It may get tougher in Texas for insurance companies to use guidelines to manage the costs of defending a policyholder from litigation. In a ruling insurance-defense lawyers say is significant, 270th District Judge Brent Gamble granted a partial motion for summary judgment that says an insurance company can’t use litigation guidelines to avoid paying a client’s reasonable and necessary costs of defense.
The ruling came in a suit Houston’s WNS Inc., the franchisor of Wicks ‘n’ Sticks stores, filed against American Motorist Insurance Co. and a fee auditing company, Juris Prudent Inc., over nonpayment of $800,298 in legal costs. The defendants are units of Kemper National Insurance Companies. [See the judge's order and the plaintiff's first amended original petition.]
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