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Redrick v. State Farm Lloyds

Court of Appeals of Texas, Fifth District, Dallas

July 18, 2019

SHERICA REDRICK, Appellant
v.
STATE FARM LLOYDS, Appellee

          On Appeal from the 116th Judicial District Court Dallas County, Texas, Trial Court Cause No. DC-15-12379

          Before Justices Myers, Molberg, and Carlyle.

          MEMORANDUM OPINION

          CORY L. CARLYLE JUSTICE.

         Sherica Redrick appeals from the trial court's take-nothing judgment in favor of State Farm Lloyds.[1] In her opening brief, Redrick contended that the trial court's judgment should be reversed and remanded in the interest of justice based on fatally conflicting answers in the jury's verdict. In her reply brief, Redrick concedes the issue was not preserved for our review under the analysis in USAA Texas Lloyds Co. v. Menchaca (Menchaca II), 545 S.W.3d 479 (Tex. 2018), issued after the trial here. We affirm by this memorandum opinion. See Tex. R. App. P. 47.4.

         I. Background

         This is a first-party insurance dispute. Redrick's home was damaged in a storm, and she filed a claim with her insurer, State Farm. State Farm acknowledged coverage, but it found that Redrick was not entitled to benefits because the cost of necessary repairs would not exceed her policy's deductible. Redrick disagreed. She believed her roof needed to be replaced, so she sued State Farm for breach of contract, violations of the Texas Insurance Code, and breach of the duty of good faith and fair dealing.

         Approximately six months before Redrick's case went to trial, the Texas Supreme Court issued its first opinion in USAA Texas Lloyds Co. v. Menchaca (Menchaca I).[2] We briefly discuss Menchaca I because it influenced the proceedings here.

         Menchaca I dealt with a similar first-party insurance dispute. The insurance company determined that, while the policy at issue covered some of the storm damage, Menchaca was not entitled to benefits because the costs of repairs would not exceed the policy's deductible. Menchaca sued the insurance company both for breach of the policy and for violations of the Texas Insurance Code, seeking the same measure of damages for each claim-the policy benefits she claimed she should have received. Ultimately, the jury determined that the insurer did not breach the policy, but also found that the insurance company had failed to conduct a reasonable investigation of Menchaca's claim, a violation of the Insurance Code. It therefore awarded Menchaca, as actual damages for the insurance-code violation, the same amount she sought as benefits under the policy.

         Each side claimed it was entitled to judgment on the verdict. The insurer argued that Menchaca should take nothing as a matter of law because the jury found there was no breach of the policy. Menchaca argued that she was entitled to judgment on the insurance-code violations, which were not conditioned on a breach of the policy. Neither side asserted that the jury's answers irreconcilably conflicted. Ultimately, the trial court disregarded the jury's finding on contractual liability and entered final judgment in Menchaca's favor. The court of appeals affirmed.

         The supreme court tried to clarify the circumstances under which a plaintiff may recover tort damages for an insurer's conduct in relation to a claim made for benefits under an insurance policy, as follows:

We clarify today that an insured cannot recover policy benefits as damages for an insurer's statutory violation if the policy does not provide the insured a right to receive those benefits. An insured who establishes a right to receive benefits under the policy can recover those benefits as actual damages under the Insurance Code if the insurer's statutory violation causes the loss of the benefits. And an insured can recover benefits as actual damages under the Insurance Code even if the insured has no contractual right to those benefits if the insurer's conduct caused the insured to lose that right. If an insurer's statutory violation causes an injury independent of the insured's right to recover policy benefits, the insured may recover damages for that injury even if the insured is not entitled to receive benefits under the policy. But if the policy does entitle the insured to benefits, the insurer's statutory violation does not permit the insured to recover any actual damages beyond those policy benefits unless the violation causes an injury that is independent from the loss of the benefits. Finally, an insured cannot recover any damages based on an insurer's statutory violation if the insured had no right to receive benefits under the policy and sustained no injury independent of a right to benefits.

         The supreme court reversed the lower courts' decisions to disregard the jury's answer to the contractual question, concluding that the answer was not immaterial. But given the lack of clarity in its prior precedent, the supreme court did not fault either party for the positions it took based on that precedent. Instead, the supreme court remanded the case for a new trial in the interest of justice, allowing both parties to present their cases with the benefit of the supreme court's clarification of the applicable law. See Tex. R. App. P. 60.3.

         With that as a backdrop, Redrick tried her case to a jury in October 2017. Like the jury in Menchaca, the jury in Redrick's case answered "No" to the first question asking whether State Farm had failed to comply with the policy. And, like the jury in Menchaca, the jury in Redrick's case responded "Yes" to a question asking whether State Farm had engaged in an unfair or deceptive act or practice. In connection with that finding, the jury awarded $10, 000 in actual damages which it based on "[t]he cost to repair or replace the roof on the Subject Property due to damages caused by wind and/or hail as a result of" the storm. The jury also awarded an additional $11, 000 after finding that State Farm acted knowingly, and it awarded Redrick $170, 000 for attorney fees through trial, $40, 000 for attorney fees for representation at the court of appeals, and up to $20, 000 for representation at the supreme court.

         Like the parties in Menchaca, neither Redrick nor State Farm objected to the verdict on the basis of conflicting answers. Instead, each party sought to have judgment entered in its favor. Redrick contended she should receive judgment based on the jury's finding that State Farm knowingly committed a deceptive practice that caused her damages. State Farm, for its part, argued based on Menchaca I that it was entitled to a take-nothing judgment because the jury found it did not fail to comply with the policy-thus necessarily finding that Redrick was not contractually entitled to the damages she sought to ...


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