INSURANCE-RELATED COURT CASES
Digested from case reports published online
COURT DECISIONS
No attorney fees for tornado victim
On May 25, 2019, after a tornado damaged the home of Mario Rodriguez, his homeowners insurer, Safeco Insurance Company of Indiana, issued a payment of $27,449.88, which Rodriguez accepted. Rodriguez’s counsel then informed Safeco that it owed an additional $29,500 and threatened to sue.
On June 18, 2020, Rodriguez sued Safeco, bringing several claims, including breach of contract and statutory claims under the Texas insurance code.
After an unsuccessful mediation, Safeco invoked the policy’s appraisal provision. On April 5, 2022, the appraisal panel valued the damage at $36,514.52. On April 12, 2022, after subtracting prior payments and other amounts, Safeco issued a check to Rodriguez for $32,447.73, which it viewed as full payment of the appraisal amount due under the policy. Rodriguez did not dispute that Safeco fully paid the appraised amount or that Safeco did so in a timely fashion in response to the appraisal. At the same time, Safeco paid an additional $9,458.40, which it claimed would cover any interest possibly owed on the appraised amount.
Safeco moved for summary judgment, arguing that its full payment of the appraisal plus interest should put an end to the litigation, including any attempt by Rodriguez to recover attorney’s fees. Safeco contended that a section of the insurance code foreclosed Rodriguez’s request for attorney’s fees. The section provides:
(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; 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.
The parties disputed the calculation of attorney’s fees under a subsection of the insurance code. Safeco argued that its pretrial payment of the appraised amount plus any possible statutory interest fully discharged its obligations to Rodriguez under the policy, which means there will never be a “judgment to the claimant under the insurance policy” on which to base the calculation described by the subsection. The district court agreed with Safeco and dismissed the case.
Rodriguez appealed to the fifth circuit, which certified the question: “In an action under Chapter 542A of the Texas Prompt Payment of Claims Act, does an insurer’s payment of the full appraisal award plus any possible statutory interest preclude recovery of attorney’s fees?”
The Supreme Court of Texas held that the answer to the certified question was yes.
When an insurer has fully discharged its obligations under the policy by voluntarily paying the appraised amount plus any statutory interest in compliance with the policy’s appraisal provisions, a section of the insurance code prohibits an award of attorney’s fees. This is because there is no remaining “amount to be awarded in the judgment to the claimant for the claimant’s claim under the insurance policy,” which means no attorney’s fees are available under a formula of the insurance code section.
Rodriguez v. Safeco Insurance Company of Indiana—Supreme Court of Texas—No. 23-0534—February 2, 2024.
