Texas Insurance Law Newsbrief - September 19, 2023

Texas Insurance Law Newsbrief


The Southern District of Texas granted summary judgment in favor of the insurer after finding that payments made before and after appraisal for both damage to the dwelling and personal property satisfied the insurer’s contractual and statutory obligations under the Texas Insurance Code.

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In Roeder v. Allstate Vehicle and Property Insurance Company, 2023 WL 5985240 (S.D. Tex. September 14, 2023), the insured residence was damaged by burst water pipes following Winter Storm Uri in February 2021. Allstate promptly investigated the claim and after applying the $4,740.00 deductible, paid $68,230.73 for damage to the dwelling and $20,221.63 for personal property damage - $88,452.26 total. 

The insured disagreed with the amount paid and hired an attorney who sent a demand letter under Texas Insurance Code 542A seeking additional amounts it claimed was owed, plus statutory interest and attorney fees. Allstate responded by invoking appraisal and without the need for an umpire, the appraisers agreed that the amount of loss to the dwelling was $100,072.83 but found the personal property loss was only $250.00 - $100,322.83 total.  After applying the $4,740.00 deductible, and $6,666.62 depreciation, Allstate then paid an additional $20,435.48. Allstate also paid 12.5% interest on the outstanding sum totaling $5,225.32. The insured filed suit alleging breach of contract, insurance code violations and bad faith. Allstate then moved for summary judgment.

The court first considered the breach of contract claims based on the insured’s allegations that the initial payments did not fully cover the property damage and that the $20,221.63 paid for personal property before the appraisal award was improperly deducted from the dwelling payment and the total payment was less than he was owed. The court disagreed, stating “The arithmetic does not support Roeder’s claim” and granted summary judgment in favor of the insurer on the breach of contract claims. Analyzing the prompt payment claims under Texas Insurance Code 542A, the court found that payments based on the initial investigation and later, on the appraisal award which included interest, would not support the insured’s Prompt Payment Act claims. Interestingly, the court also reviewed a series of cases considering the comparative reasonableness of the pre and post-appraisal payments and noted: “Here, the pre-appraisal payments were over 75% of the ultimate award less depreciation and deductible. Allstate is entitled to summary judgment on Roeder’s Prompt Payment Act claim because it complied with the statutory deadlines and made reasonable payments.”

Addressing the extracontractual causes of action, including bad faith, the court considered and agreed with Allstate’s argument that because the insured is not entitled to additional policy benefits and has not alleged or presented any evidence in support of any independent injury, Allstate was entitled to summary judgment on those claims. Lastly, after finding that Allstate was entitled to summary judgment on all claims, the court observed that “attorney’s fees are not available, as a matter of law.” Accordingly, the court granted summary judgment in favor of Allstate, on all claims.

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The Southern District of Texas recently denied a motion to remand a construction site wrongful death case to state court and dismissed a subcontractor after finding they were improperly joined in the lawsuit.

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In Matamoros v. Dragados, S.A. et.al., No. 4:23-cv-01541 (S.D. Tex. August 18, 2023), Isidiro Matamoros, a construction foreman on a freeway jobsite was killed after being run over by a construction tractor. Suit was filed in state court against Matamoros’ employer, its parent company, and others, including JB Pinnacle Group, LLC who was “tasked with concrete pouring and concrete work to be carried out” at the job site. JB Pinnacle was the only in-state defendant and was evidently joined in the lawsuit to defeat federal court diversity jurisdiction. The case was removed to federal court asserting improper joinder of JB Pinnacle and the plaintiff filed a motion to remand the lawsuit to state court.

In considering the motion, the court noted that “improper joinder can be established in two ways: (1) actual fraud in the pleading of jurisdictional facts, or (2) inability of the plaintiff to establish a cause of action against the non-diverse party in state court.” And because defendants relied on the later, the court examined the pleadings and allegations against JB Pinnacle which included vague and conclusory assertions that “JB Pinnacle contributed to making the project area unreasonably dangerous, especially the tight and unsafe working condition[s] in the incident area where Isidro Matamoros was struck.” And that JB Pinnacle “committed acts and omissions, which collectively and separately constitute negligence and gross negligence.” In part, the court observed that “Allegations that the worksite was “tight,” without more, does not state a claim for negligence.” Accordingly, the court found that JB Pinnacle was improperly joined and denied Matamoros’s motion to remand. JB Pinnacle then filed a motion to dismiss based on Fifth Circuit precedent, arguing that a defendant found to have been improperly joined must be dismissed. The court agreed and dismissed all claims against JB Pinnacle, LLC.

Editor’s Note: MDJW Partners Shane Osborn and Kevin Sewell were retained by Allied World Surplus Lines Insurance and had the privilege of representing its insured, our client, JB Pinnacle, LLC in this lawsuit and congratulates them both on this significant win.

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