Judge Melinda Harmon of the Southern District of Texas recently ruled for insurance carriers in three first-party lawsuits.  In each case, she declined the insured’s request to remand based on joinder of the adjuster.  In two worker’s compensation matters, Judge Harmon held that the Texas Supreme Court’s Ruttiger decision precluded statutory bad faith claims even though the court had granted rehearing, but declined to conclude that common law bad faith claims were likewise barred.  And in one of the worker’s compensation cases and a Hurricane Ike case, she dismissed the case based on insufficient pleading.

Worker’s Compensation Cases: Alvarez v. Liberty Mutual and Keen v. Wausau

Alvarez v. Liberty Mutual Fire Ins. Co., Civ. No. H-10-1292 (S.D. Tex. March 16, 2012), involved a plaintiff who was attacked and injured by unidentified assailants while working as a security guard at a retirement home.  The entity who directly employed her was a non-subscriber, but a related entity did carry worker’s compensation coverage.  Judge Harmon first addressed the joinder of the Liberty Mutual adjuster, concluding that even though the adjuster admitted to independent responsibilities in her role as a licensed adjuster, the plaintiff’s claims against the adjuster were indistinguishable from those against the insurer.  Remand was therefore denied.  Judge Harmon then granted summary judgment on Plaintiff’s statutory claims because the Texas Supreme Court in Ruttiger held that private action under the Texas Insurance Code and the Texas Deceptive Trade Practices-Consumer Protection Act are foreclosed by the detailed remedies of the Worker’s Compensation Act.  Finally, Judge Harmon declined to hold that the plaintiff’s common law bad faith claim was disallowed by Ruttiger, but granted summary judgment on that claim nonetheless because the evidence established as a matter of law that Liberty Mutual’s claims decision was reasonably based on evidence obtained in the course of its investigation.

In Keen v. Wausau Business Ins. Co., Civ. No. H-11-1415 (S.D. Tex. March 20, 2012), the insurer overcame a motion to remand on identical grounds as in Alvarez.  The court also dismissed the plaintiff’s statutory claims by applying the same Ruttiger-based reasoning.  Judge Harmon again declined to hold that Ruttiger precludes liability for common law bad faith, and in this case dismissed plaintiff’s bad faith claim  based  on  insufficiently  specific  pleading.   She  criticized  the  Plaintiff’s  petition  for  merely presenting an “unadorned, the-defendant-unlawfully-harmed-me accusation.”  Judge Harmon ordered the plaintiff leave to file an amended, proper complaint within 30 days, or inform the court that he no longer wishes to pursue the claim.

Hurricane Ike Case: Novelli v. Allstate

In Novelli v. Allstate Texas Lloyd’s, Civ. No. H-11-2690 (S.D. Tex. March 19, 2012), Judge Harmon denied the insured’s motion to remand and dismissed the case based on the pleadings.  Jude Harmon observed that the claims against the individual adjuster defendant were identical to the claims against Allstate and the independent adjusting company and found that the adjuster was improperly joined.  She also noted that the pleadings.

  • Did not identify the particular damages that the adjuster omitted from his report;
  • Did not state the true value of the purportedly omitted damages or the extent to which the claim was underpaid;
  • Did not identify the manner in which the defendants attempted to effectuate the allegedly unfair settlement.

The Plaintiffs had failed to state a claim by omitting these necessary details.  Moreover, relating to the plaintiffs’ Texas Insurance Code claims, the original petition contained only “conclusory” allegations that failed to state “the who, what, when, where and how” of the defendants’ alleged misrepresentations or concealment of facts.  The court granted the defendants’ motion to dismiss, but like in Keen, she granted Plaintiffs leave to amend their complaint.

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