Since we opened our firm, our goal has been to fight for policyholders’ rights against insurance companies, who often take advantage of businesses when they are at their most vulnerable. In 2020, we saw a massive influx of insurance claims that are only now beginning to be resolved. Texas, Puerto Rico, and other communities along the Gulf Coast were still recovering from the devastation of Hurricane Harvey and Hurricane Maria – which both made landfall in 2017 – when they were hammered by Hurricanes Hanna, Laura, and Delta. The hope that 2021 would provide some relief was dimmed, as Winter Storm Uri caused chaos across Texas. Commercial property owners in every industry have faced new and unparalleled property damage, foreclosures, and restructurings, ranging from the COVID-19 pandemic to an increasing number of hailstorms. Though the destruction of the past few years has brought to light complex and nuanced insurance issues, policyholders should take solace in Raizner Slania’s willingness and ability to continue to take on some of the largest insurance companies in the world and win. We have been able to assist clients in diverse industries with various types of property damage claims and are proud to have helped restore some semblance of normalcy in their quest to rebuild their properties and businesses.
A Sample of Our Recent Insurance Coverage Disputes
In December, we filed a lawsuit in Harris County against Certain Underwriters at Lloyd’s, London on behalf of the food service industry non-profit group, International Dairy Deli Bakery Association (“IDDBA”), over the insurance company’s refusal to pay a claim under an event cancellation policy. The IDDBA’s policy provided event cancellation coverage for the organization’s 2020, 2021 and 2022 trade shows. Though the insurer paid the claim when the IDDBA canceled its 2020 trade show due to the COVID-19 pandemic, the insurer resisted payment for the 2021 event, despite the identical circumstances. As COVID-19 cases continue to increase due to the presence of highly contagious variants, we expect to see many more instances of event cancellation policies not being honored.
After years of litigating on behalf of a number of condominiums in Puerto Rico with our locally licensed co-counsel, the courts have ordered multiple recalcitrant insurers to make interim payments of over $14 million for adjusted or undisputed amounts for damage caused by Hurricane Maria. Claims totaling several hundred million dollars remain pending in the courts, with trials both already underway and more scheduled over the coming year.
The firm settled multiple lawsuits for hotel owners in Corpus Christi, Texas for claims arising from Hurricane Harvey, such as wind damage to roof systems, elevators, sliding glass doors, and interior rooms.
The firm achieved a confidential settlement in an arbitration in New York on behalf of a Texas multi-family property owner. The property owner had asserted claims against its insurers after Hurricane Harvey caused substantial damage to the apartment complex as well as subsequent lost business income due to the physical damage. Unfortunately, the mandatory arbitration provision contained in the policy, as well as the provisions mandating the application of New York law and New York as the mandatory venue for the arbitration, were never disclosed to our client during the sale of the insurance policy. Accordingly, we filed a separate lawsuit against the agents who failed or decided not to disclose the arbitration related terms of the policy to our client prior to the claim. After significant briefing in federal court, we successfully obtained a denial of the defendants’ motion to compel arbitration and a remand of the case to Harris County, where it remains pending.
We finalized a settlement on behalf of a homeowners’ association for a large condominium after a catastrophic fire damaged two of the condominium buildings. The insurer claimed that the policy contained a per-building limit that, if applied, would have resulted in a significant underpayment. A Dallas County District Court granted our Motion for Summary Judgment, which confirmed full coverage without a per building limitation. The parties reached a confidential settlement shortly after this favorable ruling for our client.
We commenced arbitration on behalf of one of the largest independent school districts in Texas after Hurricane Hanna devastated its South Texas school buildings. Due to our commitment to protect this ISD and Texas taxpayers, who would have to fund repairing the schools, we are representing multiple other ISDs with Hurricane Hanna related claims.
We filed suit on behalf of and finalized a confidential settlement for the owner of a large apartment complex in East Texas after the insurers underpaid the property damage claim for damages resulting from Hurricane Laura.
In a slight departure from our typical insurance recovery practice, we successfully resolved two large construction defect cases. The first involved the representation of a hotel owner, whose hotel experienced significant water intrusion whenever it rained due to defective construction. The construction company attempted to strike our expert opinions, but a Collin County District Court admitted all of our team’s expert opinions, including reports on building failures, causation, and scope of repairs. The case was subsequently settled prior to trial. In another construction defect case in Dallas County, we successfully resolved the claims of a medical practice whose building suffered leaks and other water intrusion due to alleged defective construction. That case also settled shortly before trial.
We achieved a pre-suit settlement on behalf of a Harris County hotel owner after the insurers denied their claim for Winter Storm Uri damage.
In conjunction with local counsel in Louisiana, we represent several different property owners – all large retail centers – in the Shreveport area whose buildings were significantly damaged by hailstorms.
The Development of the Texas Prompt Payment of Claims Act following Barbara Technologies
The Texas Prompt Payment of Claims Act (TPPCA) requires insurance companies to pay interest, in addition to the amount of the insurance claim, when an insurance company delays payment of a claim longer than the statute’s imposed deadlines for making a claims decision. However, a trend began to form where insurance companies would invoke the appraisal clause common in insurance policies in order to delay payment. This all began to change for the better in 2019, when the Texas Supreme Court decided our client’s case, Barbara Technologies Corp. v. State Farm Lloyds, providing much needed clarification on the potential viability of a claim for statutory penalties under the TPPCA when an insurer rejects a claim and then subsequently invokes appraisal and pays the award. The Court held that an insurance company’s payment of an appraisal award after the statutory deadline to pay a claim did not absolve it of liability under the TPPCA. Put simply, an insurer’s payment of an appraisal award, without more, does not relieve the insurer from having to pay interest and attorneys’ fees under the TPPCA.
Following Barbara Tech, we have been at the forefront of pursuing statutory interest under the TPPCA following the payment of an appraisal award. For example, not long after Barbara Tech was decided, we were retained by the owner of 14 commercial properties in Texas and Missouri to pursue interest and attorneys’ fees owed under the TPPCA, where all but one of our client’s claims were sent to appraisal. After significant legal briefing on various issues, the Court entered a 28-page summary judgment order that held our client was entitled to TPPCA damages for several of the properties. The case settled shortly thereafter. Over the past year, we have settled a number of other cases involving TPPCA damages following large appraisal awards for car dealerships, manufacturing facilities, and multi-family property owners.
Our Leadership as Amicus Counsel
In addition to the sampling of cases noted above, we are proud to have maintained our role as a thought leader in shaping Texas insurance law through filing amicus curiae briefs at the Texas Supreme Court. An amicus curiae (meaning a “friend of the court”) brief is filed by a person or organization – often an industry group – that is not a party to the lawsuit at issue but has a stake in its outcome.
We filed an amicus curiae brief in the case of Hinojos v. State Farm Lloyds, in the Texas Supreme Court to addresses the application of a “reasonableness” exception to the Texas Prompt Payment of Claims Act (“TPPCA”), which several courts were applying after the Texas Supreme Court’s decision in our client’s case Barbara Technologies Corporation v. State Farm Lloyd’s (“Barbara Tech”). The TPPCA requires insurers to make payments on valid claims within a specified amount of time. In Barbara Tech, the Court found that insurers are still liable under the TPPCA even when there is an appraisal award, regardless of whether there was a prior partial payment. In other words, appraisal payments do not absolve insurers of liability under the TPPCA to pay insurance claims within the legally mandated time limits. To get around this, insurance companies began arguing that there was an exception to liability under the TPPCA if the insurer made a “reasonable” payment before a claim was taken through the appraisal process and the appraisal award was ultimately paid. In our amicus brief, we urged the Court to strike down the “reasonableness” exception and highlighted the nonsensical nature of the exception. The Court in Hinojos agreed and held:
Nothing in Chapter 542 discharges prompt payment liability based on the partial payment of the amount that “must be paid” under the policy. Otherwise, an insurer could pay a nominal amount toward a valid claim to avoid the prompt payment deadline that the Legislature has imposed.
Raizner Slania also filed an amicus curiaebrief before the Texas Supreme Court in Frymire Home Services, Inc. v. Ohio Security Ins. Co. We represented amici United Policyholders and the Edinburg Consolidated Independent School District to address key legal issues involving the concurrent causation doctrine, specifically whether the doctrine applies to the mere presence of wear and tear on a property. We urged the Court to apply the doctrine to causes – such as wind and flood – and not to ever-present conditions such as wear and tear. A little over a week after we filed the brief, the case was settled, which suggests the insurers made the decision not to press issue further in the courts.
We are truly fortunate to work with so many great clients and co-counsel and look forward to a productive 2022!