Case Notes

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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Future Medical Expenses After Escabedo

January 11th, 2017 By Anne-Marie Abarado

In Haygood v. Escabedo, 356 S.W.3d 390, 399 (Tex. 2011), the Texas Supreme Court held that “only evidence of recoverable medical expenses is admissible at trial,” but no cases have directly addressed the impact of Escabedo on claims of future medical expenses. Plaintiffs are not required to use expert testimony to establish future medical expenses, but they must show there is a “reasonable probability” that they will incur expenses and must present evidence to show “future medical expenses are required
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New Fifth Circuit Decision Revisits Stowers Liability in the Multiple-Insured Context

January 7th, 2017 By David L. Plaut

If you were paying attention to friends and family over the holidays and not reading slip opinions, you may have missed the recent Fifth Circuit decision in OneBeacon Ins. Co. v. T. Wade Welch & Assocs., 841 F.3d 669 (5th Cir. 2016).   Wade Welch held that a valid Stowers demand could offer to settle with one and not all insureds under a policy.   Id. at 677-82. Under Texas law, an insurer may be liable for negligently failing to settle within
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​Soriano – The best friend insurance carriers don’t know they have.

December 14th, 2016 By Catherine Hanna

Here at Hanna & Plaut, we are happy to answer our clients’ questions about Texas law and how that impacts their claims handling. One of the most frequent questions we get involves claims with multiple claims and inadequate policy proceeds to settle those claims. Our clients struggle with the problem of what to do when everyone cannot be made whole. The Texas Supreme Court has given carriers very clear direction in these cases. In Texas Farmers Ins. Co. v. Soriano,
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