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Salinas v. State Farm Lloyds

Court of Appeals of Texas, Thirteenth District, Corpus Christi-Edinburg

April 11, 2019


          On appeal from the 92nd District Court of Hidalgo County, Texas.

          Before Chief Justice Contreras and Justices Longoria and Perkes



         Appellants Israel and Hilda Salinas sued appellee State Farm Lloyds ("State Farm") for breach of their insurance contract. Judgment was entered in favor of the Salinases. After an ex parte hearing at which the Salinases were not present, the trial court issued a modified final judgment that reduced the Salinases' award to zero. By two issues which we combine into one, the Salinases argue that the trial court erred in holding an ex parte hearing. We affirm.

         I. Background

         In April of 2012, the Salinases' house was hit by a hailstorm. In June of 2014, the Salinases filed suit against State Farm, alleging multiple causes of action, including breach of contract and unconscionable conduct. More specifically, the Salinases asserted that State Farm took advantage of their lack of knowledge in construction and insurance claims processes, misrepresented losses covered under the policy, and failed to promptly and reasonably investigate and pay the amount covered under the policy. On September 16, 2014, State Farm offered the Salinases a settlement of $25, 900. See Tex. Civ. Prac. & Rem. Code Ann. § 42.002 (West, Westlaw through 2017 1st C.S.); Tex.R.Civ.P. 167.1. State Farm's settlement offer expired without a response from the Salinases.

         The case proceeded to jury trial in June of 2017. The jury returned a verdict in favor of the Salinases. The jury found that State Farm breached the insurance contract it had with the Salinases and awarded the Salinases $10, 500 for the breach of contract. The jury also found that State Farm had engaged in unconscionable conduct under the Texas Deceptive Trade Practices Act and awarded the Salinases $10, 500 for the unconscionable conduct. The final judgment, as signed by the trial court in September of 2017, ordered that the Salinases be awarded $10, 500 for State Farm's breach of contract, $9, 066.82 for prejudgment interest, $10, 500 for necessary and reasonable attorney's fees, and $8, 097.05 for "costs of court," for a total of $38, 163.87.

         On October 10, 2017, State Farm filed a motion to modify the final judgment, arguing that application of Rule 167 required the court to enter a take-nothing judgment for the Salinases. See Tex. R. Civ. P. 167.4 (setting forth conditions for when litigation costs may be awarded to the offeror of a settlement offer). According to State Farm, its settlement offer "triggered an offset that exceeds [the Salinases'] monetary recovery at trial" because the final amount that the Salinases were awarded was less than eighty percent of what State Farm originally offered to the Salinases as a settlement. See id. The Salinases never filed a response to State Farm's motion to modify.

         The trial court originally set the motion to modify to be heard on November 14, 2017. However, the trial court was unavailable on that day and reset the hearing for November 21, 2017. On that day, the judge's father-in-law passed away so the hearing was rescheduled for December 5, 2017. On that day, the hearing on the motion to modify was held before an associate judge, who ultimately decided that the original judge would be in a better position to rule on the matter. Both parties were present and were informed that the motion to modify would likely be heard on submission. However, on December 6, 2017, the trial court informed the parties that the trial court was going to reset the motion to modify hearing for December 11, 2017. The Salinases' counsel informed the trial court that he would be unavailable in person because he was being deposed in a federal case that day for his role as a trustee for Texas Southmost College. The trial court informed counsel for the Salinases that the trial court would hear the motion by telephone sometime between 8:15 a.m. and 8:30 a.m. Counsel for the Salinases agreed to appear via telephone for the hearing. Around 8:30 a.m. on December 11, 2017, the Salinases' counsel called the court; he was informed the trial court had not arrived yet but that counsel would be called to participate in the hearing by 9:00 a.m. The Salinases' counsel did not receive a call from the trial court; instead, in the afternoon, State Farm's counsel called the Salinases' counsel to tell him that the trial court heard the motion to modify without him or the Salinases present.

         The trial court signed a modified final judgment on December 11, 2017, which reduced the Salinases' award to zero and explained the trial court's reasoning for the modification as follows:

The "total damages" found by the jury on Plaintiffs' breach of contract claim total $10, 500. The monetary damages awarded for Plaintiffs' claim that State Farm engaged in unconscionable conduct are for the same amount ($10, 500). As these identical amounts are damages for the same injury, pursuant to the one-satisfaction rule, Plaintiffs may recover damages under either of the legal theories under which damages are sought, but not under both. Thus, the amount of actual damages recoverable pursuant to the jury's verdict is $10, 500. Because attorney's fees are allowable under Plaintiffs' breach of contract theory, the Court finds that Plaintiffs should recover under this theory rather than the "unconscionable conduct" theory. The applicable Policy deductible for Plaintiff's claims was $1, 566.00, which reduces Plaintiffs' recoverable damages under breach of contract to $8, 934.00.
Plaintiffs' attorney's fees incurred prior to the October 4, 2014 expiration of Defendant's settlement offer were $3, 150.00
. . .
Pursuant to Insurance Code Chapter 542, interest at a rate of 18% per annum would be payable on the amount due Plaintiffs under their breach of contract claim. Plaintiffs contend that such interest should be calculated from September 19, 2012. Interest from that date ...

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