IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 15-40567

STEVE QUIBODEAUX; THE KIDS SAFARI, INCORPORATED, doing 

business as Wee Care Childcare and Preschool, 

 Plaintiffs - Appellants

v.

NAUTILUS INSURANCE COMPANY, 

 Defendant - Appellee

Appeal from the United States District Court 

for the Eastern District of Texas

USDC No. 1:10-CV-739

Before HIGGINBOTHAM, SOUTHWICK, and HIGGINSON, Circuit Judges.

STEPHEN A. HIGGINSON, Circuit Judge:*

In September 2008, Hurricane Ike damaged a warehouse and daycare 

center owned by appellant Steve Quibodeaux. He filed a claim with his 

property insurer, appellee Nautilus Insurance Company, which paid the claims 

based on an independent adjuster’s estimates. Two years later, Quibodeaux 

sued Nautilus for breach of contract and bad faith. After full discovery and a 

 

* Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not 

be published and is not precedent except under the limited circumstances set forth in 5TH 

CIR. R. 47.5.4.

United States Court of Appeals

Fifth Circuit

FILED

July 7, 2016

Lyle W. Cayce

Clerk

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full appraisal process, the district court granted summary judgment for 

Nautilus on all of Quibodeaux’s claims. For the reasons that follow, we affirm.

I.

On September 13, 2008, Hurricane Ike made landfall near Galveston, 

Texas, causing damage along the Texas coastline and into Louisiana, including 

to two Texas properties owned by Quibodeaux: a warehouse in Orange, Texas,

and a daycare center in Bridge City, Texas.1 Nautilus provided commercialproperty insurance for both properties. After the storm, Quibodeaux reported

a claim to his insurance agent, McNeill Insurance Company; McNeill notified 

Nautilus of the claim on September 19. On October 14, Nautilus sent Dalton 

Evans, an independent adjuster, to inspect the properties. Two months later, 

on December 23, Evans completed his estimate of the claims. His estimates, 

less the applicable deductibles, came to $11,367.82 for the daycare claim and 

$62,588.13 for the warehouse claim. In January 2009, Nautilus paid these 

amounts and then some; as Nautilus explained at oral argument, it determined 

that it was “more expedient” to pay the replacement-cost value for each claim, 

instead of the lower actual-cash value, without requiring proof of repairs as is 

typically required to receive the replacement-cost value. Ultimately, Nautilus 

paid $12,149.69 on the daycare claim on January 6 and $72,720.97 on the 

warehouse claim on January 8. Quibodeaux cashed both checks. In total, 

Nautilus overpaid by $10,914.17.

Nautilus heard nothing from Quibodeaux for nearly two years, until 

September 2010, when Quibodeaux sued Nautilus in state court. Quibodeaux 

brought claims for breach of contract, statutory bad faith under Chapter 541 

of the Texas Insurance Code, common law bad faith, violation of the Texas

 

1 The Bridge City property is owned by Kids Safari, Inc. d/b/a Wee Care Childcare and 

Preschool, the other plaintiff in this lawsuit. Steve and Carolyn Quibodeaux own Kids Safari, 

Inc. We refer to both plaintiffs as “Quibodeaux.”

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Deceptive Trade Practices-Consumer Protection Act, Tex. Bus. & Com. Code 

§§ 17.41−.63, and violation of Chapter 542 of the Texas Insurance Code.

For the next two months, Nautilus repeatedly asked Quibodeaux for a 

demand or an itemization of damages so that it could attempt to resolve the 

claim outside of court. Quibodeaux’s attorney agreed to make a demand, but 

never sent one. He later told Nautilus that he did not have expert reports 

estimating the cost of repairs that he needed to make a demand.

Thereafter, Nautilus removed the lawsuit to federal court and sent a 

letter to Quibodeaux’s attorney demanding appraisal in accordance with the 

insurance policies. Nautilus attached a proof of loss form to this letter and 

requested that Quibodeaux complete the proof of loss for any additional 

damages he was claiming. Quibodeaux did not agree to appraisal and refused 

to complete the proof of loss form, but did identify his appraiser if the court 

compelled appraisal. Nautilus moved to compel appraisal. 

Meanwhile, the parties conducted discovery. In Quibodeaux’s Rule 26(a) 

initial disclosures, Quibodeaux mentioned for the first time that “unpaid 

contents damage” were part of his damages in this case. Quibodeaux also 

provided, as part of a larger document production, a handwritten list of 

contents and their values for the daycare property. 

Thereafter, the district court granted Nautilus’s motion to compel 

appraisal and stayed the case pending the appraisal. The appraisers 

completed the appraisal on May 23, 2013; the appraisal assessed damages to 

the exteriors and structures of the two properties. No amounts for contents 

damages were included in the appraisal award. That same week, on May 28, 

Nautilus wrote to Quibodeaux explaining its calculation of how much it owed

under the appraisal award after subtracting the deductibles and its initial 

payments. Quibodeaux did not respond. Two weeks later, on June 13, 

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Nautilus sent checks to Quibodeaux, which Quibodeaux cashed without 

dispute. 

Nautilus again heard nothing from Quibodeaux for six months, until

November 2013, when Quibodeaux wrote to Nautilus stating that he still had 

claims for, among other things, damaged contents and lost business income, 

which needed to proceed to trial. Quibodeaux also moved to set a trial date. 

The district court denied the motion and ordered the parties to file dispositive 

motions. Nautilus filed a motion for summary judgment, which a magistrate 

judge reviewed and recommended granting. The district court adopted the 

magistrate judge’s recommendation in full, overruled Quibodeaux’s objections, 

and entered summary judgment for Nautilus. This appeal followed.

II. 

We review a summary judgment de novo, applying the same legal 

standards as the district court. Hemphill v. State Farm Mut. Auto. Ins. Co., 

805 F.3d 535, 538 (5th Cir. 2015). Summary judgment is proper when the 

pleadings, the discovery and disclosure material on file, and any affidavits 

show that “there is no genuine dispute as to any material fact and the movant 

is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). When a party 

does not object to a magistrate judge’s “findings of fact, conclusions of law, or 

recommendation to the district court,” despite receiving “notice of the 

consequences of failing to object,” we review for plain error. Ortiz v. City of 

San Antonio Fire Dep’t, 806 F.3d 822, 825–26 (5th Cir. 2015). We do not 

consider “evidence or arguments that were not presented to the district court 

for its consideration in ruling on the motion.” Estate of Henson v. Wichita 

County, 795 F.3d 456, 469 n.8 (5th Cir. 2015) (quoting Stults v. Conoco, Inc., 

76 F.3d 651, 657 (5th Cir. 1996)). We may affirm on any basis raised below 

and supported by the record. QBE Ins. Corp. v. Brown & Mitchell, Inc., 591 

F.3d 439, 443 (5th Cir. 2009).

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III.

A.

Quibodeaux first challenges the district court’s grant of summary 

judgment on his breach-of-contract claim. Under Texas law, an insurer’s 

timely payment of a binding and enforceable appraisal award, and the 

insured’s acceptance of the payment, estops the insured from maintaining a 

breach-of-contract claim against the insurer. See Franco v. Slavonic Mut. Fire 

Ins. Ass’n, 154 S.W.3d 777, 787 (Tex. App. 2004). Here, it is undisputed that 

Nautilus timely paid the amount awarded to Quibodeaux in the appraisal, and 

that Quibodeaux accepted the payment. Thus, the appraisal should estop 

Quibodeaux from proceeding with his breach-of-contract claim.

In response, Quibodeaux argues that he should not be estopped from 

bringing his breach-of-contract claim for contents damages because the 

appraisal award included only structural damages, not contents damages. As 

a result, he contends, the appraisal should not be binding with respect to those

damages. To prevail on a claim for breach of an insurance contract under 

Texas law, a plaintiff must prove, among other things, “that the insured was 

damaged by the breach, and the amount of resulting damages.” Metro Hosp. 

Partners, Ltd. v. Lexington Ins. Co., 84 F. Supp. 3d 553, 569–70 (S.D. Tex. 2015) 

(applying Texas law). Here, Quibodeaux points to no competent summary 

judgment evidence on the damages element of his claim. Our own unaided

review of the record reveals only the unsigned, handwritten list of contents 

from the daycare center produced during discovery. Even if Quibodeaux had 

directed our attention to the list, the document is unauthenticated and thus is 

improper as summary judgment evidence. See King v. Dogan, 31 F.3d 344, 346 

(5th Cir. 1994). Thus, Quibodeaux has failed to show that there is a genuine

dispute as to an essential element of his breach-of-contract claim for contents 

damages. See Metro, 84 F. Supp. 3d at 570.

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Quibodeaux also argues that he should not be estopped from bringing his 

breach-of-contract claim related to Nautilus’s claims-handling process. He 

contends that Nautilus breached the insurance contract pre-appraisal by

failing to provide a proof-of-loss form, failing to comply with policy deadlines, 

and failing to properly investigate by using an overworked adjuster. In the 

district court, Quibodeaux did not present these arguments about Nautilus’s 

possible breaches related to the claim-handling process. Instead, the portion 

of his response to Nautilus’s motion for summary judgment dedicated to his 

breach-of-contract claim focused on his claim for contents damages, discussed 

above. We do not consider “arguments that were not presented to the district 

court.” Estate of Henson, 795 F.3d at 469 n.8. The district court properly 

granted summary judgment for Nautilus on Quibodeaux’s breach-of-contract 

claim.

B.

Quibodeaux next challenges the district court’s grant of summary 

judgment on his claims for common-law bad faith and statutory bad faith 

under Chapter 541 of the Texas Insurance Code, and his claim under the Texas

Deceptive Trade Practices-Consumer Protection Act, Tex. Bus. & Com. Code 

§§ 17.41−.63. Under Texas law, to prevail on a common-law bad faith claim, 

an insured must first show that the insurer breached the contract. See Liberty 

Nat’l Fire Ins. Co. v. Akin, 927 S.W.2d 627, 629 (Tex. 1996). The same 

requirement applies to claims for statutory bad faith under Chapter 541 of the 

Insurance Code and under the Trade Practices Act. See Emmert v. Progressive 

Cnty. Mut. Ins. Co., 882 S.W.2d 32, 36 (Tex. App. 1994). As shown above,

Quibodeaux cannot show a breach of contract, so he cannot establish the 

predicate to bring a bad faith claim. Nor does he argue that an exception to 

the rule applies. See Republic Ins. Co. v. Stoker, 903 S.W.2d 338, 341 (Tex. 

1995) (summarizing exceptions). So these claims fail.

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C.

Finally, Quibodeaux challenges the district court’s grant of summary 

judgment on his “Prompt Payment Act” claims under Chapter 542 of the Texas 

Insurance Code. Quibodeaux argues that he is entitled to Chapter 542 

damages both for Nautilus’s delay in payment between the initial payments 

and the payment of the appraisal award and for the delay in notice and 

payment between the inspection and the initial payment. The former 

argument fails as a matter of law: A plaintiff may not seek Chapter 542 

damages for any delay in payment between an initial payment and the 

insurer’s timely payment of an appraisal award. See In re Slavonic Mut. Fire 

Ins. Ass’n, 308 S.W.3d 556, 563 (Tex. App. 2010). As to the damages for the 

initial delay, Quibodeaux argues on appeal that Nautilus is liable for violations 

of Texas Insurance Code §§ 542.056 and 542.058. The latter claim was not 

presented to the district court, so we will not consider it. See Estate of Henson, 

795 F.3d at 469 n.8. Thus, we turn to Quibodeaux’s claim under section 

542.056.

Section 542.056 requires that an insurer notify a claimant of acceptance 

or rejection of the claim within 15 business days of receiving all necessary 

documents. Tex. Ins. Code § 542.056. Alternatively, under section 542.056(d), 

the insurer must notify the claimant that it needs more time to accept or reject. 

Id. § 542.056(d). In this case, these deadlines were extended by 15 days 

because Hurricane Ike was a weather-related catastrophe. See id. 

§ 542.059(b). Nautilus concedes that it failed to notify Quibodeaux of 

acceptance, rejection, or the need for more time on Quibodeaux’s claims within 

the required deadline.

The district court adopted the magistrate judge’s report and 

recommendation, which held that the Prompt Payment Act claims should be 

dismissed on the ground that they were barred by Nautilus’s timely payment 

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of the appraisal award. We review for plain error when a party is “served with 

notice of the consequences of failing to object” to a magistrate’s report and 

recommendation but nonetheless does not object to the “magistrate judge’s 

findings of fact, conclusions of law, or recommendation to the district court.”

Ortiz, 806 F.3d at 825−26. Here, the magistrate judge’s report and 

recommendation contained a clear warning about the consequences of failing 

to object. Nonetheless, Quibodeaux’s objection as to the Prompt Payment Act 

claims stated only that “the Magistrate erred in dismissing Plaintiffs’ claim for 

penalty interest under § 542 of the Texas Insurance Code because, as 

demonstrated in Plaintiffs’ summary judgment response, they are entitled to 

that interest for the time period preceding Defendant’s untimely payments[.]” 

This objection addresses only untimely payment, which could refer to only 

sections 542.0572 (timely payment after acceptance) and 542.058 (timely 

payment), not section 542.056 (timely notice of acceptance of claim or of need 

for more time). Hence we review for plain error Quibodeaux’s claim under 

section 542.056.

Under the plain error standard of review, we have discretion to correct a 

plain error that affects substantial rights. See Oden v. Oktibbeha County, 246 

F.3d 458, 466 (5th Cir. 2001). But we should not exercise our discretion to 

correct a plain error unless “the error seriously affects the fairness, integrity 

or public reputation of judicial proceedings.” Id. (quoting Johnson v. United 

States, 520 U.S. 461, 467 (1997)).

Here, Nautilus has calculated the 18% penalty interest on the daycare 

and warehouse property claims that would have accrued until it notified 

Quibodeaux of acceptance of the claim by paying it. See U.S. Fire Ins. Co. v. 

 

2 To the extent that Quibodeaux had earlier raised a claim under section 542.057, he 

has failed to brief it on appeal, and thus has waived it. See Dardar v. Lafourche Realty Co., 

985 F.2d 824, 831 (5th Cir. 1993).

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Lynd Co., 399 S.W.3d 206, 221–22 (Tex. App. 2012) (affirming trial court 

finding of a presumption of acceptance when a claim is paid). Nautilus 

demonstrates that its initial overpayment of the adjuster’s estimates more 

than compensated Quibodeaux for the penalty interest that accrued because of 

Nautilus’s delay. In addition, if Nautilus is liable for an 18% penalty for 

violating section 542.056, then Quibodeaux would be entitled to the attorney’s 

fees on that successful claim. Tex. Ins. Code § 542.060. Nautilus asserts that, 

as with the 18% penalty interest, its overpayment of both claims by over 

$10,000 compensates Quibodeaux for whatever attorney’s fees may have been 

incurred in pursuing the section 542.056 claim, which has not been the focus 

of this lawsuit. Quibodeaux does not contest any of these calculations in his 

reply brief, nor does he challenge Nautilus’s argument that its voluntary 

overpayment of the claims in January 2009 was greater than the amount that

Quibodeaux would be entitled to for any violation of Texas Insurance Code 

§ 542.056. As a result, Quibodeaux has not shown that the district court’s 

grant of summary judgment on this issue affected his substantial rights. Oden,

246 F.3d at 466. Hence there is no reversible plain error.

IV.

The judgment of the district court is affirmed.

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