Insurance Law Section
ILS Events Calendar

Apr

7

Insurance Law Section Council Meeting (Houston)

10:00am - 2:00pm Offices of Pillsbury Winthrop Shaw Pittman LLP, Houston, TX

Jun

7

Insurance Law Section Council Meeting (San Antonio)

5:00pm - 7:00pm Hyatt Regency Hill Country Resort & Spa, San Antonio, TX

Jun

8

14th Annual Advanced Insurance Law Course

June 8-9, 2017 @ Hyatt Hill Country Resort & Spa in San Antonio, Texas (More)

To Protect Itself, Insurer Must Consider Agency Principles Before Issuing Payment to Joint Payees
by Eric Scott Peabody

Insurers frequently issue checks to multiple payees – usually to some combination of the insured, adjuster/third-party administrator, mortgagee or lienholder, and attorneys.  Carriers had long considered themselves protected when issuing payment to joint payees by simply including all payees on the check; if a bank cashed the check without the signature of all payees – or with the forged signature of a payee – liability for that error rested squarely with the bank. See, e.g., Benchmark Bank v. State Farm Lloyds, 893 S.W.2d 649, 651 (Tex. App.–Dallas 1994, no writ) (payment to joint payees discharged obligation under policy). But a set of 2014 opinions from the Texas Supreme Court and the Dallas Court of Appeals created significant uncertainty for insurers on this issue.  McAllen Hospitals, L.P. v. State Farm County Mutual Insurance Co. of Texas, 433 S.W.3d 535 (Tex. 2014); ViewPoint Bank v. Allied Property & Casualty Ins. Co.,439 S.W.3d 626 (Tex. App.–Dallas 2014, pet. denied).  In McAllen Hospitals, the court held that an insurer’s checks issued jointly to patients and a hospital (which had given notice of its liens pursuant to the Texas Hospital Lien statute) did not discharge its payment obligation to the hospital when the patients deposited the checks without obtaining the hospital’s endorsement.  433 S.W.3d at 540-41.  The court appli...(Continue)

 
 
Section News
14th Annual Advanced Insurance Law Course

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Recent Decisions
Supreme Court Vacates Appellate Opinion Denying Prompt Payment Penalty on a Technicality  
United Services Automobile Association v. Hayes Tx Sup 3/24/17—
Following a settlement by the parties, the Texas Supreme Court has vacated an appellate opinion affirming denial of the prompt payment penalty on a breach of contract judgment because the insured homeowners had not sent a written demand to the insurer.
Fifth Circuit Denies Claimant's Appeal for Insurer to Satisfy Claim Filed in Bankruptcy Proceeding  
Kipp Flores Architects, LLC v. Mid-Continent Casualty Co. 5th Cir 3/24/17—
Court agrees with district court that proofs of claim in "no asset" bankruptcy are not "deemed allowed" if not objected to.
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Court finds that allegations were sufficient to establish a possibility of recovery, but insurer had objectively reasonable grounds to remove and, thus, an award of fees was not warranted.
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Wilson v. Allstate Insurance Co ED Tx 3/22/17—
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Court finds that private cause of action exists and remands case for furth proceedings on the merits.
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Aldous v. Darwin National Assurance Co. 5th Cir 3/16/17—
Court finds that billing guidelines are tantamount to an extra-contractual limitation on coverage.
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Euler Herms North America Insurance Co. v. ILJIN Steel America, Inc. SD Tx 3/15/17—
Court finds that insurer's declaratory judgment was duplicative of state court litigation that had been previously remanded.
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