Texas Supreme Court Hands Out A Halloween Treat To Insurance Carriers
On Friday the Texas Supreme Court granted National Lloyds Insurance Company relief from a discovery mandate ordered by a Dallas trial court. Its decision in In re National Lloyds Insurance Company, No. 13-0761, limits the rights of policyholders to obtain information about other claims handled by their insurance carrier in order to evaluate their damages. The Court’s opinion curtails plaintiff’s discovery requests in first party claims — and possibly third party cases in the future.
The Facts of the Case
Mary Erving’s home was damaged during severe storms that hit Cedar Hill in September 2011 and again in June 2012. Ms. Erving filed claims for the damages with her homeowner’s insurance company. Two independent adjusting companies inspected her residence and her homeowner’s company paid her a limited amount of money. (This is not a photograph of Ms. Erving’s house.)
Ms. Erving believed the insurance company had undervalued her claim and filed a lawsuit against her carrier. She alleged breach of contract, bad faith, fraud, conspiracy to commit fraud and violations of the Texas Deceptive Trade Practices Act and Texas Insurance Code.
The Plaintiff’s Request for Information
During discovery, the plaintiff requested six years of claims files from the adjusters, the past year’s claim files pertaining to properties located in Dallas and Tarrant Counties handled by the adjustment companies,and identifying information associated with the requested files. She needed to use this information to compare related claims with the assessment made of her own property damage in order to support her argument that her claims were undervalued.
In response to the insurance company’s objections, the trial court greatly narrowed the plaintiff’s requests to include only recent claims files pertaining to houses in Cedar Hill handled by the same adjusting companies. However the insurance company filed a mandamus proceeding (an appeal) of the discovery order. The Dallas Court of Appeals sided with the plaintiff and the insurance carrier appealed again.
The Texas Supreme Court’s Decision
The Texas Supreme Court ruled per curia (unanimously) that the trial court abused its discretion and directed the trial court to vacate its order. In response to the insurance company’s objections, the trial court narrowed the plaintiff’s requests to include only recent claims files pertaining to houses in Cedar Hill handled by the two adjusting companies.
However the Court acknowledged that the standards for obtaining discovery were liberal. However, “we fail to see how National Lloyds’ overpayment, underpayment, or proper payment of the claims of unrelated third parties is probative of its conduct with respect to Erving’s undervaluation claims at issue in this case.” How else can the homeowner show that she was underpaid. The Court went on to write: “scouring claim files in hopes of finding similarly situated claimants whose claims were evaluated differently from Erving’s is at best an impermissible fishing expedition.”
Will This Ruling Affect Auto and Truck Accident Claims?
Auto and truck insurance companies use comparative information to assess the amount of property damage and personal injuries. It seems only fair that a person should also have access to relevant information pertaining to other claims handled by the insurance company to make his own comparative evaluation. Although in In re National Lloyds Insurance Company involves a homeowner’s policy, no doubt this case will be used as precedent when applied to an auto insurance policy. In a footnote, the Court implied that it may do so in the future with third party claims in coverage litigation.
We Fight Insurance Companies
Learn your legal rights if your auto insurance company has undervalued your car or truck crash claim. Dallas-Fort Worth personal injury attorney Bill Berenson can negotiate a just settlement. Call our office at 817-885-8000 or toll-free at 1-888-801-8585 to schedule a free consultation today. We will fight to get you the compensation you deserve.