SE Texas Record

Friday, November 15, 2019

Justices reverse order forcing Farmers to issue retroactive HO-B polices

Attorneys & Judges

By David Yates | Oct 21, 2019

RMQ partner Glen Morgan

BEAUMONT – A 17-year old lawsuit against Farmers Insurance has tumbled back down to the trial court where it originated, landing in the lap of a new district judge who must now decide what remedy, if any, is appropriate to address the insurer’s “improper non-renewal” of HO-B policies.

On Oct. 10, the 13th Court of Appeals reversed a judgment compelling Farmers to offer or issue retroactive renewed HO-B polices.

The litigation stems from a class-action lawsuit brought by Sandra Geter in 2002. The case was filed in Jefferson County and assigned to Judge Donald Floyd, 172nd District Court. Floyd retired last year.

The Reaud Morgan & Quinn law firm in Beaumont represented Geter. RMQ attorneys donated generously to Judge Floyd's election campaigns over the years.

In her suit, Geter alleged that she attempted to renew her Farmers HO-B policy in 2001.

HO-B policies are hybrid polices with elements of “open peril” and “named peril” coverage.

However, in January 2002 Farmers mailed a “Policyholder Notice of Non-Renewal” to Geter stating in part: “Because of substantial losses which we have incurred for the homeowners and dwelling lines of insurance in Texas, we regrettably must inform you that we will no longer offer property insurance coverage in the state of Texas under the policy form you currently have.”

Geter sued, alleging Farmers was required to renew the HO-B policy pursuant to the terms of the policy, which included: “We may not refuse to renew this policy because of claims for losses resulting from natural causes.”

Court records show that in October 2010 Farmers moved for summary judgment, arguing that its non-renewal of the HO-B policies did not violate Texas insurance law or the terms of the policy. The Geter class responded with its own motion for partial summary judgment.

A month later, Judge Floyd denied Farmers’ motion but granted Geter’s, ordering that each class member is “entitled to renewal” of the HO-B policy.

Court records show that additional motions were filed by the parties. Geter argued in hers that the trial court had jurisdiction to set the premium rate as “supplemental relief” under the Uniform Declaratory Judgments Act (UDJA).

Geter further noted that, though Farmers charged a premium of $2,181 for the HO-B policy in effect from 2001 to 2002, it demanded a $5,410 premium for the HO-A replacement policy effective the following year, even though the latter policy provided less coverage.

She asked the trial court to rule that the premium for the retroactively renewed HO-B policies — which Farmers was required to offer under the November 2010 order — would be the same as the premium Farmers charged for the HO-A replacement policies.

On June 21, 2011, the trial court signed an order granting Geter’s second summary judgment motion, granting Geter’s motion to show cause, and denying Farmers’ second summary judgment motion.

The order set forth the premium rate for the HO-B renewal policies precisely as requested by Geter in her motions, the opinion states.

In November 2016, a trial on attorney’s fees was held and a jury found that $812,332.50 was a reasonable fee for necessary services.

On Dec. 14, 2017, Judge Floyd found the amounts determined by the jury were a “base lodestar” and awarded the class $3,046,246.88 in attorney’s fees, along with conditional appellate fees, and $486,789.97 in costs.

The final judgment prompted Farmers to appeal – an appeal that would draw in a third party.

In a separate proceeding initiated in 2002, the state of Texas, Texas Department of Insurance, and the commissioner of insurance filed suit in Travis County, alleging Farmers violated the Deceptive Trade Practices Act for charging higher premiums for HO-A policies than it did for HO-B policies, according to the opinion.

They did not, however, seek a declaration that the HO-B policies were wrongfully non-renewed, according to the opinion.

Eventually, Farmers and the state proposed a settlement agreement under which the members of a settlement class, including Hooks and Nolen PC, would release their claims against Farmers.

Hooks and Nolen, represented by attorney Joseph Blanks of Hobson Blanks, intervened in the Travis County proceeding in order to prevent the release of any claims for declaratory relief regarding non-renewal of the HO-B policies (the claims raised in the Geter class action).

Farmers eventually entered into a settlement agreement with the state that contained a release that — in accordance with Blanks’ demand — “carved out” the declaratory relief requested in the Geter class action, the opinion states.

In June 2016, Hooks and Nolen intervened in the Geter class action seeking to recoup their attorney’s fees. Farmers moved to strike and the trial court granted the motion.

Blanks then filed its own plea in intervention making the same assertions, which Judge Floyd struck – leading to the Hooks and Nolen and Blanks appeal.

Justices reversed the order granting Famers’ motion to strike the intervention filed by Hooks and Nolen to the extent they seek recovery of attorney’s fees under the UDJA.

The 172nd District Court's new judge, Mitch Templeton, is now presiding over the case.

Appellate case No. 13-18-00187-CV

Jefferson County District Court case No. E-167872

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Jefferson County District CourtREAUD & MORGAN

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