INSURANCE LAW
I. For Insurers
Skelton & Woody's clients call
upon us to address regulatory
concerns, coverage questions
under a broad spectrum of policy
forms, extra-contractual
litigation and appeals. We
provide coverage opinions, file
declaratory judgment actions,
and handle all manner of "bad
faith" and coverage litigation in state and
federal courts throughout Texas.
Please see the Skelton & Woody
News for
a summary of recent trials and
other decisions in insurance
cases.
A. Litigation
Our trial practice encompasses
the broadest spectrum of
extra-contractual and commercial
cases, from the most complex
antitrust and class action
matters to more routine bad
faith disputes. In recent years,
this work has been fairly evenly
divided between CGL coverage
disputes between large
commercial entities, and
homeowners' suits involving mold
and foundation loss claims filed
under the Texas Insurance Code
and Deceptive Trade Practices
Act. While our first goal is to
defeat such claims on motions to
dismiss or for summary judgment,
we are prepared to conduct
cost-effective trials in the
cases that need to be tried.
Our jury trial experience ranges
from a $106 million bad faith
coverage case tried in San
Antonio (complete "take nothing"
judgment entered after a
three-week trial), to arson/bad
faith suits, to a recent flood
of extra-contractual cases
involving coverage for
foundation and mold damage to a
variety of structures.
Summary Judgment for State
Farm in March 2009
The firm prevailed on a summary
judgment motion in state
district court in Travis County
on March 10, 2009 in Cause No.
D-1-GN-08-000897; Angelia
Davidson v. State Farm Lloyds
and Buddy Henderson; in the
261st Judicial District Court,
Travis County, Texas. The
lawsuit alleged breach of
contract and bad faith in
connection with a fire loss
claims.
Summary Judgment for
Continental Casualty on February
9, 2009
The firm won summary judgment
for Continental Casualty Co., a
Hartford Company, in February
2009 in a coverage case
involving accidental death
benefits. The decision turned on
contractual limitations,
statutory limitations and
coverage issues. Here is a link
to this order:
Mildred Dick Opinion
Summary Judgment for
Travelers on February 21, 2007
The firm won a summary judgment
in Travelers favor in state
court in Austin on February 21,
2007 in Olga Palacios v.
AIC-Sunbelt Group, Inc. and
Travelers Lloyds of Texas
Insurance Company. The case
involved a frequent litigant who
sued Travelers and Plaintiff's
insurance agent for allegedly
failing to bind new coverage
after the cancellation of her
policy. Plaintiff also alleged
that her signature had been
forged on a policy cancellation
request. She sued for a variety
of contractual and
extra-contractual theories,
including fraud, and asserted a
large mental anguish claim.
Travelers prevailed on
limitations grounds as to all
but one claim asserted,
enforcing a contractual
limitations period that was
shorter than the one provided
for by statute, and prevailed on
a "no evidence" summary judgment
on the only claim not barred by
limitations, fraud.
Victory in Texas Supreme
Court in February 2007
On February 9, 2007, The Texas
Supreme Court issued its opinion
in State Farm Life Insurance
Company v. Martinez, 216 S.W.3d 799 (Tex. 2007),
reversing the Tenth Court of
Appeals’ opinion that unfairly
penalized State Farm for not
choosing and apportioning among
three competing claimants to the
same $500,000 life insurance
proceeds. The unanimous opinion vindicated our
client's decision to file an
interpleader action, paying the
policy proceeds into the
registry of the court, in the
face of conflicting claims by
the deceased's daughter, former
wife (whose divorce decree made
her “irrevocable beneficiary”)
and widow whom the deceased had
attempted to designate as sole
beneficiary. The opinion
clarified how the Texas prompt
payment statute (the former Tex.
Ins. Code Art. 21.55) applies
when insurers who face rival
claims for the same benefits
interplead the funds.
State Farm Life Insurance
Company v. Martinez, 2007
Victory on Appeal on April
19, 2006
In Estate of Hunt v. St. Paul
Fire and Marine Ins. Co, 2006 WL
1004870 (Tex. App.--San
Antonio), Hunt's estate sought
$5 million in actual damages
plus various extra-contractual
measures of damage in connection
with coverage for a fatal
collision between two commercial
trucks. St. Paul won summary
judgment on all theories and the
San Antonio Court of Appeals
affirmed in an opinion
containing language clarifying
the appropriateness of summary
disposition when a plaintiff
seeks to continue the hearing.
Victory on Appeal on January
12, 2006
In Jennings v. State Farm
Lloyds, 2006 WL 66408 (Tex.
App.--Austin), the Austin Court
of Appeals affirmed a case that
clarified the scope of coverage
afforded under homeowners'
policies. The policyholders, who
had been sued by the buyers of
their house for failures to
disclose defects, sought what
amounted to "seller's errors and
omissions" coverage under their
homeowner's policy. The Jennings
opinion clarified the difference
between property damage covered
by homeowner's insurance and
"economic damages" flowing from
failures to disclose or failure
to live up to promises to the
buyers.
Victory on Appeal on
September 7, 2005
In State Farm Lloyds v. Blacklock , (2005 WL 2155635
Tex. App.-- Waco, September 7,
2005) the Waco Court of Appeals
agreed with State Farm’s Daubert/Robinson
challenges to all three of
Plaintiffs’ expert witnesses,
reversed the trial court’s
judgment and rendered judgment
for State Farm. This was an
important win for State Farm in
that these three experts had
appeared in scores of cases
against the company. Skelton &
Woody won a similar “reverse and
render” against the same
plaintiff’s lawyer in State Farm
Lloyds v. Mireles, 63 S.W.3d 491
(Tex. App.--San Antonio 2001),
also prevailing on a Daubert/Robinson
argument to the effect the trial
court abused its discretion in
permitting an engineering
expert’s testimony. Rehearing
was overruled November 29, 2005.
Summary Judgment for St. Paul
in Medina County in 2005
The Estate of Geneva Hunt sued
St. Paul and broker, Marsh,
Inc., claiming $5 million in
underinsured motorist (UIM)
coverage in connection with a
fatal accident between two
18-wheeler trucks. Hunt's
employer, Reynolds Trucking, had
purchased a $5 million liability
policy from St. Paul, but had
only bought the $55,000
statutory minimum UIM coverage.
Hunt's estate sued for failure
to procure proper coverage and a
host of extra-contractual
theories. The case was heard in
Hondo, Texas by an excellent
judge who "rides the circuit,"
sitting in several counties west
of San Antonio. Hamp Skelton
successfully argued for summary
judgment, which was entered at
the hearing on April 21, 2005.
Corporate and Institutional Litigation for Insurers
Defense of one of
the nation's largest
carriers in class
litigation brought
in El Paso by
chiropractors
against workers'
compensation
insurers. Plaintiffs
sued under RICO, the
antitrust laws, as
well as a variety of
state common law and
statutory theories.
Defense of life
insurance companies
in suits involving
multiple claimants
for the same
benefits.
Defense of a large
insurer in massive
"destruction of
business" litigation
brought in Barbour
County, Alabama
alleging bad faith
in the handling of
hundreds of fraud
claims against
insured.
Declaratory Judgment
suit brought on
behalf of over 100
insurers organized
by the AIA
challenging state
regulatory rulings
concerning assigned
risk pool
allocations.
Defense of three
insurer groups in
related antitrust
and conspiracy
litigation brought
by Milberg Weiss and
others in fifteen
states. |
B. Appeals for Insurers
Skelton & Woody has had a major
role in shaping coverage and bad
faith law in the Texas courts of
appeal and Texas Supreme Court.
We handle appeals not only of
the cases we try, but are
frequently called upon to take
over a file at the post-trial
level. Recent reported decisions
include:
State Farm Life Insurance
Company v. Martinez, 216 S.W.3d 799 (Tex. 2007),
reversing the Tenth Court of
Appeals’ opinion that unfairly
penalized State Farm for not
choosing and apportioning among
three competing claimants to the
same $500,000 life insurance
proceeds.
Phillips Petroleum Co. v. St.
Paul Fire & Marine Ins. Co.,
113 S.W.3d 37 (Tex.
App.--Houston [1st Dist.] 2003,
pet. denied) (upholding summary
judgment in favor of St. Paul
and validating its
interpretation of its CGL
"fronting" policy.)
Closner v. State Farm Lloyds,
64 S.W.3d 5 (Tex. App.--San
Antonio 2001, no pet.)
(affirming jury verdict and
judgment for insurer based on
"first manifestation of loss"
prior to the policy period sued
upon)
State Farm Lloyds v. Mireles,
63 S.W.3d 491 (Tex.
App.--San Antonio 2001, no pet.)
(reverse and render decision in
insurer's favor based on Daubert/Robinson
challenge to plaintiffs' sole
causation expert)
Martin Marietta v. St. Paul
Fire and Marine Ins. Co.,
2002 WL 261437 (5th Cir. 2002)
(upholding summary judgment for
insurer on novel question under
CGL policy concerning
forseeability of damage to
downstream water rights owners
by insured's decision to divert
creek water: not an
"occurrence.")
Sharp v. State Farm, 115
F.3d 1258, 1260 (5th Cir. 1997)
(establishing no coverage for
foundation damage and affirming
dismissal of all
extra-contractual claims)
Performance Improvement Corp.
v. State Farm Lloyds, 974
S.W.2nd 135 (Tex. App.--San
Antonio 1998, pet. denied)
(establishing that professional
services exclusion in commercial
general liability policies is
unambiguous and excludes
coverage for business-related
activity)
Oram v. State Farm Lloyds,
977 S.W.2d 163 (Tex.
App.--Austin, 1998, no writ)
(establishing that an erroneous
coverage position that was
nonetheless "reasonable" compels
summary dismissal of extra
contractual claims)
C. Regulatory Work
We represent insurance entities
in all phases of regulatory
matters before the Texas
Department of Insurance. For
example, in the fall of 2003,
Allstate retained us to
challenge a drastic roll-back of
homeowners insurance rates
ordered by the Commission of
Insurance after a legislative
decree. We handled the
administrative hearings,
challenging the legitimacy and
constitutionality of the rate
roll-back, until Allstate
reached an agreement on rates
with the Department.
Our clients call upon us to
respond to investigation and
audits, for representation in
administrative litigation,
rule-making proceedings and
rate-making applications, and to
resolve regulatory problems of
any nature. We also assist
insurers in becoming licensed to
conduct business in Texas.
Frequently, we counsel insurers
on underwriting and rating
issues on a variety of policies,
including the more complex
retrospectively rated and large
deductible workers' compensation
policies.
We also handle appeals of
administrative agency decisions
and the litigation that can
follow. For a separate
discussion of our regulatory
work for health insurers, please
see our Health Law section.
D. Regulatory Appeals
Butler Weldments v. Liberty
Mutual Ins. Co., et al., 35
S.W.3d 654 (Tex.
App.--Austin 1999)
On October 7, 1999, the Austin
Court of Appeals affirmed a
judgment we obtained in favor of
a large group of insurers
organized by the AIA. The
dispute began in rulemaking
proceedings at the TDI over
allocation of a $200 million
surplus accumulated in a Texas
assigned risk pool. Dissatisfied
with the Commissioner of
Insurance's ruling, a group of
policyholders filed class
litigation, alleging that a
defendant class of insurers
conspired to skew the
rule-making process. We obtained
dismissal by challenging
Plaintiffs' pleadings. The
Plaintiffs appealed and Hamp
Skelton argued for the insurers.
The opinion affirming the
dismissal can be found at 35
S.W.3d 654 (Tex. App.--Austin
1999).
E. Clients
Our regular clients include The
St. Paul Companies, The
Travelers, United States
Fidelity and Guaranty, State
Farm, Homewise, Crum & Forster, and Texas
Mutual Insurance Company. We
also represent insurance
brokers. In addition to
litigation, appeals and
regulatory work, we counsel
insurers on the duty to defend,
and a wide variety of coverage
concerns.
For Agents and Brokers
Skelton & Woody represents
agents and brokers on regulatory
matters, litigation and appeals.
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