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dependent or otherwise.3 Although the statute does not claim the list is exhaustive, it is fairly specific in enumerating the entities considered to be insurers. There is no mention of any type of insurance adjuster.4 This exclusion leads one to be- lieve that the list is fairly comprehensive and insurance ad- justers were intentionally omitted from potential liability un- der Article 21.55. must be satisfied whenever the consumer is not in privity with the defendant.11 In Amstadt, the Texas Supreme Court held that a deceptive trade act or practice is not actionable under the DTPA unless it is committed in connection with a trans- action involving goods or services.12 Although there has not been much discussion of the “in connection requirement” since the decision in Amstadt, it probably requires that the adjuster’s misrepresentations reach the homeowner to be actionable. Article 21.21, protecting against unfair methods of competition and unfair or deceptive acts or practices, may pro- vide a homeowner’s strongest claim against his insurance com- pany for non-payment of claims. However, the process could prove to be complicated if the homeowner is pursuing a claim under Article 21.21 against an insurance adjusting firm or an insurance adjuster. Article 21.21 applies only to acts or prac- tices in the “business of insurance.” In Dagley v. Haag Engi- neering Co., the Fourteenth Court of Appeals stated that the independent engineering company used to investigate claims in that case could not be sued under the provisions of Article 21.21 because the engineering company was not engaged in “the business of insurance,” as that term should be defined for purposes of Article 21.21.5 If the homeowners in the above situation can prove that any misrepresentations or unconscionable conduct aris- ing out of the investigative services purchased by their insur- ance company, thereby satisfying the “in connection require- ment,” there is no requirement that the homeowner be the actual purchaser of the service. Services or goods purchased for the benefit of one party, even if actually bought by a third party, may form the basis for consumer status under the DTPA.13 As the Texas Supreme Court held in Kennedy v. Sale, there is no indication in the DTPA that the legislature intended to restrict the application of the statute solely to deceptive prac- tices committed by the person who actually furnished the good or service on which the complaint was based.14 A plaintiff in a DTPA case establishes his or her standing as a consumer in terms of his or her relationship to the transaction, not by a contractual relationship with the defendant.15 A homeowner may also consider a claim against the adjuster based on a breach of the duty of good faith and fair dealing. This issue was addressed by the Texas Supreme Court in Natividad v. Alexsis, Inc.6 In Natividad, the Texas Supreme Court held that an independent insurance adjuster does not owe a duty of any kind to an insured absent a contract, even if hired by the insured’s primary insurance company.7 The Dallas Court of Appeals in Dear v. Scottsdale Ins. Co. reached a similar con- clusion, when it held that the indepen- dent insurance adjuster was not in priv- ity of contract with the insured and, therefore, did not owe the insured any duty whatsoever.8 The Fifth Circuit also affirmed the dismissal of a negligent investigation claim against an independent insurance adjuster in Bui v. St. Paul Mercury Ins. Co. because the adjuster was not a party to the insurance contract, and therefore was found to owe no duty to the in- sured under Texas law.9 A homeowner who files a claim against an indepen- dent insurance adjuster would be able to establish that he is a While suing the insurance company is an avenue for compensation, homeowners might choose to pursue the insurance adjuster who conducted the investigation. consumer under the DTPA. This is so even if the indepen- dent firm was hired by the homeowner’s insurance company and not directly by the homeowner. Unlike the TIC, which is limited to the business of insurance, the DTPA applies to any service. Therefore, the DTPA appears to provide a more prag- matic method of recovering against an insurance adjuster for any misrepresentations or false claims made under the statute. Nonetheless, a lawsuit against a third party insurance adjuster by a homeowner has problematic areas, even under the DTPA. It follows from the above cases that an insurance adjuster does not owe an insured any contractual duties, and because it is not listed as an entity authorized to do business as an insurance company in Article 21.55, and may not be engaged in the business of insurance for purposes of Article 21.21. A rational conclusion may be reached that the ulti- mate responsibility falls with the primary insurance com- pany from whom the insured bought his or her policy, not an independent adjusting firm hired for consulting purposes by the insurance company. Only if secondary contractual privity exists between an insured and an insurance adjust- ing firm, will there be the possibility of a claim based on the TIC or good faith and fair dealing. The most serious problem homeowners will face in a DTPA suit against an adjuster was discussed in Dagley v. Haag Engineering Co.16 If, as in Dagley, none of the insurance adjuster’s representations concerning settlement of a homeowner’s insurance claims are submitted directly to the homeowner, but instead are communicated directly to the in- surance company, a homeowner will not be able to satisfy the Amstadt “in connection with” requirement.17 The appellate court in Dagley also found that absent a special relationship between the third party investigative firm (here, an engineer- ing company) and the insured, the adjuster could not be held liable for any alleged impropriety for its investigation into the insured’s claims.18 In light of the inapplicability of claims under the In- surance Code, the DTPA may provide a more successful way of imposing liability on the adjuster. To maintain a claim un- der the DTPA, the homeowner must first show that he or she is a consumer as that term is defined in the Act.10 Although there is no privity requirement under the DTPA, per se, the transaction complained of must form the basis of the homeowner’s complaint, and the conduct complained of must have occurred “in connection with” the consumer’s transac- tion. This judicial prerequisite to DTPA liability was imposed by the Texas Supreme Court in Amstadt v. Brass Corp, and The holding in Dagley, rested in part on the decision in Dear v. Scottsdale Ins. Co. wherein the court concluded that the insurance adjuster could not be held liable to the insured, regardless of how the insured phrased his complaints and claims against the adjuster.19 The court in Dear stated: We also conclude that H & G, an independent ad- justing firm hired exclusively by Scottsdale, had no

Journal of Texas Consumer Law


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