2009 Houston Marine Insurance Seminar Vincent E. Morgan Pillsbury Winthrop Shaw Pittman LLP...

2009 Houston Marine Insurance Seminar

Vincent E. MorganPillsbury Winthrop Shaw Pittman [email protected]

Ten Things About Texas Insurance Law You Should Know

Overview

Changes to the Insurance Code

Myths, Mistakes & Misconceptions

Some (Sort of) Interesting Historical Facts

Preview of Coming Attractions

Two Take-Aways

Changes to the Texas Insurance Code

1. From 4 numbers to 6.



2. The Insurance Code is actually a code now (and it has more volumes than any other except the Texas Government Code).



2. The Insurance Code is actually a code now.

3. Help is now available – Annotated Texas Insurance Code.





4. All (or almost all) of your old citations are now outdated.






5. Clients and lawyers have new reasons to talk.







6. The Texas Department of Insurance gets to update its regulations.








7. Insurers get to update their forms.









8. We get to say “case of first impression.”










9. We get to argue the Code Construction Act all over again.










9. We get to argue the Code Construction Act all over again.

10. We get to read the “derivation tables” once more.


Supposed to be non-substantive revisions

Tex. Ins. Code §30.001 – no substantive changes intended

But revisions are substantive

Fleming Foods v. Rylander (Tex. 1999)


Example – 21.55 542.051

Remedy

542.060 describes the 18% remedy as “interest” does this negate the “penalty” argument? does this affect “interest on interest”?

10 Myths, Mistakes & Misconceptions


Myth #1 – Putting negligence in the pleading makes it covered

Duty to defend determined by pleaded facts, not causes of action

Some intentional conduct is still not covered

Farmers v. Griffin (Tex. 1997)(drive-by shootings are not accidental)

Inferred intent for sexual abuse of minors


Myth #2 – Intentional conduct is never covered

Intentional conduct vs. “intended or expected” injuries

Very intentional vs. very injurious

Coverage B


Myth #3 – 21.55 only applies to 1st party coverage

Lamar Homes (Tex. 2007)

“Lawsuit Insurance” vs. “Liability Insurance” Gray v. Zurich (Cal. 1966)

Definitions in the statute

Focus on the coverage at issue


Myth #4 – Extrinsic evidence can never be used to determine the duty to defend

Defense limited by complaint allegation rule:

Fielder Road Baptist Church (Tex. 2006)

but see

Allstate Ins. Co. v. Hallman (Tex. 2004)(profit motive inferred from nature of activity)

Or any Additional Insured Case

Evanston Insurance Company v. Atofina Petrochemicals, Inc. (Tex. 2008)

Atofina Petrochemicals, Inc. v. Cont'l Cas. Co. (Tex. 2005)

Distinction between “coverage only” facts, “liability only” facts and overlapping facts

And recently used to determine date

Boss Mgmt. Servs., Inc. v. Acceptance Ins. Co. (S.D. Tex. 2007)(referring to certificate of occupancy to determine earliest possible date of damage)


Myth #5 – If there is no duty to defend, there can never be a duty to indemnify

Duties to defend and indemnify are “separate and distinct.”

8 Corners Rule vs. Actual Facts

Free Amendment of Pleadings

Trial by Consent

Trinity v. Cowan (Tex. 1997) – Footnote 5 Texas Supreme Court held no duty to defend, but did not address whether the

facts proved at trial might be sufficient to trigger the duty to indemnify Hartford v. Litchfield (Conn. 2005) – Connecticut case holding duty to indemnify

existed even where duty to defend did not


Myth #6 – If there is an ambiguity, the insured wins

Insured’s interpretation must be reasonable

Insured’s interpretation must actually support coverage

Insured’s interpretation can be less reasonable

Insurer’s interpretation can be more accurate reflection of parties’ intent Ultimate test is whether insured’s interpretation is reasonable


Myth #7 – Waiver and estoppel cannot be used to create coverage where none exists

“Coverage cannot be created by waiver.”

Texas Farmers Ins. Co. v. Mc Guire (Tex. 1988)

But, coverage can be created by failing to reserve properly and causing prejudice

Farmers v. Wilkinson (Tex. Civ. App. – Austin 1980) Ulico Cas. Co. v. Allied Pilots Ass’n (Tex. 2008)

Waiver requires a known right What insurance company can defeat this?

Estoppel requires some prejudice or detrimental change in position

Quasi-Estoppel does not require detrimental reliance


Myth #8 – Certificates of insurance have any legal effect

ACORD language — does not amend, extend, or alter the terms of the policy

TIG Ins. Co. v. Sedgwick James (S.D. Tex. 2001)

Reliance on certificates may be unreasonable, but they still have some value on a business

level


Myth #9 – Bad faith is dead

Individual vs. institutional claimantsMental anguish

Independent injuryCastaneda (Tex. 1999) & Parkans (5th Cir. 2002)

v.

Vail (Tex. 1988) & Waite Hill (Tex. 1998)

Whether coverage exists is the key


Myth #10 – You’ve read Stowers

Stowers (Tex. Comm’n App. 1929) was a 2-1 opinion

The dissent was never published

Stowers

Accident scene at Austin & Capitol

Stowers Furniture Building

2-1 Decision

Reasonable person vs. reasonable insurer

Very clear in Stowers

Not so clear in later cases – APIE v. Garcia (Tex. 1994)

“Both statements are correct.” – Excess Underwriters v. Frank’s Casing (Tex. 2008)

Overview

Changes to the Insurance Code


Some (Sort of) Interesting Historical Facts

A Preview of Coming Attractions

Two Take-Aways

Two Take-Aways

Continuing education credit

The Stowers dissent

2009 Houston Marine Insurance Seminar

Vincent E. MorganPillsbury Winthrop Shaw Pittman [email protected]

Ten Things About Texas Insurance Law You Should Know

2009 Houston Marine Insurance Seminar Vincent E. Morgan Pillsbury Winthrop Shaw Pittman LLP...

Documents

Transcript of 2009 Houston Marine Insurance Seminar Vincent E. Morgan Pillsbury Winthrop Shaw Pittman LLP...