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Barbara Techs. Corp. v. State Farm Lloyds

Supreme Court of Texas

February 20, 2019, Argued; June 28, 2019, Opinion Delivered

NO. 17-0640

Opinion

 [*809]  In this case, we consider competing motions for summary judgment that present the issue of whether an insured party can prevail on its claim for damages for delayed payment pursuant to the Texas Prompt Payment of Claims Act (TPPCA), see Tex. Ins. Code ch. 542, when it is undisputed that the insurer investigated the claim, rejected it, invoked the policy's provision for an appraisal process, and ultimately paid the insured in full in accordance with the appraisal. We hold that the insurer's payment based on the appraisal was neither an acknowledgment of liability under the policy nor an award of actual damages. Because the insured has not established that it is entitled to TPPCA prompt pay damages as [**3]  a matter of law and the insurer likewise has not established that it can owe no TPPCA damages as a matter of law, we reverse the court of appeals' judgment and remand the case to the trial court for further proceedings.

I. Background

Barbara Technologies Corporation contracted with State Farm Lloyds for property insurance covering Barbara Tech's commercial property in San Antonio. The insurance policy covered damage resulting from wind and hail. A wind and hail storm damaged Barbara Tech's property on March 31, 2013. On October 17, 2013, Barbara Tech filed a claim with State Farm pursuant to the insurance policy, requesting coverage of the cost of repairs. State Farm inspected the property about two weeks later. State Farm denied Barbara Tech's claim on November 4, 2013, stating that the property sustained $3,153.57 in damages, which was less than Barbara Tech's $5,000 deductible under the policy. Barbara Tech requested a second inspection on February 21, 2014. State Farm obliged and conducted another inspection on March 4, 2014, finding no additional damage.

Barbara Tech filed suit against State Farm on July 14, 2014, alleging violations of the TPPCA, among other claims. State Farm invoked [**4]  the appraisal provision under the policy on January 9, 2015.1 The  [*810]  appraisal provision allowed either party to demand an appraisal of the loss, in which each party would select its own appraiser, with an umpire to settle any dispute between the appraisers. On August 18, 2015, approximately seven months after invocation of the appraisal provision, the appraisers agreed to an appraisal value of $195,345.63. State Farm received the appraisal award on August 19, 2015, and then paid $178,845.25—the appraisal value less depreciation and the deductible—on August 25, 2015. Barbara Tech received and accepted the payment and amended its petition to include only claims for violations of the TPPCA2—specifically, Barbara Tech claimed statutory damages under Texas Insurance Code chapter 542 for State Farm's alleged failure to comply with statutory deadlines for acknowledging receipt of the claim, commencing an investigation of the claim, notifying Barbara Tech of its rejection of the claim, and paying the claim. See Tex. Ins. Code §§ 542.055(a)(1)-(3), .056(a), .058(a), .060. Barbara Tech then moved for traditional summary judgment, asserting that, as a matter of law, State Farm violated the TPPCA by failing to pay the claim within [**5]  the TPPCA's sixty-day time limit and therefore owed TPPCA damages. Id. §§ 542.058, .060. State Farm filed a cross-motion for summary judgment, asserting that it did not violate the TPPCA as a matter of law because it timely paid the appraisal award and was not liable under the policy.

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589 S.W.3d 806 *; 2019 Tex. LEXIS 687 **; 2019 WL 2710089

BARBARA TECHNOLOGIES CORPORATION, PETITIONER, v. STATE FARM LLOYDS, RESPONDENT

Subsequent History: Rehearing denied by Barbara Techs. Corp. v. State Farm Lloyds, 2019 Tex. LEXIS 1225 (Tex., Dec. 13, 2019)

Prior History:  [**1] ON PETITION FOR REVIEW FROM THE COURT OF APPEALS FOR THE FOURTH DISTRICT OF TEXAS.

Barbara Techs. Corp. v. State Farm Lloyds, 566 S.W.3d 294, 2017 Tex. App. LEXIS 3414 (Tex. App. San Antonio, Apr. 19, 2017)

CORE TERMS

insurer, appraisal, damages, appraisal process, rejected claim, deadlines, appraisal award, claimant, pays, benefits, attorney's fees, amount of loss, matter of law, insurance policy, accepts, summary judgment, invalid, trial court, contractual, statutory interest, parties, business day, unconditionally, invoked, notify, pay interest, investigated, policy benefits, sixty days, adjudicated

Civil Procedure, Summary Judgment, Motions for Summary Judgment, Cross Motions, Appeals, Standards of Review, De Novo Review, Summary Judgment Review, Standards of Review, Governments, Legislation, Interpretation, Insurance Law, Liability & Performance Standards, Bad Faith & Extracontractual Liability, Payment Delays & Denials, Good Faith & Fair Dealing, Payments, Coverage, Real Property, Appraisals, Claim, Contract & Practice Issues, Remedies, Damages, Consequential Damages