Lee v. CATLIN SPECIALTY INSURANCE COMPANY
2011 U.S. Dist. LEXIS 19145
| S.D. Tex. | 2011Background
- Lee owns a Houston shopping-center and held a Catlin policy for wind-storm damage up to $1.7M with a $36k deductible.
- Hurricane Ike (Sept. 2008) damaged the property; Lee filed a claim Sept. 24, 2008 and Catlin assigned Engle Martin to adjust the claim.
- Engle Martin and PT & C conducted multiple inspections and infrared analysis; they concluded no wind-related damage and that preexisting issues and wear caused the loss.
- Engle Martin's findings andCatlin's denial framed Lee's extra-contractual claims (bad faith, unfair settlement, etc.).
- Catlin moved for partial summary judgment on Lee’s extra-contractual claims; the court granted in part and denied in part.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Catlin acted in bad faith. | Lee argues reports were biased or unobjective and Catlin relied unreasonably on them. | Catlin relied on Engle Martin/PT&C reports; no genuine bias shown; reports supported denial. | Catlin did not act with reasonable certainty that claim was covered; bad-faith claims barred. |
| Whether Catlin engaged in unfair settlement practices. | Lee alleges misrepresentations and improper handling under Tex. Ins. Code § 541.060. | Catlin had a reasonable basis for denial and timely communications. | No triable issue; no material misrepresentations or improper timing shown. |
| Whether Catlin violated prompt-payment provisions (542.056/542.058). | Delay in notification and payment beyond required periods. | Some items outstanding; final determination unresolved; timelines disputed. | Genuine issue of material fact exists regarding whether delays were warranted. |
| Whether Lee's DTPA claims survive. | DTPA violations due to bad faith, misrepresentation, or unconscionable conduct. | No evidence of misrepresentation, unconscionable conduct, or Texas Insurance Code violations. | DTPA claims fail as discretionary under the evidence. |
| Whether Lee's fraud claims survive. | Catlin knowingly misrepresented or concealed facts to induce denial. | No evidence of knowing misrepresentation or concealment. | Fraud claims granted summary judgment for Catlin. |
Key Cases Cited
- Higginbotham v. State Farm Mut. Auto. Ins. Co., 103 F.3d 456 (5th Cir. 1997) (insurer duty to deal fairly in claim handling)
- Universe Life Ins. Co. v. Giles, 950 S.W.2d 48 (Tex. 1997) (bad-faith standard — reasonably clear coverage needed)
- Transp. Ins. Co. v. Moriel, 879 S.W.2d 10 (Tex. 1994) (bona fide dispute does not equal bad faith; objective reliance matters)
- State Farm Lloyds v. Nicolau, 951 S.W.2d 444 (Tex. 1997) (evidence of biased reports can support bad-faith finding when insurer knew or should have known)
- Avila v. State Farm Fire & Cas. Co., 147 F. Supp. 2d 570 (W.D. Tex. 1999) (summary judgment on bad-faith claims based on lack of evidence of improper purpose)
- Tex. Mut. Ins. Co. v. Ruttiger, 265 S.W.3d 651 (Tex.App.—Houston [1st Dist.] 2008) (context for DTPA/insurance-code interaction and bad-faith framework)