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A federal district court in Texas, citing appraisal of the insured’s claim and the insurer’s payment of the amount awarded by the appraisers, has granted summary judgment in favor of the insurer in the insured’s lawsuit.

The Case

After Deborah Gonzales’ home was damaged by Hurricane Harvey in August 2017, she filed a claim with her homeowner’s insurance carrier, Allstate Vehicle and Property Insurance Company.

Allstate’s adjuster investigated and reported damages totaling $8,597.63. After adjustments and the deductible, Allstate issued its check payable to Ms. Gonzales for $6,062.63.

Ms. Gonzales disputed the amount due, and she and Allstate designated appraisers. The appraisers evaluated Ms. Gonzales’ loss and determined that the replacement cost was $23,822.72. The parties agreed and, after applying the deductible, Allstate paid $15,073.98 to Ms. Gonzales.

Ms. Gonzales nevertheless sued Allstate, objecting to the insurer’s “underpayment and mishandling of [her] claim.” She contended that Allstate had violated Texas’ Prompt Pay Act and the policy term that required payment of the appraisal award within five business days after the final loss was determined. Allstate moved for summary judgment.

The District Court’s Decision

The district court granted Allstate’s motion.

In its decision, the district court explained that the parties did not dispute the appraisal award or the payment, and that Ms. Gonzales did not contend that a sum greater than tendered or paid was due. Instead, the district court said, Ms. Gonzales asserted that her state common law and statutory claims survived the appraisal award.

The district court disagreed.

The district court reasoned that the appraisal agreement and award established the loss owed to Ms. Gonzales under her insurance policy, adding that Ms. Gonzales had not challenged the appraisal and in fact that she had agreed to the award of $23,822.72. Therefore, the district court ruled, Ms. Gonzales could not assert a claim for breach of contract against Allstate.

Next, the district court found that the appraisal payment was forwarded to Ms. Gonzales by Allstate’s counsel, after receipt and notification. Whether or not the payment was received within five days of counsel’s notice, the district court said, “[I]t was paid in full.”

The district court added that even assuming receipt after five days, the delay was “of no consequence” and did “not constitute a breach of contract.” Observing that Ms. Gonzales had not presented any evidence of any consequential damages stemming from a late payment, the district court concluded that there were “no disputed fact issues concerning [Allstate’s] payment in compliance with the insurance policy and the Prompt Pay Act.”

Finally, the district court ruled that there were no disputed facts that supported a damage claim under the Texas Deceptive Trade Practices Consumer Protection Act (“DTPA”) or for bad faith. Moreover, the district court continued, there was no evidence of prejudice or that Allstate had acted in bad faith that resulted in damages beyond the actual or contracted loss.

Specifically, the district court said, Ms. Gonzales had not asserted or proffered evidence that policy benefits had been wrongfully withheld, that any alleged statutory violations had resulted in or had caused her to lose any benefit under her policy, or that she was entitled to recover losses or damages independently of the actual policy benefits.

Accordingly, the district court concluded that, based on the evidence, Ms. Gonzales had been timely paid following an appraisal award and, therefore, could not establish extra-contractual or negligence claims against Allstate.

The case is Gonzales v. Allstate Vehicle and Property Ins. Co., No. 6:18-CV-26 (S.D. Tex. Feb. 19, 2019). Attorneys involved include: For Deborah Gonzales, Plaintiff: Maria Rizkalla Gerguis, David Loren Bergen, Jr., LEAD ATTORNEYS, Daly & Black, P.C., Houston, TX; Richard D Daly, LEAD ATTORNEY, Daly Black PC, Houston, TX. For Allstate Vehicle and Property Insurance Company, Defendant: Brittany Marie Baker, LEAD ATTORNEY, Valdez & Trevino PC, San Antonio, TX; Robert Edward Valdez, Valdez & Trevino, Attorneys at Law P.C., San Antonio, TX.

Steven A. Meyerowitz, Esq., is the Director of FC&S Legal, the Editor-in-Chief of the Insurance Coverage Law Report, and the Founder and President of Meyerowitz Communications Inc. As FC&S Legal Director, Mr. Meyerowitz, a member of the team that conceptualized FC&S Legal, provides daily analysis and commentary on the most significant insurance coverage law decisions from courts across the country and news regarding legislative and regulatory developments. A graduate of Harvard Law School, Mr. Meyerowitz was an attorney at a prominent Wall Street law firm before founding Meyerowitz Communications Inc., a law firm marketing communications consulting company.