In August I wrote a blog called Rethinking the Sixty-Day Notice Letter in Texas. My blog had two points: (1) To encourage policyholders to send out the sixty-day notice as early in the process as possible so that if a lawyer must be hired the lawyer doesn’t have to waste sixty days waiting on the insurance company not to settle in response to the sixty-day notice letter. (2) To encourage lawyers writing sixty-day notice letters to say less and mean more. The other day I was reading In Re Cypress Texas Lloyds1 again and thought I should redux the blog with some key quotes from the Cypress Lloyds case.
In Cypress Lloyds the policyholder was Martinez, whose home was damaged by Hurricane Dolly on July 23, 2008. She filed a claim with Cypress Lloyds, which paid her about $4,329.53. According to Martinez this was not full payment of the damages she claimed were incurred. The opinion does not say when Martinez filed suit, but apparently it was near the two-year anniversary of Hurricane Dolly. The opinion notes that on July 13, 2010 Martinez sent a notice letter to Cypress Lloyds and that it was sent less than sixty days before suit was filed.
Cypress Lloyds did something deliberate and unfortunate. Cypress Lloyds waited sixty two days after receiving the notice letter from Martinez to file a plea in abatement asking the court to abate the case another sixty days until after Martinez sent a proper notice letter to Cypress Lloyds. I saw this a lot during the Hurricane Ike days. Insurance company lawyers suddenly, become the worst 5th Grade English teacher you ever had. They would pull out their red grease pencils and start marking up your 60-day notice letter like you were asking for a Daisy Red Rider BB Gun for Christmas.2 Their argument was that even though the policyholder sent a notice letter, the notice letter did not pass the muster under Texas Insurance Code or DTPA requirements and the policyholder had to start all over again. It was frustrating because the only purpose behind it was to delay the claim and harass me and my clients.
Thankfully, the Cypress Lloyds court may have eliminated some of the red pencils. The court summarized the case law in Texas on sufficiency of 60-day notice and stated that “pre-suit notice [has] been extensively litigated and the majority of cases apply a very low threshold for pre-suit notice requirements.” In a nutshell the question is whether the notice is stated with enough detail so the insurance company, knowing nothing of the claims and allegations except what is asserted in the notice, can grasp the basis of the policyholder’s complaints against it. Also important, the policyholder must say what amount of damages is being claimed. If you say you are still investigating and you don’t know exactly what the damages are then it is not a proper notice letter. Remember the purpose of the notice letter is to encourage total and complete settlement of the entire claim and the insurance company can’t pay you if they don’t know exactly what you want.
For the lawyers, looking at all the cases surveyed by the Cypress Lloyds court, the notice letters that did not pass muster were typically the ones where a lawyer parroted statutory bad faith language without setting out anything specific about the claim. For example, saying that the carrier was “not attempting in good faith to effectuate a prompt, fair and equitable settlement of the claim submitted in which liability has become reasonably clear” as opposed to saying that the adjuster spent inadequate time examining the damage to the home, including the roof, and allowed only minimum repairs to the roof in the estimate.
Therefore, the rule of thumb with sixty-day notice letters is that it is better to be short and specific than to be long-winded and ambiguous. Get to the point and leave out all the legalese.
1 In Re Cypress Texas Lloyds, 437 S.W.3d 1 (Tex. App. – Corpus Christi, 2011).
2 A Christmas Story is the best Christmas movie ever…Elf runs a close second and the first two Home Alone movies are third and fourth.