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Kezar v. State Farm Lloyds

United States District Court, W.D. Texas, Austin Division

May 17, 2018

THOMAS G. KEZAR and SYLVA SHROYER KEZAR, Plaintiffs,
v.
STATE FARM LLOYDS, Defendant.

          ORDER

          ROBERT PITMAN UNITED STATES DISTRICT JUDGE

         Before the Court is Defendant State Farm Lloyds' (“State Farm”) Motion for Partial Summary Judgment, (Dkt. 21), and the parties' responsive briefing. Having considered the parties' arguments and the relevant law, the Court will grant the motion.

         I. BACKGROUND

         Plaintiffs Thomas G. and Sylva Shroyer Kezar (“the Kezars”) own a home that was damaged by a fire in August 2015, for which they filed a homeowners insurance claim with State Farm. (First Am. Pet., Dkt. 1-5, at 2). The Kezars allege that State Farm provided them with an inadequate initial claims estimate; that State Farm failed to timely address damaged temporary roof coverings, causing more damage; and that State Farm delayed in responding to settlement communications. (Id. at 2-3). Out of these allegations, the Kezars assert causes of action against State Farm for fraud, negligence, breach of contract, breach of the duty of good faith and fair dealing, and unfair settlement practices. (Id. at 3-4).

         In the instant motion, State Farm asks the Court to grant summary judgment with respect to the causes of action arising out of only one of three components of their policy: the component pertaining to the dwelling (“the Coverage A claim”).[1] (Part. Mot. Summ. J., Dkt. 21, at 1). State Farm argues that the Coverage A claim is subject to the policy's appraisal provision and that its payment of an appraisal award precludes relief under each of the Kezars' causes of action with respect to that claim. (Id. at 6-17). The Kezars respond that summary judgment is inappropriate with respect to their breach of contract cause of action regarding the Coverage A claim because State Farm failed to timely pay the appraisal award. (Resp. Part. Mot. Summ. J., Dkt. 23, at 4-7).

         II. LEGAL STANDARD

         Summary judgment is appropriate under Rule 56 of the Federal Rules of Civil Procedure only “if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). A dispute is genuine only if the evidence is such that a reasonable jury could return a verdict for the nonmoving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 254 (1986). “A fact issue is ‘material' if its resolution could affect the outcome of the action.” Poole v. City of Shreveport, 691 F.3d 624, 627 (5th Cir. 2012).

         The party moving for summary judgment bears the initial burden of “informing the district court of the basis for its motion, and identifying those portions of [the record] which it believes demonstrate the absence of a genuine issue of material fact.” Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). The burden then shifts to the nonmoving party to establish the existence of a genuine issue for trial. Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 585-87 (1986); Wise v. E.I. Dupont de Nemours & Co., 58 F.3d 193, 195 (5th Cir. 1995). After the non-movant has been given the opportunity to raise a genuine factual issue, if no reasonable juror could find for the non-movant, summary judgment will be granted. Miss. River Basin Alliance v. Westphal, 230 F.3d 170, 175 (5th Cir. 2000).

         III. DISCUSSION

         A. The Breach of Contract Claim

         In Texas, an appraisal award made pursuant to the provisions of an insurance contract is binding and enforceable. Franco v. Slavonic Mut. Fire Ins. Ass'n, 154 S.W.3d 777, 786 (Tex. App.- Houston [14th Dist.] 2004, no pet.) When an insurer makes timely payment of a binding and enforceable appraisal award, and the insured accepts the payment, the insured is “estopped by the appraisal award from maintaining a breach of contract claim against [the insurer].” Blum's Furniture Co. v. Certain Underwriters at Lloyds London, 459 Fed.Appx. 366, 368 (5th Cir. 2012) (citing Franco, 154 S.W.3d at 787). Because “every reasonable presumption will be indulged to sustain an appraisal award, ” the party seeking to avoid the award bears the burden of proof. Id. (citation omitted).

         The parties agree that the Kezars' insurance policy has an appraisal provision, (see Policy, Dkt. 21-1, at 17), and that State Farm initiated the appraisal process after the parties failed to agree on the amount of loss. (Part. Mot. Summ. J., Dkt. 21, at 5; Resp. Part. Mot. Summ. J., Dkt. 23, at 5). The parties also agree that State Farm made a payment of an appraisal award and that the Kezars received that payment. (Part. Mot. Summ. J., Dkt. 21, at 5-6; Resp. Part. Mot. Summ. J., Dkt. 23, at 6). The parties disagree only about whether that payment was timely.

         A written agreement signed by State Farm's appraiser and the umpire set the amount of the loss on June 23, 2017. (Appraisal Award, Dkt. 21-8; Resp. Part. Mot. Summ. J., Dkt. 23, at 5-6). The signed appraisal award was delivered to State Farm on July 5, 2017, and State Farm notified the Kezars of the award and delivered a check in the amount of the award to the Kezars on July 14, 2017. (Part. Mot. Summ. J., Dkt. 21, at 5-6; Resp. Part. Mot. Summ. J., Dkt. 23, at 6). The “Loss Payment” section of the policy contains a clause that reads:

If we notify you that we will pay your claim, or part of your claims, we must pay within 5 business days after we notify you. If payment of your claim or part of your claim requires the performance of an act by you, we must pay ...

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