Barbara Techs. Corp. v. State Farm Lloyds

589 S.W.3d 806

BARBARA TECHNOLOGIES CORPORATION, Petitioner,

v.STATE FARM LLOYDS, Respondent

NO. 17-0640

Supreme Court of Texas.

Argued February 20, 2019

OPINION DELIVERED: June 28, 2019

Rehearing Denied December 13, 2019

William Richard (Rick) Thompson II, Dana Brooke Levy, Thad D. Spalding, Durham, Pittard & Spalding, LLP, Dallas, TX, Amy B. Hargis, Andrew P. Slania, Jeffrey L. Raizner, Raizner Slania LLP, Peter Michael Kelly, First Court of Appeals, Houston, TX, for Petitioner.

Melissa A. Lorber, Craig T. Enoch, Enoch Kever PLLC, Austin, TX, M. Micah Kessler, Nistico, Crouch & Kessler, PC, Ryan Newman, Thompson & Horton, LLP, Houston, TX, for Respondent.

Russell J. Bowman, Bowman & Stella, Irving, TX, for Amicus Curiae Central Mutual Insurance Company.

Brendan K. McBride, The McBride Law Firm, Jonathan C. Lisenby, Marc E. Gravely, Matthew R. Pearson, Gravely & Pearson, L.L.P, San Antonio, TX, for Amicus Curiae Independent Bankers Association of Texas, Texas Association of Community Schools, Texas Automobile Dealers Association, Texas Hospital Association, Texas Hotel & Lodging Association, Texas Independent Automobile Dealers Association, Texas League of Community Charter Schools, Texas Organization of Rural and Community Hospitals.

Justice Green delivered the opinion of the Court, in which Justice Guzman, Justice Lehrmann, Justice Devine, and Justice Busby joined.

In this case, we consider competing motions for summary judgment that present the issue of whether an insured party can prevail on its claim for damages for delayed payment pursuant to the Texas Prompt Payment of Claims Act (TPPCA), see TEX. INS. CODE ch. 542, when it is undisputed that the insurer investigated the claim, rejected it, invoked the policy's provision for an appraisal process, and ultimately paid the insured in full in accordance with the appraisal. We hold that the insurer's payment based on the appraisal was neither an acknowledgment of liability under the policy nor an award of actual damages. Because the insured has not established that it is entitled to TPPCA prompt pay damages as a matter of law and the insurer likewise has not established that it can owe no TPPCA damages as a matter of law, we reverse the court of appeals' judgment and remand the case to the trial court for further proceedings.

I. Background

Barbara Technologies Corporation contracted with State Farm Lloyds for property insurance covering Barbara Tech's commercial property in San Antonio. The insurance policy covered damage resulting from wind and hail. A wind and hail storm damaged Barbara Tech's property on March 31, 2013. On October 17, 2013, Barbara Tech filed a claim with State Farm pursuant to the insurance policy, requesting coverage of the cost of repairs. State Farm inspected the property about two weeks later. State Farm denied Barbara Tech's claim on November 4, 2013, stating that the property sustained $3,153.57 in damages, which was less than Barbara Tech's $5,000 deductible under the policy. Barbara Tech requested a second inspection on February 21, 2014. State Farm obliged and conducted another inspection on March 4, 2014, finding no additional damage.

Barbara Tech filed suit against State Farm on July 14, 2014, alleging violations of the TPPCA, among other claims. State Farm invoked the appraisal provision under the policy on January 9, 2015.¹ The appraisal provision allowed either party to demand an appraisal of the loss, in which each party would select its own appraiser, with an umpire to settle any dispute between the appraisers. On August 18, 2015, approximately seven months after invocation of the appraisal provision, the appraisers agreed to an appraisal value of $195,345.63. State Farm received the appraisal award on August 19, 2015, and then paid $178,845.25—the appraisal value less depreciation and the deductible—on August 25, 2015. Barbara Tech received and accepted the payment and amended its petition to include only claims for violations of the TPPCA² —specifically, Barbara Tech claimed statutory damages under Texas Insurance Code chapter 542 for State Farm's alleged failure to comply with statutory deadlines for acknowledging receipt of the claim, commencing an investigation of the claim, notifying Barbara Tech of its rejection of the claim, and paying the claim. See TEX. INS. CODE §§ 542.055(a)(1)–(3), .056(a), .058(a), .060. Barbara Tech then moved for traditional summary judgment, asserting that, as a matter of law, State Farm violated the TPPCA by failing to pay the claim within the TPPCA's sixty-day time limit and therefore owed TPPCA damages. Id. §§ 542.058, .060. State Farm filed a cross-motion for summary judgment, asserting that it did not violate the TPPCA as a matter of law because it timely paid the appraisal award and was not liable under the policy.

The trial court denied Barbara Tech's summary judgment motion and granted summary judgment in favor of State Farm. Barbara Tech appealed, arguing that "its TPPCA claim survived State Farm's invocation of the appraisal process and its payment of the appraisal" and that "State Farm is strictly liable for interest and attorneys' fees under chapter 542 because it did not pay the claim within sixty ... days after it received notice of the loss." State Farm countered that an insurer does not violate the TPPCA when it pays in accordance with an appraisal award. The court of appeals affirmed the trial court's judgment and held that a "plaintiff could not sustain a claim under the TPPCA when it [is] undisputed that the insurer had paid the appraisal award." 566 S.W.3d 294, 296 (Tex. App.—San Antonio 2017, pet. granted) (mem. op.).

Specifically, the court of appeals relied on its own precedent, Garcia v. State Farm Lloyds , 514 S.W.3d 257 (Tex. App.—San Antonio 2016, pet. denied), in concluding that a full and timely payment of an appraisal award under the policy precludes an insured from recovering damages under the TPPCA as a matter of law. See 566 S.W.3d at 296–97 (citing Garcia , 514 S.W.3d at 274–79 ). The court of appeals reasoned that the facts of this case were indistinguishable from Garcia and that "undisputed evidence show[ed] that State Farm invoked the appraisal provision in the policy and timely paid the appraisal award," and therefore the trial court did not err in granting summary judgment in favor of State Farm. Id. at 297. Barbara Tech petitioned for review in this Court, and we granted the petition. 62 Tex. Sup. Ct. J. 313 (Jan. 18, 2019).

II. Appraisal and the TPPCA

Although presented initially through competing motions for summary judgment, the legal issue before this Court is whether an insured's claim for prompt pay damages under the TPPCA survives the insurer's payment in full after the amount of loss was determined through an appraisal process provided for in the parties' insurance policy. The parties ask us to determine whether Barbara Tech is entitled to damages under the TPPCA despite State Farm's use of the appraisal process, and whether State Farm's payment in accordance with the appraisal exempts it from TPPCA damages.

A. Standard of Review

We review summary judgments de novo, taking as true all evidence favorable to the nonmovant, and indulging every reasonable inference and resolving any doubts in the nonmovant's favor. E.g. , Frost Nat'l Bank v. Fernandez , 315 S.W.3d 494, 508 (Tex. 2010) (citation omitted); Valence Operating Co. v. Dorsett , 164 S.W.3d 656, 661 (Tex. 2005) (citation omitted). When both parties move for summary judgment on the same issue, the reviewing court considers the evidence presented by both parties, determining all questions presented. Dorsett , 164 S.W.3d at 661 (citation omitted). If we determine that the trial court erred in granting summary judgment, and therefore the court of appeals erred in affirming the trial court's judgment, we render the judgment the trial court should have rendered. See id.

B. State Farm's Motion for Summary Judgment

State Farm moved for traditional summary judgment on two grounds. First, State Farm asserted that Barbara Tech cannot maintain its claim under the TPPCA because State Farm paid timely and in accordance with the appraisal. In other words, citing various courts of appeals cases, State Farm took the position that timely payment of an appraisal award forecloses TPPCA damages as a matter of law. See, e.g. , In re Slavonic Mut. Fire Ins. , 308 S.W.3d 556, 563 (Tex. App.—Houston [14th Dist.] 2010, orig. proceeding) (citations omitted); Breshears v. State Farm Lloyds , 155 S.W.3d 340, 343 (Tex. App.—Corpus Christi–Edinburg 2004, pet. denied) (mem. op.). Second, State Farm argued that it is not liable for Barbara Tech's claim, as it has never accepted liability or been adjudicated liable. And, arguing that it cannot be held liable for breach of contract because Barbara Tech nonsuited that claim, State Farm contends that it is not subject to TPPCA damages as a matter of law. The court of appeals decided the case on the first ground, holding that State Farm was entitled to summary judgment because "a full and timely payment of an appraisal award under the policy precludes an insured from recovering [damages] under the TPPCA as a matter of law." 566 S.W.3d at 296–97.

1. Payment of Appraisal Award

We first consider the court of appeals' basis for affirming summary judgment for State Farm—that a plaintiff cannot sustain a claim for prompt pay damages under the TPPCA when it is undisputed that the insurer paid in accordance with the appraisal, in effect paying all benefits to which the plaintiff could be entitled under the policy. Id. Because analysis of this issue requires an understanding of the circumstances under which a claimant can sustain a claim for damages under the TPPCA, we begin with a review of the plain language of the TPPCA provisions, as that is the surest indicator of the Legislature's intent. See Sullivan v. Abraham , 488 S.W.3d 294, 299 (Tex. 2016) (recognizing that in interpreting a statute,...