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An unhappy insured is not proof of bad faith



Refusing to pay the amount that the insured deems appropriate is nothing more than a dispute about good faith protection.

IN Vernon Humphries and Rebecca Humphries v State Farm Lloyds, Civil Action No. 3: 20-CV-01163-X, United States District Court, ND Texas, Dallas Division (March 9, 2022) State Farm Lloyd’s (State Farm) successfully moved USDC for a partial summary judgment against Vernon and Rebecca Humphries’ lawsuit for violation of the duty of good faith and fair handling and related statutory claims.

FACTUAL BACKGROUND

In October 2019, Vernon and Rebecca Humphries filed a claim with State Farm under their homeowners insurance for damage caused by a tornado. Shortly afterwards, an independent adjuster named Chris Chivers inspected the property and confirmed that the wind had blown the chimney into the back slope of the roof. Based on his inspection, Chivers wrote a repair estimate of $ 51,299.76. On the same day, State Farm inspected damages representative Ed Hand for damage to personal property. Hand wrote a summary of personal content totaling $ 3,162.88 and, after deducting the impairment, State Farm issued $ 2,117.82 to Humphries for personal property damage.

In January 2020, the Humphries State Farm family filed a claim for the Texas Deceptive Trade Practices Act (DTPA) and a notice from Texas Insurance Code Chapter 542A, claiming actual damages of $ 120,370.41 and with a total DTPA claim of $ 365,511 , 23 USD. In response, State Farm scheduled a second inspection and asked Humphries to send the estimate based on $ 120,370.41 in actual damages, but Humphries did not. In March 2020, State Farm’s tort representative Bryon Turner conducted a second inspection of the property. Based on additional damage he found, Turner wrote a new repair estimate of $ 66,177.38, and State Farm issued an additional payment to Humphries to compensate for the difference between State Farm’s first and second estimates. At the time, State Farm also told Humphries that, based on repair status, they would continue to pay for Humphries’ temporary housing until June 10, 2020.

Dissatisfied, Humphries filed a lawsuit against State Farm in the Texas State Court in April 2020, and State Farm dropped the case to the Federal Court. Since they applied, the Humphries family has changed the amount they claim is necessary for repairs five times based on various estimates by their expert, Duane Smith, and settled on $ 247,138.71, more than double their original claim. This increase seems to be largely due to a report they received from an electrician after filing a lawsuit, which claims that switching is necessary throughout the house. Meanwhile, at Mr. Humphries’ deposit, Humphries produced a $ 80,000 contract between Humphries and a contractor, HNL. According to Mr Humphries, this contract covers all necessary repairs as well as any additional items, including the installation of an outdoor pergola that Humphries did not have before the storm. For its part, State Farm has also changed its estimate since this lawsuit was filed, conducting an additional inspection and reaching $ 70,200.90. State Farm issued an additional payment that reflects this new estimate.

Analysis

The Humphries base their claim of bad faith on their characterization of State Farm’s investigation as results-oriented and pretextual. Men Humphries “[do] not provide any expert testimony, evidence of industry standard practice or legal authority ‘at all to support their claim that State Farm’s investigation was not conducted adequately and in good faith. For example, Humphries claims that the time the adjuster spent on the first inspection was unreasonably short, but points to no evidence to suggest that it was atypical at all by State Farm or industry-wide standards. Similarly, they claim that State Farm should have sent an engineer rather than an adjuster to carry out the initial inspection because structural damage was involved and would also have sent an electrician at some point, but fail to claim that State Farm’s decision represented a discrepancy. from the standard. practice.

While Humphries characterizes Mr Humphries’ lack of expertise as an element of their argument, it is in fact a mistake. For there is no factual or legal basis for equating Mr. Humphrie’s opinion with expert opinions or reasonable industry standards that may challenge the reliability of an adjuster’s work. To allow an interested layman’s negative opinion of a technical investigation to function as adequate evidence of the investigator’s bad faith would be deeply problematic.

Here, the Humphries present no investigative standards against which State Farm’s investigation can be judged to be deficient, let alone purposeful. In summary, the Humphries fails to point to any evidence to suggest that State Farms’ refusal to pay Humphries the amount it deems appropriate reflects anything more than a dispute over coverage in good faith.

Consequently, the court upheld State Farm’s request for a partial summary judgment regarding the Humphries family’s common law violation of the duty of good faith and fair handling and related statutory claims. The action on breach of contract will continue.

It takes more than one upset insured person to bring an action for bad faith. Although Mr. Humphries was sure that the adjuster was inadequate, there is no evidence, other than that his lack of expertise would allow him to prove a claim of medical malpractice even if he knew nothing about medicine. This case teaches that in order to prove a claim in bad faith, it is necessary to present expert statements that the insurer has not acted within the industry’s customs and practices or acted incorrectly and in bad faith. Rather, the fact that State Farm took up the sums it paid to Humphries when evidence was presented to them, they paid immediately and in good faith.


(c) 2022 Barry Zalma & ClaimSchool, Inc.

Barry Zalma, Esq., CFE, now limits his internship to the position of insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He also acts as an arbitrator or mediator for insurance-related disputes. He practiced law in California for more than 44 years as a lawyer for insurance coverage and claims management and more than 54 years in the insurance industry. He is available at http://www.zalma.com and zalma@zalma.com.

For the past 54 years, Barry Zalma has devoted his life to insurance, insurance claims and the need to defeat insurance fraud. He has created a library of books and other materials to enable insurers and their claims staff to become professionals in insurance claims.

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