Last Wednesday, a U.S. District in Houston analyzed an insurance dispute following storm damage to the insured’s building project and the insurer’s Verified Motion to Preclude Attorney’s Fees because it did not receive proper notice as required under Texas Insurance Code § 542A.003(a). The motion was granted. In Gilbane Building Co. Inc. v. Swiss Re Corporate Solutions Elite Ins. Co., 2023 WL 2021014 (S.D.  Tex. February 15, 2023), the builder’s risk insurance policy applied a $50,000 deductible for damage from windstorm, but a deductible of 2% of the property’s insured value if the damage was caused by a named storm. The insureds submitted a summary of costs and damages totaling $906,220 and the insurer responded stating that it would apply the 2% “named storm” deductible. A series of letters were then exchanged with the insured arguing that the $50,000 “windstorm” deductible should apply. The insured then filed suit seeking recovery for $856,220 (after applying the $50,000 deductible) plus attorney fees and other damages.

The insurer filed an answer and then a Motion to Preclude Attorney’s fees due to a lack of proper notice as required under Texas Insurance Code § 542A.003(a). The insurer argued that Texas Insurance Code § 542A.003(b) required the notice to include: 1) a statement of the acts or omissions, 2) the specific amount alleged to be owed, and 3) the amount of reasonable and necessary attorney's fees incurred. The court also noted that § 542A.007(d) allows the insurer “to seek preclusion of attorney’s fees if it timely pleads and proves that it was entitled to receive a presuit notice “stating the specific amount alleged to be owed by the insure under Section 542A.003 (b) (2).” In response, the insured argued that the “series of communications" including the spreadsheet summarizing its damages and costs satisfied the statutory notice requirements. The court disagreed, noting that § 542A.003 (b) (2) “expressly requires presuit notice to state ‘the specific amount alleged to be owed” (emphasis in original). And, that the back-and-forth letters debating which deductible should apply, failed to "state any damage total or amount owed and therefore cannot satisfy 542A.003 (b) (2).”

In conclusion, the court observed: “It may be that the parties’ substantive dispute was clear before Plaintiff filed this action. But 542A.007 (d) does not have an exception for when the claimed amount is unstated but easily calculable.” Accordingly, the court found that proper notice as required by the statute was not given and granted the insurer’s motion precluding any award of the insured’s attorney’s fees incurred "starting on the date the Defendants filed their answers, August 22, 2022.”

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