Lee v. Liberty Ins. Corp.

• Decision Date: 30 September 2021
• Docket Number: Civil Action 3:19-CV-321-L
• Parties: SANG LEE, Plaintiff, v. LIBERTY INSURANCE CORPORATION and DAVID YOON, Defendants.
• Court: U.S. District Court — Northern District of Texas

SANG LEE, Plaintiff,
v.
LIBERTY INSURANCE CORPORATION and DAVID YOON, Defendants.

Civil Action No. 3:19-CV-321-L

United States District Court, N.D. Texas, Dallas Division

September 30, 2021

MEMORANDUM OPINION AND ORDER

Sam A. Lindsay United States District Judge

Before the court are Defendant Liberty Insurance Corporation's (“Liberty” or “Defendant”) Motion for Summary Judgment (Doc. 32), filed January 6, 2021; Defendants Liberty and David Yoon's Motion to Dismiss David Yoon with Prejudice (“Defendants' Motion to Dismiss”) (Doc. 38), filed January 21, 2021; Plaintiff Sang Lee's Motion for Partial Summary Judgment (Doc. 45), filed January 27, 2021; and Plaintiff's Motion for Leave to File Supplemental Response (“Motion for Leave”) (Doc. 66), filed June 7, 2021.

After considering the parties' motions, briefs, admissible summary judgment evidence, file, record, and applicable law, the court grants Plaintiff's Motion for Leave to File Supplemental Response (Doc. 66) and directs the clerk of the court to file as a separate document Plaintiff's Supplemental Response (Doc. 66-2); grants Defendants' Motion to Dismiss (Doc. 38) and dismisses with prejudice all claims against David Yoon; grants in part Liberty's Motion for Summary Judgment (Doc. 32) and dismisses with prejudice all claims asserted against Liberty, except for Plaintiff's fraudulent inducement claim; and denies Plaintiff's Motion for Partial Summary Judgment (Doc. 45).

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I. Factual and Procedural Background^[1]

Sang Lee (“Mr. Lee” or “Plaintiff”) originally filed this action on January 2, 2019, against Liberty and David Yoon (“Defendants”), asserting claims for breach of contract, alleged violations of the Texas Deceptive Trade Practices Act (“DTPA”); breach of the common law duty of good faith and fair dealing; breach of the Texas Prompt Payment of Claims Act (“TPPCA”); breach of express or implied warranty; and fraud. Mr. Lee's claims arise from Liberty's allegedly wrongful denial or underpayment of his claim to recover benefits under a homeowners' insurance policy (“the Policy”) for weather related damages to his house located at 202 Old Gate Lane, Sunnyvale, Texas (“Property”).

Mr. Lee reported the claim to Liberty on June 13, 2017, and Liberty sent adjuster David Yoon (“Mr. Yoon”) to inspect the Property on June 22, 2017. That same day, Mr. Yoon prepared an estimate of the damage that totaled $19, 779.34 for replacement cost value (“RCV”) and $17, 429.47 for actual cost value (“ACV”). After deducting depreciation ($2, 349.87) and the Policy deductible ($3, 548) from the RCV of $19, 779.34, Liberty issued a payment of $13, 881.47 to Mr. Lee on June 22, 2017, and sent a letter to him explaining how his “payment for covered damages was calculated.” Def.'s Summ. J. App. 18. Mr. Lee contends that this payment by Liberty amounts to a wrongful denial of his claim because he ultimately had to pay a contractor more than this amount to repair the damage to his Property. He also contends that Liberty's “June 22, 2017 denial letter failed to give the reasons for rejecting [his] claim.” Pl.'s Summ. J. Resp. App. 25 ¶ 3.

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There is no evidence that Mr. Lee disputed the $13, 881.47 payment or requested additional money under his Policy before June 18, 2018, when his contractor Ridgestone Restoration, LLC (Ridgestone”) submitted a “Supplement[al] Request and . . . “Final Invoice” to Liberty on June 18, 2018, for $5, 220.33 in additional or supplemental costs not covered by Liberty's first payment. Def.'s Summ. J. App. 3, 20-22. Mr. Lee states in conclusory fashion in his declaration that he “complained to Liberty . . . but his complaints were ignored”; however, he does not indicate when he complained to Liberty or explain the nature of his complaint. Pl.'s Summ. J. Resp. App. 25 ¶ 3.

After reviewing the documentation provided by Ridgestone, Liberty agreed that more was owed. On June 29, 2018, Liberty issued a second payment to Mr. Lee in the amount of $2, 807.05. In a letter on the same date, Liberty explained that this “payment for covered damages was calculated” using an increased estimate of $20, 236.52 (RCV) and $17, 832.36 (ACV) and subtracting depreciation ($2, 404.16), the Policy deductible ($3, 548), and the prior payment ($13, 881.47) from the revised RCV of $20, 236.52. See Def.'s Summ. J. App. 3, 22-23. Plaintiff subsequently brought this action against Liberty and Mr. Yoon in the 44th Judicial District Court, Dallas County, Texas. It is not clear from the admissible summary judgment evidence what transpired in the several months between June 29, 2018, when Liberty made the second payment to Mr. Lee after the repairs to his Property were completed, and January 10, 2019, when Liberty was served with a citation and copy of Plaintiff's Original Petition in the underlying state court action.

The Appraisal Award issued on December 7, 2020, after both appraisers signed the award. On December 14, 2020, Liberty forwarded a check to Mr. Lee's attorney in the amount of $5, 883.43 for next day delivery and received confirmation the following day that the letter was delivered. Id. at 34, 42-46. On January 14, 2021, Mr. Lee's attorney rejected and returned the

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payment, arguing that it was only a “partial payment” that it did not account for penalty interest and attorney's fees that Plaintiff was entitled to under the TPPCA. Pl.'s Summ. J. Resp. App. 29, 34.

Notwithstanding the $24, 589.42 (RCV) Appraisal Award, Mr. Lee continues to maintain that he spent $25, 257.95 to repair the storm damage to his Property, and he contends that Liberty failed to attempt in good faith to settle his claim quickly by not paying this amount in June 2017. Id. at 25-26. In addition, he states in his declaration that Liberty has yet to pay him for costs he incurred in the amount of $4, 209.66 (the amount of his contractor's overhead and profit) and “$1, 500 for pre-appraisal damage assessments.” Id. at 26.

On February 8, 2019, Liberty removed the action to federal court based on diversity jurisdiction. On January 6, 2021, Liberty moved for summary judgment on all of Plaintiff's claims. On January 21, 2021, Defendants moved to dismiss all claims against insurance agent David Yoon based on Liberty's formal, written notice to Plaintiff of its election to accept whatever liability Mr. Yoon might have to Plaintiff. Plaintiff did not respond to the motion to dismiss Mr. Yoon. On January 27, 2021, Plaintiff moved for summary judgment on his TPPA claim.

In February 2020, the parties engaged in settlement discussions in an attempt to resolve the difference between what Liberty had paid to date and what Plaintiff contended was still owed under the Policy (approximately $5, 000, plus attorney's fees and expenses). On February 18, 2020, Liberty demanded that Plaintiff select an appraiser in accordance with the Policy within twenty days. Plaintiff did not designate an appraiser until April 20, 2020, after the court entered an order on April 18, 2020, granting Liberty's March 4, 2020 motion for abatement of the case pending completion of the appraisal process, which was opposed by Plaintiff. Def.'s Summ. J. App. 40.

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On June 7, 2021, approximately four months after briefing on the parties' summary judgment motions was complete, Plaintiff moved for leave to file a supplemental response to Liberty's summary judgment motion to address the effect of recent Texas Supreme Court authority on his TPPA claim. Liberty opposes the motion for leave.

II. Defendants' Motion to Dismiss (Doc. 38)

Defendants contend that all claims against Mr. Yoon should be dismissed with prejudice in light of Liberty's written notice to Plaintiff regarding its election to accept whatever liability Mr. Yoon might have to Plaintiff. Defendants contend that, under Texas law, and in particular under Texas Insurance Code § 542A.006(b), after such an election, “no cause of action exists against the agent.” Defendants, therefore, assert that no cause of action exists against Mr. Yoon, as Liberty's insurance agent. The court agrees. As noted, Plaintiff did not respond to the motion to dismiss, and the court determines that Defendants are entitled to dismissal of Plaintiff's claims against Mr. Yoon for the reasons stated in their motion. Accordingly, the court grants Defendant's Motion to Dismiss (Doc. 38) with respect to Mr. Yoon and dismisses with prejudice all claims asserted against him by Plaintiff in this action.

III. Liberty's Motion for Summary Judgment (Doc. 32)

Liberty contends that it is entitled to summary judgment on Plaintiff's breach of contract claim and all of his remaining claims, which it refers to collectively as Plaintiff's extra-contractual claims. Liberty contends that its payment of the appraisal award estops Plaintiff from maintaining a contract claim against it. Liberty further asserts that Plaintiff's remaining extra-contractual claims fail because: (1) generally, there can be no extra-contractual claims without a breach of contract; (2) Plaintiff has not suffered an independent injury beyond the loss of benefits under the Policy; and (3) Liberty's pre-appraisal payment was timely and reasonable.

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A. Motion for Summary Judgment Standard

Summary judgment shall be granted when the record shows that there is no genuine dispute as to any material fact and that the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(a); Celotex Corp. v. Catrett, 477 U.S. 317, 323-25 (1986); Ragas v. Tennessee Gas Pipeline Co., 136 F.3d 455, 458 (5th Cir. 1998). A dispute regarding a material fact is “genuine” if the evidence is such that a reasonable jury could return a verdict in favor of the nonmoving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). When ruling on a motion for summary judgment, the court is required to view all facts and inferences in the light most favorable to the nonmoving party and resolve all...