Morakabian v. Allstate Vehicle & Prop. Ins. Co.

Decision Date30 March 2023
Docket NumberCIVIL 4:21-CV-100-SDJ
CourtU.S. District Court — Eastern District of Texas



Came on for consideration the Report and Recommendation (“Report”) of the United States Magistrate Judge in this action, (Dkt. #66), this matter having been heretofore referred to the Magistrate Judge pursuant to 28 U.S.C. § 636 and Local Rule CV-72, (Dkt. #14). In the Report, the Magistrate Judge recommended that the Court grant Defendant Allstate Vehicle and Property Insurance Company's (“Allstate”) Motion for Summary Judgment. (Dkt. #32). Plaintiff Kourosh Morakabian timely filed objections, (Dkt. #68), and Allstate responded to Morakabian's objections, (Dkt. #72).

The Court has conducted a de novo review of the objections and the portions of the Report to which Morakabian specifically objects, and the Court is of the opinion that the findings and conclusions of the Magistrate Judge are correct and that the objections are without merit as to the ultimate findings of the Magistrate Judge. The Court hereby adopts the findings and conclusions of the Magistrate Judge as the findings and conclusions of the Court.

I. Background

Morakabian filed a claim with Allstate on his homeowner's insurance policy following damage to his property caused by a storm. Initially, Allstate refused Morakabian's claim. Morakabian then filed suit in the 397th District Court of Grayson County, Texas, which Allstate removed to this Court. (Dkt. #1). During the pendency of these proceedings Morakabian invoked his right to an appraisal under the insurance policy. Morakabian's appraiser and an umpire-over the objections of Allstate's appraiser-determined that Morakabian was entitled to payment on his claim.

Allstate subsequently paid Morakabian two checks-the first being a payment of $35,577.44 to cover the signed appraisal award (Dkt. #32 at 12), and the second being a payment of $4,699.00 to cover “any additional interest [Morakabian] could possibly allege to be owed.” (Dkt. #32-1 at 75). Morakabian deposited both checks. (Dkt. #31 at 77-85). Allstate indicated that [t]he payments are in no way an admission of liability on the part of Allstate and Allstate denies any liability in relation to the handling of this claim.” (Dkt. #32-1 at 76).

Morakabian's operative amended complaint alleges (1) breach of contract, (2) failure of Allstate to promptly pay the claim under Chapter 542 of the Texas Insurance Code, also referred to as the Texas Prompt Payment of Claims Act (“TPPCA”), and (3) bad faith in violation of Chapter 541 of the Texas Insurance Code. (Dkt. #9 at 7-9). Morakabian also seeks his attorney's fees incurred litigating this matter. (Dkt. #9 at 9-10).

Allstate filed a motion for summary judgment on all claims, (Dkt. #32 at 2), and Morakabian subsequently nonsuited his breach of contract and Chapter 541 claims, (Dkt. #33 at 2). Accordingly, the only claim before the Court is Morakabian's TPPCA claim. Newton v. State Farm Lloyds, No. 4:21-CV-322, 2022 WL 2195464, at *2 (E.D. Tex. May 17, 2022) (citation omitted) (recommending dismissal of claims that plaintiff “concedes or otherwise abandons”), report and recommendation adopted, 2022 WL 2195019 (E.D. Tex. June 17, 2022). Following extensive briefing and oral argument, the Magistrate Judge recommended granting Allstate's summary-judgment motion.

II. Legal Standard

A district court reviews the findings and conclusions of a magistrate judge de novo only if a party objects within fourteen days after being served with the report and recommendation. FED. R. CIV. P. 72(b)(2)-(3). To challenge a magistrate judge's report, a party must specifically identify those findings to which it objects. “Frivolous, conclusive or general objections need not be considered by the district court.” Nettles v. Wainright, 677 F.2d 404, 410 n.8 (5th Cir. 1982) (en banc), overruled on other grounds by Douglass v. United Servs. Auto. Ass'n, 79 F.3d 1415 (5th Cir. 1996) (en banc). “And objections that simply rehash or mirror the underlying claims addressed in the report are not sufficient to entitle the party to de novo review.” Thompson v. Pruett, No. 4:21-CV-371, 2022 WL 989461, at *1 (E.D. Tex. Mar. 31, 2022).

III. Discussion

The TPPCA provides procedural guardrails and deadlines on insurers to “promote the prompt payment of insurance claims.” TEX. INS. CODE § 542.054. As detailed in the Report, recent amendments to the TPPCA altered the amount of damages available for any first-party claim “made by an insured under an insurance policy providing coverage for real property” that “arises from damage to or loss of covered property caused” by hail, wind, or rainstorm. TEX. INS. CODE § 542A.001(2). For such claims, the statutory interest rate “on the amount of the claim” is calculated as the amount prescribed by the relevant provision of the Texas Finance Code added to a base of five percent per annum. TEX. INS. CODE § 542.060(c). Further, statutory attorney's fees are limited to the lesser of the amount of attorney's fees (1) “supported at trial” or (2) “that may be awarded to the claimant under other applicable law” or (3) as calculated by the following formula:

(A) dividing the amount to be awarded in the judgment to the claimant for the claimant's claim under the insurance policy for damage to or loss of covered property by the amount alleged to be owed on the claim for that damage or loss in a notice given under this chapter; and
(B) multiplying the amount calculated under Paragraph (A) by the total amount of reasonable and necessary attorney's fees supported at trial by sufficient evidence and determined by the trier of fact to have been incurred by the claimant in bringing the action.

TEX. INS. CODE § 542A.007(a).

The parties agree that these amendments apply to Morakabian's TPPCA claim, but disagree as to their effect. The Report concluded that Morakabian lacks any cognizable TPPCA claim for either statutory interest or statutory attorney's fees. Morakabian objects to the Report's conclusion on both issues. Following a de novo review, the Court concludes that Morakabian's objections lack merit.

A. Morakabian's First Objection

First, Morakabian objects to the Report's conclusion that Allstate's $4,699.00 payment to Morakabian forecloses Morakabian's eligibility for statutory interest under the TPPCA. Morakabian does not object to the Report's determination that $4,699.00 exceeds the statutorily permitted interest available under the TPPCA. (Dkt. #66 at 13-14). Rather, Morakabian contends that Allstate's “gratuitous” $4,699.00 payment does not foreclose his ability to seek interest under the TPPCA, and he cites several bases for this argument. The Court considers each in turn.

First, the Court is unpersuaded by the Houston Court of Appeal's decision in Texas Fair Plan Ass'n that payment of an appraisal award plus payment of all statutory interest, did not as a matter of law vitiate a TPPCA claim. Tex. Fair Plan Ass'n v. Ahmed, 654 S.W.3d 488, 489-90 (Tex. App.-Houston [14th Dist.] 2022, no pet.), reh'g denied. Significantly, Texas Fair Plan Ass'n is not a Chapter 542A action, and thus applied a different statutory framework for calculating TPPCA interest and attorney's fees. Id. Accordingly, Texas Fair Plan Ass'n has no bearing on interpreting the new statutory provisions under Chapter 542A, which undoubtedly sought to limit liability under the TPPCA.

Next, Morakabian relies heavily on Martinez v. Allstate Vehicle & Property Insurance Co., No. 4:19-CV-2975, 2020 WL 6887753 (S.D. Tex. Nov. 20, 2020) and Ahmad v. Allstate Fire & Casualty Insurance Co., No. 4:18-CV-4411, 2021 WL 2211799 (S.D. Tex. June 1, 2021). At the outset, the Court notes that Ahmad is of no stand-alone value, given that the pertinent analysis from that case was grounded solely in the holding of Martinez, and is therefore wholly derivative. And examining Martinez, the Court is unpersuaded by its analysis.

In Martinez, the court held that an insurance company's payment of the appraisal award plus interest did not moot the plaintiff's TPPCA claim. Martinez, 2020 WL 6887753, at *2.[1] However, as it relates to interest payments, this conclusion cuts directly against the facts and posture of this case. Here, Morakabian does not object to the Report's conclusion that he was paid the maximum amount of statutorily permitted interest under the TPPCA-as calculated based off the appraisal value.[2]In fact, the record shows that Morakabian accepted the interest payment and cashed the check.

Indeed, Morakabian presents no summary-judgment evidence that “there exists a genuine issue of material fact” concerning the amount of TPPCA interest owed to him. Hamilton v. Segue Software Inc., 232 F.3d 473, 477 (5th Cir. 2000).

Rather, Morakabian makes the farfetched argument that regardless of “how much money Allstate tendered, offered, or paid and regardless of what Allstate called it,” Morakabian would still have a cognizable TPPCA claim for interest. (Dkt. #68 at 4). But such allegations are not evidence, and Morakabian fails to present a genuine issue of material fact as it relates to the amount of interest owed. Given that no rational jury could find for Morakabian as it relates to the amount of interest, Allstate is entitled to summary judgment on that issue. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986) (citation omitted).

Finally the Court rejects Morakabian's policy argument that the Report's “proffered construction of the law would lead to absurd results” by permitting an insurer to ...

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