Claims And Issues

HAVE ATTORNEYS PRICED THEMSELVES OUT OF INSURANCE CASES?

In a case from New Mexico, a Court's award of attorney's fees was at a much lower rate than in other parts of the country where attorney's rates have been assessed.  "The primary issue is what constitutes a reasonable hourly rate for attorney's fees for high-end insurance work in Albuquerque, New Mexico in 2016. After an extensive review of local rates, the Court concludes that $350.00 is a reasonable hourly rate for experienced partners doing high-end, complicated insurance work, while a reasonable rate for experienced associates is $200.00."  XTO Energy, Inc. v. ATD, No. CIV 14-1021 JB/SCY, 2016 WL 5376322, at *1 (D.N.M. August 22, 2016).

Attorneys "doing high-end, complicated insurance work" in recent cases have been awarded hourly rates double or even three times the rates awarded in this case.  Did those attorneys in older cases price themselves out of insurance cases?

XTO may very well represent the prevailing mood on assessing attorney's fee rates in insurance cases.  If so, attorneys doing high-end, complicated insurance work are coming down to earth.

The decision in XTO is worth following.  If Courts in other jurisdictions also follow the holding on attorney's rates in this case, it will be a sea change in attorney's fee awards in insurance cases.

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Statutory COVERAGE ANYONE? WHEN UNFAIR PRACTICES REQUIRE OFFICIALS "TOO BIG TO SUE."

In Hackler v. State Farm Mut. Auto. Ins. Co., No. 3:14-cv-00531-MMD-VPC, 2016 WL 5402743, at *2 (D. Nev. September 26, 2016), the policyholder invoked many of the practices regarding coverage which are prohibited by Nevada's Unfair Claim Practices Act.  She alleged these unfair practices in a claim against her underinsured motorist (UIM) carrier based upon the statute:

    NRS § 686A.310 lists a number of activities that are considered unfair practices in the context of insurance. Hackler argues that State Farm has violated subsections (b), (c), (d), (e), (f), (k), and (n), which prohibit the following:

(b) Failing to acknowledge and act reasonably promptly upon communications with respect to claims arising under insurance policies.

(c) Failing to adopt and implement reasonable standards for the prompt investigation and processing of claims arising under insurance policies.

(d) Failing to affirm or deny coverage of claims within a reasonable time after proof of loss requirements have been completed and submitted by the insured.

(e) Failing to effectuate prompt, fair and equitable settlements of claims in which liability of the insurer has become reasonably clear.

(f) Compelling insureds to institute litigation to recover amounts due under an insurance policy by offering substantially less than the amounts ultimately recovered in actions brought by such insureds, when the insureds have made claims for amounts reasonably similar to the amounts ultimately recovered.

[...]

(k) Delaying the investigation or payment of claims by requiring an insured or a claimant, or the physician of either, to submit a preliminary claim report, and then requiring the subsequent submission of formal proof of loss forms, both of which submissions contain substantially the same information.

[...]

(n) Failing to provide promptly to an insured a reasonable explanation of the basis in the insurance policy, with respect to the facts of the insured's claim and the applicable law, for the denial of the claim or for an offer to settle or compromise the claim.

NRS § 686A.310.

Her statutory claim for alleged unfair practices failed, however.  There was no evidence in the record of what the statute required as to proof of who was responsible at the insurance company for these practices.  The Nevada statute requires that the offending practice come at the hands of an officer, director or department head of the insurer who knowingly permitted the unfair practice.  There was insufficient proof in the record on this issue.  As a result, the policyholder's statutory claim failed in this case and the District Court both denied the policyholder's motion for summary judgment on this claim, Hackler v. State Farm Mut. Auto. Ins. Co., No. 3:14-cv-00531-MMD-VPC, 2016 WL 5402743, at *3 (D. Nev. September 26, 2016), and granted the carrier's motion for summary judgment on this claim.  Id. at *5.

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WELLS FARGO: COVERAGE FOR 5,300+ "BAD APPLES?" OR FORESEEABLE DAMAGES?

News reports have been published since at least 2013 that certain demands that Wells Fargo made (makes?) on its employees pretty much foreseeably result in fraud.  Recent news reports advise that because Wells Fargo employees were subject to "cross-selling" requirements, among other requirements, at least 5,300 Wells Fargo employees at the present count opened millions of bogus accounts and credit cards in the names of Wells Fargo customers so that the employees could meet their sales quotas.  See, e.g., Michael Corkery and Stacy Cowley, "DealBook / Wells Fargo Warned Workers Against Sham Accounts, But 'They Needed a Paycheck'" (New York Times Online, posted September 16, 2016); Andrew Ross Sorkin, "DealBook / Pervasive Sham Deals at Wells Fargo, and No One Noticed?" (New York Times Online, posted September 12, 2016).

Yesterday as this article is written, the current head of Wells Fargo confirmed the fraudulent opening of bogus accounts in testimony before the United States Senate.

He blamed the 5,300+ bad apples.  He called them "rogue employees."

Are there any insurance policies including any bonds that provide coverage for 5,300+ bad apples and rogue employees?  Wells Fargo is undoubtedly looking at this question right now.  So are its insurance carriers.

Or if the damages to Wells Fargo employees are not really the results of misconduct by 5,300+ bad apples and rogue employees, but if instead they are proven to be the results of corporate requirements imposed on the apples by Wells Fargo, it seems that there may be good arguments that many if not all of the damages to Wells Fargo customers were foreseeable and even intentional.   Wells Fargo admits that it has known about the fraud since at least 2013 and the "illegal sales" may have begun in 2009.  Michael Corkery, "DealBook / Illegal Activity at Wells Fargo May Have Begun Earlier, Chief Says" (New York Times Online, posted Tuesday, September 20, 2016).

There is a recurring exclusion or "carve-out" from commercial general liability insurance "occurrence" coverage when the policyholder is shown to intentionally cause the damages complained of by the underlying plaintiff.  This is a frequent insurance coverage issue.  If that is shown to be the case here, then Wells Fargo faces some difficult issues of what it knew and when it knew it, as they say, if Wells Fargo is inclined to put on proof to contest whether the reported pattern of fraud was a covered "occurrence" or the exclusionary insurance coverage equivalent of intentional damages.

Time will tell.  Stay tuned as coverage issues develop along with the liability issues embedded in this behavior.

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SEVEN LAWSUITS, ONE CLAIM FOR LIMIT IN LAWYERS' MALPRACTICE POLICY.

In Liberty Ins. Underwriters, Inc. v. Davies Lemmis Raphaely Law Corp., 162 F. Supp. 3d 1068 (C.D. Cal. 2016) (page numbers not yet available from Westlaw), appeal docketed, No. 16-55711 (9th Cir. May 16, 2016), a District Judge in California held that seven lawsuits against a law firm for alleged malpractice collectively made for one claim for purposes of the firm's per-claim professional liability policy limit on the applicable policy.  The seven suits in this instance did not trigger $2,000,000 aggregate limits.  The reason for decision was that the alleged actions all arose from a single course of conduct:

    In this case, while the Underlying Actions have been brought by different plaintiffs, they all arise from a single course of conduct, a unified policy of making alleged affirmative misrepresentations to investors in order to induce them to invest in commercial real estate acquisitions facilitated by AMC ["Asset Management Consultants, Inc."].

AMC is identified in the opinion as "a licensed California real estate broker which facilitates real estate investment partnerships, and its principal, James Hopper (collectively 'AMC')."  Liberty Ins. Underwriters, Inc. v. Davies Lemmis Raphaely Law Corp., 162 F. Supp. 3d 1068 (C.D. Cal. 2016) (page numbers not yet available from Westlaw, but this quotation is from the final sentence of the fourth full paragraph in the District Court's opinion), appeal docketed, No. 16-55711 (9th Cir. May 16, 2016).  The District Judge accordingly granted the insurance company's motion for summary judgment "as to whether the Underlying Actions should be considered a single claim for purposes of the per-claim limit ...."

The per-claim limit on the relevant policy is $1,250,000.  In the last two paragraphs of its opinion, the District Court denied the insurance company's motion for summary judgment in this case as to the factually disputed issue of "whether the per-claim limit has been exhausted."

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FLORIDA TIPS FOR "MANAGING POST-STORM INSURANCE CLAIMS FILING PROCESS."

Storm Clouds Over the Gulf of Mexico.  Copyright by Dennis J. Wall.  All Rights Reserved.

Counseling people and businesses with insurance coverage claims caused by storm damage?  Do you have hurricane claims of your own?  See these smart tips from Florida by way of the Florida Department of Financial Services and its Office of Insurance Regulation:  Press Release, "Consumer Alert:  Managing the Post-Storm Insurance Claims Filing Process," or http://www.myfloridacfo.com/sitePages/newsroom/pressRelease.aspx?id=4723.

Please Read The Disclaimer.  © by Dennis J. Wall.  All Rights Reserved.

WEAR AND TEAR MEANS any WEAR AND TEAR, NOT "ABNORMAL."

An exclusion in a homeowner's insurance policy for damage caused by "wear and tear" does not have the word, "abnormal," in it.  The exclusion is not limited to only "abnormal" wear and tear.  It applies to all wear and tear, including the wear and tear that contributed to the homeowners' roof damage in the case at bar.  The Tenth Circuit Court of Appeals therefore affirmed a Colorado Federal District Judge's Summary Judgment for the homeowner's carrier in Gallegos v. Safeco Ins. Co. of Am., 646 F. App'x 689, 694 (10th Cir. 2016) (case involved Colorado substantive law).

Please Read The Disclaimer.  © by Dennis J. Wall.  All Rights Reserved.

FLORIDA CONSUMER COLLECTION PRACTICES ACT HOLDS LOAN SERVICER IN CASE.

Storm clouds over the Gulf of Mexico.  Image Copyright Dennis J. Wall.  All rights reserved.

The Florida Consumer Collection Practices Act "prohibits a party from collecting a debt when it 'knows that the debt is not legitimate.' Fla. Stat. § 559.72(9)."  Martorella v. Deutsche Bank Nat'l Trust Co., 161 F. Supp. 3d 1209, 1226 (S.D. Fla. 2015).  The FCCPA thus requires allegations of knowledge or intent by debt collectors before the debt collectors can be liable under the Act.

A mortgage loan servicer was kept in the case in Martorella because Ms. Martorella alleged that the servicer knew that she had insurance before it force-placed insurance on her and tried to make her pay the premium as a part of her monthly mortgage payment.  And also because Ms. Martorella alleged that the servicer "continued its debt collection efforts" even after it knew that she had adequate insurance.  Martorella v. Deutsche Bank Nat'l Trust Co., 161 F. Supp. 3d 1209, 1226 (S.D. Fla. 2015).

The fact that the servicer tried to make Ms. Martorella pay the premium for the insurance it placed on her by force was undisputed.

Please Read The Disclaimer.  © by Dennis J. Wall.  All Rights Reserved.

INSURANCE COVERAGE FOR SOMEONE ELSE'S RACIAL DISCRIMINATION?

Image courtesy of the online digital collection of the New York Public Library.

Airbnb, the rental aggregator, has reportedly released a report it commissioned on possible racial discrimination and other practices by some of its hosts:

The moves were outlined in a 32-page report that serves as a blueprint for how Airbnb plans to fight discrimination on the site. Among the other changes is a new full-time anti-discrimination team of engineers, data scientists and researchers, whose job includes discerning patterns of host behavior.

“Bias and discrimination have no place on Airbnb, and we have zero tolerance for them,” Mr. Chesky [identified as "Airbnb's chief executive"] wrote in a message to Airbnb users and hosts that accompanied the report. “Unfortunately, we have been slow to address these problems, and for this I am sorry.”

Katie Benner, "Airbnb Adopts Rules to Fight Discrimination by Its Hosts" (New York Times Online, posted September 8, 2016).

 Oh, well, Mr. Chesky is sorry.  But suppose that hypothetically a judge and jury in a given case holds Airbnb liable for the rental practices of its hosts?  Airbnb to my knowledge still maintains that its hosts are independent contractors for which it is not liable, but suppose hypothetically that a judge and jury in a given case finds that it is liable for unlawful rental practices, and that Airbnb makes an insurance claim to pay off any money judgment that may result.

Actually, the insurance coverage question seems to be fairly clear in that event.  If the insurance policies provide a duty to defend against such allegations or a duty to indemnify against such judgments, then this case becomes only one particular opportunity to apply those insurance policies.

The more complex insurance coverage question may come from cases in which the policyholder is alleged to be liable for someone else's unlawful practices for a reason related to its own behavior.  Assuming the possibility of such exposure, the same general principles of insurance coverage probably ought to apply then too:  If the insurance policies provide a duty to defend against such alleged claims or a duty to indemnify against such judgments, then this case too becomes only another opportunity to apply those insurance policies.

The really complicated questions here seem, in the end, to involve issues of liability in the first instance.  The insurance coverage questions in such cases seem relatively straight-forward by comparison.

Please Read The Disclaimer.  © By Dennis J. Wall.  All Rights Reserved.  

GOT A LENDER FORCE-PLACED INSURANCE CASE?

INTERESTED IN READING A FREE COPY OF THE ONLY BOOK WRITTEN ABOUT LENDER FORCE-PLACED INSURANCE PRACTICES?

This is the second special article of its kind since last Thursday, September 1, 2016.  This article repeats my offer for a free copy of my book, "Lender Force-Placed Insurance Practices" published by the American Bar Association.  I am reminding readers of my offer simultaneously on Insurance Claims and Issues Blog and on Insurance Bad Faith Claims Law Blog.

Before I get to the particulars, one thing must be clearly understood or nothing wonderful can come of our story, to paraphrase Dickens.  I do not expect and I have no desire to be retained in any capacity to represent as counsel or to provide expert witness services to any party in any case in which I have not already been retained before making this offer.

Here is how to get a free copy of "Lender Force-Placed Insurance Practices":  If you are or were a party or an attorney of record in a lender force-placed insurance ("LFPI") case in a Federal Court case anywhere in the United States, send me the name of your case, the case number, and the Court in which the case is located, so that I can look your case up on PACER and verify that you are or were a party or a counsel of record in one of the LFPI cases.  LFPI cases are eligible so long as they have been closed within the past five (5) years or are pending right now, in any United States District Court or United States Circuit Court of Appeals.

If you are or were a party or if your law firm is counsel of record in one of these LFPI cases, be one of the first 3 people to respond to this offer with your  mailing address and I will send you or your firm a free copy of Lender Force-Placed Insurance Practices (American Bar Association 2016).  (Limit:  One free Book per person or per law firm.)

To respond, send us an EMail either from the Contact page of www.lenderforceplacedinsurance.com or from the Contact page of www.dennisjwall.com.

The timeframe to respond to this offer is between September 1, 2016 and September 15, 2016.  This offer ends as of September 15, 2016.  On that date, I will determine who the first 3 responders are and mail them each their free Books.

That's it.  Simple as that.

Good luck.  We look forward to hearing from you.

Please Read The Disclaimer.  © By Dennis J. Wall.  All Rights Reserved.

Related articles

GOT A LENDER FORCE-PLACED INSURANCE CASE?

UNSOLICITED FAXES WERE UNCOVERED.

"This case began with the improper use of what now seems an old-fashioned method of communication: fax machines."   Auto-Owners Ins. Co. v. Stevens & Ricci Inc., ___ F.3d ___, No. 15–2080, 2016 WL 4547641, at *1 (3d Cir. September 1, 2016).  It developed into a class action settlement that was not covered, unfortunately for the policyholder.

The policyholder, Stevens & Ricci, received a solicitation from a faxer.  The fax solicitation was fake, or at least people who sued over it argued that this was not true, for the fax advertising solicitor represented that blast faxes under its program complied with the Federal Telephone Consumer Protection Act.  The policyholder bought the advertising program and 18,879 unsolicited faxes were sent to advertise the policyholder's goods and services in a one-month period.

Many recipients of the unsolicited faxes were unhappy with this.  They banded together and filed a class action against the policyholder.  The faxees sued under the TCPA.  Basically, the Act makes unsolicited faxes an actionable offense.

Unfortunately for the policyholder, it did not make the act of sending unwanted faxes either a covered occurrence or a covered offense.  The policyholder settled in essence for Two Million Dollars ($2,000,000.00).

The policyholder's liability carrier sued for declaratory relief of no coverage.  The District Court entered summary judgment for the liability carrier that there was simply no coverage under the policyholder's Businessowners Liability Policy.  There was no covered "property damage" because there was no covered "occurrence" and there was no covered "advertising injury" because there was no covered "offense," the District Court held.  The Third Circuit Court of Appeals affirmed.

What seemed like a good business idea at the time turned out to be not so good in reality.  On the other hand, a little doubt is a good thing when it leads to checking your policy before pursuing what seems like a good idea.

Unsolicited postscript:  On the face of the TCPA provisions quoted in the Third Circuit's opinion, and without researching the questions involved including coverage questions, it is at least arguable that the TCPA prohibits unsolicited advertising Emails as well as unsolicited faxes.  To say again, a little doubt is a good thing when it leads to checking insurance policies before pursuing what seems like a good idea at the time.

Please Read The Disclaimer.  © By Dennis J. Wall.  All Rights Reserved.

THE "EARTH" IN AN EXCLUSION: NO COVERAGE, NO BAD FAITH CLAIM.

Image courtesy of NASA.

The "earth" in a typical earth movement exclusion means "all natural materials that comprise the surface of the earth, including rocks and soil," said the Montana Supreme Court.  That being the situation, the Court held that the policy at bar thus excluded coverage for damage caused by a large rock falling down a hillside into the insured’s cabin.  Parker v. Safeco Ins. Co. of Am., 384 Mont. 125, 376 P.3d 114 ¶ 22 at 119 (2016).

There being no coverage, there could be no claim for bad faith in this case, either.  Specifically, in this case there could be no claim under the Montana Unfair Trade Practices Act as a result of the holding that there was no insurance coverage under the earth movement exclusion here.  Parker v. Safeco Ins. Co. of Am., 384 Mont. 125, 376 P.3d 114, ¶ 33 at 121 (2016).  This is a pretty universal holding:  Where there is no coverage, there can be no claim for insurer bad faith.

Please Read The Disclaimer.  © By Dennis J. Wall.  All Rights Reserved.

Related articles

GOT A LENDER FORCE-PLACED INSURANCE CASE?

GOT A LENDER FORCE-PLACED INSURANCE CASE?

INTERESTED IN READING A FREE COPY OF THE ONLY BOOK WRITTEN ABOUT LENDER FORCE-PLACED INSURANCE PRACTICES?

This is a special article for a couple of reasons.  For one, it is being posted both on Insurance Claims and Issues Blog and on Insurance Bad Faith Claims Law Blog.

Another reason that this is a special article is because it is addressed to a specialized audience.  I am offering a free copy of my Book, Lender Force-Placed Insurance Practices published by the American Bar Association in 2015, to the following people only.

Before I get to the particulars of this offer, one thing must be clearly understood or nothing wonderful can come of our story, to paraphrase Dickens.  I do not expect and I have no desire to be retained in any capacity to represent as counsel or to provide expert witness services to any party in any case in which I have not already been retained before making this offer.

If you are an attorney of record in a lender force-placed insurance ("LFPI") case in a Federal Court case anywhere in the United States, and if you are interested in reading a free copy of the only book ever written about LFPI practices, send me the name of your case, the case number, and the Court in which the case is located, so that I can look your case up on PACER and confirm that you and your law firm are counsel of record for one of the parties.  LFPI cases are eligible so long as they have been closed within the past five (5) years or are pending right now, in any United States District Court or United States Circuit Court of Appeals.

If your firm is counsel of record for any party in one of these LFPI cases and if you are one of the first 3 lawyers to respond to this offer with your firm's mailing address, I will send your firm a free copy of Lender Force-Placed Insurance Practices (American Bar Association 2015).  (Limit:  One free Book per law firm.)

The timeframe to respond to this offer is between September 1, 2016 and September 15, 2016.  This offer ends as of September 15, 2016.  On that date, I will determine who the first 3 responders are and mail them each their free Books.

To respond to this offer, send us an EMail either from the Contact page of www.lenderforceplacedinsurance.com or from the Contact page of www.dennisjwall.com with all the information we have laid out here for you to put in your Reply if you would like to accept this offer.

Good luck.  We look forward to hearing from you.

Please Read The Disclaimer.  © By Dennis J. Wall.  All Rights Reserved.