IN THE SUPREME COURT OF TEXAS

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NO. 18-0127

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JUAN ALVAREZ, PETITIONER,

v.

STATE FARM LLOYDS, RESPONDENT

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ON PETITION FOR REVIEW FROM THE

COURT OF APPEALS FOR THE FOURTH DISTRICT OF TEXAS

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PER CURIAM

In this insurance dispute, we consider whether an insurer’s payment of an appraisal award

bars an insured’s claim under the Texas Prompt Payment of Claims Act (TPPCA), codified in

Chapter 542 of the Insurance Code. See TEX. INS. CODE §§ 542.051–.061 (Subchapter B. Prompt

Payment of Claims). The court of appeals concluded it did. Because the court of appeals’ opinion

is inconsistent with our recent decisions on this issue, we now reverse.

Juan Alvarez’s residential property sustained wind and hail damage. After its first

inspection, State Farm determined that the property’s damages fell below Alvarez’s deductible. 

After a second inspection, however, State Farm observed additional damage, revised its estimate,

and issued Alvarez payment under his insurance policy. Believing the property damages still

undervalued, Alvarez sued State Farm. In response, State Farm successfully moved the trial court

to compel appraisal. The appraisal award exceeded State Farm’s prior estimates. State Farm
accordingly paid the award to Alvarez and subsequently moved for summary judgment on all of

Alvarez’s claims. The trial court granted State Farm’s motion and rendered a take-nothing

judgment. The court of appeals affirmed, holding that (1) payment of an appraisal award entitled

an insurer to summary judgment on all of the insured’s contractual and extra-contractual claims and

(2) our decision in USAA Texas Lloyds Co. v. Menchaca, 545 S.W.3d 479 (Tex. 2018), did not

change that conclusion. ___ S.W.3d ___, 2018 WL 340135 (Tex. App.—San Antonio 2018) (mem.

op.).

Alvarez thereafter petitioned this Court to decide whether the court of appeals’ opinion

comported with Manchaca. In the interim, however, we decided two cases relevant to the issues

Alvarez raises in his petition. In Barbara Technologies Corp. v. State Farm Lloyds, we held that

“payment in accordance with an appraisal is neither an acknowledgment of liability nor a

determination of liability under the policy for purposes of TPPCA damages under section 542.060.” 

589 S.W.3d 806, 820 (Tex. 2019). On the same day, we restated in Ortiz v. State Farm Lloyds that

“an insurer’s payment of an appraisal award does not as a matter of law bar an insured’s claims

under the Prompt Payment Act.” 589 S.W.3d 127, 135 (Tex. 2019).

Alvarez originally sought damages from State Farm for breach of contract, breach of the duty

of good faith and fair dealing, unjust enrichment, negligence, negligent misrepresentation, and

violations of Chapters 541 and 542 of the Insurance Code. After we decided Barbara Technologies

and Ortiz, however, Alvarez amended his petition for review to abandon all but his claim for

damages under Chapter 542, arguing that State Farm’s payment of the appraisal award did not

preclude him from proceeding with his TPPCA claim. 

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Although Alvarez did not expressly allege a TPPCA claim in his original petition, he alleged

that he was entitled to 18% statutory interest (which reflects the statutory interest rate for violations

of the TPPCA) and argued in his no-evidence motion for partial summary judgment that he was

entitled to TPPCA damages. State Farm appeared to acknowledge this claim, too, arguing in its own

summary-judgment motion that it was not subject to TPPCA damages. So to the extent State Farm

suggests Alvarez failed to preserve his TPPCA claim, State Farm is mistaken. See Ortiz, 589

S.W.3d at 129, n. 2.

The court of appeals concluded that Alvarez could not maintain his TPPCA claim due to

State Farm’s payment of the appraisal award. Under Barbara Technologies and Ortiz, this was

error. Without hearing oral argument, under Texas Rule of Appellate Procedure 59.1, we reverse

the judgment of the court of appeals and remand the case to the trial court to consider Alvarez’s

TPPCA claim in light of those decisions.

Opinion Delivered: April 17, 2020

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