Recently, a Texas appellate court conditionally granted an insurer’s writ of mandamus, finding that the trial court abused its discretion by striking the insurer’s plea in intervention and denying the independent adjusting company’s motion to enforce the insurer’s election to assume its agents’ liability. In re Southern Vanguard Ins. Co. & Compass Adjusting Servs., Inc., No. 13-25-00451-CV, 2025 WL 3170975 (Tex. App.—Corpus Christi-Edinburg Nov. 12, 2025, not pet.)
This matter involved a disputed storm loss, including a disagreement over the amount of loss. As a result, the insured invoked the policy’s appraisal provision. Thereafter, Southern Vanguard Insurance Company (“Southern”) paid the appraisal award plus interest.
After the conclusion of the appraisal, the insured filed suit against adjuster Timothy Cox and Compass Adjusting Services, Inc. (“Compass”), asserting that those defendants failed to conduct a proper investigation of the claimed property damage and alleging violations of the Texas Insurance Code and Texas Deceptive Trade Practices Act, breach of the duty of good faith and fair dealing, breach of fiduciary duty, fraud, fraudulent misrepresentation, fraudulent inducement, and trespass to property. Because the insurer was not named as a defendant, Southern filed a plea in intervention, which included a general denial, an election of its agents’ responsibility (including Cox and Compass) pursuant to § 542A.006(a) of the Texas Insurance Code, and a motion to dismiss the insured’s request for attorney’s fees due to the failure to provide the requisite pre-suit notice and demand pursuant to § 542A.007 of the Texas Insurance Code. In response, the insured filed a motion to strike Southern’s intervention, arguing that Southern lacked a justiciable interest in the suit. Compass then filed a motion to enforce Southern’s election with dismissal of the insured’s claims against Cox and Compass pursuant to Southern’s election. Ultimately, the trial court issued an order, denying Compass’s motion to enforce Southern’s election and Southern’s motion to preclude the recovery of attorney’s fees while also striking Southern’s plea in intervention.
As a result of the trial court’s erroneous rulings, Southern and Compass filed a petition for a writ of mandamus, asserting that the trial court abused its discretion by denying Compass’s motion to enforce Southern’s election and Southern’s motion to preclude the recovery of attorney’s fees, as well as striking Southern’s plea in intervention. Upon review, the appellate court first found that the trial court abused its discretion when it denied Southern’s plea in intervention and granted the insured’s motion to strike because it concluded that Southern “possesses a justiciable interest in [the] lawsuit because a judgment in [the insured’s] favor would likely lead to an action against Southern under § 542A.006 . . . .” Id. at *6. Likewise, the appellate court found that the trial court abused its discretion when it denied Compass’s motion to enforce Southern’s election, stating “because Southern made its election after suit was filed to assume whatever liability that Cox and Compass may have to [the insured], the Insurance Code imposes a mandatory duty on the trial court to dismiss the action against Cox and Compass with prejudice.” Id. The appellate court also held, however, that Southern failed to offer evidence in support of its motion to preclude recovery of attorney’s fees due to the insured’s alleged failure to provide the requisite pre-suit notice. Id. at *7. Finally, the appellate court concluded that Southern and Compass lacked an adequate remedy by appeal after final judgment “because proceeding without immediate review by mandamus would defeat the substantive rights that they possess by virtue of contract and statute, severely compromise and foreclose their ability to present their defenses, and waste resources.” Id.
Accordingly, the appellate court conditionally granted the petition for writ of mandamus and ordered the trial court to vacate its orders striking Southern’s plea in intervention and denying Compass’s motion to enforce Southern’s election (with its writ of mandamus to be issued in the event the trial court fails to comply).
The Lowdown: The clear and mandatory language of § 542A.006 allowing an insurer to elect to accept its agent’s liability to the claimant requires dismissal with prejudice of the insured’s claims against such agent(s). If a court fails to heed this directive, then there is no adequate remedy by appeal, and a writ of mandamus forcing compliance with the statute is appropriate.
