Allison v. Fire Ins. Exchange

Citation98 S.W.3d 227
Decision Date19 December 2002
Docket NumberNo. 03-01-00717-CV.,03-01-00717-CV.
PartiesRonald ALLISON/Fire Insurance Exchange, Appellants, v. FIRE INSURANCE EXCHANGE, a Member of the Farmers Insurance Group/Mary Melinda Ballard and Ronald Allison, Individually and as Next Friends for Reese Allison, a Minor, Appellees.
CourtCourt of Appeals of Texas

Kendall C. Montgomery, Kendall Montgomery, P.C., Houston, J. Woodfin Jones Scott, Douglass & McConnico, LLP, Austin, William Fred Hagans, Paula Janecek, Hagans, Bobb & Burdine, Houston, Terry Scarborough, Hance, Scarborough, Wright, Ginsberg & Brusilow, L.L.P., Austin, Vincent Lee Marable III, Paul Webb, P.C., Wharton, for appellant-R.A.

Todd A. Hunter, Hunter & Handel, P.C., Corpus Christi, Stephen G. Tipps, Tynan Buthod, Baker & Botts, L.L.P., Houston, Joseph R. Knight, Susan Dillon Ayers, Bob E. Shannon, Baker & Botts, L.L.P., Austin, Robert F. Scheihing, Adami, Goldman & Shuffield, Inc., San Antonio, for Fire E.

Before Chief Justice ABOUSSIE, Justices PATTERSON and PURYEAR.

JAN P. PATTERSON, Justice.

In June 2001, a Travis County jury awarded a verdict for over thirty-two million dollars against Fire Insurance Exchange, a member of the Farmers Insurance Group ("FIE"), for its handling of Mary Melinda Ballard's1 homeowner's insurance claims, which began as a single claim for water damage to a hardwood floor and evolved to include mold contamination of the entire house and outbuildings. FIE contends in eleven issues on appeal that the evidence was legally and factually insufficient to support the jury's liability findings; the district court erred in denying transfer of venue to Hays County; the evidence was legally and factually insufficient to support the jury's findings that FIE failed to appoint a competent, independent appraiser and that the appraisal decision was rendered as a result of fraud, accident, or mistake; the district court abused its discretion in numerous evidentiary rulings; there was no evidence of a knowing violation; the punitive damages award is excessive; there was no evidence to support the mental anguish award; there was insufficient evidence to support the attorneys' fees award; and there was no basis for the statutory penalty under article 21.55 of the insurance code. See Tex. Ins.Code Ann. art. 21.55, § 6 (West Supp.2003).

We recognize the constraints on this Court in its review of this hotly disputed case and the importance of according the proper degree of deference to the fact finder. We have carefully reviewed the entire record. We hew to the record below despite the metamorphosis of the parties' theories on appeal. We hold that probative evidence supports the district court's denial of FIE's motion to transfer venue to Hays County. We further conclude that the district court did not abuse its discretion in the evidentiary rulings of which FIE complains. We also find sufficient evidence to uphold the jury's findings that FIE breached its duty of good faith and fair dealing toward Ballard and that FIE committed a Deceptive Trade Practices Act (DTPA) violation. We find insufficient evidence, however, to support the jury's findings of unconscionability or fraud. We additionally find insufficient evidence to support the jury's findings that FIE failed to appoint a competent, independent appraiser or that the appraisal decision was a result of fraud, accident, or mistake. Because the court's charge specified that findings of either a breach of the duty of good faith and fair dealing or a DTPA violation are sufficient to uphold the jury's award of actual damages, we affirm the actual damages award in part, in the amount of $4,006,320.72, in addition to prejudgment and postjudgment interest as stated in the final judgment. We reverse the award of $176,000 for Ballard's reasonable and necessary costs of the appraisal process.

We further conclude that there is no evidence to support the jury's finding that FIE "knowingly" breached its duty of good faith and fair dealing toward Ballard. Because a finding of a knowing violation is required to uphold punitive and mental anguish damages, we reverse the jury's awards for these damages and render judgment that Ballard take nothing for punitive and mental anguish damages. We uphold the district court's award of the article 21.55 statutory penalty in part and remand the penalty for recalculation in accordance with this opinion. We find sufficient evidence to support the award of attorneys' fees but cannot say that the amount of the award is reasonable, given our significant reduction of the jury's damages awards. Therefore, we remand the issue of attorneys' fees to the district court for further proceedings consistent with this opinion.

Ronald Allison, Ballard's husband, filed a separate appeal, contending that the district court erred in granting FIE's motion to exclude Allison's causation experts and in turn granting FIE's no-evidence motion for partial summary judgment pertaining to Allison's personal injury claims. Because we find no error in the district court's rulings, we affirm the district court's rulings in granting FIE's motion to exclude his causation experts and no-evidence motion for partial summary judgment pertaining to Allison's personal injury claims. Accordingly, we affirm the district court's judgment dismissing Allison's personal injury claims.

BACKGROUND

In 1990, Ballard bought a large house in Dripping Springs, Texas, for $275,000 in a foreclosure sale. The main house was approximately 7,400 square feet, with several outbuildings, including a nanny's apartment (also referred to as the groundskeeper's house), a garage, and a barn. In late 1992, Ballard began insuring the house with FIE. The amount of coverage remained steady over the next few years, except for cost-of-living adjustments. The coverage in late 1998 was $313,000 for the house and $187,800 for the contents.

Within a couple of years before the claims at issue, which began in December 1998, the Ballard house had a few plumbing leaks. In 1996 and 1997, Ballard filed two claims for plumbing leaks caused by frozen pipes; FIE paid $60,000 to $70,000 for the 1997 claim. She did not make another claim until December 1998 but continued to have plumbing leaks. In late 1997, Ballard had a toilet leak repaired in the downstairs half bathroom, which required another repair in January 1998. The leak caused damage to the bathroom carpet pad and wood subflooring, both of which were replaced in February 1998. The same month, Ballard notified Richard Roberts of Double R Floors that some of the boards in the downstairs hardwood floor were warping. Roberts took a moisture reading in the area of warping, which read nineteen to twenty percent. The normal moisture content of hardwood floors is around twelve percent. He then replaced some of the boards.

The plumber returned a third time to repair the half bath toilet leak in July 1998. In August 1998, Ballard notified Roberts of more hardwood floor warping and buckling. He took another moisture measurement, which was seventeen to eighteen percent, then replaced more boards. In October 1998, Ballard called Roberts again to report more hardwood floor damage. The moisture measurement was fifteen to sixteen percent, and Roberts replaced more boards. Roberts examined the floor again in December 1998 and took a moisture reading of fourteen to fifteen percent. At that time, Roberts said that the damage was too extensive to do any more spot repairs. He recommended that Ballard file a claim under her homeowner's insurance policy.

On December 17, 1998, Ballard filed a claim with FIE for the water damage to the hardwood floor. An outside adjuster inspected the floor on December 22 and at first opined that the damage was caused by foundation settling, which is not covered under the homeowner's policy. After seeing two areas of water damage, he reconsidered and requested plumbing tests. The claim was assigned to Theresa McConnell, an adjuster in FIE's Austin foundation claims office, who received the file on December 30, 1998. McConnell's original estimate of the claim was around $100,000, and her level of authority was $20,000.

On the same day, the Gerloff Company, a plumbing contractor, performed tests at FIE's request and found no leaks. McConnell contacted Jeff Jackson, a civil engineer, to determine the amount and cause of damage to the hardwood floor. In the meantime, Ballard obtained bids to replace the hardwood floor, ranging from approximately $89,000 to $171,000. The $89,000 bid, from Boatright Floors, increased to $127,950 after Ballard requested that the floor be custom made, not manufactured, as was the original floor.

McConnell and Jackson went to the Ballard home on January 7, 1999, so that Jackson could inspect the damage. Jackson found two sources of moisture, one in the half bathroom and one around the refrigerator. On January 11, McConnell sent a letter to Ballard stating that "complete plumbing tests of your residence were conducted by Gerloff Co., Inc. No leaks were located in the plumbing system of your residence." On January 12, Jackson requested additional testing of the moisture sources. The additional test showed that the moisture level of the floor was twelve percent. Ballard sent a letter to McConnell expressing concern that the buckled floors presented a tripping hazard; McConnell suggested temporary repairs while the claim was being investigated, including covering the areas with carpet or replacing the buckled pieces with plywood. Ballard agreed to carpeting the entire floor or replacing the boards in "trouble" areas, but the temporary repairs were never made.

McConnell requested an appraisal of the house by an independent appraiser because she was concerned that the house was underinsured. The appraiser valued the house at...

To continue reading

Request your trial
83 cases
  • Paxton v. City of Dall.
    • United States
    • Supreme Court of Texas
    • February 3, 2017
    ...(reversing bad-faith verdict for legal insufficiency because insurer reasonably relied on expert report); Allison v. Fire Ins. Exch., 98 S.W.3d 227, 249–50 (Tex.App.-Austin 2002, pet. granted, judgm't vacated w.r.m.) (affirming bad-faith verdict after reviewing insurer's reasons for delay a......
  • City of Keller v. Wilson
    • United States
    • Supreme Court of Texas
    • September 2, 2005
    ...no pet.) (reversing bad-faith verdict for legal insufficiency because insurer reasonably relied on expert report); Allison v. Fire Ins. Exch., 98 S.W.3d 227, 249-50 (Tex.App.-Austin 2002, pet. granted, judgm't vacated w.r.m.) (affirming bad-faith verdict after reviewing insurer's reasons fo......
  • Montgomery Mutual v. Chesson
    • United States
    • Court of Special Appeals of Maryland
    • May 23, 2007
    ...144, 549 P.2d 1240, to testimony regarding the relationship between mold exposure and sick building syndrome); Allison v. Fire Ins. Exchange, 98 S.W.3d 227 (Tex.App.2002) (applying Texas' Robinson-Daubert test to address a medical expert's theory that mold exposure led to adverse health eff......
  • In re Subpoena Issued to Commodity Futures Trading
    • United States
    • U.S. District Court — District of Columbia
    • April 28, 2005
    ...not always admissible); Kaeding v. W.R. Grace & Co.-Conn., 289 Mont. 343, 961 P.2d 1256, 1261 (1998) (same); Allison v. Fire Ins. Exch., 98 S.W.3d 227, 259 (Tex.App.2002) (although discussions in formal alternative dispute resolution proceedings are generally confidential in Texas, evidence......
  • Request a trial to view additional results
10 books & journal articles
  • Table of Cases
    • United States
    • James Publishing Practical Law Books Archive Qualifying & Attacking Expert Witnesses - 2015 Contents
    • August 4, 2015
    ...§347 Allen v. Pennsylvania Eng ’ g Corp. , 102 F.3d 194, 195-196 (5th Cir. 1996), §§521.2, 531.1 Allison v. Fire Insurance Exchange 98 S.W. 3d 227 (Ct. App. Tex. 2002), §521.2 Allstate Ins. Co. v. Sunbeam Corp. , 53 F.3d 804 (7th Cir. 1995), §424.10 Alma v. Manufacturers Hanover Trust , 684......
  • Commonly Used Experts
    • United States
    • James Publishing Practical Law Books Archive Qualifying & Attacking Expert Witnesses - 2019 Contents
    • August 4, 2019
    ...These experts provided opinions as to causation. Shortly thereafter the Texas Court of Appeals in Allison v. Fire Insurance Exchange 98 S.W. 3d 227 (Ct. App. Tex. 2002) held that the trial court did not abuse its discretion by COMMONLY USED EXPERTS §521 Qඎൺඅංൿඒංඇ඀ ൺඇൽ Aඍඍൺർ඄ංඇ඀ Eඑඉൾඋඍ Wංඍඇൾ......
  • Table of Cases
    • United States
    • James Publishing Practical Law Books Texas DTPA Forms & Practice
    • March 31, 2016
    ...Towing Service v. Mitchell , 833 S.W.2d 577 (Tex. App.—Dallas, 1992, no writ), §§1.02.4.1, 1.02.4.2 Allison v. Fire Insurance Exchange , 98 S.W.3d 227, 244 (Tex. App.—Austin 2002, no pet.), §5.14 Allstate Ins. Co. v. Watson , 876 S.W.2d 145, 149 (Tex. 1994), §§11.02.1, 11.03.2 Alvarado v. B......
  • Table of Cases
    • United States
    • James Publishing Practical Law Books Archive Qualifying & Attacking Expert Witnesses - 2016 Contents
    • August 4, 2016
    ...§347 Allen v. Pennsylvania Eng ’ g Corp. , 102 F.3d 194, 195-196 (5th Cir. 1996), §§521.2, 531.1 Allison v. Fire Insurance Exchange 98 S.W. 3d 227 (Ct. App. Tex. 2002), §521.2 Allstate Ins. Co. v. Sunbeam Corp. , 53 F.3d 804 (7th Cir. 1995), §424.10 Alma v. Manufacturers Hanover Trust , 684......
  • Request a trial to view additional results

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT