In Galveston Bay Biodiesel, L.P. v. Ace American Insurance Co., Download FREE PUBLIC ACCESS DOWNLOAD Galveston Bay Biodiesel, L.P. v. Ace American Insurance Co. (S.D. Tex. Case No. 10.132, Opinion Filed June 11, 2010) also published as 2010 WL 2485995 (S.D. Tex. June 11, 2010)(Westlaw subscription required to access Westlaw), a Policyholder sued its Property Insurance Company for nonpayment of alleged Hurricane Damages incurred during Hurricane Ike. The Policyholder also sued the Property Insurance Company and two Adjusters it employed, for alleged Unfair Claim Practices in violation of the Texas Insurance Code. This destroyed diversity between a Texas Plaintiff and two out of three Defendants who were also citizens of Texas.
The Federal Judge in this case accordingly granted the Policyholder's-Plaintiff's Motion to Remand to State Court where the Plaintiff originally filed this case. The Federal Court reached this conclusion by explicitly applying the same standard as that which governs the resolution of Motions to Dismiss for Failure to State a Claim Upon Which Relief Can Be Granted, which is a prevailing standard govening Motions to Remand. The Federal Judge specifically held that the Plaintiff in the Galveston Bay Biodiesel case alleged a Claim under the Texas Insurance Code Upon Which Relief Can Be Granted against not only the Insurance Company Defendant in that case, but also against the two individual adjuster-Defendants as well. Galveston Bay Biodiesel, 2010 WL 2485995 at *4-*5. Do not be misled, however; if there had been no Insurance Company Defendant, there still would have been viable Claims against the individual Defendant's under the settled law applied by this Federal Court in Texas.
Under the Texas Deceptive Trade Practices Law, a "consumer" can sue "any person" who acts in violation of Chapter 541 of the Texas Insurance Code, thereby causing alleged "economic damages or damages for mental anguish". TEX. BUSINESS AND COMMERCE CODE ANN. § 17.50(a). Parenthetically, the exposure of individuals who violate the Code can include treble damages, id. § 17.50(b), and perhaps actual damages in addition. Id. § 17.50(h). Here is a link to the entire Chapter 17 made available by the Texas Legislature for the entire Texas Deceptive Trade Practices Law (and not for individual sections or subsections).
Texas law is settled that "a claims adjuster responsible for the servicing of insurance policies" can be held liable under the Texas Insurance Code for alleged Unfair and Deceptive Trade Practices. Gasch v. Hartford Accident & Indemnity Co., 491 F.3d 278, 282-83 (5th Cir. 2007)(applying Texas law; Summary Judgment for Insurance Company vacated and cause remanded for lack of Federal Jurisdiction because the case was improvidently removed from State Court to Federal Court accordingly).
Following the decision in the Gasch case, the District Judge, facing the same set of causes of action alleged upon similar facts, therefore granted the Plaintiff-Policyholder's Motion to Remand in Galveston Bay Biodiesel, 2010 WL 2485995 at *5. The exposure faced by individual adjusters to liability for alleged violations of the Texas Insurance Code prevented Federal Courts from acquiring jurisdiction of the Plaintiff's case.
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Thank you for the detailed information regarding this case and the outcome for the situation. This precedent could really affect the manner in which Texas insurance adjuster license holders operate when handling future claims.
Posted by: Adjuster Annie | January 28, 2011 at 01:57 PM
This is just a reminder that adjuster license agents must be cautious in what they are doing and that it may affect their license status in case they become careless. This goes as well that liability is something that is needed to be
Posted by: texas insurance license | June 03, 2011 at 08:45 AM