Appeal from County Court Waller County, Texas Trial Court
Case No. C17-129
consists of Chief Justice Radack and Justices Higley and
CARTER HIGLEY JUSTICE.
his home was damaged during Hurricane Harvey, Thomas Phillips
sued American Bankers Insurance Company of Florida
("ABIC") for breaching the homeowner's policy
it had issued to him. ABIC moved to dismiss the suit based on
Rule of Civil Procedure 91a and Insurance Code Chapter
542A. The trial court granted the motion and
signed a judgment dismissing the suit without prejudice to
refiling it. Less than 30 days later, ABIC filed a motion to
modify the judgment. The trial court denied the motion but
signed an order awarding, among other relief, sanctions to
ABIC to be paid, jointly and severally, by Phillips and his
appeal, Phillips raises three issues. In his first issue,
Phillips claims that the trial court lacked plenary power to
award the post-judgment sanctions. In his second and third
issues, Phillips contends that the trial court abused its
discretion in sanctioning him.
disagree that the trial court lacked plenary power to sign
the post-judgment order, but we agree with Phillips that the
trial court abused its discretion in sanctioning him.
Accordingly, we reverse the trial court's award of
sanctions against Phillips and render judgment that ABIC take
nothing from him. We otherwise affirm the judgment.
filed a claim with ABIC under his homeowner's policy to
recover insurance money for damage to his home caused by
Hurricane Harvey. Phillips retained counsel who sued ABIC on
Phillips's behalf. The suit alleged that the two sides
could not agree regarding the amount of loss to the home.
Phillips's amended petition claimed that ABIC breached
the insurance policy by refusing to engage in the appraisal
process as the policy required. Phillips asked the trial
court to order ABIC to participate in the appraisal process.
answered and moved to dismiss the suit. ABIC asserted that
the suit should be dismissed because the breach of contract
claim was not ripe. ABIC pointed out that, under the terms of
the insurance policy, an appraisal was not required until
Phillips made a written demand for an appraisal, and he had
not made such a demand.
Supreme Court of Texas case authority, ABIC explained that an
appraisal is intended to take place before a suit is filed as
a condition precedent to suit. See State Farm Lloyds v.
Johnson, 290 S.W.3d 886, 894 (Tex. 2009). ABIC relied on
the supreme court's statement that "[a]ppraisals
require no attorneys, no lawsuits, no pleadings, no
subpoenas, and no hearings." Id. And ABIC
pointed out that "the right to demand an appraisal
accrues when the parties reach an impasse in their
negotiations" regarding the amount of loss. See In
re Universal Underwriters of Tex. Ins. Co., 345 S.W.3d
404, 412 (Tex. 2011) (orig. proceeding). ABIC indicated that
no impasse had been reached. ABIC stated that, to the
contrary, the parties were still in the pre-suit stages,
attempting to resolve the insurance claim without the
necessity of litigation. ABIC also asserted that the suit
should be dismissed because Phillips did not comply with
Insurance Code Chapter 524A's pre-suit notice
requirements. See Tex. Ins. Code §§
motion to dismiss, ABIC also sought attorney's fees and
sanctions. ABIC requested sanctions against Phillips and his
attorney under Rule 13 of the Rules of Civil Procedure and
Chapters 9 and 10 of the Civil Practice and Remedies Code.
See Tex. R. Civ. P. 13; Tex. Civ. Prac. & Rem.
Code §§ 9.001-.014, 10.001-.006. ABIC claimed that
it was entitled to sanctions because Phillips's petition
was frivolous and groundless.
hearing on the motion to dismiss, ABIC asserted that the suit
should be dismissed because Phillips had not complied with
the pre-suit notice requirements of Insurance Code Chapter
542A. ABIC also emphasized that Phillips's breach of
contract claim, based on the allegation that ABIC would not
engage in the appraisal process, was premature because ABIC
had not been given the opportunity to conduct an appraisal.
ABIC explained that Phillips had not invoked the appraisal
process by providing ABIC proper written notification
regarding his claim. ABIC stated that Phillips had provided
an estimate of his damages to ABIC but had done so less than
a week before the hearing, not affording ABIC an opportunity
to begin the appraisal process.
provide ABIC the opportunity to engage in the appraisal
process, the trial court recessed the hearing for two weeks.
ABIC immediately appointed an appraiser. The appraiser went
to Phillips's home where the appraiser discovered that
Phillips had already made repairs. Because the home had been
repaired, an appraisal could not be performed.
the hearing on the dismissal motion reconvened, ABIC informed
the trial court that it could not conduct the appraisal
because the home had been repaired. The trial court noted on
the record that the relief Phillips had requested was an
order requiring ABIC to appraise the home. The trial court
agreed with ABIC that the suit should be dismissed because
Phillips's claim for appraisal was mooted by the repair
of the home.
opposed the dismissal. He asserted that he anticipated ABIC
would ultimately deny coverage under the insurance policy.
The trial court informed Phillips that it would dismiss the
suit without prejudice, allowing Phillips to refile the suit
should he ultimately believe coverage was wrongfully denied.
end of the hearing, Phillips's counsel asked whether the
dismissal order would include sanctions, and ABIC's
counsel stated on the record that the order would not include
sanctions. On January 18, 2018, the trial court signed an
order dismissing the case without prejudice. No sanctions or
attorney's fees were awarded.
than 30 days later, on February 13, 2018, ABIC filed a motion
to modify the judgment of dismissal. ABIC requested $9,
287.31 for attorney's fees it claimed to have incurred
from the filing of Phillips's suit through the suit's
dismissal. ABIC asserted it was entitled to these fees under
Rule of Civil Procedure 91a.7. It offered the affidavit of
its attorney to support the amount of the fees.
motion to modify, ABIC also informed the trial court that
"the appraisal of the underlying insurance claim
remain[s] ongoing." ABIC explained that, after the suit
was dismissed, it sent a letter to Phillips's attorney
and copied Phillips, requesting Phillips and his wife to
submit to an examination under oath ("EUO") as part
of its investigation of Phillips's claim. ABIC relied on
a provision in the insurance policy requiring Phillips to
submit to an EUO if requested.
was scheduled to take place at the courthouse in Hempstead,
Texas on January 30, 2018. ABIC never heard from Phillips or
his attorney regarding whether they would attend the EUO. On
the day of the EUO, ABIC's attorney drove from Fort Worth
to Hempstead; however, neither Phillips nor his attorney
showed up for the EUO.
motion to modify, ABIC also sought "abatement of the
appraisal process" and recovery of its attorney's
fees incurred for its attorney to travel from Fort Worth to
Hempstead for the EUO. ABIC asserted that Phillips's
"failure to appear at the EUO as required in the policy
breached an underlying condition of the insurance
contract." ABIC requested "its reasonable costs and
attorney's fees under Chapter 38 of the Texas Civil
Practice and Remedies Code." ABIC claimed, "The
total reasonable and necessary attorney's fees and costs
incurred by ABIC between dismissal of the underlying suit on
January 18, 2018 through February 8, 2018 was $3,
954.12." ABIC did not request sanctions in the motion.
trial court conducted a telephonic hearing on ABIC's
motion to modify the dismissal judgment. On February 22,
2018, the trial court signed an order regarding the motion,
which provides as follows:
considering ABIC's Motion [to Modify], evidence and
arguments of counsel, the Court makes the following findings:
1. The Court properly granted ABIC's Motion to Dismiss by
Order entered and rendered January 18, 2018;
2. This Court retains plenary power to modify the January 18,
2018 Order under Rule 329b(g) of the Texas Rules of Civil
Procedure because this Motion was filed within 30 days of the
3. The Court finds that plaintiff's counsel and plaintiff
committed sanctionable conduct after entry of the Order
dismissing their case by refusing to attend and by failing to
notify ABIC's counsel of their refusal to attend the
properly requested and noticed examination under oath on
4. The Court finds that ABIC incurred attorney's fees
relating to the examination under oath that plaintiff and
plaintiff's counsel should reimburse.
accordance with the Court's findings, the following
rulings are issued:
1. The Court denies Defendant's Motion to Modify
2. The appraisal is abated until such time as the requested
examinations under oath have been completed; and
3. ABIC is entitled to reasonable and necessary costs and
attorney's fees in the amount of $3, 954.12 for the
refusal of plaintiff, plaintiff's wife and
plaintiff's counsel to appear for the Examinations Under
ORDERED and ADJUDGED that the appraisal be abated until such
time as plaintiff complies with the request of ABIC to take
the insureds' examinations under oath; and plaintiff
and/or plaintiff's attorney must pay $3, 954.12 as
sanctions for their wrongful conduct.
trial court then filed findings of fact and conclusions of
law. Regarding the "sanctionable conduct"
identified in the order, the trial court made ...