November 9, 2016

Last Thursday, the Beaumont Court of Appeals granted mandamus relief to protect an insurer from irrelevant and overbroad discovery requests in a bad faith suit arising out of wind damage allegedly caused by Hurricane Rita.  In re Texas Windstorm Insurance Association, 2016 WL 6518614 (Tex. App.—Beaumont 2016), insureds David James and Sue James sued their wind storm insurer alleging that it had used unfair settlement practices when evaluating the damage to their home after Hurricane Rita.  In an effort to gain data to support their experts’ opinions, the insureds requested all photographs and damage estimates on every other Hurricane Rita claim which their insurer adjusted within a one mile radius of their home.  After the insurer refused to comply with the overbroad discovery request, the trial court eventually granted the insured’s motion to compel and ordered the insurer to produce the claim files as requested.  The insurer sought mandamus relief from the intermediate appellate court arguing the trial court abused its discretion by compelling production of claim files related to different homes not in dispute in the litigation at hand.

When evaluating the request for mandamus relief, the Court of Appeals noted that “overbroad requests for irrelevant information are improper” and relied on the very recent In re National Lloyds Ins. Co. decision by the Texas Supreme Court, which also dealt with “institutional bad faith” discovery which transcended the insurance claim in question.  In that case, the Texas Supreme Court held a trial court had abused its discretion by ordering an insurer to produce claim files on all homes in the same area as the insured plaintiff’s home.  In an effort to avoid the precedent set by National Lloyds, the insureds’ counsel in Texas Windstorm submitted affidavits from their claims handling expert stating the requested photographs and estimates would be beneficial to his opinions and conclusions.  The Beaumont Court of Appeals, however, noted that a previous report filed by the same expert for the insured demonstrated the irrelevance of the requested information because it said excessive wind damage is highly sporadic due to the unpredictable pattern of high winds during a storm.  The appellate court thus rebuffed the insured’s request to “scour claim files in hopes of finding similarly situated claimants” and ordered the trial court to vacate its order compelling production of the requested photographs and damage estimates from other claims involving other insureds.

[Editor’s Note:  The insureds in this case were represented by Steve Mostyn and Randy Cashiola of the Mostyn Law Firm.  TWIA was represented by Jay Old of Old & Associates in Beaumont and Austin as well as David Salyer of the Mcleod Alexander firm in Galveston.]