Texas 2017 - 85th Regular

Texas House Bill HB1774 Compare Versions

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Version 2 (New)

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1		-	By: Bonnen of Galveston, et al. H.B. No. 1774
2		-	(Senate Sponsor - Hancock)
3		-	(In the Senate - Received from the House May 8, 2017;
4		-	May 8, 2017, read first time and referred to Committee on Business &
5		-	Commerce; May 11, 2017, reported favorably by the following vote:
6		-	Yeas 7, Nays 0; May 11, 2017, sent to printer.)
7		-	Click here to see the committee vote
	1	+	H.B. No. 1774
8	2
9	3
10		-	A BILL TO BE ENTITLED
11	4		AN ACT
12	5		relating to actions on and liability associated with certain
13	6		insurance claims.
14	7		BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
15	8		SECTION 1. Section 541.156(a), Insurance Code, is amended
16	9		to read as follows:
17	10		(a) A person who receives notice provided under Section
18	11		541.154 or 542A.003 may make a settlement offer during a period
19	12		beginning on the date notice under Section 541.154 or 542A.003 is
20	13		received and ending on the 60th day after that date.
21	14		SECTION 2. Section 542.060, Insurance Code, is amended by
22	15		amending Subsection (a) and adding Subsection (c) to read as
23	16		follows:
24	17		(a) Except as provided by Subsection (c), if [If] an insurer
25	18		that is liable for a claim under an insurance policy is not in
26	19		compliance with this subchapter, the insurer is liable to pay the
27	20		holder of the policy or the beneficiary making the claim under the
28	21		policy, in addition to the amount of the claim, interest on the
29	22		amount of the claim at the rate of 18 percent a year as damages,
30	23		together with reasonable and necessary attorney's fees. Nothing in
31	24		this subsection prevents the award of prejudgment interest on the
32	25		amount of the claim, as provided by law.
33	26		(c) In an action to which Chapter 542A applies, if an
34	27		insurer that is liable for a claim under an insurance policy is not
35	28		in compliance with this subchapter, the insurer is liable to pay the
36	29		holder of the policy, in addition to the amount of the claim, simple
37	30		interest on the amount of the claim as damages each year at the rate
38	31		determined on the date of judgment by adding five percent to the
39	32		interest rate determined under Section 304.003, Finance Code,
40	33		together with reasonable and necessary attorney's fees. Nothing in
41	34		this subsection prevents the award of prejudgment interest on the
42	35		amount of the claim, as provided by law. Interest awarded under
43	36		this subsection as damages accrues beginning on the date the claim
44	37		was required to be paid.
45	38		SECTION 3. Subtitle C, Title 5, Insurance Code, is amended
46	39		by adding Chapter 542A to read as follows:
47	40		CHAPTER 542A. CERTAIN CONSUMER ACTIONS RELATED TO CLAIMS FOR
48	41		PROPERTY DAMAGE
49	42		Sec. 542A.001. DEFINITIONS. In this chapter:
50	43		(1) "Agent" means an employee, agent, representative,
51	44		or adjuster who performs any act on behalf of an insurer.
52	45		(2) "Claim" means a first-party claim that:
53	46		(A) is made by an insured under an insurance
54	47		policy providing coverage for real property or improvements to real
55	48		property;
56	49		(B) must be paid by the insurer directly to the
57	50		insured; and
58	51		(C) arises from damage to or loss of covered
59	52		property caused, wholly or partly, by forces of nature, including
60	53		an earthquake or earth tremor, a wildfire, a flood, a tornado,
61	54		lightning, a hurricane, hail, wind, a snowstorm, or a rainstorm.
62	55		(3) "Claimant" means a person making a claim.
63	56		(4) "Insurer" means a corporation, association,
64	57		partnership, or individual, other than the Texas Windstorm
65	58		Insurance Association, engaged as a principal in the business of
66	59		insurance and authorized or eligible to write property insurance in
67	60		this state, including:
68	61		(A) an insurance company;
69	62		(B) a reciprocal or interinsurance exchange;
70	63		(C) a mutual insurance company;
71	64		(D) a capital stock insurance company;
72	65		(E) a county mutual insurance company;
73	66		(F) a farm mutual insurance company;
74	67		(G) a Lloyd's plan;
75	68		(H) an eligible surplus lines insurer; or
76	69		(I) the FAIR Plan Association, unless a
77	70		claim-related dispute resolution procedure is available to
78	71		policyholders under Chapter 2211.
79	72		(5) "Person" means a corporation, association,
80	73		partnership, or other legal entity or individual.
81	74		Sec. 542A.002. APPLICABILITY OF CHAPTER. (a) Except as
82	75		provided by Subsection (b), this chapter applies to an action on a
83	76		claim against an insurer or agent, including:
84	77		(1) an action alleging a breach of contract;
85	78		(2) an action alleging negligence, misrepresentation,
86	79		fraud, or breach of a common law duty; or
87	80		(3) an action brought under:
88	81		(A) Subchapter D, Chapter 541;
89	82		(B) Subchapter B, Chapter 542; or
90	83		(C) Subchapter E, Chapter 17, Business & Commerce
91	84		Code.
92	85		(b) This chapter does not apply to an action against the
93	86		Texas Windstorm Insurance Association or to an action relating to
94	87		or arising from a policy ceded to an insurer by the Texas Windstorm
95	88		Insurance Association under Subchapter O, Chapter 2210. This
96	89		chapter applies to an action that relates to or arises from a policy
97	90		renewed under Section 2210.703.
98	91		Sec. 542A.003. NOTICE REQUIRED. (a) In addition to any
99	92		other notice required by law or the applicable insurance policy,
100	93		not later than the 61st day before the date a claimant files an
101	94		action to which this chapter applies in which the claimant seeks
102	95		damages from any person, the claimant must give written notice to
103	96		the person in accordance with this section as a prerequisite to
104	97		filing the action.
105	98		(b) The notice required under this section must provide:
106	99		(1) a statement of the acts or omissions giving rise to
107	100		the claim;
108	101		(2) the specific amount alleged to be owed by the
109	102		insurer on the claim for damage to or loss of covered property; and
110	103		(3) the amount of reasonable and necessary attorney's
111	104		fees incurred by the claimant, calculated by multiplying the number
112	105		of hours actually worked by the claimant's attorney, as of the date
113	106		the notice is given and as reflected in contemporaneously kept time
114	107		records, by an hourly rate that is customary for similar legal
115	108		services.
116	109		(c) If an attorney or other representative gives the notice
117	110		required under this section on behalf of a claimant, the attorney or
118	111		representative shall:
119	112		(1) provide a copy of the notice to the claimant; and
120	113		(2) include in the notice a statement that a copy of
121	114		the notice was provided to the claimant.
122	115		(d) A presuit notice under Subsection (a) is not required if
123	116		giving notice is impracticable because:
124	117		(1) the claimant has a reasonable basis for believing
125	118		there is insufficient time to give the presuit notice before the
126	119		limitations period will expire; or
127	120		(2) the action is asserted as a counterclaim.
128	121		(e) To ensure that a claimant is not prejudiced by having
129	122		given the presuit notice required by this chapter, a court shall
130	123		dismiss without prejudice an action relating to the claim for which
131	124		notice is given by the claimant and commenced:
132	125		(1) before the 61st day after the date the claimant
133	126		provides presuit notice under Subsection (a);
134	127		(2) by a person to whom presuit notice is given under
135	128		Subsection (a); and
136	129		(3) against the claimant giving the notice.
137	130		(f) A claimant who gives notice in accordance with this
138	131		chapter is not relieved of the obligation to give notice under any
139	132		other applicable law. Notice given under this chapter may be
140	133		combined with notice given under any other law.
141	134		(g) Notice given under this chapter is admissible in
142	135		evidence in a civil action or alternative dispute resolution
143	136		proceeding relating to the claim for which the notice is given.
144	137		(h) The giving of a notice under this chapter does not
145	138		provide a basis for limiting the evidence of attorney's fees,
146	139		damage, or loss a claimant may offer at trial.
147	140		Sec. 542A.004. INSPECTION. Not later than the 30th day
148	141		after receiving a presuit notice given under Section 542A.003(a), a
149	142		person to whom notice is given may send a written request to the
150	143		claimant to inspect, photograph, or evaluate, in a reasonable
151	144		manner and at a reasonable time, the property that is the subject of
152	145		the claim. If reasonably possible, the inspection, photography,
153	146		and evaluation must be completed not later than the 60th day after
154	147		the date the person receives the presuit notice.
155	148		Sec. 542A.005. ABATEMENT. (a) In addition to taking any
156	149		other act allowed by contract or by any other law, a person against
157	150		whom an action to which this chapter applies is pending may file a
158	151		plea in abatement not later than the 30th day after the date the
159	152		person files an original answer in the court in which the action is
160	153		pending if the person:
161	154		(1) did not receive a presuit notice complying with
162	155		Section 542A.003; or
163	156		(2) requested under Section 542A.004 but was not
164	157		provided a reasonable opportunity to inspect, photograph, or
165	158		evaluate the property that is the subject of the claim.
166	159		(b) The court shall abate the action if the court finds that
167	160		the person filing the plea in abatement:
168	161		(1) did not, for any reason, receive a presuit notice
169	162		complying with Section 542A.003; or
170	163		(2) requested under Section 542A.004 but was not
171	164		provided a reasonable opportunity to inspect, photograph, or
172	165		evaluate the property that is the subject of the claim.
173	166		(c) An action is automatically abated without a court order
174	167		beginning on the 11th day after the date a plea in abatement is
175	168		filed if the plea:
176	169		(1) is verified and alleges that the person against
177	170		whom the action is pending:
178	171		(A) did not receive a presuit notice complying
179	172		with Section 542A.003; or
180	173		(B) requested under Section 542A.004 but was not
181	174		provided a reasonable opportunity to inspect, photograph, or
182	175		evaluate the property that is the subject of the claim; and
183	176		(2) is not controverted by an affidavit filed by the
184	177		claimant before the 11th day after the date the plea in abatement is
185	178		filed.
186	179		(d) An affidavit described by Subsection (c)(2)
187	180		controverting whether the person against whom the action is pending
188	181		received a presuit notice complying with Section 542A.003 must:
189	182		(1) include as an attachment a copy of the document the
190	183		claimant sent to give notice of the claimant's action; and
191	184		(2) state the date on which the notice was given.
192	185		(e) An abatement under this section continues until the
193	186		later of:
194	187		(1) the 60th day after the date a notice complying with
195	188		Section 542A.003 is given; or
196	189		(2) the 15th day after the date of the requested
197	190		inspection, photographing, or evaluating of the property is
198	191		completed.
199	192		(f) If an action is abated under this section, a court may
200	193		not compel participation in an alternative dispute resolution
201	194		proceeding until after the abatement period provided by Subsection
202	195		(e) has expired.
203	196		Sec. 542A.006. ACTION AGAINST AGENT; INSURER ELECTION OF
204	197		LEGAL RESPONSIBILITY. (a) Except as provided by Subsection (h), in
205	198		an action to which this chapter applies, an insurer that is a party
206	199		to the action may elect to accept whatever liability an agent might
207	200		have to the claimant for the agent's acts or omissions related to
208	201		the claim by providing written notice to the claimant.
209	202		(b) If an insurer makes an election under Subsection (a)
210	203		before a claimant files an action to which this chapter applies, no
211	204		cause of action exists against the agent related to the claimant's
212	205		claim, and, if the claimant files an action against the agent, the
213	206		court shall dismiss that action with prejudice.
214	207		(c) If a claimant files an action to which this chapter
215	208		applies against an agent and the insurer thereafter makes an
216	209		election under Subsection (a) with respect to the agent, the court
217	210		shall dismiss the action against the agent with prejudice.
218	211		(d) If an insurer makes an election under Subsection (a)
219	212		but, after having been served with a notice of intent to take a
220	213		deposition of the agent who is the subject of the election, fails to
221	214		make that agent available at a reasonable time and place to give
222	215		deposition testimony, Sections 542A.007(a), (b), and (c) do not
223	216		apply to the action with respect to which the insurer made the
224	217		election unless the court finds that:
225	218		(1) it is impracticable for the insurer to make the
226	219		agent available due to a change in circumstances arising after the
227	220		insurer made the election under Subsection (a);
228	221		(2) the agent whose liability was assumed would not
229	222		have been a proper party to the action; or
230	223		(3) obtaining the agent's deposition testimony is not
231	224		warranted under the law.
232	225		(e) An insurer's election under Subsection (a) is
233	226		ineffective to obtain the dismissal of an action against an agent if
234	227		the insurer's election is conditioned in a way that will result in
235	228		the insurer avoiding liability for any claim-related damage caused
236	229		to the claimant by the agent's acts or omissions.
237	230		(f) An insurer may not revoke, and a court may not nullify,
238	231		an insurer's election under Subsection (a).
239	232		(g) If an insurer makes an election under Subsection (a) and
240	233		the agent is not a party to the action, evidence of the agent's acts
241	234		or omissions may be offered at trial and, if supported by sufficient
242	235		evidence, the trier of fact may be asked to resolve fact issues as
243	236		if the agent were a defendant, and a judgment against the insurer
244	237		must include any liability that would have been assessed against
245	238		the agent. To the extent there is a conflict between this
246	239		subsection and Chapter 33, Civil Practice and Remedies Code, this
247	240		subsection prevails.
248	241		(h) If an insurer is in receivership at the time the
249	242		claimant commences an action against the insurer, the insurer may
250	243		not make an election under Subsection (a), and the court shall
251	244		disregard any prior election made by the insurer relating to the
252	245		claimant's claim.
253	246		(i) In an action tried by a jury, an insurer's election
254	247		under Subsection (a) may not be made known to the jury.
255	248		Sec. 542A.007. AWARD OF ATTORNEY'S FEES. (a) Except as
256	249		otherwise provided by this section, the amount of attorney's fees
257	250		that may be awarded to a claimant in an action to which this chapter
258	251		applies is the lesser of:
259	252		(1) the amount of reasonable and necessary attorney's
260	253		fees supported at trial by sufficient evidence and determined by
261	254		the trier of fact to have been incurred by the claimant in bringing
262	255		the action;
263	256		(2) the amount of attorney's fees that may be awarded
264	257		to the claimant under other applicable law; or
265	258		(3) the amount calculated by:
266	259		(A) dividing the amount to be awarded in the
267	260		judgment to the claimant for the claimant's claim under the
268	261		insurance policy for damage to or loss of covered property by the
269	262		amount alleged to be owed on the claim for that damage or loss in a
270	263		notice given under this chapter; and
271	264		(B) multiplying the amount calculated under
272	265		Paragraph (A) by the total amount of reasonable and necessary
273	266		attorney's fees supported at trial by sufficient evidence and
274	267		determined by the trier of fact to have been incurred by the
275	268		claimant in bringing the action.
276	269		(b) Except as provided by Subsection (d), the court shall
277	270		award to the claimant the full amount of reasonable and necessary
278	271		attorney's fees supported at trial by sufficient evidence and
279	272		determined by the trier of fact to have been incurred by the
280	273		claimant in bringing the action if the amount calculated under
281	274		Subsection (a)(3)(A) is:
282	275		(1) greater than or equal to 0.8;
283	276		(2) not limited by this section or another law; and
284	277		(3) otherwise recoverable under law.
285	278		(c) The court may not award attorney's fees to the claimant
286	279		if the amount calculated under Subsection (a)(3)(A) is less than
287	280		0.2.
288	281		(d) If a defendant in an action to which this chapter
289	282		applies pleads and proves that the defendant was entitled to but was
290	283		not given a presuit notice stating the specific amount alleged to be
291	284		owed by the insurer under Section 542A.003(b)(2) at least 61 days
292	285		before the date the action was filed by the claimant, the court may
293	286		not award to the claimant any attorney's fees incurred after the
294	287		date the defendant files the pleading with the court. A pleading
295	288		under this subsection must be filed not later than the 30th day
296	289		after the date the defendant files an original answer in the court
297	290		in which the action is pending.
298	291		SECTION 4. (a) Section 541.156, Insurance Code, as amended
299	292		by this Act, and Chapter 542A, Insurance Code, as added by this Act,
300	293		apply only to an action filed on or after the effective date of this
301	294		Act. An action that is filed before the effective date of this Act
302	295		is governed by the law as it existed immediately before the
303	296		effective date of this Act, and that law is continued in effect for
304	297		that purpose.
305	298		(b) Section 542.060(c), Insurance Code, as added by this
306	299		Act, applies only to a claim, as defined by Section 542A.001,
307	300		Insurance Code, as added by this Act, made on or after the effective
308	301		date of this Act. A claim made before the effective date of this Act
309	302		is governed by the law as it existed immediately before the
310	303		effective date of this Act, and that law is continued in effect for
311	304		that purpose.
312	305		SECTION 5. This Act takes effect September 1, 2017.
313		-	* * * * *
	306	+	______________________________ ______________________________
	307	+	President of the Senate Speaker of the House
	308	+	I certify that H.B. No. 1774 was passed by the House on May 5,
	309	+	2017, by the following vote: Yeas 92, Nays 55, 2 present, not
	310	+	voting.
	311	+	______________________________
	312	+	Chief Clerk of the House
	313	+	I certify that H.B. No. 1774 was passed by the Senate on May
	314	+	17, 2017, by the following vote: Yeas 21, Nays 7, 1 present, not
	315	+	voting
	316	+	.
	317	+	______________________________
	318	+	Secretary of the Senate
	319	+	APPROVED: _____________________
	320	+	Date
	321	+	_____________________
	322	+	Governor