Justia Insurance Law Opinion Summaries

A roofing contractor in Texas, Stonewater Roofing, Ltd. Co., filed a lawsuit against the Texas Department of Insurance and its Commissioner, Cassie Brown, seeking to invalidate Texas’s licensing and dual-capacity regulations for public insurance adjusters. Stonewater, which is not a licensed public insurance adjuster, argued that these laws violated free speech and due process rights under the First and Fourteenth Amendments of the U.S. Constitution. The trial court dismissed the case, siding with the state regulator, who argued that the laws regulated professional conduct, not speech, and that Stonewater failed to state valid void-for-vagueness claims under the Fourteenth Amendment’s Due Process Clause.The Court of Appeals for the Seventh District of Texas reversed the trial court's decision, holding that the regulations triggered First Amendment scrutiny because the business of public insurance adjusting necessarily involves speech. The court also held that Stonewater’s vagueness challenges survived because the Public Insurance Adjusters Act did not clearly proscribe Stonewater’s alleged conduct.The Supreme Court of Texas reversed the court of appeals' judgment. The court held that the challenged statutes do not regulate or restrict speech but, rather, representative capacity with a nonexpressive objective: employment to act on behalf of an insured in negotiating for or effecting the settlement of a claim. The court also held that the statutes are clear enough in proscribing Stonewater’s alleged conduct to preclude both its as-applied and facial vagueness challenges. The court concluded that Stonewater failed to state cognizable First and Fourteenth Amendment speech and vagueness claims, and therefore, the trial court properly granted the state regulator's dismissal motion. View "TEXAS DEPARTMENT OF INSURANCE v. STONEWATER ROOFING, LTD. CO" on Justia Law

The case involves Sunny Letot, who owned a vintage Mercedes-Benz sedan that was rear-ended by a driver insured by USAA Casualty Insurance Company. USAA determined that the cost of repair exceeded the car's pre-collision value and deemed it a "total loss" or "salvage." USAA sent Letot checks to cover the car’s pre-collision value and eight days of lost use. Without waiting for Letot to accept its offer, USAA reported to the Texas Department of Transportation (TxDOT) that Letot’s car was salvage. Letot disagreed with USAA’s determinations and never cashed its proffered checks. She claims that USAA’s premature filing led TxDOT to invalidate her vehicle’s regular title, which prevented her from using or selling her sedan. Letot argued that USAA’s actions constituted conversion of her car.The district court certified a class of claimants whose cars USAA had deemed salvage and about whom USAA filed a report within three days of sending the claimant a check for the salvage vehicle. The class sought injunctive relief and damages. The court of appeals affirmed the class certification.The Supreme Court of Texas concluded that class certification was impermissible in this case. The court found that neither Letot nor any class member had standing to pursue injunctive relief, so Letot could not litigate an individual claim for an injunction, much less represent a class. Letot did, however, have standing to seek damages. But as to damages, the certified class did not satisfy the requirements of predominance or typicality. The court reversed the court of appeals’ judgment and remanded the case to the trial court to resolve Letot’s individual claim. View "USAA CASUALTY INSURANCE COMPANY v. LETOT" on Justia Law

The case revolves around a dispute between the Texas Windstorm Insurance Association (TWIA) and Stephen Pruski, a policyholder. TWIA is a quasi-governmental body that provides windstorm and hail insurance to property owners in the coastal region of Texas who cannot get this coverage in the regular market due to the risk of catastrophic hurricanes. Pruski filed two claims with TWIA after Hurricane Harvey and a subsequent storm, and TWIA partially accepted and partially denied coverage for both claims. Pruski then filed a lawsuit in Nueces County District Court, seeking damages for TWIA’s alleged improper denial of coverage. The case was assigned to a judge who was not appointed by the Judicial Panel on Multidistrict Litigation (MDL), as required by Texas Insurance Code Section 2210.575(e).The case was initially heard in the Nueces County District Court, where TWIA filed a motion for summary judgment, arguing that the damages for which Pruski sought recovery were not covered by his policy as a matter of law. The district court granted the motion and rendered a final, take-nothing judgment for TWIA. Pruski appealed, arguing that the trial judge was not qualified to render judgment because she had not been appointed by the MDL panel. The court of appeals reversed the district court's judgment, holding that a trial judge who is not appointed by the MDL panel is “without authority to render judgment” in a suit under Chapter 2210.The Supreme Court of Texas disagreed with the court of appeals' interpretation of the statute. The court held that while the requirement for a judge to be appointed by the MDL panel is mandatory, it is not jurisdictional. Therefore, the district court had subject matter jurisdiction over the suit, even though the presiding judge was not appointed by the MDL panel. The Supreme Court of Texas reversed the court of appeals’ judgment and remanded the case to that court for further proceedings. View "TEXAS WINDSTORM INSURANCE ASSOCIATION v. PRUSKI" on Justia Law

Cobalt International Energy partnered with three Angolan companies to explore and produce oil and gas off the coast of West Africa. Later, the federal Securities and Exchange Commission announced it was investigating Cobalt for allegations of illegal payments to Angolan government officials and misrepresentation of the oil content of two of its exploratory wells. This led to a significant drop in Cobalt’s stock price and prompted a class action lawsuit from Cobalt's investors, led by GAMCO, a collection of investment funds that held Cobalt shares. Prior to these events, Cobalt had purchased multiple layers of liability insurance from a number of insurance companies, collectively referred to as the Insurers in this case. When the allegations surfaced, Cobalt notified the Insurers, who denied coverage on the grounds that Cobalt's notice was untimely and certain policy provisions excluded the claims from coverage.In 2017, Cobalt filed for bankruptcy and began settlement negotiations with GAMCO. Eventually, a settlement agreement was reached, which stipulated that Cobalt would pay a settlement amount of $220 million to GAMCO, but only from any insurance proceeds that might be recovered. Cobalt and GAMCO then jointly sought approval of the settlement from the federal court and the bankruptcy court, both of which granted approval.The Insurers then filed a petition for a writ of mandamus, arguing that the settlement agreement was not binding or admissible in the coverage litigation, that Cobalt had not suffered a "loss" under the policies, and that GAMCO could not sue the Insurers directly.The Supreme Court of Texas held that (1) Cobalt had suffered a “loss” under the policies because it was legally obligated to pay any recoverable insurance benefits to GAMCO, (2) GAMCO could assert claims directly against the Insurers, and (3) the settlement agreement was not binding or admissible in the coverage litigation to establish coverage or the amount of Cobalt’s loss. The court reasoned that the settlement was not the result of a "fully adversarial proceeding," as Cobalt bore no actual risk of liability for the damages agreed upon in the settlement. The court conditionally granted the Insurers' petition for a writ of mandamus in part, ordering the trial court to vacate its previous orders to the extent they relied on the holding that the settlement agreement was admissible and binding to establish coverage under the policies and the amount of any covered loss. View "IN RE ILLINOIS NATIONAL INSURANCE COMPANY" on Justia Law

This case involves a dispute between a homeowner, Mario Rodriguez, and his insurance company, Safeco Insurance Company of Indiana. After a tornado damaged Rodriguez's home, Safeco issued a payment of $27,449.88, which Rodriguez accepted. Rodriguez's counsel then informed Safeco that it owed an additional $29,500 and threatened to sue. Rodriguez sued Safeco, bringing several claims, including breach of contract and statutory claims under the Insurance Code. Safeco invoked the insurance policy’s appraisal provision and subsequently issued a check to Rodriguez for $32,447.73, which it viewed as full payment of the appraisal amount due under the policy. Safeco also paid an additional $9,458.40, which it claimed would cover any interest possibly owed on the appraised amount.The Supreme Court of Texas was asked to answer a certified question from the United States Court of Appeals for the Fifth Circuit: “In an action under Chapter 542A of the Texas Prompt Payment of Claims Act, does an insurer’s payment of the full appraisal award plus any possible statutory interest preclude recovery of attorney’s fees?” The Supreme Court of Texas held that the answer is yes. When an insurer has fully discharged its obligations under the policy by voluntarily paying the appraised amount, plus any statutory interest, in compliance with the policy’s appraisal provisions, section 542A.007 of the Insurance Code prohibits an award of attorney’s fees. This is because there is no remaining “amount to be awarded in the judgment to the claimant for the claimant’s claim under the insurance policy,” which means no attorney’s fees are available under section 542A.007(a)(3)’s formula. View "RODRIGUEZ v. SAFECO INSURANCE COMPANY OF INDIANA" on Justia Law

The Supreme Court conditionally granted a writ of mandamus in this action brought by Plaintiff, Thalia Harris, against Defendant, her insurer, for underinsured motorist (UIM) benefits, holding that the trial court did not abuse its discretion by quashing requested discovery and by ordering Defendant's counsel to pay $2,000 as a sanction.Following a car collision, Plaintiff settled with the other driver for his policy limits and sued Defendant for UIM benefits. Defendant disputed the amount of Plaintiff's alleged damages and sought production from her primary care physician of Plaintiff's medical records spanning a period of ten years during which Plaintiff was involved in five other car accidents, some of which caused injuries similar to those Plaintiff sustained in the accident at issue. The trial court granted Plaintiff's motion to quash the discovery and for sanctions. The Supreme Court conditionally granted a writ of mandamus and ordered the trial court to vacate its order quashing deposition notices and ordering sanctions, holding (1) the trial court's order vitiated or several compromised Defendant's ability to present a viable defense at trial, and an appeal was not an adequate remedy; and (2) the trial court clearly abused its discretion by quashing Plaintiff's discovery requests. View "In re Liberty County Mutual Insurance Co." on Justia Law

The Supreme Court reversed the judgment of the court of appeals in the underlying insurance dispute, holding that the insurance policy at issue did not incorporate the payout limits in an underlying service agreement.ExxonMobil Corporation hired Savage Refinery Services to work as an independent contractor at Exxon's Baytown refinery, and the parties memorialized their arrangement with a service agreement. Under the agreement, Savage promised to obtain at least a minimum stated amount of liability insurance for its employees and to name Exxon as an additional insured. Savage ultimately procured five different insurance policies, three of which were underwritten by National Union Fire Insurance Company and Starr Indemnity & Liability Insurance Company. After a workplace accident at the Baytown Refinery two injured employees sought compensation. Plaintiffs settled with Exxon for $24 million. When National Union and Starr denied Exxon coverage under their umbrella policies Exxon sued for breach of contract. The trial court ruled for Exxon. The court of appeals reversed, concluding that Exxon was not insured under National Union's umbrella policy. The Supreme Court reversed, holding that Exxon was an "insured" under National Union's umbrella policy and that the lower court's ruling with respect to Starr's bumbershoot policy was predicated on a similar error. View "ExxonMobil Corp. v. Nat'l Union Fire Insurance Co. of Pittsburgh, PA" on Justia Law

The Supreme Court reversed in part the judgment of the court of appeals in this insurance dispute, holding that Tex. Ins. Code 705.051 does not displace the common-law rule that insurers may not avoid liability under an insurance policy based on a misrepresentation in an insurance application unless the insurer pleads and proves the insured intended to deceive or induce the insurer to issue the policy.At issue was whether the common-law scienter requirement was repugnant to the plain language of section 705.051, which provides that a misrepresentation in an application for an insurance policy does not defeat recovery under the policy unless the misrepresentation is of a material fact and affects the risks assumed. The court of appeals held that the common-law scienter requirement survived section 705.051's recodification, and therefore, summary judgment was not proper. The Supreme Court affirmed in part, holding (1) section 705.051 does not displace the common-law rule; and (2) as a matter of law, the insurer in this case was exempt from complying with the ninety-day notice provision in Texas Ins. Code 705.005. View "American Nat'l Insurance Co. v. Arce" on Justia Law

The Supreme Court reversed the judgment of the court of appeals in this insurance dispute, holding that an insurance policy does not incorporate by reference the payout limits in an underlying service agreement.Two employees that were severely burned in a workplace accident at an ExxonMobil Corporation refinery sought compensation for their injuries and settled for a collective amount over $24 million. When two of Exxon's insurers, National Union Fire Insurance Company and Starr Indemnity & Liability Insurance Company, denied Exxon coverage under their umbrella policies Exxon sued both insurers for breach of contract. The trial court sided with Exxon, ruling that National Union was obligated to reimburse Exxon. The court of appeals reversed, concluding that Exxon was not insured under National Union's umbrella policy. The Supreme Court reversed, holding (1) Exxon was an insured under National Union's umbrella policy, and the court of appeals erred in ruling otherwise; and (2) because the court of appeals' holding with respect to Starr's policy was predicated on a similar error, judgment in favor of Starr must also be reversed. View "ExxonMobil Corp. v. Nat'l Union Fire Ins. Co. of Pittsburgh, PA" on Justia Law

The Supreme Court held that the Texas Insurance Code does not authorize a private cause of action by a physician against an insurer for payment of claims that accrued prior to 2020 and that Plaintiffs' claims for recovery in quantum merit and for unfair settlement practices failed as a matter of law.In each of the consolidated cases before the Supreme Court, Plaintiffs, groups of emergency medicine doctors outside of an insurer's provider network, brought suit against Defendant, the insurer, alleging that it did not pay them at the usual and customary rates for treating its insureds. Defendant moved for dismissal under Fed. R. Civ. P. 12(b)(6) for failure to state a claim. The district court granted the motion with respect to Plaintiff's implied contract and quantum merit claims and with respect to claims brought under the Emergency Care Statutes. On appeal, the court of appeals certified a question to the Supreme Court. The Supreme Court held (1) the Insurance Code does not create a private cause of action for claims under the Emergency Care Statutes; and (2) with respect to one case, the lower courts did not err in dismissing Plaintiffs' quantum merit and unfair settlement practices claims. View "Texas Medicine Resources, LLP v. Molina Healthcare of Texas, Inc." on Justia Law