Pre-Suit Notice Of Damages

Bad Faith insurance lawyers understand that when sending an insurance company a pre-suit demand for damages that sending an improper letter ends up like sending no letter at all under certain circumstances.  One of the issues related to pre-suit notice letters was the topic in a January 2023 opinion from the Northern District of Texas, Dallas Division.  The opinion is styled, J. David Koncak v. American Security Insurance Company.

Koncak suffered a hail damage claim in June 2019 and then again in October 2019.  The claims resulted in a dispute and Koncak hired an attorney.  The attorney sent a pre-suit demand letter as required by the Texas Insurance Code, Section 542A.003(b).  The letter demanded damages in the amount of $550,000 plus $5,000 in attorney fees.

Koncak eventually filed suit.  American Security filed motions contending the notice letter did not satisfy the requirements of 542A.003(b).

Texas Insurance Code section 542A.003 requires that “not later than the 61st day before the date a claimant files an action to which this chapter applies in which the claimant seeks damages from any person, the claimant must give written notice to the person.”  Pursuant to Section 542A.007(d) if the claimant fails to provide sufficient notice, then the court “may not award to the claimant any attorney’s fees incurred after the date the defendant files the pleading with the court.”  A party entitled to notice, but which did not receive such notice, must file a pleading with the court within 30 days after the date the defendant files an original answer to preclude attorney’s fees.

It is undisputed that American Security was entitled to pre-suit notice under section 542A.003, and the parties only dispute whether section 542A.003(b)(2) is satisfied.  American Security argues that Koncak’s pre-suit demand letter did not include “the specific amount alleged to be owed by the insurer on the claim for damage to or loss of the covered property,” so that Koncak is precluded from recovering attorney’s fees in this suit.  American Security contends that the pre-suit demand letter does not specify the amount claimed, but instead is “vague and ambiguous” and demands a “conservative estimate of” $550,000.  Further, American Security urges the court to consider the purpose behind section 542A.  Koncak, in
turn, contends that the pre-suit demand letter is adequate because it provided a specific dollar amount.  The court agrees with Koncak.

The statute only requires that pre-suit notice includes “the specific amount alleged to be owed by the insurer.”  The pre-suit demand letter specified $550,000 for damages incurred to Koncak’s property.  American Security contends that the demand amount is inadequate because the calculation is illogical, and that another Texas district court has commended a plaintiff for “submitting damage appraisals that specifically addressed the amount of property damage owed under the claim.  But the statute does not require reasonableness or submitting damage appraisals in pre-suit notice.

The court agrees with its sister courts that “the specific amount alleged to be owed” requirement is satisfied when the notice includes a specific dollar amount.  Even if the pre-suit
demand letter’s specific amount was an estimate and “vague and ambiguous” as American Security contends, that does not render the notice invalid under section 542A.003(b) because the letter alleges an amount to be owed.  The statute does not require proof of damages or reasonableness for pre-suit notice, only a specific amount alleged to be owed.  The court
declines to read any additional requirements for pre-suit notice into section 542A.003(b), and thus, the court concludes the pre-suit demand letter satisfies the statute.

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