COURT ENFORCES “INSURED’S DUTIES AFTER LOSS” – ABATES LAWSUIT PENDING INSURED’S COOPERATION IN COMPLETING EUO, PROVIDING REQUESTED DOCUMENTS AND ALLOWING PROPERTY RE-INSPECTION

Last week, the U.S. District for the Northern District of Texas granted an insurer’s motion to abate a lawsuit pending the insured’s completion of an examination under oath (EUO), and other duties after loss, as conditions precedent for bringing a lawsuit alleging breach of contract, breach of the duty of good faith and fair dealing, DTPA and Texas Insurance Code violations. In Cooper v. Metropolitan Lloyds Insurance Company of Texas, 2018 WL 620206 (N.D. Tex. January 30, 2018), the insured presented a claim for wind and hail damage to their residence on April 11, 2016. The insurer investigated the claim and on April 25, 2016, it promptly paid $12,867.88 for covered losses based on its estimates. The following month, a public adjuster contacted the insurer but did not submit a damage estimate until September 2016. The insurer requested additional information and documents to support the claim and, to re-inspect the property. But those requests went unanswered and both parties retained counsel.

Finally, over a year after the date of loss, in May 2017, the insured agreed to submit to the EUO and was asked to bring documents related to the damage being claimed. But during the EUO, she refused or was unable to answer many questions regarding the items claimed and failed to provide the requested documents and information. The insured then ended the EUO, over the insurer’s objection, before the insurer was through with its questioning. The insurer also requested the opportunity to re-inspect the property with the insured’s public adjuster but was unable to do so before suit was filed. The lawsuit was removed to federal court and the insurer moved to abate the case pending the insured’s cooperation and compliance with its “Duties After Loss” under the policy.

In response, the insured’s attorney argued that the insurer could get the same information through discovery and abatement was not necessary. The court analyzed policy terms requiring the insured’s cooperation with its duties after loss as a condition precedent to bringing a lawsuit and applying Texas law, determined that abatement of the lawsuit pending the insured’s compliance with those duties was the proper legal remedy. Accordingly, the court ordered the case abated for “sixty (60) days to allow time for Plaintiff to fully cooperate with Defendant by completing an examination under oath, supplying the requested examination documents, and allowing Defendant to re-inspect the damaged property as required by the insurance policy.”