Texas 2017 - 85th Regular

Texas Senate Bill SB10 Compare Versions

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