Property Insurance Coverage Law Blog : Florida Insurance Lawyer & Attorney : Merlin Law Group Law Firm : Tampa, Houston, Coral Gables, Gulfport

The case stems from a Hurricane Charley claim with Florida Preferred Property Insurance Company. The trial court ordered FIGA to pay the insured's attorney’s fees pursuant to Florida Statute §627.428. Relying in part upon a Third District Court of Appeals case, Florida Insurance Guaranty Association v. Soto, 979 So.2d 964 (Fla. 3d DCA 2008), the trial court held that the insured's right to attorney’s fees and costs was a covered claim. FIGA appealed to the Second District Court of Appeal.

FIGA argued on appeal that §627.428 was not applicable since the association did not deny by affirmative action any portion of the insured's covered claim. The Second District Court of Appeal noted that for a claim to be a covered claim, it must: (1) arise out of the insurance policy; and (2) be within the coverage of the insurance policy. The Court noted that the parties did not point to any language in the policy that provided coverage for attorney’s fees. The Second District Court reversed the attorney’s fee award.

The Second District Court opinion conflicted with the Third District Court of Appeals ruling in Soto, which recognized that §627.428 is an implicit part of all insurance policies and held that an attorney’s fee judgment is a covered claim under the FIGA Act. The Florida Supreme Court reviewed both decisions.

The Florida Supreme Court noted that the FIGA Act, Florida Statute §631.57(1)(a), provides that FIGA shall “be obligated to the extent of the covered claims existing prior to an insurer’s adjudication of insolvency.” The Act, at §631.54(3), defines a covered claim as:

[A]n unpaid claim, including one of unearned premiums, which arises out of, and is within the coverage, and not in excess of, the applicable limits of an insurance policy to which this part applies, issued by an insurer, if such insurer becomes an insolvent insurer and the claimant or insured is a resident of this state at the time of the insured event or the property from which the claim arises is permanently located in this state.

The Florida Supreme Court noted that to be a covered claim, it must: (1) arise out of the insurance policy; and (2) be within the coverage of the insurance policy. The parties agreed that the fee claim arose from the policy of insurance. However, the Court noted that to recover fees from FIGA, the claim for fees must be within the insurance policy’s coverage provisions.

While the attorney's fee statute is an implicit part of an insurance policy in Florida, the Florida Supreme Court held that this does not mean that the insured’s claim against FIGA for fees is part of the policy’s coverage. In reaching its conclusion, the Court held:

There is a clear difference between an obligation to pay fees that is imposed by operation of law upon a party due to its behavior under the insurance contract and an obligation imposed upon a party by an express provision for which the party contracted. Section 627.428(1) imposes the obligation to pay a fee award upon an insurer that has wrongfully contested an insured’s valid claim. It does not alter the coverage provisions of the insurance contract itself.

Since Petty's insurance policy did not expressly provide coverage for a section 627.428 fee award, the Court held it is not a covered claim that FIGA must pay. The Court approved the Second District Court’s ruling, and specifically disapproved the third District Court of Appeals’ ruling in Florida Insurance Guaranty Association v. Soto.

This case holding may not apply to a scenario where FIGA actually denies an insured’s claim. FIGA’s denial of coverage of an insured’s claim opens the door to its responsibility for fees under a separate and distinct provision of the FIGA Act.

Generally, FIGA assumes the liabilities of insolvent insurance companies and pursuant to Florida Statute Chapter 631, possesses the rights, duties, defenses and obligations of the insolvent insurer. Florida Statute §631.70 excludes FIGA from the provisions of Florida’s attorney’s fee statute, §627.428, unless FIGA denies by affirmative action, other than delay, a covered claim or a portion thereof.

In Ehrlich, the Court appeared rely on the fact that the trial court compelled FIGA to answer the complaint. At the time of the May 9th post, it was unclear whether the Fourth District Court would have upheld the attorney’s fee award and found that FIGA denied the policyholder’s claim by affirmative action if FIGA had filed affirmative defenses challenging coverage for the claim on its own.

The recent Rahabi case presented a different factual scenario to the Fourth District Court of Appeal. That is, if FIGA raises affirmative defenses on its own, and not pursuant to a court order to answer a complaint, would FIGA be responsible for attorney’s fees for denying the policyholder’s claim by affirmative action?

In Rahabi, the policyholder filed a two count complaint against FIGA for declaratory relief and breach of contract. FIGA did not seek a stay of litigation to complete its investigation into the claim for damages. FIGA filed a motion to dismiss, claiming that the policyholder’s count for declaratory relief failed to state a cause of action and because they “fail[ed] to comply with all post-loss obligations.” FIGA moved to compel the insureds to answer its discovery requests. Without obtaining a ruling on that motion, FIGA filed its answer to the count for breach of contract. In the answer, FIGA asserted eight affirmative defenses, seven of which alleged that the insureds' damages “were not caused by a covered loss.”

The Fourth District Court of Appeals determined:

We interpret that action, in the context of FIGA’s overall course of conduct, as ‘deni[al] by affirmative action’.

FIGA argued it was compelled to allege those affirmative defenses because the “failure to ... assert affirmative defenses [ ] would result in a waiver.” The Court disagreed and held:

[I]f FIGA believed, as it did in Ehrlich, that it had insufficient time to investigate the claim, then it should have sought a motion for extension of time to respond to the complaint for that reason. If the circuit court denied that motion, then FIGA, as it did in Ehrlich, should have crafted its answer to avoid any allegation constituting a denial of the claim by affirmative action. Because FIGA did not do so here, but instead alleged in seven affirmative defenses that the insureds' damages “[were] not caused by a covered loss,” we must conclude that the insureds are entitled to recover their attorney's fees pursuant to sections 627.428(1) and 631.70.

Law is a fluid concept, different results occur with only minor factual variations. In the comparison of these two cases, it appears that if FIGA voluntarily asserts affirmative defenses that can be construed as denying all or a portion of the claim, then it will be responsible for policyholders’ attorney’s fees

In California, the seminal case that allows for attorney fees and litigation costs is Brandt v. Superior Court (Standard Ins. Co.), (1985) 37 Cal.3d 813, 817. In Brandt, the California Supreme Court established an exception to the general contract rule that each party bears its own attorney fees. Brandt allows recovery of attorney fees incurred in obtaining contract benefits when the insurer’s withholding of those benefits was in bad faith.

To recover attorney fees, a policyholder must prove:

1. Benefits were withheld in bad faith; and
2. The fees incurred by the policyholder to recover those benefits. The fees incurred to prove the bad faith are NOT recoverable; only fees incurred to prove coverage are recoverable. (Cassim v. Allstate Ins. Co., (2004) 33 Cal.4th 780, 811)

In White v. Western Title Ins. Co., (1985) 40 Cal.3d 870, the Supreme Court extended its analysis in Brandt to recovery of litigation costs, including expert fees, incurred in proving coverage. Since coverage experts can be very expensive, this additional economic damage should not be overlooked. Attorney fee and litigation costs are normally a jury issue, but, as the Brandt court recommended, they are usually best determined by the court after the verdict.

Regarding the award of attorneys’ fees to the insured, Lexington argued:

[T]he North Dakota statute's language is couched in discretionary terms and thus an award of attorney fees is not mandatory. Because Lexington lacked bad faith in its denial of Offutt's coverage, it says it would be inappropriate to award Offutt fees.

The Federal Court applied North Dakota state law to the dispute. The Court looked to law from the North Dakota Supreme Court, which did not hold that the absence of bad faith is relevant to an award of fees to an insured. In Western National Mutual Insurance Co. v. University of North Dakota, 643 N.W.2d 4 (N.D. 2002), the jury found that the insurer had not acted in bad faith by denying coverage; this finding was not challenged on appeal, and the insured was awarded fees.

More fundamentally, the supreme court has based its decisions in this area on the principle that insureds should be made whole, not on a desire to deter bad acts by insurers. As the court has stated, “When the insured gets ... policy protection only by court order after litigating coverage, it is both ‘necessary’ and ‘proper’ to award attorney fees and costs to give the insured the full benefit of his insurance contract.” [citation omitted] This principle applies even if an insurer denies coverage in good faith, since even a good faith denial that leads to litigation forces the insured to spend money litigating the issue of coverage. Moreover, the district court was careful not to award Offutt fees for time spent litigating the unsuccessful bad faith claim.

Based on this reasoning, the Eighth Circuit Court of Appeals determined that the District Court did not abuse its discretion in awarding fees to the insured.

Please consider that the outcome in this case was based on North Dakota statutory and case law. It is important to keep in mind that the law in other jurisdictions may vary.

In some recent cases, insurers have challenged this traditional rule, attempting to modify the standard to whether they wrongfully forced the policyholder to resort to litigation to resolve the conflict. In other words, the insurers argue, unless the insurers wrongfully forced the policyholder to resort to litigation, there was no conflict between the parties; there was no unreasonable withholding of a claim payment, and so the legal services and the lawsuit were unnecessary.

In determining an entitlement to attorney’s fees issue, the Fourth District Court of Appeal analyzed whether the lawsuit serves as a “necessary catalyst” to resolve the dispute between the parties in forcing the insurer to satisfy its policy obligations. Lewis v. Universal Prop. & Cas. Ins. Co., 13 So.3d 1079 (Fla. 4th DCA 2009). Recent arguments surrounding this issue have surfaced in the Florida Second District case, Beverly v. State Farm Florida Ins. Co., --- So. 3d ---, 2010 WL 4226548 (Fla. 2d DCA October 27, 2010). The Beverlys’ claim stemmed from Hurricane Charley, in which they suffered damage to their residence, barn, trailers, shed, and personal property. They reported it timely, and State Farm’s initial adjuster told them that the barn, fence, shed and trailers were not covered under the policy. However, it does not appear that State Farm denied coverage for those areas in writing. State Farm advanced a nominal amount for emergency expenses and claimed to have begun adjusting the loss with the Beverlys. The Beverlys timely submitted the claim documents and a Proof of Loss to State Farm, and, after receiving no further payment, they filed a lawsuit approximately six weeks after the date of loss. Nearly nine months after the lawsuit was filed, State Farm invoked appraisal, which ultimately resulted in an award of damages that State Farm paid.

After the claim was resolved in the Beverlys’ litigation, the Court was left to address the issue of attorney’s fees. State Farm asserted that it never denied coverage for the claim and that the insureds failed to comply with policy conditions for payment. The Beverlys argued that State Farm did deny coverage for the barn, shed, fence and trailers, and that they timely submitted the claim documentation to State Farm. The appellate court reversed the trial court’s judgment that was entered in favor of State Farm, and sent the case back to the trial court to determine whether State Farm “wrongfully caus[ed] its insured to resort to litigation in order to resolve a conflict with its insurer when it was within the company’s power to resolve it.” (emphasis added)

Part of the analysis that appears to be important to Florida courts in determining entitlement to attorney’s fees is whether the lawsuit gave the insurer that extra push to pay the claim. Insurers appear to be arguing that despite their post-suit payments, the rules of the game involving confessions of judgment do not apply. Is there really a need to distinguish between causing an insured to file suit to obtain a claim payment and wrongfully causing the insured to file suit to obtain payment? If this will become the new standard, courts will need to evaluate the particular facts of each case to determine the reasonableness of the argument posed by the insurer and whether the litigation did push the insurer in the right direction to pay the claim.

In a recent case, FIGA appealed a trial court’s final judgment awarding attorney’s fees of $29,300 to the insureds in their action related to Hurricane Charley. FIGA argued that it does not have to pay the attorney’s fee award since it was not a covered claim pursuant to the FIGA Act.

The insureds’ home was damaged by Hurricane Charley in August 2004. Florida Preferred Property Insurance Company insured the home at the time of loss. Florida Preferred partially paid their damages, and the insureds demanded appraisal to set the amount of loss. Florida Preferred refused to submit to appraisal, and the insureds sued to compel it. An appraisal was eventually conducted and the insureds filed a motion to confirm the award, motion for entry of final judgment, and motion for attorney’s fees. Florida Preferred paid the appraisal award, but shortly after became insolvent and an automatic stay entered in the lawsuit. Once FIGA officially stepped in for Florida Preferred, the insureds substituted FIGA in the lawsuit and sought an order to compel FIGA to pay their attorney’s fees and costs for the litigation, pursuant to Florida Statute §627.428.

The trial court ruled that Florida Preferred’s payment of the appraisal award was a confession of judgment that invoked the attorney’s fees provisions of §627.428. Relying in part upon a Third District Court of Appeals case, FIGA v. Soto, 979 So. 2d 964 (Fla. 3d DCA 2008), the trial court held that the insureds’ right to attorney’s fees and costs was a covered claim. FIGA appealed.

FIGA argued on appeal that §627.428,which provides for attorney’s fees, was not applicable since the association did not deny by affirmative action any portion of the insureds’ covered claim. The Second District Court of Appeal noted that to be a covered claim, it must: (1) arise out of the insurance policy; and (2) be within the coverage of the insurance policy. The Court noted that the parties did not point to any language in the policy that provided coverage for attorney’s fees. The Court held that the FIGA Act does not impose coverage for attorney’s fees claimed under Florida’s attorney’s fee statute (§627.428) when the fees are not within the insurance policy’s coverage provisions.

It should be noted that this recent opinion appears to be in conflict with the Third District Court of Appeals’ ruling in Soto, which determined that insurance policies are subject, as a matter of law, to the obligation to reimburse an insured for attorney’s fees and costs if the insured prevails in a lawsuit for payment of a claim under the policy. The Third District Court of Appeals in Soto recognized that §627.428 is an implicit part of all insurance policies and ruled that an attorney’s fee judgment is a covered claim under the FIGA Act.

In Great American Insurance Company v. North Austin Utility District No. 1, the Texas Supreme Court noted that:

Chapter 38.001 of the Texas Civil Practice and Remedies Code allows a party to recover reasonable attorneys’ fees for a valid claim on an oral or written contract, and is to be liberally construed.

After concluding that the insurer was liable for attorney’s fees, the Texas Supreme Court affirmed the jury’s decision that 33 1/3% of the policyholder’s recovery was a reasonable amount for attorney’s fees.

In affirming an award for an attorney’s contingency-based fee in a prompt payment lawsuit, the Texas Appellate Court in Mid-Century Insurance Company of Texas v. Barclay stated the following:

[W]e believe it is consistent with the statute’s purpose to pay a contingency fee, which may be greater than an hourly fee. The specter of large attorney’s fees serves as additional incentive to the insurance company to respond promptly and diligently to its insured’s claims.

So the answer to the question in the title is, yes, you can recover attorney’s fees from your insurance company in Texas. As a policyholder advocate, it is my duty to aggressively pursue recovery of attorney’s fees from the insurer so my clients can use their full benefits to restore their lives and possessions.

"The following must be followed when completing the proofs for flood claims:

1. Use the exact Federal Form for the Proof of Loss and not a generic form. Failure to do so may jeopardize payment. It would be similar to filing a Federal Income Tax return with a state form.
2. Figure exact amounts owed. Do not put, "policy limits" or "to be determined."
3. Document the amounts owed and attach the documentation. Do not just "ballpark" or "estimate" an amount. File the proof with actual estimates, proposals, lists, or some type of documentation which "proves" and substantiates the loss amount.
4. Get it received and in the hands of the company listed on the policy by the deadline. Do not just send it to the adjuster on the deadline day.
5. Do not rely upon other oral or written extensions from the field adjuster or his supervisor. Only written extensions coming from the Director or Deputy Director can legally extend the time.

National Flood may, on appeal, rescind these requirements. If you get in this predicament, we strongly suggest you obtain legal counsel. The best course of action is to never place yourself in that position in the first place."

We have been receiving some wrongful responses to properly complete Flood Proofs of Loss and imagine many others have as well. If you submit a properly filled out Proof of Loss, the insurer either pays the claim, pays part of the claim, and if the policy allows, may even replace or repair the property. The one thing some insurance adjusters wrongfully do is reject a properly completed proof of loss. This is technically a breach of the insurance contract by the insurance company because no property insurance contract, even a Flood contract, allows that to be the response.

When I did property insurance defense early in my career over twenty-six years ago, my mentor, Paul Butler, Jr., made this point in a number of insurance seminars, but the wrongful practice of "rejecting" properly completed Proofs of Loss still exists for some reason. We have received a number of these from National Flood and the adjusters with Fidelity. We have talked with them and they are clueless about what to do when a Flood policyholder sends a properly completed and documented Proof of Loss for a claim amount which is higher than what they agree is the amount of damage. I hope Russ Tinsley and others with National Flood are reading this because it is a problem that is harming policyholders.

Most insurance companies will pay the undisputed portion of the claimed amounts and try to adjust the disputed amounts through good faith discussion. This activity goes on all the time. Most property insurance claims being handled with disagreements can end with each side giving some after consideration for the other's point of view. But, the Proof of Loss is not rejected. Instead, the good faith insurer merely indicates that it disagrees, puts in writing why it disagrees, pays the undisputed amounts, and usually asks to meet right away for a settlement or other adjustment conference trying to resolve differences in good faith.

The alternatives left to resolve the dispute are usually litigation or appraisal. The problem with litigating against National Flood is the unavailability of attorney’s fees and the usual high expense of federal litigation. The policyholder can win the lawsuit, but have no money after attorney’s fees and costs because the disputes are not usually that large.

A good example of this is in Dwyer v. Fidelity National Property and Casualty Insurance Company, 565 F.3d 284 (5th Cir., April 09, 2009). A summary of the facts were:

"...Fidelity paid the policy limit for contents and $86,629 for flooding-related building damages. After the first set of checks did not arrive, Fidelity mailed a second set, which the Dwyers received in December.

On February 21, 2006, Dwyer sent a certified letter to both Fidelity and Traveler's Insurance Company (“Traveler's”), whose homeowner's insurance policy on the Dwyer dwelling covers wind damage. The letter stated that a contractor's estimate to repair the house was roughly $100,000 more than the combined amounts paid by Fidelity and Traveler's. Dwyer wrote that neither he nor the contractor could accurately distinguish between wind and flood damage, so Dwyer recommended each company pay the additional expenses in proportion to the amount it had already paid. Based on this calculation, he requested an additional $85,471.89 from Fidelity.

Fidelity instructed the Dwyers to contact the adjuster and faxed a copy of the letter to him. Apparently no further action occurred, and the Dwyers sued Fidelity on August 25, 2006, seeking additional money under the policy and damages under federal common law for bad faith claim adjustment. The complaint does not limit its allegations to undervaluation of the Dwyers' loss nor does it disavow a claim to increase Fidelity's share of the wind/water allocation, and it includes claims such as “failing to properly train its adjusters and agents,” which could be related to valuation, coverage, or both.

In its answer, Fidelity denied liability and stated:

If these Plaintiffs' SFIP claims dispute reaches a point where it is established that there is (1) full and complete compliance with all conditions precedent to the making of a claim, and (2) resolution and agreement upon all issues of both coverage and the scope of the loss, then in that event (but not until that event) Defendant affirmatively asserts and invokes the appraisal clause of the SFIP. 44 C.F.R. Pt. 61, App. A(1), Art. VII(P).

...

...Fidelity filed a motion to compel appraisal...

Because the trial date was close at hand, the district court denied the motion as untimely. After a four-day bench trial, the court awarded the Dwyers the difference between Velez's estimate and the money already paid by Fidelity. In addition, the court awarded the Dwyers their attorneys' fees, finding that Fidelity qualified as a “federal agency” under the Equal Access to Justice Act. Fidelity appeals both rulings."

I assume there was no bad faith award because there is no federal common law bad faith. But the case is not finished and insurance monies paid because of what the Fifth Circuit did on appeal. It held that the matter had to go to appraisal despite the long time of litigating the matter and also held that no attorney’s fees and costs could be awarded against National Flood or the WYO (Write Your Own) carriers.

The appraisal analysis first noted:

"The Dwyers...argue that appraisal cannot be requested after suit has been filed. They offer no authority support their position. Nothing in the clause or the contract as a whole establishes a time limit for invoking the appraisal clause. Contractual clauses cannot be evaded by racing to the courthouse, and appraisal and arbitration clauses are routinely invoked during litigation. E.g., Hill v. G E Power Sys., Inc., 282 F.3d 343 (5th Cir.2002) (arbitration); Terra Indus., Inc. v. Commonwealth Ins. Co., 981 F.Supp. 581, 600 (N.D.Iowa 1997) (appraisal). Consequently, the appraisal clause may be invoked after suit, provided that the failure to do so has not amounted to waiver.

…The district court incorrectly homed in on the interval between the appraisal request and the trial date. The appropriate waiver inquiry examines Fidelity's knowledge and action-when Fidelity knew that the appraisal clause could be invoked, whether it reacted timely to the knowledge. Fidelity first learned that the Dwyers disputed only the amount of loss, not coverage or other issues, on January 5, when it received the Velez estimate. Five weeks later, after informal requests failed, Fidelity formally moved the court to compel appraisal. Fidelity did not sit on its rights. In the context of the ongoing litigation, Fidelity raised the issue of appraisal in a timely fashion….”

Regarding the attorneys fees, the Court found: 

“Fidelity, a private insurer, cannot be characterized as a department, commission, administration, authority, board, or bureau of the United States. For the Dwyers to recover EAJA fees, Fidelity must qualify as an “independent establishment” or a “corporation in which the United States has a proprietary interest.” An “independent establishment,” however, is “an independent entity within the executive branch.” Scott v. Fed. Reserve Bank of Kansas City, 406 F.3d 532, 535 (8th Cir.2005) (emphasis added). Fidelity is not so situated, nor is Fidelity “a corporation in which the United States has a proprietary interest.” See id.

Finally, although Fidelity acts as a fiscal agent of the United States, “it is possible to be a fiscal agent ... of the government without being a federal agency.” Id. (citing In Re Hoag Ranches, 846 F.2d 1225, 1227 (9th Cir.1988)). The SFIP regulations expressly state:

A WYO Company shall act as a fiscal agent of the Federal Government, but not as its general agent. WYO Companies are solely responsible for their obligations to their insured under any flood insurance policies issued under agreements entered into with the Administrator, such that the Federal Government is not a proper party defendant in any lawsuit arising out of such policies.

… In analyzing the definition of “federal agency” under the Federal Tort Claims Act, the Supreme Court admonished that although “[b]illions of dollars of federal money are spent each year on projects performed by people and institutions which contract with the Government” and “the Government may fix specific and precise conditions to implement federal objectives,” such contracts and regulations do not transform private actors into federal agencies. United States v. Orleans, 425 U.S. 807, 815-16, 96 S.Ct. 1971, 1976-77, 48 L.Ed.2d 390 (1976). Likewise, serving as a fiscal agent and a participant in a heavily regulated federal program did not transform Fidelity into a federal agency under the EAJA.
…

This conclusion is consistent with that reached by several district courts. See Dickerson v. State Farm Fire and Cas. Co., 2007 WL 1537631, at *4, No. 06-5181 (E.D.La. May 23, 2007) (“[W]hile State Farm is a WYO carrier participating in the NFIP as fiscal agent for the United States, it is not an agency of the United States as required by the EAJA.”); Schopen v. State Farm Ins. Co., 1996 WL 696444, at *2, No. 96-1892 (E.D.La. Dec. 2, 1996) (“Section 2412(b) only applies to civil actions which are ‘brought ... against the United States.’ State Farm is neither the United States nor an agency of the United States.”). The district court erred in awarding EAJA fees to the Dwyers.”

I feel for the Dwyers. It appeared they were awarded only another $56,963.19 which easily gets eaten up by deposition and expert costs even before the cost of their attorneys. Now, they will have to pay for an appraiser and half an umpire’s cost as well. Some may correctly figure that it may not pay to fight the National Flood bureaucracy. Something needs to be done in Congress about this because policyholders are economically forced to take less. There is no meaningful way for them to “win” and be made whole, unless they file a lawsuit to only prove a point.

Here is the wording buried on page 41 of the bill (SB 14) that has now been sent to the Texas House of Representatives:

     SECTION 41.  Section 2210.552, Insurance Code, is amended to read as follows:

     Sec. 2210.552.  CLAIM DISPUTES; VENUE.  (a)  Except as provided by Sections 2210.007 and 2210.106, a person insured under this chapter who is aggrieved by an act, ruling, or decision of the association relating to the payment of, the amount of, or the denial of a claim may:

(1)  bring an action for policy benefits against the association[, including an action under Chapter 541]; or

(2)  appeal [the act, ruling, or decision] under Section 2210.551.

     (b)  The remedies provided by Subsection (a) and Section 2210.551 are exclusive.  A person may not proceed under both Section 2210.551 and this section for the same act, ruling, or decision.

     (c)  Venue [Except as provided by Subsection (d), venue] in an action brought under this section[, including an action under Chapter 541,] against the association is in the county in which the insured property is located or in a district court in Travis County.

    [(d)  Venue in an action, including an action under Chapter 541, brought under this section in which the claimant joins the department as a party to the action is only in a district court in Travis County.]

The consumer protections in Chapter 541 of the Insurance Code would be eliminated. No interest for delays, no costs, no extracontractual damages (even if caused by TWIA), no attorneys fees, and no penalties for TWIA's wrongful conduct. In essence, the Texas Senate proposed that TWIA not be held responsible when it acts wrongfully. In a world hurting as a result of corporate mismanagement, Texas is giving a pass to the insurance industry and TWIA.

We are going to do what we can for the policyholders and our clients in Texas. Off to Austin we go.

Any public or private suggestions or comments are welcome.

We need your help.
 

State Farm delayed naming its appraiser. After months, the condominium came to us for help. After we filed suit, State Farm finally started moving the appraisal along. State Farm still maintained its right to deny the claim following appraisal. Not surprisingly, the award from the appraisal panel was approximately $2.1 million, about three times State Farm's estimate.

Kristin then filed a Motion for Entry of Final Judgment and To Determine Entitlement to Attorneys Fee and Costs. State Farm fought the entitlement to fees and lost. The amount of the fees and costs will be determined later.

On a side note, State Farm hired two engineers that routinely work for insurance companies and whose opinions always seem to favor less damage and less coverage for the policyholder. While the bad faith and claim practice lawsuit has not been filed yet, one of the recurrent themes with State Farm is that it claims not to act in an outcome oriented manner, but routinely supports its positions with experts that are outcome oriented to find less damage and coverage.

Also, we sometimes do work with Stephen Sarasohn, a public adjuster in the Boca Raton area. Stephen tells me that when he gets retained on a State Farm loss, he always carries several old State Farm files with him to show the State Farm adjuster. He tells and then shows the State Farm adjuster that State Farm's reserve and estimate should be tripled because State Farm usually determines a loss at one third of the actual value. This is exactly what happened in our case.

You would think the field adjusters would report what Stephen Sarasohn told them to their State Farm managers. State Farm, if it truly wanted to make certain its policyholders were getting every penny they deserved, would contact Stephen and find out why their estimates are routinely low. Possibly, State Farm claims management already knows and simply does not want to change.