Pre-Suit Notice And Attorney Fees – 3

Bad faith insurance lawyers will always sue for recovery of attorney fee when forced to file a lawsuit.  Here is a 2022, opinion dealing with attorney fees under Texas Insurance Code, Section 542A.  The opinion is from the Western District of Texas, Waco Division, and is styled, Waco Hippodrome Inc. v. Central Mutual Insurance Company D/B/A Central Insurance et al.

Hippodrome filed a lawsuit against it’s insurer, Central and others alleging violation of the Texas Insurance Code and breach of contract.  As part of the lawsuit, Hippodrome also sought attorney fees.  Central filed a motion seeking that Hippodrome’s request for attorney fees be dismissed based on the assertion there was non compliance by Hippodrome with Section 542A.003(b)(2).

In order to prevail in its Attorney’s Fee Motion, Central has the burden to “prove that Central was entitled to but was not given a presuit notice stating the specific amount alleged to be owed by the insurer under Section 542A.003(b)(2) at least 61 days before the date the action was filed by the claimant Hippodrome.”

In this case, it is undisputed that Hippodrome sent Central a presuit notice pursuant to Section 542A.003(a) and 542A.007(d) by at least October 5, 2021.  It is undisputed that Hippodrome’s October 5, 2021 demand and notice letter was sent to, and received by, Defendant Central and intended to satisfy Section 542A.003’s presuit notice requirement.  It is also undisputed that the Second Action, in which the Attorney’s Fee Motion is pending, was filed on April 1, 2022.  Thus, the undisputed evidence demonstrates that Hippodrome provided Central, the insurer, at least one hundred seventyseven (177) days between the date of its October 5, 2021 presuit notice letter and the date the Second Action was filed, in compliance with 542A.003.

The underlying purpose of the presuit demand letter and statutorily required sixtyone day waiting period in Chapter 542A is, in part, to trigger several statutory rights of the insurer, including (1) the right to request to inspect, photograph, or evaluate the property that is the subject of the claim with 30 days of receipt of a 542A presuit demand letter, and (2) the right to “elect to accept whatever liability an agent might have to the claimant for the agent’s acts or
omissions related to the claim” pursuant to Section 542.004, .006.  But here, in addition to the one hundred seventyseven (177) days between the date of the October 5, 2021 presuit notice letter and the filing of the Second Action, Hippodrome offered uncontested evidence that Central was given at least four opportunities to inspect the Property, including two such inspections between the date of the presuit notice letter and filing of the Second Action.  Although Chapter 542A also provides the insurer the right to file a “plea in abatement” so that the insurer may have an opportunity to inspect the subject property, Central did not file a plea in abatement in the present Action presumably because the purpose of the statute’s pursuit demand requirement had been fulfilled.  Thus, not only has Hippodrome complied with the letter of Chapter 542A’s presuit notice requirement, Hippodrome also appears to have satisfied the underlying purpose of Chapter 542A’s presuit notice requirement by permitting Central multiple opportunities to inspect the Property.

Central has presented no evidence that Hippodrome’s presuit notice letter was defective in such manner as to support the Attorney’s Fee Motion Under Section 542A.003, the claimant’s presuit notice must include (1) a statement of the acts or omissions giving rise to the  claim, (2) the specific amount alleged to be owed by the insurer, and (3) the amount of
reasonable and necessary attorney’s fees.  In this case, Central offers no evidence or argument that Hippodrome’s October 5, 2021 presuit notice letter failed to satisfy the requirements set forth in 542A.003(b), relying exclusively on the argument that Hippodrome’s presuit demand letter was untimely.  Although Central was unwilling during oral argument to concede that Hippodrome’s presuit notice letter satisfied the requirements of 542A.003(b), Central failed to
point to any specific deficiency in the form or specificity of Hippodrome’s October 5, 2021 demand and, more importantly, offered no evidence of any deficiency in the form of the presuit notice letter.  Under Chapter 542A, the burden of proof falls squarely on Central.  Without offering any legal authority or evidence the Hippodrome’s October 5, 2021 letter failed to satisfy Chapter 542A’s specific presuit notice requirements, Section 542.003(b) cannot serve as a basis for granting Central’s Attorney’s Fee Motion.

This opinion expands on this issue and is a good read for situations where a demand for attorney fees is made under 542A.

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