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

Decision Date16 May 2023
Docket Number05-22-00676-CV
CourtTexas Court of Appeals

Before Molberg, Pedersen, III, and Miskel, Justices.



Louis Rosales, Sr. appeals a summary judgment that disposed of all his claims, including his claim for attorney's fees under the Texas Prompt Payment of Claims Act (TPPCA).[1] Rosales's main argument in favor of attorney's fees concerns the recent opinion Barbara Technologies Corp. v. State Farm Lloyds, 589 S.W.3d 806 (Tex. 2019). According to Rosales, Barbara Technologies forecloses the reasoning that Allstate Insurance Company relied on in its summary judgment motion that its preemptive payment of TPPCA damages blocked his claim for attorney's fees.

But unlike Barbara Technologies, this case is governed by Chapter 542A of the Insurance Code. That chapter provides a distinctive damage formula that precludes any award of attorney's fees in cases like this one, where the defendant has paid the full amount that could be awarded under the policy. We therefore affirm the summary denial of Rosales's claim for attorney's fees, which is the only aspect of the summary judgment that Rosales has challenged on appeal.

I. Background

On October 28, 2020, a hailstorm hit Mesquite, Texas, where Rosales owned property. A few days later, Rosales filed an insurance claim with Allstate for damage to his property. On November 5, 2020, Allstate's adjuster determined that the covered damage amounted to only $474.07. Because this amount was less than Rosales's deductible, Allstate denied payment on the claim.

On November 13, 2020, Rosales's contractor provided Allstate with an estimate to replace the entire roof of Rosales's property as well as photographs of the damage. On November 25, 2020, another Allstate adjuster reviewed the photographs and revised the damage estimate upward to $862.83. This amount was still less than Rosales's deductible, so Allstate paid Rosales nothing.

Rosales filed suit on May 27, 2021, alleging breach of contract, bad-faith violations, and breach of the TPPCA. On October 8, 2021, Rosales invoked the appraisal clause in his policy. The case was abated pending the outcome of the appraisal.

The appraisers found the actual cash value of the loss was $14,869.68. Allstate received the appraisal award on January 7, 2022, and on January 10, 2022, Allstate issued payment for $11,751.68-the full actual cash value minus Rosales's deductible. At the same time, Allstate also issued a check for $1,408, which, in Allstate's words, was intended "to cover any additional interest you could possibly allege to be owed" under the TPPCA. Rosales has not disputed that the amount of the interest payment is sufficient under the statute.

In March, Allstate filed a hybrid motion for summary judgment. Allstate moved for-and ultimately obtained-a traditional summary judgment on Rosales's contract and bad-faith claims, and Rosales does not challenge those rulings on appeal.

With regard to Rosales's TPPCA claim, Allstate argued on traditional grounds that because it paid all that could be owed on the claim (i.e., the full appraisal award plus any possible TPPCA interest), Rosales was not entitled to any money judgment on this claim. Allstate further reasoned that because Rosales was not entitled to a money judgment, this cut off Rosales's right to recover attorney's fees under Chapter 542A, which makes the amount of attorney's fees dependent on the amount of the money judgment. Allstate also moved for no-evidence summary judgment on Rosales's TPPCA claim, arguing that Rosales had produced no proof that Allstate violated any TPPCA deadline or was liable on the claim.

The trial court granted a final summary judgment in Allstate's favor without stating the grounds on which its ruling was based. Rosales appeals with respect to only his TPPCA claim.

II. Discussion

In his first and second issues, Rosales contends that the trial court erred to the extent that it granted traditional summary judgment on his TPPCA claim. He makes essentially the same argument in both issues: that Allstate's "gratuitous" payment of what it characterized as any interest that could be owed under the TPPCA did not establish Allstate's right to summary judgment on his claim for attorney's fees. According to Rosales, several authorities-including Barbara Technologies and multiple federal decisions interpreting Chapter 542A-dictate that Allstate cannot prevail.

In his third issue, Rosales challenges the summary judgment to the extent that it was granted on no-evidence grounds. Because Rosales's first and second issues are dispositive, we do not consider his third issue.

A. Summary Judgment Standard

We review a grant of summary judgment de novo. Trial v. Dragon, 593 S.W.3d 313, 316 (Tex. 2019). If no grounds are specified for the ruling, we must affirm if any of the grounds on which judgment is sought are meritorious. Merriman v. XTO Energy, Inc., 407 S.W.3d 244, 248 (Tex. 2013). We credit evidence favorable to the nonmovant if reasonable jurors could, and we disregard evidence contrary to the nonmovant unless reasonable jurors could not. Timpte Indus. v. Gish, 286 S.W.3d 306, 310 (Tex. 2009).

In a traditional motion, the movant has the burden to show there is no genuine issue of material fact and the movant is entitled to judgment as a matter of law. Painter v. Amerimex Drilling I, Ltd., 561 S.W.3d 125, 130 (Tex. 2018). A defendant is entitled to summary judgment if it conclusively negates at least one element of the plaintiff's claim, id., or if it conclusively proves all elements of an affirmative defense, Frost Nat'l Bank v. Fernandez, 315 S.W.3d 494, 508 (Tex. 2010).

When a party files a hybrid motion for summary judgment, we generally first review the summary judgment under the no-evidence standard of review. Rico v. L-3 Commc'ns Corp., 420 S.W.3d 431, 438-39 (Tex. App.-Dallas 2014, no pet.). However, if the court is required to affirm the trial court's ruling on traditional grounds, then we need only address those grounds. Gibson v. Stonebriar Mall, LLC, No. 05-17-01242-CV, 2019 WL 494068, at *5 (Tex. App.-Dallas Feb. 8, 2019, no pet.) (mem. op.).

B. Applicable Law: The TPPCA and Chapter 542A's New Limits

The TPPCA imposes several requirements on insurers, one of which is that if the insurer delays payment of a claim for more than the applicable statutory period or sixty days, the insurer shall pay TPPCA damages. Barbara Techs., 589 S.W.3d at 812-13 (citing, inter alia, Tex. Ins. Code. § 542.058(a)). Those damages include statutory interest on the claim along with reasonable and necessary attorney's fees. Tex. Ins. Code § 542.060(a).

On September 1, 2017, significant changes to the Texas Insurance Code took effect that were aimed at limiting TPPCA damages and attorney's fees in cases of natural disaster. Morakabian v. Allstate Vehicle & Prop. Ins. Co., No. 4:21-CV-00100-SDJ-CAN, 2022 WL 17501024, at *5 (E.D. Tex. Dec. 6, 2022) (quoting White v. Allstate Vehicle & Prop. Ins. Co., No. 6:19-CV-00066, 2021 WL 4311114, at *9 (S.D. Tex. Sept. 21, 2021)). "Codified as Chapter 542A, the recent amendments apply to 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 a rainstorm." Id. (quoting Tex. Ins. Code § 542A.001(2)).

Chapter 542A limits a policyholder's ability to recover attorney's fees and statutory interest in connection with delayed payments. Id. "Previously, Chapter 542 fixed the statutory interest penalty at 18% annually; under Chapter 542A, an insurer liable for violation of Chapter 542 owes statutory interest at a rate equal to 5% plus the amount of the current interest rate as defined by the Texas Finance Code . . . ." Id. (citing Tex. Ins. Code § 542.060(a), (c)). Chapter 542A limits the available attorney's fees by applying the following formula:

(a) Except as otherwise provided by this section, the amount of attorney's fees that may be awarded to a claimant in an action to which this chapter applies is the lesser of:
(1) the 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;
(2) the amount of attorney's fees that may be awarded to the claimant under other applicable law; or
(3) the amount calculated by:
(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;
(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) (emphasis and formatting added). In other words, if the amount to be awarded in the judgment is less than the amount the insured demanded before filing suit, the insured's attorney's fees will be reduced. See TEX. INS. CODE §§ 542A.003, .007.

C. In this Case, the Insurer's Preemptive Payment of the Appraisal Award Eliminated the Insured's Ability to Collect Statutory Attorney's Fees

Rosales concedes that Chapter 542A applies to his property insurance claim because it arose from damage caused by a hailstorm. Also, he does not...

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