Comparing the Texas Windstorm Insurance Association to a platypus — a creature native to Australia that appears to be a cross between a duck and a beaver — a Texas appeals court said while it knows what Texas’ insurer of last resort for wind and hail insurance along the Texas coast looks like, it’s not always clear what it is – a private entity or a government agency.
In a case that asked the court to decide whether or not TWIA can initiate legal proceedings in order to protect its interests, a panel from the Texas Court of Appeals for the Seventh District of Texas noted that while TWIA may have been initiated by the Texas legislature and has “some earmarks of a governmental agency,” its members are private insurance companies and it conducts business very much like a private insurer. Therefore, the court reasoned, it should have access to the legal system for resolving disputes just like any other insurance company.
Siding with TWIA in Texas Windstorm Association v. Renetta Poole and Walter Poole, (NO. 07-07-0061-CV) the appeals panel remanded the case back to the trial court that initially ruled the against windstorm pool.
Justices Quinn, Campbell and Hancock considered the case. According to the opinion written by Justice Quinn, the Pooles’ Port Arthur home was damaged when Hurricane Rita hit in 2005. TWIA paid the Pooles $12,472.75 to repair the damage. About eight months later, however, the association received a letter from a public adjuster saying that the Pooles disagreed with the insurer’s assessment of the claim and were requesting “an appraisal of the property be undertaken under the policy terms.” TWIA disagreed that it was obligated to provide an appraisal and filed a petition seeking declaratory relief in the case.
“In response, the Pooles moved to dismiss the suit contending that the Association lacked statutory authority to sue in Texas courts to adjudicate disputes related to their insurance claims,” Quinn wrote. The trial court agreed with the Pooles and dismissed the suit; TWIA appealed that decision.
Discussing its own ruling, Quinn wrote that the appeals court found “it difficult to picture a scenario wherein an entity authorized to acquire property, execute contracts, hire and fire personnel, collect and disburse monies, and otherwise delve into the insurance business will avoid legal entanglements necessitating resolution. While it is likely that many of those entanglements can and will be resolved without the intervention of third parties, believing that all will so be ended is, quite frankly, unrealistic and unreasonable. Indeed, finding success in the realm of business is often dependent upon the ability to petition the state’s judiciary to resolve disputes that defy private disposition. Consequently, to deprive the Association of this opportunity would be tantamount to placing an obstacle before it that does not stand before like businesses and that obstacle could only but impede its ability to fulfill the purpose or charge placed on it by the legislature.
“So, in view of the realities of today’s business world, it would seem that the ability to petition the state’s judicial system for assistance from time to time is not only appropriate to the conduct of the Association’s business but also reasonably necessary to the accomplishment of its mandated purpose.”
The appeals court added that the legislation establishing the windstorm pool “says nothing about the Association being barred from initiating a lawsuit.”
The appeals court decision can be found online at http://www.7thcoa.courts.state.tx.us/opinions/htmlopinion.asp?OpinionId=12575.
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