United States District Court, S.D. Texas, Houston Division
MEMORANDUM & ORDER
KEITH P. ELLISON, UNITED STATES DISTRICT JUDGE.
the Court is Defendant's Motion for Summary Judgment on
Plaintiff's claims of: (1) breach of contract, (2)
violation of the prompt payment of claims statute, and (3)
bad faith/violation of the Deceptive Trade Practices Act
(“DTPA”). (Doc. No. 27.) Defendant has paid the
arbitration panel award in this case, and Plaintiff agrees
that the breach of contract claim no longer exists. (Doc. No.
29 at 2.)
dispute now is whether the extracontractual claims can be
brought after full and timely payment of an appraisal award.
The parties each argue for a different interpretation of
USAA Texas Lloyds Co. v. Menchaca, 545 S.W.3d 479,
499-500 (Tex. 2018).
case arises out of an insurance dispute relating to damages
to Plaintiff's home sustained during Hurricane Harvey.
(Doc. No. 1.) On September 3, 2017, Defendant conducted an
initial inspection of the damage to Plaintiff's home and
came to an estimate of $3, 590.92 in damage. (Doc. No. 27 at
9.) Later, Plaintiff reported additional damages, and a
subsequent inspection led to a revised damage estimate of $4,
616.63. (Doc. No. 27 at 9.)
February 21, 2018, Plaintiff filed this lawsuit, alleging (1)
breach of contract, (2) violation of the prompt payment of
claims statute, and (3) bad faith/violation of the DTPA.
(Doc. No. 1.) On March 11, 2019, Plaintiff invoked the
appraisal provision of the policy, and the case was abated.
(Doc. No. 27 at 9.) The appraisers reached an award of $25,
944.94 on March 27, 2019. (Doc. No. 27 at 9.) Defendant paid
the award, less deductible and prior payment amount, on March
29, 2019, and notified Plaintiff of the payment. (Doc. No. 27
at 10.) Defendant notified the Court that the appraisal
process had concluded, lifting the abatement, and filed this
Motion for Summary Judgment. (Doc. No. 26.)
motion for summary judgment, the movant can only succeed if
there is “no genuine issue as to any material fact and
. . . the moving party is entitled to a judgment as a matter
of law.” Fed.R.Civ.P. 56(c). “A fact is material
only when it might affect the outcome of the suit under the
governing law, and a fact is genuinely in dispute only if a
reasonable jury could return a verdict for the non-moving
party.” Fordoche, Inc. v. Texaco, Inc., 463
F.3d 388, 392 (5th Cir. 2006).
the moving party meets the initial burden of showing that
there is no genuine issue of material fact, the burden shifts
to the non-moving party to produce evidence or designate
specific facts showing the existence of a genuine issue for
trial.” Engstrom v. First Nat'l Bank of Eagle
Lake, 47 F.3d 1459, 1462 (5th Cir. 1995). In deciding a
motion for summary judgment, a court must view the evidence
in the light most favorable to the non-moving party.
BREACH OF CONTRACT CLAIM
admits that the breach of contract claim cannot be maintained
now that the appraisal award has been paid in full. (Doc. No.
29 at 2.) There is overwhelming support for this conclusion
in the case law. See e.g., Nat'l Sec. Fire
& Cas. Co. v. Hurst, 523 S.W.3d 840, 847 (Tex. Ct.
App. 2017), reh'g denied (July 25, 2017)
(“Generally, tender of the full amount owed pursuant to
the conditions of an appraisal clause is all that is required
to estop the insured from raising a breach of contract
claim.” (citing Blum's Furniture Co. v. Certain
Underwriters at Lloyds London, 459 Fed.Appx. 366, 368
(5th Cir. 2012); Brownlow v. United Servs. Auto.
Ass'n, 2005 WL 608252, at *2 (Tex. Ct. App. 2005);
Toonen v. United Servs. Auto. Ass'n, 935 S.W.2d
937, 940 (Tex. Ct. App. 1996)); Losciale v. State Farm
Lloyds, 2017 WL 3008642, at *2-*3 (S.D. Tex. July 14,
2017) (“[T]imely and full payment of an appraisal award
precludes a breach of contract claim . . . .”).
Court finds that Defendant is entitled to summary judgment on
Plaintiff's breach of contract claim.
PROMPT PAYMENT CLAIM
case law is also clear that “full and timely payment of
an appraisal award under the policy precludes an award of
penalties under the Insurance Code's prompt payment
provisions as a matter of law.” Nat'l Sec. Fire
& Cas. Co. v. Hurst, 523 S.W.3d 840, 847 (Tex. App.
2017), reh'g denied (July 25, 2017) (citing
In re Slavonic Mut. Fire Ins. Ass'n, 308 S.W.3d
556, 563 (Tex. Ct. App. 2010), overruled on other grounds
by In re Universal Underwriters of Tex. Ins. Co., 345
S.W.3d 404, 405-07 (Tex. 2011)). See also Mainali Corp.
v. Covington Specialty Ins. Co., 872 F.3d 255, 258-59
(5th Cir. 2017), as revised (Sept. 27, 2017)
(“We must decide whether a payment made to comply with
an appraisal award, which in most if not all cases is going
to be paid after the 60-day window, is subject to this
penalty. No. reported Texas case has ever subjected such a
payment to the statute.”); Zhu v. First Cmty. Ins.
Co., 543 S.W.3d 428, 436-37 (Tex. App. 2018) (“As
this court has recognized, full and timely payment of an
appraisal award under the policy precludes as a matter of law
an award of penalties under the Insurance Code's
prompt-payment provisions.”); Cano v. State Farm
Lloyds, 276 F.Supp.3d 620, 628-29 (N.D. Tex. 2017)
("Plaintiffs' TPPCA claim fails as a matter of law
because “[a] plaintiff may not seek Chapter 542 damages
for any delay in payment between an initial payment and the
insurer's timely payment of an appraisal award.”
(citing Quibodeaux v. Nautilus Ins. Co., 655
Fed.Appx. 984, 988 (5th Cir. 2016); In re Slavonic Mut.
Fire Ins. Ass'n, 308 S.W.3d 556, 563 (Tex. Ct. App.
the appraisers reached an award of $25, 944.94 on March 27,
2019. (Doc. No. 27 at 9.) Defendant paid the award, less
Plaintiff's deductible and prior payment amounts, on
March 29, 2019, and notified Plaintiff of the payment. (Doc.
No. 27 at 10.) ...