{"id":472,"date":"2023-02-21T19:10:50","date_gmt":"2023-02-21T23:10:50","guid":{"rendered":"https:\/\/blogs.duanemorris.com\/insurancelaw\/?p=472"},"modified":"2023-02-21T19:10:50","modified_gmt":"2023-02-21T23:10:50","slug":"mistakes-do-not-prove-malice-federal-court-in-dallas-enters-summary-judgment-on-policyholders-bad-faith-claim","status":"publish","type":"post","link":"https:\/\/blogs.duanemorris.com\/insurancelaw\/2023\/02\/21\/mistakes-do-not-prove-malice-federal-court-in-dallas-enters-summary-judgment-on-policyholders-bad-faith-claim\/","title":{"rendered":"Mistakes Do Not Prove Malice: Federal Court in Dallas Enters Summary Judgment on Policyholder\u2019s Bad Faith Claim"},"content":{"rendered":"

By: Daniel B. Heidtke<\/a><\/strong><\/p>\n

Alleging an insurer was \u201cdilatory, deficient, and pre-textual\u201d in its handling of a claim is not enough to state a claim for bad faith, explained the Northern District of Texas, as it entered summary judgment against a policyholder\u2019s breach of the duty of good faith and fair dealing claim earlier this month.\u00a0 After recognizing that the record lacked \u201cexpert testimony, proof of standard industry practices, [] legal authority\u201d or evidence that demonstrated duplicity, the court held that the policyholder failed to meet his burden.\u00a0 After all, the court explained, \u201cmistakes do not prove malice\u201d nor \u201cdoes delay ensure duplicity\u201d.<\/p>\n

In Craig Collins v. State Farm Lloyds,<\/em> Civil Action No. 3:21-cv-0982 (N.D. Tex. Feb. 3, 2023), Collins filed a claim on his homeowner\u2019s insurance policy after a tornado damaged his home.\u00a0 Collins\u2019s insurer sent an adjuster to his home, who \u201ctook photographs, inspected the property, and filed a report.\u201d\u00a0 The adjuster recommended a total replacement cost, which Collins\u2019s insurer paid.\u00a0 The insurer continued to adjust and investigate his claim, performing a second inspection of Collins\u2019s roof and, after paying an additional sum, sent a third adjuster to inspect Collins\u2019s home.\u00a0 The third adjuster recommended that the insurer pay an additional sum, which the insurer did, and hired an engineering firm to further inspect the property.\u00a0 After concluding its inspection, the engineering firm concluded that no further damages were due to the tornado, but were due to \u201cfoundation movement and age-related deterioration.\u201d\u00a0 Evidently unhappy with the outcome and perhaps equally unhappy with the process, Collins filed suit alleging breach of contract, violation of the Texas Prompt Payment of Claims Act, violations of the Texas Deceptive Trade Practices Act, and breach of the common-law duty of good faith and fair dealing.<\/p>\n

<\/p>\n

Collins\u2019s insurer moved for summary judgment on Collins\u2019s common law bad faith claim, Deceptive Trade Practices (Texas Insurance Code, Section 541) claim, and Prompt Payment of Claims (Texas Insurance Code, Section 542) claim.\u00a0 After noting that bad faith requires a plaintiff to show that \u201cthe insurer had no reasonable basis for denying or delaying payment of a claim, and [that] the insurer knew or should have known that fact[,]\u201d the court found that Collins had plainly failed to meet his burden.\u00a0 It dismissed Collins\u2019s proof as \u201cevidentiary odds and ends\u201d that failed to provide an \u201cobjective indication\u201d that his insurer\u2019s investigation was pre-textual.<\/p>\n

The court also rejected Collins\u2019s argument that because \u201cas he sees it\u201d his insurer has \u201cno reasonable basis\u201d for refusing to pay \u201cthe remaining covered damage,\u201d he had presented evidence in support of his bad faith claim.\u00a0 Relying on State Farm Fire & Cas. Co. v. Simmons<\/em>, 963 S.W.2d 42, 44 (Tex. 1998), the court held, a \u201cbona fide coverage dispute [] does not demonstrate bad faith.\u201d\u00a0 And because Collins\u2019s common law bad faith claim failed, so too did his Section 541 claim\u2014relying on Spicewood Summit Office Condos. Ass\u2019n, Inc. v. Am. First Lloyd\u2019s Ins. Co.<\/em>, 287 S.W.3d 461, 468 (Tex. App.\u2014Austin 2009, pet. denied), and explaining, \u201cthere can be no liability on the statutory bad faith claims based on [Section] 541 when a claimant has failed to prove bad faith.\u201d<\/p>\n

It wasn\u2019t a home run, however.\u00a0 The court found that several questions remained with respect to Collins\u2019s Section 542 claims, including whether his insurer \u201ctimely notif[ied]\u201d him that it needed an extension to reassess and make further payments; and whether, in the event a jury determines the insurer must pay more under the policy, that as-yet-unpaid payment is untimely.<\/p>\n","protected":false},"excerpt":{"rendered":"

By: Daniel B. Heidtke Alleging an insurer was \u201cdilatory, deficient, and pre-textual\u201d in its handling of a claim is not enough to state a claim for bad faith, explained the Northern District of Texas, as it entered summary judgment against a policyholder\u2019s breach of the duty of good faith and fair dealing claim earlier this … <\/p>\n

Continue reading “Mistakes Do Not Prove Malice: Federal Court in Dallas Enters Summary Judgment on Policyholder\u2019s Bad Faith Claim”<\/span><\/a><\/p>\n","protected":false},"author":243,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[39,473,455,12,19,244,471],"ppma_author":[431],"class_list":["post-472","post","type-post","status-publish","format-standard","hentry","category-general","tag-bad-faith","tag-danny-heidtke","tag-first-party-insurance","tag-insurance","tag-insurance-coverage","tag-statutory-bad-faith-claims","tag-texas"],"authors":[{"term_id":431,"user_id":243,"is_guest":0,"slug":"dbheidtke","display_name":"Daniel B. Heidtke","avatar_url":"https:\/\/blogs.duanemorris.com\/insurancelaw\/wp-content\/uploads\/sites\/12\/2024\/10\/Danny-Heidtke-LinkedIn-6249-e1729870422263-100x100.jpg","0":null,"1":"","2":"","3":"","4":"","5":"","6":"","7":"","8":""}],"_links":{"self":[{"href":"https:\/\/blogs.duanemorris.com\/insurancelaw\/wp-json\/wp\/v2\/posts\/472","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/blogs.duanemorris.com\/insurancelaw\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blogs.duanemorris.com\/insurancelaw\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blogs.duanemorris.com\/insurancelaw\/wp-json\/wp\/v2\/users\/243"}],"replies":[{"embeddable":true,"href":"https:\/\/blogs.duanemorris.com\/insurancelaw\/wp-json\/wp\/v2\/comments?post=472"}],"version-history":[{"count":0,"href":"https:\/\/blogs.duanemorris.com\/insurancelaw\/wp-json\/wp\/v2\/posts\/472\/revisions"}],"wp:attachment":[{"href":"https:\/\/blogs.duanemorris.com\/insurancelaw\/wp-json\/wp\/v2\/media?parent=472"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blogs.duanemorris.com\/insurancelaw\/wp-json\/wp\/v2\/categories?post=472"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blogs.duanemorris.com\/insurancelaw\/wp-json\/wp\/v2\/tags?post=472"},{"taxonomy":"author","embeddable":true,"href":"https:\/\/blogs.duanemorris.com\/insurancelaw\/wp-json\/wp\/v2\/ppma_author?post=472"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}