“When Insurers Hide Behind their Experts in Texas” – Merlin’s blog report case involving State Farm and HAAG Engineering

With Larry and his brothers Darryl following the three qui tam cases, I found this Sergio Leal post on Merlin’s blog relevant to the Rigsby qui tam case against defendants State Farm and HAAG Engineering. Read it here and then visit the Property Insurance Coverage Law Blog.  Chip has it loaded with interesting information.

One strategy insurance companies use to avoid bad faith liability is claiming that they reasonably relied on their experts’ reports to deny a claim. Texas law on bad faith states that an insurer breaches its duty of good faith when: (1) denies or delays payment of a claim for which liability is reasonably clear, and (2) the insurer knew or should have known that liability was reasonably clear. Therefore, insurance companies often argue that because their retained experts concluded that there was no valid insurance claim, liability was not reasonably clear and they should not be found liable for bad faith. Courts typically side with insurance companies on this issue, but sometimes the facts of a case require courts to doubt this argument, just as the Texas Supreme Court did in State Farm Lloyds v. Nicolau, 951 S.W.2d 444 (Tex. 1997).

In Nicolau, a homeowner filed a lawsuit against its insurer for foundation and other structural damage that resulted from a plumbing leak that introduced water into the clay subsoil. The insurer retained an expert, HAAG Engineering¸ to conduct a study on the homeowner’s claim. It was established in Nicolau that the insurer hired HAAG Engineering with the belief that HAAG Engineering generally believed that leaks beneath a house would not cause foundation movement. Continue reading ““When Insurers Hide Behind their Experts in Texas” – Merlin’s blog report case involving State Farm and HAAG Engineering”

Gentleman start your attorney! Phil Bryant may not smell oil on the coast but the bar smells money. Slabbed updates the Oil Spill.

This post has a little something for everyone as the media frenzy on BP’s little mess is exceeded only by the feeding frenzy of the legal profession as seemingly every ambulance chasing lawyer in the nation has descended upon the Gulf Coast like a swarm of locusts. And we have some video for those folks that are wondering what the heck Jefferson Parish Council at large members John Young and Tom Capella are doing these days besides suing the blogosphere as it appears they are hunting a new washed up celebrity to pal around with as their boy Steven Seagal is currently out of the picture (due to recent accusations involving making a staffer his sex slave during filming of reality TeeVee show). Well, either that or they are cuddling up with the managing partner of Wendell Gautheir’s old firm, John Houghtaling, hoping they can finagle a redo of the Pan AM Flight 759 crash from 1982 when then Kenner mayor Aaron Broussard managed to steer the boys at the Gautheir firm the lion’s share of the after crash legal work. Lets begin with this Channel 4 video of a washed up Kevin Costner, the gang from Jefferson Parish and Costner’s contraption which he claims will cure the slick:

[vodpod id=ExternalVideo.941794&w=425&h=350&fv=]
more about “New Orleans News, Local News, Breakin…“, posted with vodpod

So with much of the gang in Jefferson Parish accounted for let’s shift over to New Orleans City Business and Ben Myers who covered the attorney problem a bit over a week ago: Continue reading “Gentleman start your attorney! Phil Bryant may not smell oil on the coast but the bar smells money. Slabbed updates the Oil Spill.”

Mississippi Law Journal publishes “…Rendered far too late” – Chip Merlin on Corban v USAA

To understand the significance of the Mississippi Supreme Court’s decision in Corban v. USAA, it is necessary to consider the financial devastation and unnecessary insurance coverage litigation caused by the absence of it during the four years from the date Hurricane Katrina hit Mississippi’s gulf coast.

Merlin’s lead grabbed my attention as did his page one footnote referencing SLABBED:

The obliterated structures have been termed by those in Mississippi’s gulf coast “slabbed,” as there was literally nothing but a slab left where homes and businesses once stood. Slabbed is also the name of a blog that has chronicled the reconstruction efforts and struggles with the insurance industry along the way. For more on this topic and stories behind the Katrina litigation, see http://www.slabbed.org.

Since Merlin’s blog provides what he calls the “Reader’s Digest version” of his article for the Mississippi Law Journal, SLABBED moves from his lead to the references to Bossier v State Farm and Robohm v State Farm in his Conclusion: (emphasis added)

While the Corban decision made it clear that insurers cannot use the ACC and wind/water protocol to evade their burdens under an all-risk policy, State Farm’s trial motions show that it is still using both to deny claims. One month after Corban was released, State Farm tried to shirk its obligations with a tortured interpretation of Continue reading “Mississippi Law Journal publishes “…Rendered far too late” – Chip Merlin on Corban v USAA”

Judge Barbier shines in Lightell! – Chip Merlin spotlights the Decision

I started my morning read-around with Can an Insured Recover Under a Flood Policy and an All Risk Homeowners Policy for the Same Damage? on Merlin’s blog – and that plus the beautiful sunshine here in the “Bold New City” just made my day.

Chip did his usual good job spotlighting the significant points in the decision and his post in total is below.  However, he didn’t mention the name of the judge and – call it a side-effect of my exposure to the corruption in Jefferson Parish and the pending impeachment of Thomas Porteous- but, nowadays, that’s the first thing I want to know about a Louisiana court decision.  If you follow the link to the case as I did, you’ll find this victory for justice credited to one of the truly Honorable federal district judges in the Eastern District of Louisiana,  Carl J. Barbier.

In Louisiana, the answer is probably “yes.” The FC&S pondered this question in its March 2010 Dec Page report titled, “Recovery Under Flood Policy and Homeowners Policy?” The highlighted case was Lightell v. State Farm Fire & Cas. Co., 2009 WL 4505942 (E.D.La. 2009). The article noted the significant facts and issues as follows:

The insured suffered property damage due to the wind and flood caused by Hurricane Katrina. They collected partial payment of their policy limits from both the homeowners and flood insurance policies. Believing that the payments were not indicative of the extent of the actual damage to the home, the insured filed a lawsuit against the insurers. State Farm, the homeowners insurer, filed a motion for summary judgment.

State Farm asserted that the insured is estopped from recovery related to wind claims because he previously alleged that he was entitled to flood policy limits due to the total destruction of the property. And, the insurer said that the insured has the burden of proving the damage was caused by wind (a covered loss) as opposed to flood (not covered).

The Federal Court wrote an interesting section on estoppel, which arises in these types of cases, and the burden of proof. Regarding the estoppel issue, the Court noted: Continue reading “Judge Barbier shines in Lightell! – Chip Merlin spotlights the Decision”

Merlin – Amy Bach and United Policyholders Supports Mississippi Insurance Protections

Sun Herald reporter Michael Newsom reported the current current status of insurance legislation pending at the Capitol in House OK’s Compromise:

House Bill 563 passed in a 107-7 vote Wednesday, which included all South Mississippi representatives voting for it. The measure is the lone surviving piece of Hurricane Katrina insurance legislation. Several other insurance bills, which Coast lawmakers file annually, died with a Feb. 2 deadline to clear committee. Coast lawmakers have said the insurance industry carries much influence over the Legislature, which has contributed to the bills failing in the years since Hurricane Katrina.

However, House Bill 563, the subject of Sop’s recent post Watered down policyholder legislation still hanging on in the Mississippi  Legislature, passed the House with language Sop claimed would give insurers “free rein” still in the bill:

In addition to the rights that are specified by the commissioner and the provision regarding reasonable time frames, the Mississippi Homeowners Insurance Policyholder Bill of Rights must include the following provisions:  (a) Unless based on sound actuarial principles, an insurance company may not treat a policyholder differently from other individuals of the same class and essentially the same  hazard when evaluating a claim…(emphasis added)

Keep in mind that Sop is a CPA who knows “adjusting claims has nothing to do with “actuarial principles” and his related opinion is as worthy of consideration as that of those in other professions commenting on proposed insurance legislation:

Taken at its face that language essentially gives an insurer free rein to do whatever the heck they want provided they pay a shill like Robert Hartwig enough to concoct some whopper actuarial principle to justify why it is OK for an insurer to hose a policyholder on a claim.

Sop spoke for SLABBED when he pointed out the red flag language in House Bill 563 and I saw no need to add more until I read this paragraph in Merlin’s related post this morning:

I am certain many may think these efforts are a waste of time because the insurance lobby in Mississippi seems to be in control of the political process. Standing up for the right principle and social policy is always the right thing to do. Like water in a stream relentlessly influencing the earth, just social policy reflected in law will eventually happen. But this will occur only so long as we stand up to those with more significant wealth or power that are attempting to keep the unjust status quo in place.

It is not the strength of the insurance lobby that concerns me.  Instead, my consideration is framing insurance legislation as a matter of “social policy” when the “unjust status quo in place” is a matter of “public policy”.  The distinction is important. Continue reading “Merlin – Amy Bach and United Policyholders Supports Mississippi Insurance Protections”

No more Mr. Nice Guy – Merlin takes on Safeco and Liberty Mutual

Chip Merlin, fired up and ready to go after Safeco and Liberty Mutual, issued a call to arms on his blog today in Safeco and Liberty Mutual Claims Practices Questioned on a National Basis: Policyholders Organize Against Wrongful Claims Practices.

Having seen what wrongful claims practices can do to family and communities in our State’s coastal counties, SLABBED  grabbed a keyboard and stands ready to type.

Suppose you knew that your insurance company had started a new claims practice program called “Quantum Leap” to increase corporate practices by making certain no claim was overpaid—would you buy that insurance? Would you feel peace of mine if you knew that secret program was in place and had such a claims philosophy? Continue reading “No more Mr. Nice Guy – Merlin takes on Safeco and Liberty Mutual”

Merlin – Replacement Cost Implications by Replacing at Another Location

Chip Merlin answers a question that has been on my mind of late in his post Replacement Cost Implications by Replacing at Another Location:

Replacement at the same location or repairing the same premises has been a frequent question posed by a number of clients. In many situations, clients of older structures in areas where it is not economically feasible to rebuild wish to replace in another location. They want to know if they can replace or repair with another structure at another location and whether they can obtain the holdback of the replacement cost benefits since the insurer generally pays only the actual cash value until the replacement is incurred. Fortunately, the FC&S Bulletins has the right answer to those questions and a Florida case provides a good example of the general law to this topic.

A New York subscriber to the FC&S Bulletins asked: Continue reading “Merlin – Replacement Cost Implications by Replacing at Another Location”

Merlin makes introduction and SLABBED welcomes Shelia Birnbaum

Posted on September 22, 2009 by Chip Merlin (posted to SLABBED with permission)

Sheila Birnbaum: The Attorney Behind State Farm’s Katrina Scruggs Defense Explains How Major Corporations Can Use the Civil Justice System to Thwart Consumer Rights

I enjoy good lawyering. Corporate America has the best lawyers defending their actions and figuring out how they can be unaccountable for their bad acts. A formidable New York Ivy League trained lawyer, Sheila Birnbaum, is one of those lawyers. I give her, Corporate America, and especially State Farm, all the credit they deserve for showing that they can beat State Farm’s customers and their attorneys in the appellate courts of America. Birnbaum implied that large corporations have greater influence over federal courts of appeal in her webinar with the Washington Legal Foundation last year.

The Washington Legal Foundation is one of those “ultra conservative” tobacco, manufacturing, and insurance interest dominated “think tanks” that espouses legal theories that limit consumer interests. Insurance defense firms and lobbying groups use these groups for propaganda. They try to get their board members appointed to government and judicial positions. Unless you are supported by one of these groups or you represent those product manufacturers, you could not dispute me. This group is as much anti-consumer as communists are anti-capitalist.

These groups use their vast financial resources to substantially affect our laws, even though they have no vote or legitimate need to affect public policy and the rights of millions of consumers. They hire the most highly paid lawyers, like Sheila Birnbaum. So long as these corporate interest groups are allowed to use their money to influence politicians and the media, Americans will always have the problem of their government ultimately working for the corporations and against their best interests. British Tories were the “corporate interests” at the time of the American Revolution, and corporations represented by lawyers like Birnbaum are the new American Tories of the twenty-first century. Their law firms pretend to do good while they rake-in millions from corporate representation, public relations advertisements, political support, and corporate propaganda. Individual and consumer interests have much less affluent financial political help. Guess who is winning?

Over the weekend, I came across a webinar by the Washington Legal Foundation featuring Sheila Birnbaum. I first thought that Slabbed would have noted this. But, I search the term “Birnbaum” on Slabbed search and found the following Continue reading “Merlin makes introduction and SLABBED welcomes Shelia Birnbaum”

Merlin: Court rules them that’s got your policy have good faith obligation to investigate all facts supporting coverage, not just those that do not!

Thanks, Sop! Perfect music for today’s post on Merlin’s blog: Property Insurers Have An Obligation To Investigate All Facts Supporting Coverage.

An attorney from another law firm asked me whether an insurer is obligated to investigate facts supporting coverage in a property insurance coverage dispute. It is common for colleagues to share information and help when they can. It seems that the more one shares, the more one receives –usually with compound interest.

Although SLABBED is more often on the receiving end, our standing “share and share alike” agreement with Chip paid compound interest today:

…an insurer cannot reasonably and in good faith deny payments to its insured without fully investigating the grounds for its denial…. Indeed, in Egan v. Mutual of Omaha Ins. Co… the Supreme Court emphasized that, in order to protect the interests of its insured, it was “essential that an insurer fully inquire into possible bases that might support the insured’s claim.”

Today’s “compound interest” also includes this comment from one of Merlin’s readers:

I often wondered why we spent so much time in elementary school diagramming sentences. Now as an adjuster I have a clue.

More about the “language of Katrina litigation” later.  Now, and with a big tip of the SLABBED hat, here’s Merlin:

Currently my favorite case on the topic of an insurer’s obligation to investigate fully for facts supporting coverage (rather than facts supporting only denial) is Jordan v. Allstate Ins. Co., 148 Cal. App. 4th 1062 (Cal. App. 2d Dist. 2007). Continue reading “Merlin: Court rules them that’s got your policy have good faith obligation to investigate all facts supporting coverage, not just those that do not!”

Merlin: Insurance industry is using the “letter of the contract” to defeat the promise they sell

Here are two new posts on Merlin’s blog that are a great fit with Sop’s View from the trenches on the disconnect at the National Underwriter –Leading Insurance Academic Proves State Farm Accepts “Reasonable Expectations” of Insurance Coverage and Insurance Advertisements Stress an Expectation of Coverage and Service.

Both posts go to the heart of every Katrina case – the “illusory coverage” policyholders found they were sold and told would cover loss from a hurricane.

The first, Merlin wrote this past Tuesday:

Professor Jeffrey Stempel is among the best legal writers of matters pertaining to insurance. When reading his work, I often think “why can’t I explain my thoughts so clearly and eloquently?” Maybe that is why he is the insurance law professor, and I am in the middle of legal muck and controversies.

While following up on Saturday’s Post, “Fireworks are Loved by Americans–and Insurance Companies Seeking Not to Pay Fourth of July Fires,” where I quoted Barry Zalma at length for the proposition that insurance companies often advertise one product but sell another, I came across a related article on the LexisNexis Insurance Law Center written by Stempel. His article, March Madness Makes It “Official: State Farm Embraces the Reasonable Expectations Doctrine and Rejects Linguistic Literalism, is a must read for those trying to prove that even the industry leader recognizes what it advertises is not what it sells. This is the point I was trying to make in my post, “Is the State Farm Policy Really Worth Anything?

I felt the following paragraphs best sum up Stempel’s points: Continue reading “Merlin: Insurance industry is using the “letter of the contract” to defeat the promise they sell”