Agredano v. State Farm Lloyds, 5:15-cv-1067-RCL

CourtUnited States District Courts. 5th Circuit. Western District of Texas
Docket Number5:15-cv-1067-RCL
Decision Date16 September 2021



No. 5:15-cv-1067-RCL

United States District Court, W.D. Texas, San Antonio Division

September 16, 2021



Jesus and Margaret Agredano sued their insurance carrier State Farm Lloyds ("State Farm") for refusing to pay a claim for wind and hail damage to their home. ECF No. 1-2. A jury ultimately found State Farm liable for breach of contract and awarded plaintiffs $13, 661.00 in damages. Jury Verdict, ECF No. 103. Both parties stipulated that the Court would address issues relating to attorneys' fees after the trial. ECF No. 84. Originally, the Court held that plaintiffs were entitled to attorneys' fees and statutory penalty interest under the Texas Prompt Payment of Claims Act ("TPPCA"). ECF No. 121. But after a Fifth Circuit decision-Chavez v. State Farm Lloyds, 746 Fed.Appx. 337 (5th Cir. 2018)-cast doubt on that holding, the Court granted a motion for reconsideration and held that plaintiffs were not entitled to attorneys' fees and statutory penalty interest as a matter of law. Mem. Op., ECF No. 127.

On appeal, the Fifth Circuit reversed the Court's holding in this case. See Agredano v. State Farm Lloyds, 975 F.3d 504 (5th Cir. 2020). Per Agredano and this Court's prior Memorandum Opinion, plaintiffs are-as a matter of law-entitled to attorneys' fees and statutory penalty interest under the TPPCA. The case now returns for the Court to determine the dollar amount of the judgment plaintiffs have secured. Plaintiffs filed a fee application in a Motion for Entry of Judgment. ECF No. 151. The parties subsequently filed a series of responses, replies, and supplemental briefs. See ECF Nos. 156, 157, 158, 159, 162, 164. For the reasons explained below, the Court will award plaintiffs attorneys' fees, statutory penalty interest, costs, and pre- and postjudgment interest for a total of $112, 219.58.


On September 23, 2015, Jesus and Margaret Agredano sued State Farm in Texas state court for failing to pay a claim on their homeowners' insurance policy. ECF No. 1-2 at 4. The Agredanos alleged that they suffered wind and hail damage to their home but that State Farm improperly refused to pay the full value of the claim. ECF No. 1-2 at 5-6. State Farm removed the case to the Western District of Texas. ECF No. 1 at 1. Though the Agredanos raised numerous claims, Judge David A. Ezra granted summary judgment against all but their breach-of-contract claim. ECF No. 56. Judge Ezra subsequently transferred the case to this Court. ECF No. 61.

At trial, a jury found State Farm liable for breach of contract and awarded the Agredanos $13, 661.00 in damages. ECF No. 103. Next came the payment dispute. Throughout this litigation, the Davis Law Group-a Houston law firm headed by Joshua P. Davis-has represented the Agredanos. Davis filed two motions claiming that plaintiffs were entitled, as a matter of law, to attorneys' fees and statutory penalty interest under the TPPCA. ECF Nos. Ill. 123; see also Tex. Ins. Code § 542.060. State Farm opposed these motions on the grounds that: (1) the Agredanos were not entitled to statutory penalty interest because they failed to mention the relevant statute, § 542.060 of the TPPCA, in their pleadings; (2) the excessive-demand doctrine precluded the Agredanos from recovering attorneys' fees; and (3) the fees requested were not "reasonable and necessary" for the litigation. See ECF Nos. 114, 125.

This Court has ruled twice on this payment dispute. Initially, the Court analyzed whether the plaintiffs' failure to mention the TPPCA's damages provision precluded their recovery of interest or fees under the statute. Mem. Op., ECF No. 121 at 6. The Court reasoned that Rule 54(c) of the Federal Rules of Civil Procedure still entitled plaintiffs, as a matter of law, to that recovery. Mem. Op., ECF No. 121 at 6; Final J., ECF No. 122 at 1. The Fifth Circuit then released an unpublished case stating that a plaintiff "could not continue to seek relief for TPPCA claims that had been dismissed on summary judgment. Chavez, 746 Fed.Appx. at 342-43. Unlike the Court, the panel in Chavez did not mention awarding interest or fees under Rule 54(c). See Id. State Farm then moved to reconsider the final judgment, ECF No. 124, leading the Court to hold that plaintiffs were not entitled to attorneys' fees or interest "because they did not adequately request damages under § 542 in their pleadings," ECF No. 127 at 4. See also Am. Final J., ECF No. 129.

The Fifth Circuit disagreed. In Agredano v. State Farm Lloyds, the panel explained that

[Plaintiffs] pleaded entitlement to an "18% [p]enalty [i]nterest pursuant to Ch. 542 of the Texas Insurance Code" and "[attorney's fees." The only relevant statute entitling an insured to an 18% penalty is § 542.60. While the pleading could have been more robust, the Twombly/Iqbal "plausibility" standard does not require magic words or detailed facts in most cases. ... Instead, it prohibits speculative claims which the request for a TPPCA penalty interest clearly is not

975 F.3d at 506 (citations omitted). The panel also expressly abrogated Chavez, noting that recent opinions by the Texas Supreme Court had clarified the elements of a valid TPPCA claim. Id. At 507 (citing Barbara Techs. Corp. v. State Farm Lloyds, 589 S.W.3d 806, 819 (Tex. 2019); Ortiz v. State Farm Lloyds, 589 S.W.3d 127, 135 (Tex. 2019)).

The case now returns to the Court on remand. In the motion before the Court, plaintiffs request $135, 418.44 in compensation for damages, attorneys' fees, statutory penalty interest, costs, and pre- and postjudgment interest. ECF No. 151-1 at 2. Plaintiffs update this request to $203, 202.83 in their latest filing, adding further attorneys' fees and contingent appellate fees. See ECF No. 162-1 at 2. For the reasons explained below, the Court finds plaintiffs are entitled to a total of $112, 219.58.


The Court's jurisdiction over this case stems from the federal diversity jurisdiction statute. 28 U.S.C. § 1332. As the Fifth Circuit has made clear, "[s]tate law controls both the award of and the reasonableness of fees awarded where state law supplies the rule of decision." Mathis v. Exxon Corp., 302 F.3d 448, 461 (5th Cir. 2002). Since Texas law governed the merits of this action, Texas law will direct the Court's analysis in this fee dispute. Id. Under Texas law, each party generally must pay its own attorneys' fees. Rohrmoos Venture v. UTSWDVA Healthcare, 578 S.W.3d 469, 483 (Tex. 2019). But a prevailing party may recover attorneys' fees if authorized by statute. Id. at 487. The relevant statute in this case is the TPPCA, Tex. Ins. Code § 542.001 et seq.

A. Attorneys' Fees

Texas law requires the Court to employ the "lodestar" method to calculate reasonable and necessary attorneys' fees. Rohrmoos Venture, 578 S.W.3d at 498. Under the lodestar method, the district court must determine "the reasonable hours worked" and the "reasonable hourly rate" for each attorney. Id. The fee applicant carries the burden of proof on these elements and must provide "sufficient evidence to support the fee award sought." Rohrmoos Venture, 578 S.W.3d at 502. Sufficient evidence includes, at a minimum, "evidence of (1) particular services performed, (2) who performed those services, (3) approximately when the services were performed, (4) the reasonable amount of time required to perform the services, and (5) the reasonable hourly rate for each person performing such services." Id. at 498.

District courts may deduct hours from a lodestar and generally do so in three situations. First, "a district court may reduce the number of hours awarded if the documentation is vague or incomplete." Rappaport v. State Farm Lloyds, No. 00-10745, 2001 WL 1467357, at *3 (5th Cir. 2001) (per curiam). Second, fees billed in pursuit of failed or "unrecoverable" claims are also deductible. Merritt Hawkins & Assoc, L.L.C. v. Gresham, 861 F.3d 143, 156 (5th Cir. 2017); Kinsel v. Lindsey, 526 S.W.3d 411, 427 (Tex. 2017). Finally, district courts may deduct time expended on unsuccessful or unnecessary pleadings, motions, discovery requests, or other court filings. See, e.g., Leroy v. City of Houston, 906 F.2d 1068, 1085-86 (5th Cir. 1990) (denying fees for hours expended on an unsuccessful motion for postjudgment interest).

By multiplying the reasonable hours by the reasonable rates charged for legal services, the district court produces a presumptively reasonable award-the lodestar-that should be modified only in exceptional cases. Rohrmoos Venture, 578 S.W.3d at 499-501. If "relevant factors indicate an adjustment is necessary to reach a reasonable fee in the case," a district court still retains discretion to adjust the lodestar estimate. El Apple I, Ltd. v. Olivas, 370 S.W.3d 757, 760 (Tex. 2012). But a court should not reference "considerations already incorporated" in its initial lodestar calculation when determining whether to adjust a fee award. Rohrmoos Venture, 578 S.W.3dat501.

B. Texas Prompt Payment of Claims Act

When an insurance claimant provides written notice of a claim to an insurer, the TPPCA imposes several procedural deadlines on the insurer. Within fifteen days, the insurer must acknowledge receipt of the claim, commence an investigation, and request "all items, statements, and forms that the insurer reasonably believes, at that time, will be required from the claimant." Tex. Ins. Code § 542.055(a). Once the insurer receives the requested information, two additional deadlines begin running. First, the insurer has fifteen days to notify the claimant in writing whether it will accept or reject the claim. Id. § 542.056(a). Second, the insurer must pay the claim within sixty days. Id. § 542.058(a). An insurer who violates any of these provisions must pay (1)...

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