FEDERAL COURT IN FORT WORTH FINDS PAYMENT TO INSURED AND MORTGAGEE CONSTITUTES CLAIM UNDER CHAPTER 542A AND DISMISSES CLAIMS AGAINST ADJUSTER

Judge Mark T. Pittman in Fort Worth recently granted an insurer’s motion to dismiss based on an election to accept liability under Section 542A.006 of the Texas Insurance Code and denied a motion to remand. In Lewis v. Safeco Ins. Co. of Indiana, 2021 WL 1250324, (N.D.Tex., April 5, 2021), the insureds filed suit after a disagreement with Safeco on damages, cost of repairs, and coverage for storm damage.  They filed suit against Safeco and the individual adjuster. Prior to the filing of the lawsuit, Safeco notified Plaintiffs’ counsel that they were accepting liability on behalf of the adjuster pursuant to Section 542A.006 of the Texas Insurance Code. The defendants timely removed the case and moved for dismissal of the adjuster. The insureds moved for remand. 

In response to the motion to dismiss the adjuster, the insureds argued that the payment under the insurance policy to the insured and the mortgagee of the home did not qualify as a "claim" under Chapter 542A because the payment was not made directly to the insured.  The Court rejected this argument, found the language of 542A to be unambiguous, and granted the adjuster's motion to dismiss.  The court also denied the motion to remand because the parties were diverse and the adjuster was improperly joined.  In a footnote to the opinion, the Court remarked that, despite the denial of the motion to remand, it “has serious concerns as to whether, as a practical matter, this simple hail-storm insurance coverage case should have been removed to federal court rather than remained in the state court.”