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State Farm Lloyds v. MacKeen

Court of Appeals of Texas, Seventh District, Amarillo

May 17, 2019


          On Appeal from the 47th District Court Potter County, Texas Trial Court No. 102404A, Honorable Dan L. Schaap, Presiding

          Before QUINN, C.J., and CAMPBELL and PIRTLE, JJ.


          James T. Campbell Justice

         Appellees Robert and Rebecca MacKeen sued their homeowners insurance carrier, appellant State Farm Lloyds, for claims of breach of contract and unfair settlement practices under the Texas Insurance Code.[1] The case was tried by jury; the verdict and the judgment of the trial court were for the MacKeens. State Farm appealed, presenting three issues. Finding error in the jury charge that was not harmless, we will reverse the judgment of the trial court and remand the case for a new trial.


         The MacKeens' property lies outside Amarillo in Potter County. Improvements include their residence, a separate rent house, a barn, and storage buildings. These structures sustained wind and hail damage during a May 2013 storm. The roof of a shed where the MacKeens stored items of personal property was blown off, exposing the contents to damage.

         The State Farm homeowners policy in effect at the time of the storm provided Coverage A for the dwelling up to $268, 000 and dwelling extensions[2] up to $53, 000. Coverage B under the policy insured personal property losses up to $201, 000. Within a day or two of the storm the MacKeens notified State Farm of their damages.

         State Farm adjusted the claim, finding the amount payable for damage to the residence and extensions was less than the MacKeens' $13, 400 deductible. State Farm accordingly made no Coverage A payment. The MacKeens claimed losses of personal property under coverage B.

         In September 2013, the MacKeens submitted to State Farm a nine-page estimate of personal property items they valued at some $52, 000. In late October, at the MacKeens' request, State Farm sent a second adjuster to inspect the property. This inspection was interrupted by confrontation between the adjuster and a roofing contractor brought in by the MacKeens, and ended after Mr. MacKeen asked the adjuster to leave. The parties disagree who was responsible for the confrontation. Some two days later the MacKeens' attorney instructed State Farm in writing to cease all communications with his clients.

         In April 2014, the MacKeens filed suit against State Farm and one of its adjusters alleging breach of the insurance policy, knowing violations of the Insurance Code, breach of the duty of good faith and fair dealing, gross negligence, and fraud. The MacKeens later nonsuited their claims against the adjuster and the common law torts alleged against State Farm.

         In 2016, State Farm tendered the MacKeens $18, 424.83 for the depreciated value of all items on their personal property loss inventory. To that total it added 18% interest required by Chapter 542 of the Texas Insurance Code. State Farm also tendered the MacKeens $864.50 for a temporary electrical repair made on the night of the storm. It added 18% interest to this amount.

         The case was tried over a week in November 2016. The MacKeens' evidence presented State Farm's untimely payments for personal property and the temporary repair as breaches of the insurance policy as well as violations of the Insurance Code. But they sought no breach-of-contract damages with respect to those items. The alleged policy breach in dispute, the issue on which the parties presented conflicting evidence, was whether State Farm had paid all benefits owed under the policy for damage to the residence and other structures. The contract damages question submitted to the jury asked only for findings on the replacement cost values of the dwelling and dwelling extensions.

         To that end, the MacKeens presented a forensic engineer-architect who testified to his opinion the cause of damage to the residence and outbuildings was the May 2013 storm. He testified the roofs of the residence and the rent house required replacement and the storage shed would have to be rebuilt. The MacKeens also presented an estimator in whose opinion the cost to replace the roof and fence and make interior and exterior repairs to the residence would exceed $56, 000. He further said more than $10, 000 would be necessary to replace the roof and fence and make repairs to the rent house and over $29, 000 to replace the roof of the storage shed and repair the other outbuildings.

         State Farm presented a local roofing contractor and an engineer. The roofing contractor described the roof of the residence as "older" with damage that preceded the storm. He found storm-produced wind damage which he said could be repaired. As for the rent house, he found no wind or hail damage. On the corrugated metal roofs of the remaining outbuildings, other than the storage shed whose roof was blown off, he found no storm-produced damage. The contractor generally agreed with State Farm's repair estimate for the residence. The engineer also found the roof of the residence did not require replacement but could be repaired. On the rent house, he found no wind or hail damage. He also inspected the roofs of the outbuildings. His testimony indicated none of the roofs, other than the storage shed roof, required replacement.

         The jury charge included the following relevant questions, definitions, and instructions:

You are instructed that the Court has found that State Farm Lloyds failed to comply with the Homeowners Policy. [Italics in original]
What sum of money, if any, if paid now in cash, would fairly and reasonably compensate the MacKeens for State Farm Lloyds [sic] failure to ...

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