Blog Archives

Louisiana Supreme Court Reverses a Rare State Court of Appeals Win for COVID-19 Business Interruption Claimant

Posted on March 27, 2023 by Karl A. Schulz

COVID-19 business interruption claimants have had few state appellate court decisions upon which to rely. Louisiana produced one such decision in Cajun Conti, LLC v. Certain Underwriters at Lloyd’s, 2022 La. App. LEXIS 939 (La. App. 4 Cir., June 15, 2022). The insurer prevailed in the trial court in a dispute over whether coronavirus constituted “direct physical loss of or damage to” insured property. The insured restaurant appealed. Louisiana’s Fourth Circuit Court of Appeal reversed the trial court. The Court of Appeal’s opinion became widely-cited by other COVID-19 business interruption claimants. The insurer appealed to the Louisiana Supreme Court and Cajun Conti became a widely-followed dispute. As discussed below, the Court of Appeal’s analysis was out of step with the…

Tagged with: Coverage, covid, interruption, loss, Louisiana, Texas, use
Posted in Uncategorized

Texas Court of Appeals Nixes Plaintiff’s Attorney’s Fees Award Because Offsets Preclude Prevailing Party Status

Posted on December 9, 2022 by Karl A. Schulz

The First Court of Appeals in Houston affirmed an analysis that involved math and application of the Texas Insurance Code. In Jones v. Allstate Vehicle & Property Insurance Company, 2022 Tex. App. LEXIS 8896 (Tex. App.—Houston [1st Dist.] Dec. 6, 2022, no pet.), the policyholder appealed a take-nothing judgment in favor of the insurer in a dispute over a partial denial of a homeowners claim. The policyholder sued her insurer for breach of contract, violation of the Texas Insurance Code, and breach of the duty of good faith and fair dealing. At trial, the jury found that the insurer failed to comply with the policy, engaged in unfair and deceptive trade practices, and failed to comply with the duty of…

Tagged with: attorney, faith, fees, prevailing
Posted in Uncategorized

Fifth Circuit Resolves Split Over Chapter 542A Election of Liability for Agents

Posted on October 11, 2022 by Karl A. Schulz

In Advanced Indicator & Manufacturing v. Acadia Insurance Company,[1] the Fifth Circuit resolved a thorny split in Texas federal district courts regarding Texas Insurance Code Chapter 542A by returning to a bedrock principle governing removal. Now as long as the insurer has elected to accept the adjuster’s liability any time before removal – even when after suit is filed – there is no possibility of recovery against the adjuster and removal will be proper. About The Author

Posted in Uncategorized

Oklahoma Supreme Court Rejects “Loss of Use” Argument, Nixes COVID-19 Business Interruption Suit

Posted on September 19, 2022 by Karl A. Schulz

There is a clear nationwide trend of federal courts disposing of COVID-19 business interruption suits.[1] Insureds are not clearing their initial burden to establish direct physical loss or damage to property, or they are running afoul of virus and contamination exclusions. Relatively few state supreme courts, however, have weighed in to resolve the issue, thereby providing guidance to their own lower courts and federal courts that must follow state law.[2] Insurers and insureds alike have been watching to see which way the Oklahoma Supreme Court would hold. In Cherokee Nation v. Lexington Ins. Co., 2022 OK 71, the Court joined the national mainstream and ruled against the insured. About The Author

Tagged with: Cherokee, covid, damage, Insurance, interruption, Oklahoma, physical, policy, use
Posted in Uncategorized

Texas Court of Appeals Adds Confusion to Post-Appraisal Litigation Under the TPPCA

Posted on August 30, 2022 by Karl A. Schulz, Donnie Mike Apodaca, II

Ever since the Texas Supreme Court changed the landscape of Texas law regarding appraisal in Barbara Technologies Corp. v. State Farm Lloyds, 589 S.W.3d 806 (Tex. 2019) and Ortiz v. State Farm Lloyds, 589 S.W.3d 127 (Tex. 2019), practitioners and courts have been struggling to apply the Texas Supreme Court’s holdings. Barbara Technologies and Ortiz answered some questions but raised others. About The Authors

Tagged with: Attorney’s Fees, Bad Faith, Insurance, Prompt Payment, property, TCPPA, Texas
Posted in Uncategorized

Major Victories for Insurers in Fifth Circuit Regarding COVID-19 Business Interruption Claims

Posted on January 7, 2022 by Karl A. Schulz

The Fifth Circuit Court of Appeals has joined seven other Circuits in finding no coverage for COVID-19 business interruption claims.[1] In Terry Black’s Barbecue, L.L.C. v. State Auto. Mut. Ins. Co., 2022 U.S. App. LEXIS 287 (5th Cir. Jan. 5, 2022) and Aggie Invs., L.L.C. v. Continental Cas. Co., 2022 U.S. App. LEXIS 393 (5th Cir. Jan. 6, 2022), the Fifth Circuit considered claims under all-risk policies. In Terry Black’s Barbecue, the policy included provisions for loss of business income and extra expense. To trigger such coverages, the policy required that the suspension of operations “must be caused by direct physical loss of or damage to property at the premises.” The policy’s definition of “period of restoration” was the period…

Tagged with: business interruption, civil authority, covid-19, extra expense, Insurance
Posted in Uncategorized

Seventh Circuit Continues String of Insurer Victories in COVID-19 Business Interruption Litigation

Posted on December 21, 2021 by Karl A. Schulz

At least five Circuit Courts of Appeal have now come out in favor of insurers in COVID-19 business interruption lawsuits.[1] The latest is the Seventh Circuit Court of Appeals in Sandy Point Dental, P.C. v. Cincinnati Ins. Co., 2021 U.S. App. LEXIS 36399 (7th Cir. Dec. 9, 2021). The Court in Sandy Point resolved three claims in one opinion under Illinois law. The three plaintiffs were a dentistry practice, a hotel, and restaurant. Each business was allegedly impacted by orders issued by Illinois’ governor to stem the spread of COVID-19. Each of the businesses’ policies included a familiar coverage threshold of a “suspension” caused by direct physical “loss” to property at a premises caused by or resulting from a Covered…

Tenth Circuit Rules Against Insurer and Decides That Appraisers Can Decide Causation

Posted on October 12, 2021 by Karl A. Schulz

In the continuing saga of what can and cannot be appraised in a property insurance appraisal, the Tenth Circuit, in contrast to many other courts, has ruled appraisers can determine coverage issues. In Bonbeck Parker, LLC v. Travelers Indem. Co. of Am., 2021 U.S. App. LEXIS 29607 (10th Cir. October 1, 2021), a hailstorm damaged three buildings covered under a commercial property insurance policy. A dispute between the insured and insurer arose over whether the hailstorm caused all of the damage claimed. The insurer paid some of the claimed damage, but denied coverage for other claimed damage, asserting that it was caused by non-covered causes such as wear and tear. The insured invoked appraisal. About The Author

Tagged with: appraisal, appraiser, Causation, cause, Colorado, declaratory judgment, determine, loss, Tenth, Texas, umpire
Posted in Causation, Coverage, Uncategorized

Court’s Opinion Provides Guidance on Protecting a Claims Handling Manual as a Trade Secret

Posted on November 10, 2020 by Karl A. Schulz

In Chavez v. Std. Ins. Co., 2020 U.S. Dist. LEXIS 203610 (N.D. Tex. Oct. 30, 2020), Judge David C. Godbey considered a variation on a common scenario that arises in first party cases. Typically, the insured/plaintiff wants an insurer’s claims handling manual to use against the insurer in proving claims under Texas Insurance Code Chapter 541 and the DTPA. However, as Judge Godbey explained, such manuals are not automatically discoverable. Also, insurers can significantly increase the chances that a court will protect such manuals from unrestricted discovery and use in litigation by providing certain affidavit evidence. The plaintiff in Chavez was receiving long-term disability benefits from Standard Insurance Company (“Standard”). Standard terminated Chavez’s benefits after a medical examination. Litigation ensued. …

New Hurricane Harvey Opinion Provides a Roadmap to Defeating Common Policyholder Attorney Tactics

Posted on April 29, 2020 by Karl A. Schulz

Policyholders attorneys often try to skip the threshold steps of bringing their client’s claim within coverage and allocating between covered and non-covered causes of loss. Instead, the policyholder attorney would have the insurer first disprove coverage, or at least first justify its coverage position. These tactics unfold in a familiar way. The policyholder attorney will engage a consultant to write up an Xactimate estimate. Or, perhaps a public adjuster already wrote up the estimate and then brought the claim to the attorney. Everything that is wrong with the structure will go into the estimate. Every water-stained ceiling tile, bent AC condenser fin, and dent on the siding will go into the estimate regardless of causation. The bigger estimate, the better…

Tagged with: Allocation, Coverage, Hurricane Harvey, Investigation, Policy Interpretation
Posted in Catastrophes, Coverage, Hurricane