Case Notes


BBQ Season Brings Coverage Conundrum

July 26th, 2017 By Anne-Marie Abarado

It’s camping and barbecue season, and that usually involves more propane gas usage.  Injuries resulting from the emission of propane gas may not be covered under certain insurance policies.  Commercial general liability, homeowner, and auto insurance policies often have a pollution exclusion which excludes coverage for damage to property or injuries resulting from certain pollutants. Propane is classified as an asphyxiant gas and exposure to levels above 2,100 ppm is considered immediately dangerous to life or health. See The National
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Menchaca At Work: Houston Court Strengthens Appraisal Defenses, Requires Independent Injury for EC Claims

July 11th, 2017 By Eric S. Peabody

Even before the dust has settled on the Texas Supreme Court’s decision in USAA v. Menchaca, — S.W.3d —, 2017 WL 1311752 (Tex. Apr. 7, 2017, mot. reh’g filed), Texas intermediate appellate courts are busily construing its holdings. In National Security Fire & Casualty Co. v. Hurst, No. 14-15-00714-CV, 2017 WL 2258243 (Houston [14th Dist.] May 23, 2017, n.p.h.), the court used Menchaca to reverse a judgment in favor of the insured and render judgment for the carrier in a
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Great American Ins. Co. v. Hamel: The “Fully Adversarial Trial” On Trial

June 27th, 2017 By Jeffrey C. Glass

In the much-anticipated Hamel decision, the Texas Supreme Court finally addressed the definition of a “fully adversarial trial” under the Gandy rule, holding that a reviewing court must focus on the insured’s incentives to contest liability, rather than on retroactive evaluation of tactical trial details.   Great American Ins. Co., et al v. Hamel, — S.W.3d –, No. 14-1007, 2017 WL 2623067  (Tex. June 16, 2017) (citing State Farm Fire & Casualty Co. v. Gandy, 925 S.W.2d 696, 714 (Tex. 1996)). The decision
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Who’s on First – The Continuing Dilemma of Primary/Excess Issues

June 8th, 2017 By Jeffrey C. Glass

In a recent decision, Judge Sparks of the Western District of Texas addressed allocation of insurance coverage among purportedly primary and excess policies. Starnet Ins. Co. v. Fed. Ins. Co., A-16-CA-664-SS, 2017 WL 1293578, at *5 (W.D. Tex. Apr. 6, 2017). Three policies were relevant to coverage for local pollution damage caused by an oil well blow-out for which the insured, BBX, was responsible. Two of the policies were not typical CGL policies but were specialty coverages written for oil
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Indemnity: Don’t get harmed by your “hold harmless” agreement!

May 23rd, 2017 By Eric S. Peabody

At a certain level of sophistication, contracting parties begin incorporating indemnity provisions in their contracts as a risk-assignment mechanism. Without input from knowledgeable counsel, these provisions can impose an unexpected burden on unsuspecting parties, fail to offer the protection sought by the provision’s proponent, or lull the parties into believing that insurance is unnecessary or redundant. The arcane rules governing the enforcement of indemnity agreements and the continuing confusion surrounding their application make them the ultimate “trap for the unwary.”
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Homeowner’s Recovery Limited to Direct Financial Loss

April 23rd, 2017 By Todd Key

Under Texas law, property insurance policies are intended solely to indemnify the insured for its actual monetary loss. Maryland Cas. Co. v. Palestine Fashions, Inc., 402 S.W.2d 883, 888 (Tex. 1966). “Since a contract for insurance . . . is ordinarily a contract of indemnity . . . the insured is entitled to receive the sum necessary to indemnify him, or to be put, as far as practicable, in the same condition pecuniarily in which he would have been had
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Bad Faith in Texas Survives . . . this Round

April 7th, 2017 By David L. Plaut

The USAA v. Menchaca opinion, which has been eagerly (and anxiously) awaited by insurers and insureds was released today. The Texas Supreme Court reversed and remanded the judgment in the policyholder’s favor in this Hurricane Ike case.  The jury had determined there was no breach of contract, but found an Insurance Code violation, including an unfair or deceptive practice and an unreasonable investigation.  The jury awarded Plaintiff $11,350 in damages. In reversing the judgment, the Court announced the five following important principles
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Unjustly Enriched Claimant Ordered to Reimburse Carrier

February 15th, 2017 By Jeffrey C. Glass

Our clients rarely find themselves in a position to recover payments issued based on an improper or dishonest claim. Banion v. Geovera Specialty Ins. Co., CV H-15-1595, 2016 WL 7242536, at *1 (S.D. Tex. Dec. 15, 2016) involved a rare instance of such an argument’s success, even though the policy was void. Banion sued GeoVera, her homeowner’s carrier, for water damage to her home and GeoVera paid her over $57,000, but later discovered Banion had never owned the property. GeoVera
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To Protect Itself, Insurer Must Consider Agency Principles Before Issuing Payment to Joint Payees

February 6th, 2017 By Eric S. Peabody

Insurers frequently issue checks to multiple payees – usually to some combination of the insured, adjuster/third-party administrator, mortgagee or lienholder, and attorneys. Carriers had long considered themselves protected when issuing payment to joint payees by simply including all payees on the check; if a bank cashed the check without the signature of all payees – or with the forged signature of a payee – liability for that error rested squarely with the bank. See, e.g., Benchmark Bank v. State Farm
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San Antonio Court of Appeals Issues Strong Appraisal Opinion

January 30th, 2017 By Sheila Tan

Adding to a line of Texas cases that found appraisal resolved all issues regarding a dispute over the cost and scope of damage to a homeowner’s property, the Fourth Court of Appeals in San Antonio recently affirmed a trial court’s decision to grant summary judgment after completion of appraisal and payment of the appraisal award by State Farm in Garcia v. State Farm Lloyds. No. 04-16-00209-CV, 2016 WL 7234064 (Tex. App.–San Antonio Dec. 14, 2016, no pet. h.). In Garcia,
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