Texas Supreme Court Hurts Policyholders (Again)
In a much-anticipated decision, the Texas Supreme Court declined to help policyholders who have covered claims. The decision, Safeco v. Rodriguez, was pretty straightforward — statutes in Texas allow for the recovery of attorney’s fees in policyholder disputes. This is a good rule because it incentivizes attorneys to work on these cases, even if the matter is small. It has been a long-standing rule in Texas and many other jurisdictions that when insurance companies fail to pay covered benefits in a timely manner, policyholders can at least have their attorney’s fees covered if they successfully challenge the insurance company’s position. To be sure, attorney’s fees are recoverable in disputes about insurance coverage and scope of damage under various provisions: the Civil Practice and Remedies Code (Sections 37 and 38), Texas Insurance Code Chapter 541, Texas Insurance Code Chapter 542, as well as the Deceptive Trade Practice Act. The high court wiped all of those out while overplaying the effect of an appraisal award — a decision that runs in line with prior poor Texas Supreme Court decisions on appraisal dating back to 2008. We filed a brief in the case — called an amicus brief, which was featured in our January 2024 newsletter, based on a current Texas case we have. In our case, our client had invoked the appraisal clause before hiring an attorney. In fact, they did so to avoid hiring an attorney. The appraisal provision works to determine the amount of damage in a loss. The appraisal clause is limited to that analysis, leaving other issues for courts to decide, like if there were damages outside the Discover How Safeco v. Rodriguez Impacts Homeowners
contract, if the insurance company failed to pay on time, attorney’s fees, if the insurance company acted in bad faith, etc. The policyholder bears the cost of an appraisal, and the average cost is about $5,000 per appraisal (because you have to hire an appraiser and usually an umpire). Most insureds do not have that kind of money lying around to participate. However, in the case we presented to the Texas Supreme Court, our client did. They participated in an appraisal with their insurance company and received an award for a new roof (amongst other damages), but then their insurance company, Liberty Mutual, still refused to pay the appraisal award. So, our client was forced to hire us. We then provided a notice and demand, but it was rejected. We had to file a suit, but it was met with another rejection. Then, over 500 days from the award date, Liberty Mutual decided to pay the award but failed to pay any attorney’s fees. Now, Liberty Mutual has filed a motion with the court asking it to dismiss our case simply because they paid the appraisal award at some point, even though it was more than two years later. We’re still waiting for a decision on our case, but the Texas Supreme Court’s ruling in Safeco makes it possible for insurance companies to play these sorts of games. So, that leaves us with the big question: What can and should you do about this? Our simple answer is talk to your representatives about amending Texas Insurance Code Section 542A.007 to remove the phrase “is the lessor of.” You may wonder why a simple phrase like this matters or how these four words can alter the state of what you can recover. But that’s what the Texas Supreme Court focused on. These four words gave the Texas Supreme Court a way to completely eradicate attorney’s fees in cases where Texas homeowners file a claim with their insurance company, at some point go to appraisal, and at some unknown point get the payout. If an insurance company does that and pays some interest, then Rodriguez’s decision gives them an out for any other damages. We’re still taking these cases because we’re committed to helping homeowners and business owners across this great state. But we need you to help get in the fight, too. Call your state representative and senator and demand that they change the statute back to its intended meaning. In the meantime, if you ever need us for a fire loss, wind loss, hail loss, vandalism claim, pipe burst, etc., please don’t hesitate to contact us. We’ve been helping homeowners and business owners since 2006 and won’t stop now.
2 || brasherattorney.com
Made with FlippingBook Ebook Creator