Graber v. State Farm Lloyds
| Decision Date | 15 June 2015 |
| Docket Number | CIVIL ACTION NO. 3:13-CV-2671-B |
| Parties | KENNETH GRABER, Plaintiff, v. STATE FARM LLOYDS, Defendant. |
| Court | U.S. District Court — Northern District of Texas |
Before the Court is Defendant State Farm Lloyds' ("State Farm") Motion for Summary Judgment (doc. 51), filed February 6, 2015. For the reasons that follow, the Court concludes that the motion should be and hereby is GRANTED in part and DENIED in part.
This cases arises over a dispute regarding State Farm's handling of Plaintiff's claim for wind and hail damage under a homeowners insurance policy. On or about June 15, 2012, Plaintiff filed a claim with State Farm under State Farm's Homeowners Policy (the "Policy") for damage that his house sustained during a recent hail storm. Doc. 54, Def.'s Ex. B, Boren Dec. ¶ 5, App. 53. Shortly after receiving notice of Plaintiff's claim, State Farm contacted Plaintiff to arrange an inspection of his home. Def.'s Ex. B-2, State Farm Activity File Notes Excerpts, App. 63-64. On July 17, 2012, a State Farm adjuster inspected Plaintiff's house and prepared an estimate to repair the hail damage that totaled $3,443.96, including $272.51 to replace damaged contents. Id. Based on this estimate, and after applying depreciation of $305.83 and accounting for Plaintiff s $2,681 deductible, StateFarm issued a payment to Plaintiff in the amount of $729.64. Def.'s Ex. B-1, Letter Enclosing Payment of Claim, App. 55-56.
Apparently unsatisfied with State Farm's initial estimate and payment, Plaintiff requested on August 1, 2012 that State Farm send a different adjuster to inspect his property. Def.'s Ex. B-2, App. 63. State Farm complied with Plaintiff's request and, on August 24, 2012, dispatched a new adjuster to complete an independent inspection of the damage to Plaintiff's home. Def.'s Ex. B-2, App. 61. The adjuster found damage to the flashing on the front porch that was not included in the original estimate. Id. Accordingly, on August 25, 2012, State Farm issued a supplemental payment to Plaintiff in the amount of $121.77. Def.'s App. 53, Ex. B, Boren Dec. ¶ 6.
Several months later, on March 20, 2013, State Farm received a DTPA demand letter from Plaintiff. Def.'s Ex. B-3, DTPA Demand Letter, App. 65-72. In response, State Farm inspected the house for a third time, but found no hail damage other than that previously included in State Farm's estimates. Def.'s Ex. B-2, App. 59. State Farm responded to Plaintiff's demand letter on April 17, 2013. Def.'s Ex. B-4, App. 73.
Plaintiff filed suit against State Farm on or about May 3, 2013 in the 134th Judicial District Court of Dallas County, asserting claims for breach of contract, breach of the common law, various violations of Chapter 541 of the Texas Insurance Code and Deceptive Trade Practices Act ("DTPA"), and violations of the prompt payment provisions set forth in Chapter 542 of the Texas Insurance Code. Doc. 2, App. to Def.'s Notice of Removal 2-23, Original Petition. State Farm removed the suit to this Court based on the Court's diversity jurisdiction. Doc. 1, Notice of Removal.
Thereafter, on February 14, 2014, Plaintiff demanded appraisal under the Policy and appointed an appraiser. Def.'s Ex. B-5, Letter Demand for Appraisal, App. 74. State Farm respondedto Plaintiff's demand on March 5, 2014 and appointed an appraiser of its own. Def.'s Ex. B-6, State Farm Letter Appointing Appraiser, App. 75. The two appraisers then agreed to the selection of an umpire. Def.'s Ex. B-7, Selection of Umpire Agmt., App. 76.
On September 30, 2014, the appraisers returned an appraisal award in the amount of $12,898.59 based on the replacement cost value of the damaged property. Def.'s Ex. B-8, Appraisal Award, App. 77-79. State Farm tendered payment of the award to Plaintiff on October 3, 2014, less the deductible and prior payments. Def.'s Ex. B-9, Letter Issuing Appraisal Award, App. 80-81. Consequently, State Farm now moves for summary judgment on the grounds that Plaintiff's invocation of the appraisal process and State Farm's timely payment of the appraisal award preclude Plaintiff's claims as a matter of law. Doc. 51, Mot. for Summ. J.; Doc. 52, Def.'s Br. in Support 1-2.
Federal Rule of Civil Procedure 56(a) provides that summary judgment is appropriate "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). The substantive law governing a matter determines which facts are material to a case. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). The summary judgment movant bears the burden of proving that no genuine issue of material fact exists. Latimer v. Smithkline & French Labs, 919 F.2d 301, 303 (5th Cir. 1990). However, if the non-movant ultimately bears the burden of proof at trial, the summary judgment movant may satisfy its burden by pointing to the mere absence of evidence supporting the non-movant's case. Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986).
Once the summary judgment movant has met this burden, the non-movant must "go beyondthe pleadings and designate specific facts showing that there is a genuine issue for trial." Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994) (per curiam) (citing Celotex, 477 U.S. at 325). In determining whether a genuine issue exists for trial, the court will view all of the evidence in the light most favorable to the non-movant. Munoz v. Orr, 200 F.3d 291, 302 (5th Cir. 2000). But the non-movant must produce more than "some metaphysical doubt as to the material facts." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986). If the non-movant is unable to make such a showing, the court must grant summary judgment. Little, 37 F.3d at 1076.
State Farm moves for summary judgment on each of Plaintiff's claims for relief. First, State Farm moves for summary judgment on Plaintiff's breach of contract claim on the grounds that State Farm's payment of the appraisal award estops Plaintiff from maintaining a breach of contract claim. Def.'s Br. 6-7. Second, State Farm seeks summary judgment on Plaintiff's extra-contractual tort claims, asserting that these claims cannot stand when the breach of contract claim fails. Def.'s Br. 7-9. Finally, State Farm argues that it is entitled to summary judgment on Plaintiff's prompt payment claim because its full and timely payment of the appraisal award precludes an award of penalty interest under the Insurance Code's prompt payment provisions as a matter of law. Def.'s Br. 9-10. The Court addresses each of these requests for summary judgment, in turn, below.
State Farm first moves for summary judgment on Plaintiff's breach of contract claim. To prevail on a breach of contract claim under Texas law, a plaintiff must prove: (1) there was a valid contract; (2) plaintiff performed his or her obligations under the contract; (3) defendant breachedthe contract; and (4) plaintiff suffered damages as a result of defendant's breach. Smith Int'l, Inc. v. Egle Group, LLC, 490 F.3d 380, 387 (5th Cir. 2007). In his complaint, Plaintiff claims that State Farm breached the subject insurance policy "by failing to pay Plaintiff benefits relating to the cost to properly repair Plaintiff's property, as well as for related losses." Doc. 15, Second Amended Complaint ("SAC") ¶ 24. As evidence, Plaintiff points to the fact that the award returned by the appraiser was several multiples greater than the initial estimate prepared and paid by State Farm.1 Pl.'s Resp. Br. 16, 20-22,
As State Farm correctly points out, however, it is well-settled under Texas law that the insured "may not use the fact that the appraisal award was different than the amount originally paid as evidence of breach of contract." Breshears v. State Farm Lloyds, 155 S.W.3d 340, 343 (Tex. App.—Corpus Christi 2004, pet. denied); see also Scalise v. Allstate Texas Lloyds, No. 7:13-CV-178, 2013 WL 6835248, at *5 (S.D. Tex. Dec. 20, 2013) (); Blum's Furniture Co. v. Certain Underwriters at Lloyds London, No. Civ. A. H-09-3479, 2011 WL 819491, at *3 (S.D. Tex. Mar. 2, 2011), aff'd 459 F. App'x 366 (5th Cir. 2012) () (internal quotations and citations omitted); Church on the Rock North v. Church Mut. Ins., Co., No. 3:10-CV-0975-L, 2013 WL 497879, at *6 (N.D. Tex. Feb. 11, 2013) (). The reason for this defense is to prevent the insured from taking advantage of the binding appraisal process to determine the value of its claim and then, after the insurer fully pays the appraisal award, suing the insurer for its initial failure to pay. Breshears, 155 S.W.3d at 343 () (quoting Allison v. Fire Ins. Exch., 98 S.W.3d 227, 253 (Tex. App.—Austin 2002, pet. abated). The defense applies with special force where, as here, "the contract [the insured] claim[s] is being breached provides for resolution of disputes through appraisal." Id.
In this case, the undisputed summary judgment evidence shows that Plaintiff...
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