{"id":213150,"date":"2014-11-21T06:55:26","date_gmt":"2014-11-21T13:55:26","guid":{"rendered":"https:\/\/www.myconstructionexpert.com\/blog\/?p=213150"},"modified":"2014-11-19T09:02:03","modified_gmt":"2014-11-19T16:02:03","slug":"texas-supreme-court-denies-policyholders-discovery-regarding-claims-handling","status":"publish","type":"post","link":"https:\/\/www.myconstructionexpert.com\/blog\/texas-supreme-court-denies-policyholders-discovery-regarding-claims-handling\/","title":{"rendered":"Texas Supreme Court Denies Policyholder\u2019s Discovery Regarding Claims Handling"},"content":{"rendered":"

Matthew Morris | Proskauer | November 18, 2014<\/p>\n

It is rare to see a state\u2019s highest court address a discovery issue. \u00a0But the Supreme Court of Texas did just that recently in In re National Lloyds Insurance Co., holding that a policyholder\u2019s demands for discovery about how her homeowner\u2019s insurance carrier\u2019s claims adjusters handled other insurance claims was an impermissible \u201cfishing expedition.\u201d\u00a0 The decision is a sobering one for all policyholders, not just homeowners, that are insured under policies governed by Texas law and who believe that their insurers have not handled their claims in good faith.<\/p>\n

After storms damaged Mary Erving\u2019s home in Cedar Hill, Texas, she looked to her homeowner\u2019s insurer, National Lloyds to help her rebuild.\u00a0 National Lloyds sent two adjusters, Team One Adjusting, LLC and Ideal Adjusting, Inc., to inspect the Erving home, and National Lloyds ultimately paid the claims based on the adjusters\u2019 assessments.\u00a0 Convinced that National Lloyds had undervalued both claims, Erving sued, alleging that the insurance company had, among other things, breached the insurance policy, breached its duty of good faith and fair dealing, and violated Texas statutes prohibiting deceptive trade practices, unfair competition and deceptive practices in insurance and unfair claim settlement practices.<\/p>\n

In discovery, Erving requested production of: all claims files from the previous six years involving three adjusters; all claims files in two counties involving Team One Adjusting and Ideal Adjusting; and, by interrogatory, identifying information associated with the requested claims files.\u00a0 National Lloyds objected that the requests were overbroad, unduly burdensome, and not calculated to lead to the discovery of admissible evidence.\u00a0 Erving moved to compel, and the trial court entered an order requiring production of a significantly narrowed set of documents.\u00a0 Specifically, the court limited production to claims handled by Team One Adjusting and Ideal Adjusting related to properties in Cedar Hill and to the two storms that damaged Erving\u2019s house.\u00a0 National Lloyds sought relief from the court of appeals, which denied the petition.\u00a0 National Lloyds then sought relief from the Texas Supreme Court, which agreed to take up the matter.<\/p>\n

The high court began its analysis by reviewing the general rules of discovery in Texas, and noting that while those rules are \u201cliberal,\u201d they do not permit \u201c[o]verbroad requests for irrelevant information.\u201d\u00a0 Of course, Erving had argued that her demands sought relevant information, because the documents would help prove whether the adjusters used consistent methods, spent an equivalent amount of time, and used the same pricing data.\u00a0 She contended that the adjusters undervalued her claims by establishing a \u201cbaseline\u201d and comparing her claims to it.<\/p>\n

The court, however, could not see how National Lloyds\u2019 handling of the claims of third parties was probative of its conduct regarding Erving\u2019s claims.\u00a0 It observed that every claim involves many variables, including when the claim is filed, what condition the property is in, and what damage it suffers. \u00a0Although the court was unwilling to say that evidence regarding other policyholders\u2019 claims can never be relevant, it viewed Mary Erving\u2019s request for the information she needed to prove her bad faith claim as a \u201cfishing expedition.\u201d<\/p>\n

National Lloyd\u2019s is notable because many high courts give lower courts a wide berth in discovery issues, especially when the lower courts have already substantially pared down the discovery demands in dispute.\u00a0 Particularly troubling is the fact that unfair claims handling by insurers is often apparent only when those practices are examined through a wider lens that captures how similarly situated policyholders are treated differently\u2014but that perspective isn\u2019t available without access to an insurer\u2019s claims files.\u00a0 Counsel seeking to prove an insurer\u2019s bad faith in handling claims, at least in Texas, will have to keep in mind that the threshold to obtain the kind of comparative evidence Erving sought is now apparently fairly high.<\/p>\n

via Texas Supreme Court Denies Policyholder\u2019s Discovery Regarding Claims Handling | Risk and Recovery: Legal Insights for the Insured<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"

Matthew Morris | Proskauer | November 18, 2014 It is rare to see a state\u2019s highest court address a discovery issue. \u00a0But the Supreme Court of Texas did just that recently in In re National Lloyds Insurance Co., holding that a policyholder\u2019s demands for discovery about how her homeowner\u2019s insurance carrier\u2019s claims adjusters handled other… Continue reading Texas Supreme Court Denies Policyholder\u2019s Discovery Regarding Claims Handling<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","enabled":false},"version":2}},"categories":[140,3],"tags":[140,3,155],"class_list":["post-213150","post","type-post","status-publish","format-standard","hentry","category-bad-faith","category-insurance-claims","tag-bad-faith","tag-insurance-claims","tag-texas","entry"],"jetpack_publicize_connections":[],"yoast_head":"\nTexas Supreme Court Denies Policyholder\u2019s Discovery Regarding Claims Handling - 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