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Shin v. Allstate Texas Lloyds

United States District Court, S.D. Texas, Houston Division

July 3, 2019

HYEWON SHIN, Plaintiff,
v.
ALLSTATE TEXAS LLOYDS, Defendant.

          MEMORANDUM & ORDER

          HON. KEITH P. ELLISON, UNITED STATES DISTRICT JUDGE.

         Before 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.)

         The 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).

         I. BACKGROUND

         This 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.)

         On 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.)

         II. LEGAL STANDARD

         On a 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).

         “If 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. Id.

         III. BREACH OF CONTRACT CLAIM

         Plaintiff 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 . . . .”).

         The Court finds that Defendant is entitled to summary judgment on Plaintiff's breach of contract claim.

         IV. PROMPT PAYMENT CLAIM

         The 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. 2010)).

         Here, 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.) ...


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