A federal District Court in Austin recently denied an insurer’s motion for summary judgment, which sought to dismiss an insured’s cause of action because the insured did not serve the insurer until after the expiration of the statute of limitations. In Dadfar v. Liberty Mut. Ins. Co., No. A-20-CV-071-AWA, 2021 WL 272216 (W.D. Tex. Jan. 27, 2021), the insured made a claim under a homeowners’ insurance policy due to damage to their home allegedly caused by a tornado in April 2017. The insurer hired an engineer to address the necessity of the various estimated repairs and issued a final payment and coverage decision on September 27, 2017. The insured thereafter filed an Original Petition in state district court on April 1, 2019, suing the insurer for breach of contract, breach of the duty of good faith and fair dealing, and alleged violations of the Texas Insurance Code and Deceptive Trade Practices Act.

The insurer denied having been served with the Original Petition and was not served with Plaintiff’s First Amended Petition until December 23, 2019—well after the two-year statute of limitations ran on September 27, 2019, the date both parties agreed was the date the statute of limitations began to run. As a result, the insurer filed a motion for summary judgment on the statute of limitations issue.

Applying Texas law, the court denied the insurer’s motion because the insured was able to show that they filed their Original Petition within the applicable statute of limitations and, when they discovered they named and served the wrong party in their petition, “worked diligently” to effect service upon the correct party as soon as possible afterward. That is, the insured e-mailed a courtesy copy of the petition to the insurer’s attorneys—who had participated in a failed pre-suit mediation with the insured—on the day of filing. Afterward, the insured served the insurer via direct service to its president.

After the statute of limitations ran, the insurer’s attorney e-mailed the insured’s attorney and informed him that the insured misnamed the insurer in the petition and did not effectuate service because the president was not the insurer’s registered agent. The insured’s attorney responded and asked if the insurer’s attorney was able to accept service on behalf of the insurer, which the insurer’s attorney denied.

In response, the insured’s attorney asked the insurer’s attorney to confirm the insurer’s registered agent, and the insured’s attorney merely directed him to the Texas Secretary of State web site, informing him that he could find out on his own. The insured’s attorney then amended the insured’s petition to correct the misnomer, sent a courtesy copy to the insurer’s attorney, and asked her to confirm that the agent the insured was intending to serve was correct. There was no evidence the insurer’s attorney ever responded.

The Court reviewed the summary judgment evidence, which included a sworn statement by the insured’s attorney detailing the efforts described above and concluded that such efforts constituted “due diligence.” As such, they denied the insurer’s motion for summary judgment. Because the briefing the parties submitted was only related to the motion for summary judgment, the court also denied the insured’s motion to correct misnomer, which was also before the court, because the court did not have sufficient information to decide whether the insured sued the wrong entity or misnamed the correct entity.

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