The Corpus Christi Court of Appeals has mandamused a Cameron County trial court for denying an insurer’s intervention in an insured’s lawsuit against an adjuster and refusing to enforce the adjusters’ election of responsibility under § 542A.006, Insurance Code.
In Re Southern Vanguard Insurance Company And Compass Adjusting Services, Inc. (No. 13-25-00451-CV; November 12, 2025) arose from a homeowner’s claim for storm damage. Her insurer, Southern assigned Compass to inspect Plaintiff’s property to investigate her claim. The parties did not agree on the amount of loss and pursuant to the policy, the parties submitted the claim to the appraisal process. After appraisal, Southern paid the appraisal award and interest. In December 2024, Plaintiff filed suit against adjuster Timothy Cox and Compass alleging that they failed to properly investigate and adjust her property damage claim. Plaintiff alleged a litany of claims, including, fraud, negligence, breach of fiduciary duty, violations of the Texas Insurance Code, and even trespassing. In April 2025, Southern filed a plea in intervention in the lawsuit, asserting a general denial and an election of responsibility under Chapter 542A, Insurance Code, and Further, Southern alleges that it invokes its statutory election to accept whatever liability its agents Cox and Compass might have to baltazar under 542A. Southern further moved to dismiss Plaintiff’s request for attorney’s fees. Additionally in their plea, Southern claimed that Plaintiff failed to provide notice prior to filing her lawsuit, as required by Chapter 542A.
In May 2025, Plaintiff filed a motion to strike Southern’s intervention on grounds that it was “frivolous and Southern lacked justiciable interest in her lawsuit.” In June of the same year, Compass filed a motion to enforce Chapter 542A and elect Southern as responsible, as well as requesting the trial court to dismiss Plaintiff’s claims pursuant to the election. The trial court issued an omnibus order striking Southern’s plea in intervention, denying Compass’s motion, and denying Southern’s motion regarding attorney’s fees. Southern and Compass filed a petition for writ of mandamus, asserting that the trial court abused its discretion in three ways: (1) striking the plea in intervention, (2) refusing to enforce Chapter 542A for election, and (3) denying the motion regarding attorney fees. Plaintiff did not respond to the petition.
In an opinion by Chief Justice Tijerina, the court of appeals granted the writ. Insurer possessed a justiciable interest in lawsuit because: (1) a judgment in favor of the insured would likely lead to an action against the insurer because the insurer had elected to accept their agents’ liability under 542A; (2) the agents, as non-parties to the insurance policy, could not invoke appraisal, which might defeat the insured’s claims or a part thereof; and (3) the insured’s claims, however characterized, were factually premised on their insurance policies and the insurer’s rejection of their claims. The court therefore concluded that the trial court abused its discretion in denying Southern’s plea in intervention and granting Plaintiff’s motion to strike.
In the next issue, Relators asserted that the trial court abused its discretion by denying Compass’s motion to enforce Southern’s election under 542A. Section 542A.006, Insurance Code, states, “[i]f any claimant filed an action to which this chapter applies against an agent and the insurer thereafter makes an election under subsection (a) with respect to the agent, the court shall dismiss the action against the agent with prejudice.” The court ruled that because Southern made its election after the suit was filed, the statute imposed a mandatory duty on the TC to dismiss the action against Cox and Compass with prejudice.
Finally, Relators contended that the trial court abused its discretion by denying Southern’s motion regarding attorney fees. Plaintiff alleged that “Chapter 542A does not apply to this litigation because it is not an action on a claim, that she is not suing on her insurance policy, and that her insurer is not a party to her lawsuit.” The insurer in this situation bore the burden to plead and prove the claimant failed to provide statutorily compliant presuit notice to foreclose the claimant’s ability to recover attorney’s fees. (542A.007) The Relators failed to offer proof in support of this allegation, so the court overruled the third issue.
TCJL Legal Intern George E. Christian researched and drafted this article.
