Texas Insurance Law Newsbrief - August 29, 2024
INSURED’S FAILURE TO COOPERATE, ALLOW INSPECTION OF DAMAGED PROPERTY AND TO PROVIDE DOCUMENTS – PRECLUDES RECOVERY
The United States District Court for the Southern District of Texas recently granted summary judgment and dismissed the insured’s claims with prejudice in a property damage coverage lawsuit alleging breach of contract and bad faith claims.
In Ansah v. Nationwide Prop. & Cas. Ins. Co., No. H-23-2488, 2024 U.S. Dist. LEXIS 151472 (S.D. Tex. 2024), the insured alleged that Nationwide underpaid their property insurance claim. The policy at issue contained, among other things, a provision that required the insured to allow inspection of damaged property. Nationwide requested that the insured provide information regarding the damaged property but were advised that it had been disposed of and no documentation of the items existed. The insured’s counsel alleged that Nationwide failed to provide a basis for their request and claimed that this was not required under the policy. The insured then sued Nationwide, alleging breach of contract, breach of the duty of good faith and fair dealing, as well as violations of several provisions of the Texas Insurance Code and Texas Deceptive Trade Practices Act, common law fraud, and conspiracy.
Nationwide moved for summary judgment on all claims asserted arguing that in Texas, an insurer has no duty to provide coverage if the insured fails to cooperate in the investigation, or fail to show the damaged property, if the insured’s failure prejudices the insurer. Under the facts of this case, the insured failed to cooperate with the investigation as required under the policy and failed to submit the required documentation regarding the damaged property. As such, the insured’s breach of contract claim failed. As for the insured’s claim based on the breach of the duty of good faith and fair dealing, the insured failed to provide evidence of an “injury independent of the loss of policy benefits” which would allow their claim to move forward. The insured’s claims under the Texas Prompt Payment of Claims act, and claims under the Texas Insurance Code also failed because the insured failed to provide evidence that Nationwide failed to meet the deadlines or engaged in the prohibited practices under the Texas Insurance Code. The insured also failed to identify any materially false representations or provide evidence to support their fraud and conspiracy claims.
As such, all of the insured’s claims against Nationwide failed and summary judgment was granted in favor of Nationwide, dismissing all claims with prejudice.
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PRE-SUIT NOTICE MUST BE GIVEN TO INSURER TO BE SUED - NOT JUST ANY INSURER – CASE ABATED AND ADMINISTRATIVELY CLOSED
Lotus Sky, LLC v. Lexington Ins. Co., No. 2:24-cv-00085-Z-BR, 2024 U.S. Dist. LEXIS 150355 (N.D. Tex. 2024) involves a claim against an insurer, Lexington Insurance Company, alleging breach of contract, breach of the duty of good faith and fair dealing, violation of the Texas Insurance Code, and violations of the Texas Business and Commercial Code.
Under the Texas Insurance Code, an insured must provide written notice “no later than the 61st day” before filing a lawsuit. The notice must provide (1) a statement of the acts or omissions giving rise to the claim; (2) the specific amount alleged to be owed by the insurer on the claim for damage to or loss of covered property; and (3) the amount of reasonable and necessary attorney's fees incurred by the claimant. This notice requirement is “intended to give a defendant insurer a right an opportunity to make a settlement offer” and failure to provide such notice allows a defendant insurer to file a plea in abatement.
The insured attempted to argue that it provided pre-suit notice to another insurance company, and that notice to the other insurance company sufficed as pre-suit notice to Lexington. The Court here was not persuaded by such argument and found that the insured had to provide pre-suit notice to Lexington and notice to another insurer did not satisfy the requirement set out in the Texas Insurance Code.
Accordingly, the case was abated and would remain abated until 60 days after the date the insured provided Lexington with proper pre-suit notice. The case was then administratively closed and stayed.
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