Texas Supreme Court Denies Insurer's Bid to Sever Bad Faith Claims

AUSTIN, Texas - The full Texas Supreme Court has rejected insurance carriers' contention that a trial court is obligated to sever, rather than bifurcate, extra-contractual claims that could reveal prejudicial settlement information to jurors hearing the underlying contract dispute. In re Travelers Lloyds of Texas Insurance Co., et al, No. 04-07-00878-CV (Texas Sup. Ct.).

The high court withdrew an earlier opinion by a three-judge panel, which also found against Travelers Lloyds of Texas Insurance Co. and other Travelers entities sued by homeowners Apolonio and Maria Moncada.

The Moncadas were paid $1,500 for hail and water damage after a storm, but …