Remember – There Is An Obligation To Cooperate With Your Own Insurance Company When Making A Claim

Experienced insurance law lawyers in Hamilton, Texas, know the above is true.  This obligation is illustrated in a 2017, hail damage claim opinion out of the Southern District, Houston Division.  The opinion is styled, Metro Hospitality Partners, Ltd., d/b/a Crowne Plaza Hotel v. Lexington Insurance Company.

When a business sues its property insurer and the type of damage is clearly covered, the usual pattern is that the insurance company has failed to pay anything, has failed to pay anything close to what the insured claimed, or has taken too long to pay.  This case is different.  Here, the property insurer promptly adjusted the claim the insured presented and paid a large sum within the month after the hailstorm that damaged the insured’s hotel.  The insurer identified and paid what it concluded were the remaining amounts owed about two months after that.  The insured claimed that more money was owed.  The insurer asked for documents and information substantiating the demand for additional payment.  The insured refused.  The policy required the insured to “cooperate” with the insurer.  What we have here, says the insurer, is a failure to cooperate.  What we have here, says the insured, is a breach of the insurance contract and of the duty of good faith and fair dealing.

After a hail storm, the insured, Metro, promptly notified its Lexington.  Lexington quickly responded, inspected, and identified the amount of covered damage and the amount it owed.  The parties disputed whether the hailstorm damage justified an insurer-paid new roof, or whether normal wear and tear made a new roof Metro’s responsibility.

Metro presented a $2,664,427.44 estimate of its added covered losses over five months later, including the cost of a new roof, again without substantiating documents or information.  Lexington asked for substantiation.  Without complying, and before Lexington issued a final decision, Metro sued.  After filing this suit, Metro submitted an estimate for $10 million in covered losses and damages.  Before and after Metro filed this lawsuit, Lexington continued to ask for documents and information supporting the claims.  Metro asserted and continues to assert that Lexington did not need most of the documents or information and therefore that Metro had no duty to provide them.

After discovery, Lexington moved for summary judgment, Metro responded, and Lexington replied.  Based on a careful review of the motion, this court grants Lexington’s motion for summary judgment dismissing Metro’s extracontractual claims for breach of the duties of good faith and fair dealing.  The court denies Lexington’s motion for summary judgment on the breach of contract claims, but without prejudice and with leave for Lexington to re-urge its motion after Metro complies with the following Order:

The insured, Metro Hospitality, is ORDERED to produce the documents and information the insurer, Lexington Insurance, previously sought, updated as explained below, relating to Metro’s claims that Lexington pay additional losses and damages.  To avoid confusion, Lexington must give Metro a copy of the outstanding requests, updated as necessary to reflect information learned and events occurring since the requests were made, no later than April 7, 2017.  Metro is ordered to fully respond no later than May 8, 2017.

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