ome Way filed for remand back to the State Court.