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IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF TEXAS

DALLAS DIVISION

HWY 67 DEALERSHIP JV,

Plaintiff,

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v. Case No. 3:22-cv-00784-L

DEPOSITORS INSURANCE 

COMPANY,

Defendant.

FINDINGS, CONCLUSIONS, AND RECOMMENDATION

OF THE UNITED STATES MAGISTRATE JUDGE

After hail damaged two of HWY 67 Dealership JV’s (Highway 67) 

commercial properties, it filed a claim with its insurer, Depositors Insurance 

Company d/b/a Nationwide Insurance Company (“Nationwide” or “Depositors”). 

Dissatisfied with Nationwide’s adjustment of the claim, Highway 67 invoked 

appraisal under the insurance policy. After Nationwide failed to pay the full 

amount of the appraisal award, Highway 67 filed this action alleging breach of 

contract as well as extracontractual claims, including violations of the Texas 

Prompt Payment of Claims Act (TPPCA), Tex. Ins. Code § 542.051, et seq. 

The parties have filed cross-motions for summary judgment on Highway

67’s breach of contract and TPPCA claims. In addition, Nationwide moves for 

summary judgment on all remaining claims and, alternatively, moves to set aside 

the appraisal award. Highway 67 moves for partial summary judgment on 

Nationwide’s Affirmative Defense No. 17.

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For the reasons that follow, the undersigned recommends that the District 

Judge GRANT in part and DENY in part Plaintiff’s Amended Motion for Partial 

Summary Judgment (ECF No. 135) and DENY Defendant’s Renewed Motion for 

Summary Judgment and, in the Alternative, Motion to Set Aside Appraisal Award

(ECF No. 141). Further, the undersigned DENIES Defendant Depositors Insurance 

Company’s Renewed Motion to Strike or Limit Plaintiff’s Retained Expert Jeff 

Seaton (ECF No. 138).1

Factual and Procedural Background

The Court now sets forth the facts in accordance with the summary 

judgment standard summarized in the next section. The facts are undisputed 

unless otherwise noted.

A. The Policy

Nationwide insured two of Highway 67’s commercial properties in Tarrant 

County, Texas, one at 6601 Blvd. 26, North Richland Hills, Texas (the “North 

Richland Hills Property”) and the other at 1515 E. Abram Street, Arlington, Texas 

(the “Arlington Property”) under policy number ACP CPPD 3018900153 (the 

“Policy”). App. in Support of Pl.’s Am. Mot. for Partial Summ. J. (Pl.’s Summ. J. 

App.), ECF No. 137-1 at 27-29.2 The Policy provided that Nationwide “will pay for 

1 The undersigned has the authority to dispose of the Motion to Strike after the

District Judge referred this case for pretrial management. ECF No. 126; 28 U.S.C. 

§ 636(b)(1)(B). 2 Citations to the record refer to the CM/ECF page number at the top of each page 

rather than page numbers at the bottom of each filing. 

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direct physical loss of or damage to Covered Property at the premises described in 

the Declarations caused by or resulting from any Covered Cause of Loss.” Id. at 37. 

Under the Policy, hail damage was a covered cause of loss as it was not otherwise 

excluded. Id. at 75. The Policy was effective from September 27, 2019, to 

September 27, 2020. Id. at 27.

The Policy’s appraisal provision outlined the procedure to be followed in the 

event the parties disputed the amount of Highway 67’s claimed loss:

APPRAISAL

If we and you disagree on the amount of loss, either may make written 

demand for an appraisal of the loss. In this event, each party will select 

a competent and impartial appraiser and will notify the other of the 

appraiser selected within 20 days of such demand. The two appraisers 

will select an umpire. If they cannot agree within 15 days upon such 

umpire, either may request that selection be made by a judge of a court 

having jurisdiction. Each appraiser will state the amount of loss. If 

they fail to agree, they will submit their differences to the umpire. A 

decision agreed to by any two will be binding as to the amount of the 

loss. Each party will:

a. Pay its chosen appraiser; and

b. Bear the other expenses of appraisal and umpire equally.

If there is an appraisal:

* * *

a. You will still retain your right to being a legal action against 

us []; and 

b. We will still retain our right to deny the claim.

Id. at 65. The Policy also provided:

We will pay for covered loss or damage within 5 business days 

after: 

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a. We have notified you that payment of the claim or part of the 

claim will be made and have reached agreement with you on 

the amount of loss; or

b. An appraisal award has been made.

Id. at 66. 

B. The Insurance Claim and Appraisal

After a storm on April 27, 2020, Highway 67’s public adjuster, Matt 

Movalson of Focus Claims, filed a claim for hail damage on May 21, 2020, with a 

loss date of April 27, 2020, for the North Richland Hills Property and added the 

Arlington Property to the claim on June 16, 2020. Id. at 113-18. On May 29, 2020, 

Nationwide had the North Richland Hills Property inspected. Id. at 121-23. It 

determined that no exclusion applied to the claim, paid Highway 67 $39,077.18 for 

covered losses, and by letter dated June 2, 2020, explained that the payment was 

the “actual cash value of property covered by your policy less the deductible.” Id.

at 125-28.3

With respect to the Arlington Property, Nationwide’s claim adjuster Javier 

Rico acknowledged the claim on June 16, 2020, the day it was received. App. to 

Def.’s Mot. for Summ. J. (Def.’s Summ. J. App.), ECF No. 143-1 at 40. He noted the 

Policy was in force at the time of loss, that hail is a covered loss under the Policy, 

and that no exclusions applied. Id. at 128. On June 17, 2020, Rico ran a CoreLogic 

3 Although Highway 67 originally brought claims relating to both properties, on 

March 8, 2023, it stipulated that it is no longer seeking damages related to the 

NRH Property. See Def.’s Summ. J. App., ECF No. 143-1 at 1. The Court, however, 

will continue to reference the NRH Property when factually relevant to its 

disposition of the pending motions.

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weather verification report that showed 0.9” hail on April 27, 2020, and 2.3” hail 

on June 5, 2018, a date outside the policy period. Id. at 141-43 (CoreLogic Report). 

Rico retained Ladder Now to inspect the property and prepare a report. Id.

at 144-91 (Ladder Now Report). The Ladder Now Report noted hail damage to the 

HVAC condenser fins, top panels, and large exhaust vents and metal panels on the 

right and rear of the Arlington Property. Id. After reviewing the Ladder Now 

Report, Rico prepared an estimate for covered damages dated June 19, 2020, that 

totaled $9,020.39 replacement cash value (RCV) and $8,142.59 actual cash value 

(ACV). Id. at 201 (First Estimate). Rico e-mailed Movalson the estimate,

summarizing the damage Ladder Now found and noting that the inspection did not 

reveal any storm-related damage to the roof’s thermoplastic polyolefin (TPO) 

single-ply membrane. Id. at 203. Rico stated he would retain a HVAC consultant 

to evaluate rooftop HVAC damage. Id. He also noted that because the current 

covered damages were within the Policy’s hail/wind deductible, no payment would 

be made on that location. Id. (Claim Adjustment Letter 1).

Subsequently, Rico retained HVAC Investigators (HVACi), who inspected 

the property and prepared a report dated June 25, 2020. Id. at 204-309 (HVACi 

Report). HVACi determined ten of the twelve systems were damaged and all ten of 

them could be repaired. Id. at 205-09. The other two units did not sustain hail 

damage. Id. at 207. HVACi determined the cost to repair the units was $31,495.73 

RCV and $17,646.59 ACV. Id. at 205. Rico revised his estimate on June 25, 2020, 

adding the damage and cost of repair identified by HVACi. Id. at 315-23. The new 

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estimate totaled $40,516.12 RCV and $39,638.32 ACV. Id. at 319 (Estimate No. 2). 

Nationwide’s payment summary reflects that, after applying the deductible, it

issued payment in the amount of $18,758.32 on June 26, 2020. Id. at 324. On June 

26, 2020, Rico noted in the activity log that he e-mailed Movalson a copy of the 

revised estimate and “[e]xplained estimate and ACV payment of $18,758.32.” Id.

at 123. The summary judgment record, however, contains no written document 

evidencing that Rico communicated Estimate No. 2 to Highway 67 or its agents

and contains no claim adjustment letter. 

Believing Nationwide had underpaid the claim, on July 27, 2020, Highway

67 invoked its right to an appraisal in accordance with the Policy. Pl.’s Summ. J. 

App., ECF No. 137-1 at 133-35. Highway 67 named Douglas Laczynski as its 

appraiser and Nationwide named Brett Lochridge as its appraiser. Id. at 133-41. 

On August 3, 2020, after receipt of the appraisal request, Nationwide informed 

Highway 67 that it would participate in the appraisal, subject to remaining 

coverage issues, and stated that it reserved the right to deny the claim as afforded 

under the Policy. Def.’s Summ. J. App., ECF No. 143-1 at 329-31. 

Before the appraisal process was complete, Nationwide retained Timothy 

Marshall, P.E., of HAAG Engineering Co. to inspect the Arlington Property on 

August 7, 2020, and he prepared a report dated August 11, 2020, that concluded 

hail did not damage or fracture the single-ply roof membrane, damage to metal 

items on the roof indicate the damage was caused by prior hail events, and the 

largest hail that fell at the property was 2.5 inches on June 5 or 6, 2018, whereas 

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the hail that fell on April 27 or 28, 2020, was reported to only be 1-inch. Id. at 334, 

338 (Marshall/HAAG Report). 

On August 20, 2020, upon the failure of the two appraisers to agree on an 

umpire, Highway 67 requested the appointment of an umpire from the Honorable 

Tom Lowe of Tarrant County District Court, 236th Judicial Court, 100 N. Calhoun 

Street, 5th Floor, Fort Worth Texas 76196. Id. at 389-91. Judge Lowe appointed 

attorney Brent Brown as umpire. Id. at 391. On February 25, 2021, Lochridge and 

Laczynski notified Brown via e-mail that he had been appointed Umpire, that the 

two appraisers had reached an impasse on the appraisal, and that they wanted to 

engage his services to bring a resolution to this matter. Pl.’s Summ. J. App., ECF 

No. 137-2 at 75. 

Following the site visit by the appraisers and Umpire Brown, on August 10, 

2021, Lochridge e-mailed Umpire Brown that he was revising his earlier position 

(that the roof did not need to be replaced) to now include replacement of the entire 

roof at the Arlington Property after confirming that the City would not permit an 

overlay. Id., ECF No. 137-1 at 166. 

Following appraisal, on August 10, 2021, Umpire Brown issued his initial

Appraisal Award. Def.’s Summ. J. App., ECF No. 143-1 at 392-394 (Initial 

Appraisal Award). First, he noted that “both Appraisers agree that the subject roofs 

. . . each sustained varying levels of hail damage from the hail event occurring on 

April 27, 2020.” Id. at 392. He noted that in their initial appraisals, Mr. Laczynski 

“concluded that full replacement of both roofs was warranted,” while Mr. 

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Lochridge was “of the opinion that while hail damage was present to metal 

components and some individual roof surfaces at both locations, neither 

warranted full roof replacement.” Id. He also noted that after the joint site 

inspection, both Appraisers submitted amended appraisals and “Mr. Loc[h]ridge, 

after determining local building requirements as to whether a limited repair 

approach would be an option on Abram St[.] over the two existing roofs, amended 

his appraisal to recommend a full replacement of Abram St.” Id.

Umpire Brown concluded that “a full roof replacement is required at the 

[Arlington] property” but at the North Richland Hills Property, he saw “no 

indication of any hail damage to the primary roof membrane.” Id. at 393.

With respect to the North Richland Hills Property, Umpire Brown adopted 

Mr. Lochridge’s appraisal, and determined the amount of Highway 67’s loss to be 

$63,578.68 on an RCV basis and $44,797 on an ACV basis. Id. With respect to the 

Arlington Property, Mr. Laczynski had appraised the loss at $1,227,536.77 while 

Mr. Lochridge had appraised the loss at $621,361.82. Id. Umpire Brown “adopt[ed]

Mr. Laczynski’s appraisal, but [] increased the depreciation on that portion of the 

award by $100,000, to bring the appraisers two very different opinions more 

toward a middle view.” Id. Thus, he calculated estimates of the damaged roof for a 

total RCV of $1,227,536.77 and an ACV of $1,085,731.53. Id. The award included 

costs for a full removal and replacement of the “Modified Bitumin Roof” and “R&R 

Metal Sections.” Id.

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After receiving the Initial Appraisal Award, Lochridge e-mailed Rico the 

award and stated, “It appears that I prevailed on one location and did not on the 

other.” Pl.’s Summ. J. App., ECF No. 137-1 at 162. On August 17, 2021, the Initial 

Appraisal Award was signed by Laczynski, rendering it final. Def.’s Summ. J. App., 

ECF No. 143-1 at 394. 

After receipt of the executed Initial Appraisal Award, Lochridge e-mailed 

Umpire Brown and stated: “I am in agreement with the Abrams location... .” Pl.’s 

Summ. J. App., ECF No. 137-1 at 172-74. He further asked for reconsideration of 

the part of the appraisal award regarding the North Richland Hills Property. 

Lochridge e-mailed Umpire Brown again that same day, now requesting 

consideration of the “corrected estimate for 1515 Abram Rd.,” adding: “I am not 

arguing that you should change the scope of work that you have suggested be the 

award[,] only that the estimate that was presented be corrected for errors.” Id. at 

173. The challenge was to what he perceived to be errors in applying the Xactimate 

estimating software. Id. He further stated: “All other items I have left the same. 

This does not mean that I agree with any of the remaining line items, only that it is 

a subjective call to include general items in the estimate and I have presumed you 

made that decision based on your prior correspondence.” Id. 

On September 10, 2021, Umpire Brown e-mailed both parties’ appraisers: 

“[A]s was requested I have reviewed and considered your additional emails, and 

now confirm my opinion that no errors were made in the award of August 10, 2021, 

and that award will therefore stand without modification. I compliment both of 

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you on your professionalism and the quality of your submissions and your 

participation in the site inspection of these properties.” Id. at 177. 

Upon receipt of Umpire Brown’s September 10, 2021 e-mail, Nationwide’s 

assigned claims adjuster, Rico, e-mailed Lochridge: “Appears the award of 8/10/21 

is final and ‘binding’ Is that correct?” Id. at 176. Lochridge replied via e-mail 

confirming: “Yes, that is correct.” Id.

On September 15, 2021, Rico, in e-mails with Lochridge, acknowledged that 

Lochridge had agreed that the Arlington Property required a roof replacement, but 

stated that, regardless, Nationwide would deny payment for the roof replacement. 

Id. at 179-86.

On September 15, 2021, Umpire Brown and Laczynski signed a Corrected 

Appraisal Award in which Umpire Brown corrected a transcription error in the 

original award figure for the ACV of the Arlington Property. Id. at 188 (Corrected 

Appraisal Award), 199-200. 

In response to the Corrected Appraisal Award and Highway 67’s demand for 

payment, Nationwide determined that, in light of its initial payment of $39,077.18 

on the North Richland Hills Property, nothing further was due. Def.’s Summ. J. 

App., ECF No. 144 at 1. With respect to the Arlington Property, Nationwide 

concluded it owed an additional payment of $135,004.0749 (ACV) plus $16,177.65 

in prompt penalty interest, for a total of $151,181.72.50. Id. 

On September 16, 2021, Nationwide’s claim stage attorneys sent Highway

67’s counsel a letter summarizing Nationwide’s decision to issue a payment of 

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$151,181.72 (ACV), including a deduction for depreciation, based on various line 

items from the appraisal award which Nationwide contended were covered under 

the Policy, and a payment for $16,177.65 for “interest owed.” Id. at 1-5. 

C. Procedural History

On February 7, 2022, Highway 67 filed suit in the 298th Judicial District of 

Dallas County, Texas, asserting claims for breach of contract and subsidiary 

extracontractual claims premised on Nationwide’s failure to pay the full amount of 

the Corrected Appraisal Award. See Pl.’s Orig. Pet., ECF No. 1-1. On April 6, 2022, 

Nationwide removed this action to this court on the grounds that complete 

diversity of citizenship exists between the parties and that the amount in 

controversy exceeds $75,000, exclusive of interest and costs. Notice of Removal, 

ECF No. 1. In its Second Amended Complaint, filed December 19, 2022, Highway

67 asserted claims for: (1) breach of contract; (2) violations of the TPPCA; (3) bad 

faith violations in handling the claim under various subsections of § 541 of the 

Texas Insurance Code; (4) breach of the common law duty of good faith and fair

dealing; and (5) violations of the Texas Deceptive Trade Practices Act (DTPA). Sec. 

Am. Compl. ¶¶ 28-51, ECF No. 18. Highway 67 also sought attorney’s fees and 

expenses under §§ 38.001, 38.002, and 38.003 of the Texas Civil Practice and 

Remedies Code, and §§ 541.152 and 542.060 of the Texas Insurance Code. Id. ¶¶ 

33, 52-55.

On March 15, 2024, the Court granted Highway 67’s Motion for Leave to File 

Third Amended Complaint solely to add allegations concerning its anchor tenant’s 

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lease termination on April 13, 2023, as well as consequential damages related to 

the lease termination. See Order, ECF No. 169. On March 25, 2024, Highway 67 

filed its Third Amended Complaint, the live pleading, asserting identical claims as 

its Second Amended Complaint. See ECF No. 172. 

Nationwide filed its answer to the Third Amended Complaint as well as 

affirmative defenses on April 8, 2024. Def.’s Orig. Ans. and Defenses to Pl.’s Third. 

Am. Compl., ECF No. 173. In Affirmative Defense No. 17, Nationwide asserts in 

pertinent part that 

the umpire’s appraisal award is void or without effect. Alternatively, 

the award should be set aside. The umpire appointment was not made 

in accordance with the Policy because the appointment was not made 

by a court “having jurisdiction” as required by the Policy. Jurisdiction 

consists of both subject matter and personal jurisdiction. Establishing 

personal jurisdiction over a party requires valid service of process. 

Plaintiff did not serve process on Defendant as would be required to 

invoke the state court’s jurisdiction. Because Plaintiff failed to 

properly invoke the state court’s jurisdiction by serving Defendant 

with process in connection with the umpire appointment, Plaintiff 

failed to comply with the Policy’s appraisal clause and the award.

Id. ¶ 105. 

Highway 67 hired its own expert, Jeff Seaton, who inspected the Arlington 

Property on February 23, 2023, “to determine the extent of damage cause by hail 

events that reportedly occurred on April 27, 2020.” He determined that “[a]s a 

result of the April 27, 2020 hailstorm[,] the integrity of the roof membrane has 

been compromised [and] [t]he findings of the inspection conclude that the TPO 

membrane needs replacement.” App. in Support of Pl.’s Resp. to Def.’s Mot. to 

Strike, ECF No. 152-1 at 19-24. 

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The parties have filed renewed cross-motions for summary judgment as to 

Highway 67’s claims for breach of contract and violations of the TPPCA.4 As with 

its initial motion, Highway 67 also seeks partial summary judgment as to 

Nationwide’s Affirmative Defense No. 17.5 Nationwide has, once again, moved for 

summary judgment on all remaining claims and, alternatively, moves to set aside 

the appraisal award. 

Legal Standard

Summary judgment shall be granted when the record shows that there is no 

genuine dispute as to any material fact and that the moving party is entitled to 

judgment as a matter of law. Fed. R. Civ. P. 56(a); Celotex Corp. v. Catrett, 477 

U.S. 317, 323-25 (1986); Ragas v. Tennessee Gas Pipeline Co., 136 F.3d 455, 458 

(5th Cir. 1998). A dispute regarding a material fact is “genuine” if the evidence is 

such that a reasonable jury could return a verdict in favor of the nonmoving party. 

Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). When ruling on a 

4 In June 2023, the parties filed motions for summary judgment. On October 10, 

2023, Judge Lindsay referred this matter to the undersigned for pretrial 

management. See Order (ECF No. 126). Following a hearing, and in light of the 

numerous pending discovery disputes, the undersigned issued an Amended 

Scheduling Order that denied without prejudice to refiling the parties’ summary 

judgment motions and related Daubert motions, and set November 17, 2023, as 

the new dispositive motion deadline. See Am. Sch. Order ¶ 5 (ECF No. 134). The 

parties timely filed their renewed motions.

5 Highway 67’s motion for partial summary judgment as to Nationwide’s 

Affirmative Defense No. 17 appears to relate solely to paragraph 105 of Defendant’s 

Original Answer and Defenses to Plaintiff’s Third Amended Complaint (ECF No. 

173). The Court will limit its analysis accordingly.

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motion for summary judgment, the court is required to view all facts and 

inferences in the light most favorable to the nonmoving party and resolve all 

disputed facts in favor of the nonmoving party. Boudreaux v. Swift Transp. Co., 

402 F.3d 536, 540 (5th Cir. 2005). Further, a court “may not make credibility 

determinations or weigh the evidence” in ruling on a motion for summary 

judgment. Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133, 150 (2000); 

Anderson, 477 U.S. at 254-55.

Once the moving party has made an initial showing that there is no evidence 

to support the nonmoving party’s case, the party opposing the motion must come 

forward with competent summary judgment evidence of the existence of a genuine 

dispute of material fact. Matsushita Elec. Indus. Co. v. Zenith Radio, 475 U.S. 574, 

586 (1986). On the other hand, “if the movant bears the burden of proof on an 

issue, either because he is the plaintiff or as a defendant he is asserting an 

affirmative defense, he must establish beyond peradventure all of the essential 

elements of the claim or defense to warrant judgment in his favor.” Fontenot v. 

Upjohn Co., 780 F.2d 1190, 1194 (5th Cir. 1986) (emphasis in original). “[When] 

the record taken as a whole could not lead a rational trier of fact to find for the 

nonmoving party, there is no ‘genuine [dispute] for trial.’” Matsushita, 475 U.S. at 

587 (citation omitted). Mere conclusory allegations are not competent summary 

judgment evidence, and thus are insufficient to defeat a motion for summary 

judgment. Eason v. Thaler, 73 F.3d 1322, 1325 (5th Cir. 1996). Unsubstantiated 

assertions, improbable inferences, and unsupported speculation are not 

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competent summary judgment evidence. See Forsyth v. Barr, 19 F.3d 1527, 1533 

(5th Cir. 1994).

The party opposing summary judgment is required to identify specific 

evidence in the record and to articulate the precise manner in which that evidence 

supports his or her claim. Ragas, 136 F.3d at 458. Rule 56 does not impose a duty 

on the court to “sift through the record in search of evidence” to support the 

nonmovant’s opposition to the motion for summary judgment. Id.; see also Skotak 

v. Tenneco Resins, Inc., 953 F.2d 909, 915-16 & n.7 (5th Cir. 1992). “Only disputes 

over facts that might affect the outcome of the suit under the governing laws will 

properly preclude the entry of summary judgment.” Anderson, 477 U.S. at 248. If 

the nonmoving party fails to make a showing sufficient to establish the existence 

of an element essential to its case and on which it will bear the burden of proof at 

trial, summary judgment must be granted. Celotex, 477 U.S. at 322-23. “Whe[n], 

as here, parties have filed cross-motions for summary judgment, each motion must 

be considered separately because each movant bears the burden of showing that 

no genuine issue of material fact exists and that it is entitled to a judgment as a 

matter of law.” Shaw Constructors v. ICF Kaiser Engr’s, Inc., 395 F.3d 533, 538-

39 (5th Cir. 2004).

Analysis

As this matter is before the Court pursuant to its diversity jurisdiction under 

28 U.S.C. § 1332, the Court applies substantive Texas law, but federal procedural 

law. See Holt v. State Farm Fire & Cas. Co., 627 F.3d 188, 191 (5th Cir. 2010)(citing 

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Erie R.R. Co. v. Tompkins, 304 U.S. 64, 78 (1938)). In addition, the Court notes 

that, at times, one or both parties have exceeded the page limits set forth in the 

Local Civil Rules. Any future briefing that exceeds the page limits will not be 

considered absent a motion for leave of court to exceed these limits.

A. Objections to Summary Judgment Evidence 

Each party objects to portions of the other party’s summary judgment 

evidence. See ECF No. 156 at 6-13 (HYW 67’s objections to Nationwide’s evidence 

supporting Nationwide’s response to Highway 67’s motion for partial summary 

judgment); ECF No. 158 (Nationwide’s response to Highway 67’s objections); ECF 

No. 149 at 6-10 (Highway 67’s objections to evidence supporting Nationwide’s 

motion for summary judgment); ECF No. 159 at 6-7 (Nationwide’s objections to 

evidence support Highway 67’s response to its motion for summary judgment). In 

addition, Nationwide moves to strike or limit the testimony of Jeff Seaton, 

Highway 67’s retained expert.

To promote efficiency, the Court will only take up the objections to evidence 

on which it relies in making the recommendation on the pending motions for 

summary judgment. If the Court relies on evidence but does not discuss an 

objection, it considered both the evidence proffered and objections, and, to the 

extent the Court regarded portions of the evidence as relevant, admissible, and 

necessary to the resolution of particular summary judgment issues, overruled 

those objections. To the extent that the Court did not rely on other evidence about 

which either party complains, the objections are denied as moot. Accord Balfour 

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Beatty Rail Inc. v. Kansas City S. Ry. Co., 2012 WL 3100833, at *20 (N.D. Tex. 

July 31, 2012) (Lindsay, J.).

1. Nationwide’s Renewed Motion to Strike or Limit 

Plaintiff’s Retained Expert Jeff Seaton (ECF No. 138) 

Nationwide has filed a renewed motion to strike or limit Seaton’s proposed 

opinions and testimony. In support, it argues that Seaton’s expert report—

disclosed on March 20, 2023, along with Highway 67’s Amended Initial 

Disclosures—does not comply “with Federal Rule of Civil Procedure 26(a)(2)’s 

disclosure requirements or Federal Rule of Evidence 702’s admissibility 

requirements. Seaton’s report fails to state the basis and reasons for his opinions 

or other required information.” Def.’s Mot. Strike 1. It also contends that “[l]ater 

attempts to supplement his expert disclosure and report with this information are 

untimely, contradict his earlier sworn testimony, and should be struck.” Id.

Further, Nationwide asserts that “Seaton’s report also fails to comply with Federal 

Rule of Evidence 702 and Daubert because his opinions are based on an unreliable 

methodology and will not help the jury understand the evidence or determine a 

fact in issue.” Id. 

The Court turns first to Nationwide’s motion to strike Seaton’s causation 

opinion and testimony based on its contention that his expert report fails to comply 

with Rule 26(a)(2)(B). Under Rule 26(a)(2)(B), the disclosures of an expert witness 

who is retained or specially employed to provide expert testimony in the case or 

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whose duties as the party’s employee regularly involve giving expert testimony 

must be accompanied by a written report containing:

(i) a complete statement of all opinions the witness will express and 

the basis and reasons for them; (ii) the facts or data considered by the 

witness in forming them; (iii) any exhibits that will be used to 

summarize or support them; (iv) the witness’s qualifications, 

including a list of all publications authored in the previous 10 years; 

(v) a list of all other cases in which, during the previous 4 years, the 

witness testified as an expert at trial or by deposition; and (vi) a 

statement of compensation to be paid for the study and testimony in 

the case.

Fed. R. Civ. 26(a)(2)(B). The Advisory Committee’s Note to Rule 26 provides that 

expert witnesses “must prepare a detailed and complete written report, stating the 

testimony the witness is expected to present during direct examination, together 

with the reasons therefor.” Rule 26 advisory committee’s note (1993 amendments). 

“These Notes also explain that the purpose of the reports is to avoid the disclosure 

of ‘sketchy and vague’ expert information, as was the practice under the former 

rule.” Sierra Club, Lone Star Chapter v. Cedar Point Oil Co., 73 F.3d 546, 571 (5th 

Cir. 1996) (citing Rule 26 advisory committee’s note (1993 amendments)). “The 

purpose of a detailed and complete expert report as contemplated by Rule 26(a) ... 

is to prevent an ambush at trial.” In re Enron Corp. Secs., Derivative & “ERISA” 

Litig., 2007 WL 5023541, at *1 (S.D. Tex. Feb. 1, 2007) (cleaned up). 

Nationwide contends that Seaton’s expert report “fails to provide the basis 

and reasons for his opinions about the alleged damage to the TPO roof membrane 

and the date it occurred, in violation of Rule 26(a)(2)(B)(i).” Def.’s Br. in Support 

of Mot. to Strike 12, ECF No. 139. Nationwide asserts that Seaton’s expert report 

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contains scant descriptions of his observations of the property and review of one 

weather report regarding the April 27, 2020 storm before offering the conclusory 

statement, without analysis, that “[a]s a result of the April 27, 2020, hailstorm the 

integrity of the roof membrane has been compromised” and “the TPO membrane 

needs replacement.” Id. at 11. Nationwide also argues that Seaton’s expert report 

fails to include other required information, “such as a statement of compensation, 

the documents and information he reviewed, a list of any previous cases in which 

he had testified, or a list of any publications authored in the last 10 years (or 

statement that none exist)”. Id. at 18.

Seaton’s expert report does not comply with Rule 26(a)(2)(B)(ii), (iv), (v), 

and (vi). His report is sparse and does not provide a basis or reasons for his opinion 

that “[a]s a result of the April 27, 2020 hailstorm[,] the integrity of the roof 

membrane has been compromised [and] [t]he findings of the inspection conclude 

that the TPO membrane needs replacement.” See App. in Support of Def.’s Mot. to 

Strike, ECF No. 140 at 32-33 (Seaton’s expert report). In addition, his expert report 

does not contain a statement of compensation, the documents and information he 

reviewed, a list of any previous cases in which he had testified, or a list of any 

publications authored in the last 10 years (or statement that none exist). See id. 

Having concluded that Seaton’s expert report does not comply with Rule 

26(a)(2)(B), the Court now determines in its discretion whether to quash (i.e., to 

exclude) Seaton’s report and opinions or to impose some lesser sanction. See, e.g., 

Kim v. Nationwide Mut. Ins. Co., 614 F. Supp. 3d 475, 485 (N.D. Tex. 2022)

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(Fitzwater, J.) (citing Sullivan v. Glock, Inc., 175 F.R.D. 497, 505-06 (D. Md. 1997)

(surveying cases and concluding that “[t]he net result of the analysis of these cases 

is that the trial court has enormous discretion in deciding whether a party’s 

violation of the expert report rules is justified or harmless, and the result will be 

determined by the facts peculiar to each case”)). Under the circumstances here—

which do not involve willful disobedience of a court order or a complete failure to 

comply with Rule 26(a)(2)(B)—the Court concludes that it should impose a 

sanction less drastic than complete exclusion of Seaton’s expert testimony. See 

Galvez v. KLLM Transp. Servs., LLC, 575 F.Supp.3d 748, 757-59 (N.D. Tex. 2021)

(Fitzwater, J.) (describing court’s discretion). That lesser sanction is that Seaton 

must provide a supplemental report or declaration that fills the gaps in his initial 

expert report and fully complies with all requirements of Rule 26(a)(2)(B). See, 

e.g., Kim, 614 F. Supp. 3d at 485 (imposing the same requirement).6

Here, following Nationwide’s initial motion to strike—which the Court 

denied without prejudice when it amended the Scheduling Order—Highway 67 

filed its Second Supplemental Rule 26(a) Initial and Expert Disclosures (ECF No. 

115), which included a Declaration from Seaton dated July 6, 2023 (ECF No. 86 at 

6 In deciding whether exclusion is appropriate, the Court has considered four 

factors: “(1) the explanation for the failure to identify the [information]; (2) the 

importance of the [information]; (3) potential prejudice in allowing the 

[information]; and (4) the availability of a continuance to cure such prejudice.” 

Certain Underwriters at Lloyd’s, London v. Axon Pressure Prod. Inc., 951 F.3d 

248, 270 (5th Cir. 2020) (quotation omitted).

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7-16), supplementing his expert report, and in which he satisfies the requirements 

of Rule 26(a)(2)(B). 

In the event Nationwide is prejudiced with the service of Plaintiff’s Second 

Supplemental Disclosures dated August 9, 2023 (ECF No. 115), containing 

Seaton’s Declaration dated July 6, 2023 (ECF No. 86 at 7-16), Nationwide may 

move to re-open discovery to retake the deposition of Seaton.7 Based on the Court’s 

ruling, it denies as moot any further objections based on whether Seaton 

complied with Rule 26(a)(2)(B), whether his Declaration and attachments thereto 

should be struck as inconsistent with his prior deposition testimony, and any 

objections under Federal Rule of Evidence 702, as these objections pertain to 

Seaton’s initial expert report. See Def.’s Br. in Support of Mot. to Strike 18-21.

2. Highway 67’s Evidentiary Objections

In support of both its response to Highway 67’s motion for partial summary 

judgment and its own motion for summary judgment, Nationwide tenders the 

7 Any argument by Nationwide that it is prejudiced by Seaton’s Declaration or 

service of Plaintiff’s Second Supplemental Disclosures is undermined by its 

representations to the undersigned at an October 2023 pretrial management 

conference and a hearing on a pending motion to compel. The undersigned 

specifically asked both sides what fact and expert discovery still needed to be 

completed since all pretrial deadlines were vacated. Nationwide responded that it 

did not need any additional discovery other than serving additional document 

subpoenas. Notably, Nationwide did not ask to take another deposition of Jeff 

Seaton regarding any matter, issue, or evidence raised in Seaton’s Declaration 

despite taking the position in its previously filed motions to strike briefing (see ECF 

Nos. 45 and 46) that Seaton’s Declaration and Highway 67’s supplemental expert 

disclosures were untimely and that it had been prejudiced by its inability to depose 

Seaton after these additional filings. 

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June 15, 2023 Declaration of Kenneth Bauer (the “Bauer Declaration”). Def.’s 

Summ. J. App., ECF No. 143 at 2-6. Bauer is a Commercial Property Technical 

Director for the Nationwide family of companies, including Depositors, and 

assisted with the claim at issue in this lawsuit. Id. ¶¶ 1, 2. Much of his Declaration 

pertains to information from the activity log and claims file materials maintained 

by Nationwide for the claim. Id. ¶ 2 and Exhs. B-1 through B-20 thereto. 

a. Objections to ¶¶ 5, 6, 7, 8, 9, 11, 12, and 15 of Bauer Declaration

Highway 67 first objects to paragraphs 5, 6, 7, 8, 9, 11, 12, and 15 of the Bauer 

Declaration on “the grounds that these paragraphs contain inadmissible hearsay 

and there are no grounds stated indicating any basis for ‘personal knowledge’ of 

any of the described events[.]” Highway 67’s Obj. 9, ECF No. 156. Highway 67 

further objects because “Mr. Bauer has not been qualified or laid the foundation to 

state what someone else did or why they did it (regarding the multiple references 

to what other people did and why they acted in any way).” Id. 

In response, Nationwide argues that Highway 67’s objections “fail to 

specifically identify the evidence objected to” and, in any event, “Bauer’s testimony 

falls under an exception to the hearsay rule because he is competent to serve as a 

custodian of records and executed a business records affidavit.” Def.’s Resp. to Pl.’s 

Obj. 2, ECF No 158 (citing Fed. R. Evid. 803(6)). The Court agrees.

A hearsay objection must identify the specific statements constituting 

hearsay. See Fed. R. Evid. 103(a)(1); United States v. Avants, 367 F.3d 433, 445 

(5th Cir. 2004) (“Evidentiary objections must be specific.”). “A loosely formulated 

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and imprecise objection” does not suffice. United States v. Polasek, 162 F.3d 878, 

883 (5th Cir. 1998) (citation omitted). Here, Highway 67 objects to paragraphs 5, 

6, 7, 8, 9, 11, 12, and 15 of the Bauer Declaration on “the grounds that these 

paragraphs contain inadmissible hearsay,” Highway 67’s Obj. 9, while failing to 

identify specific statements to which it objects. Nevertheless, the Court will 

consider Highway 67’s objections.

Federal Rule of Civil Procedure 56(c)(4) states that “[a]n affidavit or 

declaration used to support or oppose a motion must be made on personal 

knowledge.” Fed. R. Civ. P. 56(c)(4). Yet under Federal Rule of Evidence 803(6), 

evidence that would otherwise be inadmissible as hearsay is admissible under the 

business records exception if the requirements for admitting the evidence “are 

shown by the testimony of the custodian or another qualified witness.” Fed. R. 

Evid. 803(6)(D); see also United States v. Box, 50 F.3d 345, 356 (5th Cir. 1995)

(noting authentication requirement under Rule 803(6)). A witness may testify to a 

matter only if evidence is introduced sufficient to support a finding that the witness 

has personal knowledge of the matter. Fed. R. Evid. 602. Personal knowledge can 

be “demonstrated by showing that the facts stated reasonably fall within the sphere 

of responsibility of the affiant as a corporate employee.” DIRECTV, Inc. v. Budden, 

420 F.3d 521, 530 (5th Cir. 2005). Personal knowledge may even be “reasonably 

inferred” from the affiant’s position with the company. Id.; see also PNC Bank, 

Nat’l Ass’n v. Ruiz, 2023 WL 3340078, at *3 (5th Cir. May 10, 2023) (same). 

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“There is no requirement that the witness who lays the foundation be the 

author of the record or be able to personally attest to its accuracy. A qualified 

witness is one who can explain the record keeping system of the organization and 

vouch that the requirements of Rule 803(6) are met.” United States v. Brown, 553 

F.3d 768, 792 (5th Cir. 2008) (cleaned up). Business records produced by another 

entity, but subsequently integrated into the records of the party offering them, are 

admissible. United States v. Duncan, 919 F.2d 981, 986 (5th Cir. 1990). 

The Court finds that Bauer is qualified to lay the foundation for the business 

records affidavit as he can explain Nationwide’s record keeping system and assure

that the requirements of Rule 803(6) are met. Bauer is a technical director with 

Nationwide, has worked for Nationwide since the early 2000s in various capacities, 

assists adjusters throughout the country with claims handling, and regularly serves 

as a Rule 30(b)(6) witness. Bauer Decl. ¶ 1; see also App. in Support of Pl.’s Resp. 

in Opp’n to Def.’s Summ. J. Mot. (Pl.’s Summ. J. Resp. App.), ECF No. 150-2 at 71-

72 (Bauer Deposition Tr. 7:24-8:6, 10:11-11:7). In addition, the Bauer declaration 

explains that the records were made at or near the time by someone with 

knowledge, kept in the course of a regularly conducted activity of Nationwide, and 

that making the records was a regular practice. Bauer Decl. ¶ 2. 

Further, the Court finds that Bauer’s review of Nationwide’s claims records 

and declaration that they were kept in the course of its regularly conducted 

activities and made by persons with personal knowledge or from information 

transmitted by persons with knowledge suffices to meet the personal-knowledge 

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requirement. See DIRECTV, 420 F.3d at 530; PNC Bank, 2023 WL 3340078, at 

*3.

For these reasons, the Court overrules Highway 67’s hearsay and personalknowledge objections to paragraphs 5, 6, 7, 8, 9, 11, 12, and 15 of the Bauer 

Declaration and denies its motion to strike this evidence. 

b. Objections to Exhibits to Bauer Declaration

Highway 67 objects to the following exhibits attached to the Bauer 

Declaration as inadmissible hearsay, unauthenticated and/or irrelevant: the 

CoreLogic Report (Exh. B-5); the Ladder Now Report (Exh. B-6); the HVACi 

Report (Exh. B-9); and the Tim Marshall/HAAG Report (Exh. B-15). Highway 67’s 

Obj. 10-11.

First, the Court overrules Highway 67’s argument that these reports are

inadmissible hearsay. Each report is part of Nationwide’s claims materials and 

thus integrated into its business records as part of the ordinary course of 

investigating claims and authenticated by the Bauer declaration as a business 

records affidavit. As recognized by the Fifth Circuit, “[t]here is no requirement that 

the records be created by the business having custody over them.” Duncan, 919 

F.2d at 987; see also Chillmark Fin. Co. v. Spinks Joint Venture, 87 F.3d 1312, 1312 

(5th Cir. 1996) (per curiam) (“[B]usiness records produced by another but 

integrated into the records of the party offering them are admissible.”) (citation 

omitted). 

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As to the CoreLogic Report, the Court also finds that it does not meet the 

definition of hearsay because it is not a statement under Fed. R. Evid. 801(a), but 

rather a machine output using “radar-derived estimates of hail size.” See United 

States v. Hill, 63 F.4th 335, 358-59 (5th Cir. 2023) (noting that it has found “no 

error in district court’s admitting reports containing raw machine-produced data” 

that are “non-testimonial”) (cleaned up) (collecting cases). The Court also 

overrules Highway 67’s authentication and relevance objections to the CoreLogic 

Report as the Bauer declaration authenticates it, and the report is relevant because 

it shows hailfall in 2018, which relates to whether the roof at the Arlington Property 

was damaged on the asserted date of loss or before the inception of the Policy.

With respect to the Ladder Now Report, the Court overrules Highway 67’s 

authentication and relevance objections as the Bauer declaration authenticates it. 

Also, the Ladder Now Report is relevant because it pertains to the earliest 

inspection of the Arlington Property, with the inspector finding no evidence of hail 

damage to the TPO membrane. Whether and when hail damaged the TPO 

membrane will be an issue for the jury. 

Similarly, with respect to the HVACi Report, the Court overrules Highway

67’s authentication and relevance objections as the Bauer declaration 

authenticates the report and it is relevant because it addresses whether hail 

damaged the HVAC units, and Nationwide relied on the report in making its claims

decision.

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As to the Marshall/HAAG Report, the Bauer declaration authenticates the 

report. Additionally, a party may support or dispute summary judgment using 

unsworn expert reports, provided their contents can be presented in admissible 

form at trial. Patel v. Tex. Tech. Univ., 941 F.3d 743, 746-47 (5th Cir. 2019). 

Nationwide has disclosed Marshall as an expert in this case and he can testify to 

his report at trial. In addition, the Court finds the report is relevant to matters that 

will be before the jury, including whether and when the Arlington Property was 

damaged by hail and, if so, whether the investigation was reasonable.

Highway 67 also objects to the Expert Report of David Teasdale (Exh. C) as 

hearsay and unauthenticated. Highway 67’s Obj. 12. The Court overrules these 

objections. Under Rule 56, opinions in an unsworn expert report need not be 

reduced to affidavit form to be competent summary judgment evidence if the 

expert is expected to testify at trial. Lee v. Offshore Logistical and Transport, 

L.L.C., 859 F.3d 353, 355 (5th Cir. 2017). As with Marshall, Nationwide designated 

David Teasdale as an expert, and he can testify to the contents of his report at trial. 

Teasdale’s report is thus admissible summary judgment evidence.

For these reasons, the Court overrules Highway 67’s objections to the 

CoreLogic Report; the Ladder Now Report; the HVACi Report; the Tim 

Marshall/HAAG Report; and the Expert Report of David Teasdale. The Court 

denies Highway 67’s motion to strike this evidence.

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3. Nationwide’s Evidentiary Objections

a. Objection to Exhs. 2 and 3 of Exh. DD

Nationwide objects to Exhibits 2 and 3 of Exhibit DD to Highway 67’s 

appendix in support of its response to Nationwide’s summary judgment motion. 

Def.’s Obj. 6, ECF No. 159.8 These are photographs of the interior of the Arlington

Property dated June 17, 2018, pre-dating the April 27, 2020 hailstorm but 

following the June 5, 2018 hailstorm to which Nationwide points as the cause of 

roof damage. See App. in Support of Pl.’s Resp. to Def.’s Mot. to Strike, ECF No. 

150-2 at 56-57. Nationwide objects that the photographs were produced after the 

June 3, 2023 discovery deadline. Def.’s Obj. 6.

It is undisputed that these photographs were produced after June 3, 2023. 

Nevertheless, the record shows ongoing discovery between the parties after the 

discovery deadline. See App. in Support of Pl.’s Resp. to Def.’s Mot. to Strike, ECF 

No. 152-1 at 316-23. In addition, the record contains the Declaration of Bart 

Higgins, counsel for Highway 67, who states that: 

As a result of Nationwide’s request and the Court’s Order, Plaintiff’s 

owner, Jake Jordan, performed an additional and thorough search for 

documents and found [the photographs] which are photos of the 

interior of the building pre-dating the April 27, 2020 hailstorm at 

issue. Plaintiff immediately produced the additional photos and other 

documents found compliant with Nationwide’s request to conduct 

another search of Jake Jordan’s cell phone and certified to the Court 

on September 20, 2023, that all responsive documents in Plaintiff’s 

possession had been produced. Nationwide should not complain 

8 These photographs are also attached to Seaton’s Declaration. See App. in Support 

of Pl.’s Resp. to Def.’s Mot. to Strike, ECF No. 150-2 at 253-56. 

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about documents produced in compliance with its request and the 

Court order.

Id., ECF No. 152-1 at 344. Higgins also states that while the photographs were 

produced after the discovery deadline, “there is absolutely no prejudice to 

Defendant.” Id. 

Based on this record, the Court overrules Nationwide’s objection, as it is 

evident that the parties continued to engage in discovery after June 3, 2023, and 

in September 2023, the Court specifically ordered Highway 67 to certify that it had 

produced all responsive documents. Ongoing and unresolved discovery disputes 

were the primary reason the undersigned vacated all pretrial deadlines and denied 

without prejudice the earlier motions. See supra note 4. Further, the evidence is 

important, as it relates to the condition of the roof before the April 27, 2020 

hailstorm and, as Higgins states, Nationwide has failed to show any prejudice from 

the delay in production of the photographs. 

b. Objection to Exh. NN

Nationwide objects to Exhibit NN to Highway’s 67’s appendix in support of 

its response to Nationwide’s summary judgment motion. Def.’s Obj. 7. Exhibit NN 

is an e-mail from Mike Frasinetti (on behalf of Highway 67’s anchor tenant) to Jake 

Jordan (co-owner of the Arlington Property), dated April 13, 2023, attaching a 

copy of a lease termination agreement by Highway 67’s anchor tenant. In the email, Mr. Frasinetti states that “[t]he ongoing problems we’ve been having with the 

roofing and the HVAC is a factor in our decision” to terminate the lease. Pl.’s 

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Summ. J. Resp. App., ECF No. 150-2 at 253-56. Nationwide objects that this e-mail

regarding the anchor tenant’s lease termination is “inadmissible hearsay and not 

subject to an exception.” Def.’s Obj., ECF No. 159 at 7. Nationwide also objects “to 

the speculative nature of the email, which Plaintiff purports indicates a lease 

termination in April 2023 due to an April 2020 hail event.” Id. 

The Court notes that Nationwide itself cited to this very e-mail in support of 

its motion for summary judgment and it is included in Nationwide’s appendix. See

Def.’s Summ. J. App., ECF No. 144 at 48. Given these inconsistencies, and because 

the Court finds that the e-mail is not speculative, the Court overrules

Nationwide’s objection to Exhibit NN. 

c. Objection to Exh. FF

Nationwide also objects to Exhibit FF (Seaton’s Declaration) to Highway’s 

67’s appendix in support of its response to Nationwide’s summary judgment 

motions. Def.’s Obj. 7. Because Nationwide makes the same arguments the Court 

already rejected in denying Nationwide’s motion to strike, see supra Sec. A.1, the 

Court overrules Nationwide’s objection to Exhibit FF.

B. Cross-Motions for Summary Judgment on Highway 67’s 

Breach of Contract Claim

The parties have filed cross-motions for summary judgment on Highway

67’s breach of contract claim. Highway 67 seeks entry of summary judgment in its 

favor that: (i) the Corrected Appraisal Award is “binding and enforceable”; and (ii) 

“Nationwide is in breach of contract for not paying the [Corrected] Appraisal 

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Award [in full].” Pl.’s Summ. J. Br. 7, ECF No. 136. Relatedly, Highway 67 seeks 

summary judgment on Nationwide’s Affirmative Defense No. 17, arguing that 

“[n]either the appraisal clause of [the] Policy or Texas law required Highway 67 to 

provide prior notice and/or service of process on Nationwide before the 

appointment of Umpire Brown[.]” Id. 

In response, Nationwide contends that it “has offered evidence of specific 

genuine fact issues as to the enforceability of the award and whether there is 

coverage under the Policy such that Plaintiff’s Partial MSJ fails as a matter of law.” 

Def.’s Summ. J. Resp. Br. 31, ECF No. 146. 

In its cross-motion for summary judgment on the breach of contract claim, 

Nationwide contends it is entitled to summary judgment under the concurrent 

causation doctrine, because Highway 67 has failed to “segregate damages that 

occurred during the policy period from those outside the policy period.” Def.’s 

Summ. J. Br. 12, ECF No. 142. In the alternative, Nationwide moves the Court to 

set aside the appraisal award because “[t]he court that appointed the appraisal 

umpire did not have jurisdiction over [Nationwide], which violated the policy’s 

terms such that the umpire’s actions are void and without effect”; and “[t]he 

appraisal award is the result of fraud, accident, or mistake.” Id. at 13-14.

The Court first addresses the competing arguments regarding the validity 

and enforceability of the Corrected Appraisal Award. 

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1. The Corrected Appraisal Award is valid and enforceable and 

Highway 67’s motion for summary judgment on this point 

should be granted.

Highway 67 moves for partial summary judgment on the validity and 

binding nature of the Corrected Appraisal Award. Pl.’s Mot. Partial Summ. J. 2-3. 

Relatedly, Highway 67 moves for partial summary judgment dismissing 

Nationwide’s Affirmative Defense No. 17, supra, in which Nationwide asserts that 

the Corrected Appraisal Award should be set aside as the umpire’s appointment 

was not made in accordance with the policy. See Def.’s Orig. Ans. and Defenses to 

Pl.’s Third Am. Compl. ¶ 105. 

In response, Nationwide contends that fact questions remain as to whether 

the appraisal award was “issued as a result of fraud, accident, or mistake” or “was 

an honest assessment of necessary repairs.” Def.’s Summ. J. Resp. Br. 15. It further 

contends that, “[t]o the extent it is not dispositive as a matter of law, a fact question 

remains as to whether the appraisal award was not made in compliance with the 

requirements of the policy as the policy requires that a court having jurisdiction 

appoint the umpire.” Id. at 15-16. Further, to the extent the Court declines to grant 

summary judgment in its favor on Highway 67’s breach of contract claim, 

Nationwide moves the Court to set aside the appraisal award because “[t]he court 

that appointed the appraisal umpire did not have jurisdiction over [Nationwide], 

which violated the policy’s terms such that the umpire’s actions are void and 

without effect”; and “[t]he appraisal award is the result of fraud, accident, or 

mistake.” Def.’s Summ. J. Br.13-14.

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An appraisal award is binding and enforceable and may not be set aside by 

the court unless the contesting party shows the award was (1) made without 

authority; (2) the result of fraud, accident, or mistake; or (3) not in substantial 

compliance with the insurance policy. TMM Investments, Ltd. v. Ohio Casualty 

Ins. Co., 730 F.3d 466, 472 (5th Cir. 2013) (citing Texas law); Breshears v. State 

Farm Lloyds, 155 S.W.3d 340, 344 (Tex. App.—Corpus Christi 2004, pet. denied). 

Every reasonable presumption will be indulged to sustain the award. TMM 

Investments, 730 F.3d at 472. 

As the contesting party, Nationwide has the burden to prove at least one of 

the exceptions to enforceability, otherwise it is estopped from contesting the issue 

of damages. Franco v. Slavonic Mut. Fire Ins. Ass’n, 154 S.W.3d 777, 786 (Tex. 

App.—Houston [14th Dist.] 2004, no pet.); TMM Investments, 730 F.3d at 472. 

Nevertheless, the Court must resolve all doubts in Nationwide’s favor and view the 

evidence in the light most favorable to it, as it is the party opposing summary 

judgment. Dhaliwal v. Meridian Sec. Ins. Co., 2022 WL 16836609, at *3 (E.D. Tex. 

Nov. 9, 2022) (citation omitted).

a. Fraud, Accident, or Mistake

Although Nationwide originally asserted that the Corrected Appraisal Award 

was a result of fraud, Kenneth Bauer, Nationwide’s national claim organization’s 

technical director, conceded at his deposition that Nationwide had no evidence of 

fraud and was no longer arguing that the award was the result of fraud. See Pl.’s

Summ. J. App., ECF No. 137-2 at 30 (Depo. Tr. 151:4-151:7). 

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Nationwide first contends the award was the result of a mistake or accident 

because the “record contains evidence that the umpire, Brent Brown, issued his 

award relying on an incorrect assumption that the appraisers’ positions presented 

damage only occurring on the Date of Loss, without himself ever verifying the date 

of the alleged damage.” Def.’s Summ. J. Resp. Br. 15-16. In support, Nationwide 

points to a March 8, 2021 e-mail from Lochridge to Umpire Brown, in which 

Lochridge made the following general disclaimer: “Also, please be aware that in 

accordance with the recent Tippett v. Safeco case, I valued all damage regardless 

of causation or coverage including when that damage may have occurred.” Id. at 

16 (citing March 8, 2021 E-mail from Lochridge, Def.’s Summ. J. App., ECF No. 

144 at 216). In addition, Nationwide asserts that “[t]he record contains no evidence 

that Plaintiff’s appraiser limited the scope of his submission to only damage 

occurring during the policy period. Yet Brown mistakenly believed the positions 

submitted by the appraisers reflected damage only from the one specific event.” Id.

Nationwide concludes that “[b]ecause Brown issued an award he believed was 

limited to damage occurring during the policy period when the record makes clear 

it was not, [it] has presented evidence that the award was the result of fraud, 

accident, or mistake.” Id. 

“A court may set aside an award on the ground of mistake . . . only upon a 

showing that the award does not speak the intention of the appraisers.” MLCSV10 

v. Stateside Enters., Inc., 866 F. Supp. 2d 691, 702 (S.D. Tex. 2012) (Rosenthal, J.) 

(quoting Providence Wash. Ins. Co. v. Farmers Elevator Co., 141 S.W.2d 1024, 

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1026 (Tex. Civ. App.—Amarillo 1940, no writ)). “‘Mistake’ in this context has a 

narrowly defined meaning: an actionable ‘mistake’ is one that caused an award to 

operate in a way the appraisers did not intend.” Garcia v. Lloyds, 514 S.W.3d 257, 

269 (Tex. App.—San Antonio 2016, pet. denied). Mistake “applies when the 

complainant establishes that the appraisers were operating under a mistake of fact 

which resulted in an unintended award.” Abdalla v. Farmers Ins. Exch., 2018 WL 

2220269, at *1 (Tex. App.—Amarillo May 14, 2018, no pet.). 

Here, Nationwide has failed to provide evidence sufficient to raise a genuine 

dispute of material fact that the Corrected Appraisal Award did not speak to 

Umpire Brown’s or the appraisers’ intent. An umpire often must choose between 

two competing values, and Umpire Brown’s decision to agree with the appraisal 

estimate of Highway 67’s appraiser rather than Nationwide’s does not mean his 

award was premised on a mistake. See MLCSV10, 866 F. Supp. 2d at 702. 

Further, Lochridge’s March 8, 2021 e-mail was written before he revised his 

estimate and opinion on July 14, 2021, now opining that a full roof replacement 

was required at the Arlington Property to comply with code requirements and 

providing Brown with new numbers for estimated damages. See Pl.’s Summ. J. 

App., ECF No. 137-1 at 166 (E-mail from Lochridge to Brown dated August 10, 

2021) (“As we discussed on site, I revised my position to include full replacement 

of [Arlington Property] roof...”); id. at 182 (E-mail from Rico to Lochridge dated 

September 15, 2021) (“Your scope and evaluation on [the Arlington Property] 

indicates that you agreed to replace the main roof. Could you please let us know 

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what you saw on the main roof that caused you to agree that there was hail damage 

to the roofing membrane.”); id., ECF No. 137-2 at 238, 245-48 (Lochridge’s 

Revised Estimate dated July 14, 2021). Thus, Umpire Brown had before him 

Lochridge’s revised estimate (not his original estimate in his March 8th e-mail) 

when he issued the Corrected Appraisal Award. Umpire Brown testified at his 

deposition that he based his award of the “new numbers” submitted by Lochridge 

after he changed his opinion and concluded that the roof had to be completely 

replaced. Pl.’s Summ. J. Resp. Br., ECF No. 150-1 at 251 (Depo. Tr. 142:17-142:25, 

143:11-143:25). In light of Lochridge’s revised estimate and Umpire Brown’s 

deposition testimony, Nationwide’s arguments premised on a pro forma 

disclaimer in Lochridge’s March 8, 2021 e-mail fail to raise a material fact issue. 

Further, while Nationwide argues that Umpire Brown “did not verify that 

the appraisal award only contained damages that occurred in the policy period,” it 

does not offer what damages occurring outside the policy period were included in 

the Corrected Appraisal Award. Without that evidence, Nationwide relies on 

speculation, which is not sufficient to raise a genuine dispute of material fact. See 

Clayton v. U.S. Xpress, Inc., 538 F. Supp. 3d 707, 711 (N.D. Tex. 2021) (Lindsay, 

J.) (“Unsubstantiated assertions, improbable inferences, and unsupported 

speculation are not competent summary judgment evidence.”) (citation omitted).

 Nationwide next contends that the award should be set aside because 

Umpire Brown did not follow Xactimate pricing and items used by Lochridge, and, 

therefore, the award was not an “honest assessment of damages.” Def.’s Summ. J. 

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Resp. Br. 15. As previously stated, however, Bauer made clear at his deposition that 

Nationwide had no evidence that the award should be set aside because of fraud, 

see Pl.’s Summ. J. App., ECF No. 137-2 at 30, which encompasses its contention 

that the award was a dishonest assessment of damages.

Even assuming Nationwide had not abandoned arguments premised on 

fraud, Lochridge acknowledged in his revised estimate that “[u]ltimately, the 

prices used within estimates and the items included are completely up to the 

estimator. As stated above, the size and complexity of jobs can have a significant 

impact on the amount of labor required to complete them. Estimators must use 

their skill and knowledge of each loss to determine the appropriate items and

pricing.” See Lochridge’s Revised Estimate, Pl.’s Summ. J. App., ECF No. 137-2 at 

245. In addition, Nationwide presented the same arithmetic and pricing 

arguments to Umpire Brown before he issued the Corrected Appraisal Award. Id., 

ECF No. 137-1 at 172-74. Umpire Brown found no error and rejected these 

arguments. Id. at 177. An umpire’s decision to use certain pricing, labor, and items 

in an award does not constitute evidence to vacate an appraisal award on the 

grounds of a mistake. “An umpire often must choose between two competing 

values,” and the decision to choose one value over another does not mean the 

award was premised on a mistake. MLCSV10, 866 F. Supp. 2d at 702. 

For these reasons, the Court determines that, even viewing all evidence in 

the light most favorable to Nationwide as the non-moving party, Nationwide has 

failed to raise a genuine dispute of material fact that the Corrected Appraisal Award 

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should be set aside based on accident or mistake or because it was not an honest 

assessment of damages. 

b. Compliance with the Policy

Nationwide also contends that “a fact question remains as to whether the 

appraisal award was not made in compliance with the requirements of the policy 

as the policy requires that a court having jurisdiction appoint the umpire.” Def.’s 

Summ. J. Resp. Br. 18. Nationwide posits that jurisdiction, as used in the appraisal 

provision, consists of both subject matter and personal jurisdiction, and that 

“[p]ersonal jurisdiction is composed of two elements: (1) the defendant must be 

amenable to the jurisdiction of the court, and (2) the plaintiff must validly invoke 

that jurisdiction by valid service of process on the defendant.” Id. (citations 

omitted). Nationwide argues that “[i]t is undisputed that Plaintiff did not obtain 

valid service of process [over it] prior to requesting the umpire appointment. To 

the extent this failure is not dispositive of whether the award is enforceable as a 

matter of law, a fact issue remains as to whether the resulting award was issued in 

compliance with the requirements of the policy.” Id. at 19 (citation omitted).

In reply, Highway 67 asserts that Nationwide’s argument “upends appraisal 

law.” Pl.’s Reply 24, ECF No. 156. Highway 67 further points out that the “Policy 

drafted by Nationwide does not require service of citation of a request for the 

appointment of an umpire and no court has ever held that citation is a 

jurisdictional prerequisite to the appointment of an umpire by a court.” Id.

According to Highway 67, Umpire Brown’s appointment satisfied the Policy and 

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Nationwide never contested jurisdiction or challenged the appraisal award as to 

the North Richland Hills Property. Id. at 24-25. The Court agrees and, for the 

reasons that follow, determines that Nationwide’s argument is without legal merit 

and inconsistent with its conduct during and after the appraisal process. 

The relevant portion of the Policy’s appraisal provision provides:

If we and you disagree on the amount of loss, either may make written 

demand for an appraisal of the loss. In this event, each party will select 

a competent and impartial appraiser and will notify the other of the 

appraiser selected within 20 days of such demand. The two appraisers 

will select an umpire. If they cannot agree within 15 days upon such 

umpire, either may request that selection be made by a judge of a 

court having jurisdiction. 

Pl.’s Summ. J. App. 65 (emphasis added). 

Neither party has provided the Court with case law that is on point. The 

Court’s research reveals that two federal district court judges in Texas have opined 

on this exact issue under nearly identical appraisal provisions, and both have 

rejected the argument currently espoused by Nationwide, i.e., that service of 

process is required under these circumstances. See Charter Oak Fire Ins. Co. v. 

Shamrock Steel Sales, Inc., 2019 WL 10351608, at *4 (W.D. Tex. Jan. 3, 2019); 

Janice B. Schwartz, et al. v. Century Surety Co., Civil Action No. 1:11-CV-217-C, 

United States District Court for the Northern District of Texas, Abilene Division, 

Order, ECF No. 8 at 3. 

In Charter Oak Fire, the insurance company sought to set aside an appraisal 

or remove the umpire after the insured invoked appraisal under a nearly identical 

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appraisal provision without providing additional notice or conference with the 

insurer. The district judge denied the motion stating:

After a written demand is made, the appraisal clause provides that 

each party will select a competent and impartial appraiser and notify 

the other of the appraiser selected within 20 days of the demand. The 

two appraisers will select an umpire but, if they cannot agree within 

15 days, “either may request that selection be made by a judge of a 

court having jurisdiction.” Again, Defendant made its appraisal 

demand on March 26, 2018. Therefore, on May 11, 2018—after more 

than the contractually-outlined 35 days passed without Plaintiff 

appointing an appraiser or the parties’ appraisers reaching an 

agreement—the appraisal clause authorized Defendant to file its 

Application requesting that the judge select an umpire to serve in this 

matter. To find otherwise would render the time specifications in the 

Policy meaningless. Coker v. Coker, 650 S.W.2d 391, 393 (Tex. 1983)

(“[C]ourts should examine and consider the entire writing in an effort 

to harmonize and give effect to all the provisions of the contract so 

that none will be rendered meaningless.”).

The operative question, then, is whether either the Policy or Due 

Process demand more notice be given to Plaintiff with regard to the 

Application process. The Policy provides that either may request that 

a judge select an umpire. Applying the presumption of consistent 

usage, “either” should be given the same meaning throughout the 

appraisal clause. Horseshoe Bay Resort, Ltd. v. CRVI CDP Portfolio, 

LLC, 415 S.W.3d 370, 384 n.7 (Tex. App. 2013) (noting that a word or 

phrase is presumed to bear the same meaning throughout a text). 

Plaintiff does not contest that Defendant properly invoked the 

appraisal process—without first notifying Plaintiff—in fulfillment of 

the provision that “either may make a written demand.” In accordance 

with that usage, the Policy authorized Defendant to request that a 

judge select the umpire in this matter without necessitating additional 

notice or conference with Plaintiff. The Court finds that the Policy is 

unambiguous, and Defendant’s actions comported with the demand 

process outlined in its appraisal clause.

Id. at *4 (italicization in original) (underline added) (internal citations omitted). 

The court also found that “the steps outlined by the appraisal clause and taken by 

the [insured] satisfy the requirements of due process.” Id. (citations omitted). 

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In the Schwartz case, supra, Judge Sam Cummings reached the same 

conclusion, denying an insurer’s Motion for Emergency Relief to Vacate Order 

Appointing Umpire and Stay Appraisal Process, predicated on the same argument 

as that made by Nationwide. See Schwartz, Civil Action No. 1:11-CV-217-C, Order, 

ECF No. 8 at 3. In Schwartz, the insurer argued that the process was not fair 

because the insured sought the appointment of the umpire without notice to the 

insurer; however, the Judge Cummings agreed with the insured and found that 

“the insurance contract, presumably drafted by the insurer, does not require that 

notice be given to the other party before seeking appointment of an umpire by a 

court with jurisdiction. As such, any ambiguity as to whether notice is first required 

before seeking judicial intervention is interpreted against the drafter.” Id. (citing 

Assicurazioni Generali, S.p.A. v. Ranger Ins. Co., 64 F.3d 979, 983 (5th Cir. 

1995)). 

The undersigned agrees with the reasoning in these two decisions and 

determines that the appraisal provision in the Policy, nearly identical to that in 

Charter Oak Fire and Schwartz, supra, authorized Highway 67 to request that a 

judge in Tarrant County (where both properties are located) select the umpire in 

this matter without necessitating additional notice or conference with Nationwide. 

The Court finds that the Policy is unambiguous, and Highway 67’s actions 

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comported with the demand process outlined in its appraisal clause and with due 

process concerns.9 

Further, Nationwide’s conduct during and after appraisal undermines its 

argument. Nationwide’s September 16, 2021 letter from its claim stage attorneys 

did not challenge the appointment of Umpire Brown or the appraisal process and 

accepted the appraisal award for the North Richland Hills Property, which was 

favorable to it. See Def.’s Summ. J. App., ECF No. 144 at 2-5. Neither Nationwide 

nor its lawyers claimed that the appraisal for either property was defective or 

improper or in any way void or unenforceable until Highway 67 filed this lawsuit. 

Id. Also, Nationwide paid 50% of the umpire’s professional fees before the 

appraisal awards were issued. Pl.’s Summ. J. Resp. App., ECF No. 150-1 at 249. On 

this record, the legitimacy of Nationwide’s argument is undermined by its 

inconsistent actions. 

The Court also agrees with Highway 67 that, in addition to lacking any legal 

support, Nationwide’s argument “upends appraisal law.” Pl.’s Reply 24 (cleaned 

up). The purpose of appraisal is “to resolve the parties’ dispute over the amount of 

loss for a covered claim without incurring the time and expense of litigation.” 

9 The Court also notes that, given an opportunity to interpret a nearly identical 

appraisal provision in the manner argued by Nationwide, the Texas Supreme Court 

instead denied a petition for mandamus filed by an insurance company. See In re 

Amerisure Ins. Co., No. 13-0723, 2014 Tex. LEXIS 1249, at 1 (Tex. Mar. 21, 2014) 

(orig. proceeding) (denying mandamus relief to an insurance company 

complaining that an appointment of an umpire should be set aside because a judge 

signed the appointment before the insurance company was even notified that the 

application was filed).

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Scalise v. Allstate Texas Lloyds, 2013 WL 6835248, at *3 (S.D. Tex. Dec. 20, 2013). 

As stated by the Texas Supreme Court, “Appraisals require no attorneys, no 

lawsuits, no pleadings, no subpoenas, and no hearings. It would be a rare case in

which appraisal could not be completed with less time and expense than it would 

take to file motions contesting it.” State Farm Lloyds v. Johnson, 290 S.W. 3d 886, 

894 (Tex. 2009).

In short, the Policy detailed the specific process to resolve any disagreement 

between the parties regarding the amount of loss. Each party chose its appraiser 

and, after the appraisers reached an impasse as to the amount of loss and could 

not agree on an umpire, within the time frame specified in the Policy, Highway 67 

sought the appointment of an umpire from a judge in Tarrant County, where the 

two properties are located. The award was entered following the appraisal process 

outlined by the Policy. Brown resolved any disagreements between the parties as 

to the amount of loss when he entered the Corrected Appraisal Award, and two of 

the three signed on to the award. Thus, the appraisal process was consistent with 

the requirements of the Policy. 

Accordingly, Nationwide has failed to raise a genuine dispute of material fact 

sufficient to defeat Highway 67’s motion for summary judgment as to the validity 

and enforceability of the Corrected Appraisal Award. There are no grounds, legal 

or factual, to set aside the Corrected Appraisal Award and the District Judge should 

grant Highway 67’s motion for summary judgment as to the validity and 

enforceability of the Corrected Appraisal Award and dismiss Nationwide’s 

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Affirmative Defense No. 17 (in which Nationwide asserts that the Corrected 

Appraisal Award is void and without effect or, alternatively, it should be set aside 

as the umpire’s appointment was not made in accordance with the Policy)10; deny 

Nationwide’s motion for summary judgment insofar as it challenges the validity of 

the Corrected Appraisal Award; and deny Nationwide’s alternative motion to set 

aside the Corrected Appraisal Award, as it is premised on the same arguments the 

Court has already rejected. 

2. Because both parties have raised genuine disputes of material 

fact as to Nationwide’s liability under the Policy for failing to 

pay the full amount of the Corrected Appraisal Award, the 

cross-motions for summary judgment on Highway 67’s

breach of contract claim should be denied.

A “breach of contract” occurs when a party fails to perform an act it has 

promised to perform. Gaspar v. Lawnpro, Inc., 372 S.W.3d 754, 757 (Tex. App.—

Dallas 2012, no pet.). “In Texas, ‘[t]he essential elements of a breach of contract 

claim are: (1) the existence of a valid contract; (2) performance or tendered 

performance by the plaintiff; (3) breach of the contract by the defendant; and (4) 

10 When, as here, the summary judgment movant will not have the burden of proof 

on a defense at trial, it can obtain summary judgment by pointing the court to the 

absence of evidence on any essential element of the nonmovant’s affirmative 

defense. See Celotex, 477 U.S. at 325. As detailed above, Highway 67 has met this 

burden and has shown that Affirmative Defense No. 17 lacks legal merit. The 

burden has therefore shifted to Nationwide to present evidence that creates a 

genuine dispute of material fact. As discussed above, Nationwide has failed to do 

so, and the Court has determined that its legal arguments seeking to set aside the 

Corrected Appraisal Award lack merit. Therefore, the District Judge should also 

grant Highway 67’s motion for partial summary judgment and dismiss that portion 

of Nationwide’s Affirmative Defense No. 17 seeking to set aside the Corrected 

Appraisal Award and hold that it has no merit. 

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damages sustained by the plaintiff as a result of the breach.’” Mullins v. 

TestAmerica, Inc., 564 F.3d 386, 418 (5th Cir. 2009) (quoting Aguiar v. Segal, 167 

S.W.3d 443, 450 (Tex. App.—Houston [14th Dist.] 2005, pet. denied)).

Courts must construe insurance policies “using ordinary rules of contract 

interpretation.” Nassar v. Liberty Mut. Fire Ins. Co., 508 S.W.3d 254, 257 (Tex. 

2017). Thus, an insurance policy is “interpreted as a whole in accordance with the 

plain meaning of its terms.” Great Am. Ins. Co. v. Primo, 512 S.W.3d 890, 892 

(Tex. 2017). When policy language is “clear and definite,” the policy “is not 

ambiguous and will be construed as a matter of law.” Id. at 893. 

“Initially, the insured has the burden of establishing coverage under the 

terms of the policy.” JAW The Pointe, L.L.C. v. Lexington Co., 460 S.W.3d 597, 

603 (Tex. 2015) (citation omitted).

a. The Court should deny Highway 67’s motion for summary 

judgment as to Nationwide’s liability for breach of contract.

Highway 67 seeks summary judgment on its breach of contract claim, 

arguing that “Nationwide is in breach of contract for not paying the [Corrected] 

Appraisal Award [in full].” Pl.’s Summ. J. Br. 7. In addition, Highway 67 argues 

that it is entitled to summary judgment on its breach of contract claim because 

liability has already been established. See Pl.’s Reply 14, ECF No. 156. 

In response, Nationwide argues that Highway 67 conflates damages and 

liability, and that it has raised a genuine dispute of material fact that the TPO 

membrane of the roof at the Arlington Property was not damaged by hail and, 

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therefore, not covered under the Policy. Def.’s Summ. J. Resp. Br. 23. Alternatively, 

Nationwide contends that even if there is hail damage to the roof, it has raised a 

genuine dispute of material fact as to whether hail damage existed at the property 

prior to the Policy period. Id. at 28. 

Highway 67 is moving for summary judgment on a claim for which it will 

have the burden of proof at trial. To establish that it is entitled to summary 

judgment on this claim, it must establish “beyond peradventure all of the essential 

elements of the claim[.]” Fontenot, 780 F.2d at 1194. This means that it must 

demonstrate that there are no genuine and material fact disputes and that it is 

entitled to summary judgment as a matter of law. See Martin v. Alamo Cmty. Coll. 

Dist., 353 F.3d 409, 412 (5th Cir. 2003). “The court has noted that the ‘beyond 

peradventure’ standard is heavy.” Carolina Cas. Ins. Co. v. Sowell, 603 F. Supp.

2d 914, 923-24 (N.D. Tex. 2009) (Fitzwater, C.J.) (cleaned up). For the reasons 

that follow, Highway 67 has not met this burden, and thus the Court should deny 

Highway 67’s motion for partial summary judgment on its breach of contract 

claim.

First, insofar as Highway 67 seeks to rely on the Corrected Appraisal Award 

as “proof” of its assertion that Nationwide is liable for breaching the terms of the 

Policy, such reliance is unfounded. Under Texas precedent, an appraisal award, by 

itself, does not entitle either the insured or the insurer to judgment in its favor as 

to the insured’s claim against the insurer for breach of contract. See Sec. Nat. Ins. 

Co. v. Waloon Inv., Inc., 384 S.W.3d 901, 905 (Tex. App.—Houston [14th Dist.]

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2012, no pet.) (appraisal award, standing alone, does not determine the merits of 

a breach of contract claim; appraisal is limited to determining amount of loss, not 

whether an insurer should pay); see also Hall v. Germania Farm Mut. Ins. Ass’n, 

2017 WL 4630028 (Tex. App.—Amarillo Oct. 13, 2017, no pet.) (noting that the 

effect of an appraisal award estops one party from contesting the issue of damages 

while leaving open the question of liability); Amtrust Ins. Co. of Kan., Inc. v. 

Starship League City, L.P., 2012 WL 2996489 (E.D. Tex. June 4, 2012) (appraisal 

process does not replace judicial process; party still has the right to ask a court to 

interpret its rights and obligations under policy). As the Texas Supreme Court held 

in State Farm Lloyds v. Johnson, “the scope of appraisal is damages, not liability.” 

Johnson, 290 S.W. 2d at 890. Notably, however, an “appraisal necessarily includes 

some causation element, because setting the ‘amount of loss’ requires appraisers 

to decide between damages for which coverage is claimed from damages caused by 

everything else.” Id. at 892-93. 

With respect to Highway 67’s assertion that liability was established before

the appraisal, this contention is premised on its position that “Nationwide 

unconditionally accepted the claim” and that no coverage issues existed when 

appraisal was invoked. See Pl.’s Reply 14. Nationwide has provided evidence that, 

although it did not cite to any exclusions in the policy relating to coverage, its 

estimates made clear that it only paid for what it determined were covered losses, 

which did not include the roof itself. Nationwide’s revised estimate stated: 

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[Ladder Now’s inspection] did not reveal any storm related damage 

to the TPO membrane. They did find hail damage to the exhaust 

ventilators, the metal roofing on the right and back elevations, and the 

HVAC units condenser fins. . . . At this time, I am attaching our 

Revised Estimate which now includes the covered damages found [at 

the Property].

Def.’s Summ. J. App., ECF No. 143-1 at 203 (emphasis added). 

The revised estimate dated June 25, 2020, added the damage and cost of 

repair identified by HVACi. Id., ECF No. 143-1 at 315-23. The new estimate totaled 

$40,516.12 RCV and $39,638.32 ACV. Id., ECF No. 143-1 at 319. Nationwide’s 

payment summary reflects that, after applying the $20,880.00 hail/wind 

deductible, it issued payment in the amount of $18,758.32 on June 26, 2020. Id., 

ECF No. 143-1 at 324. On June 26, 2020, Rico noted in the activity log that he emailed Movalson a copy of the revised estimate and “[e]xplained estimate and ACV 

payment of $18,758.32.” Id., ECF No. 143-1 at 123. 

And, when it accepted Highway 67’s invocation of appraisal, Nationwide 

expressly stated that “coverage issues remain” surrounding the “extent and 

causation of damage” to the property, that an engineer was being engaged to 

investigate the extent and causation of additional covered damages, if any, and 

explicitly reserved its rights under the Policy and applicable law, including its 

contractual right to deny the claim for lack of coverage even after the appraisal was 

conducted. Id., ECF No. 143-1 at 329-31.11

11 Although HWY 67 contends that the reservation of rights letter was “too little, 

too late[,]” see Pl.’s Reply 14, ECF No. 156, it provides no argument supporting this 

statement. 

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Moreover, Nationwide has raised a genuine dispute of material fact that the 

TPO membrane of the roof at the Arlington Property was not damaged by hail, and 

therefore not covered under the Policy. The Ladder Now Report, prepared 

following the initial inspection of the property, revealed no wind or hail damage to 

the property’s TPO roofing system. Id., ECF No. 143-1 at 147-49. In addition, 

HAAG engineer Marshall inspected the property on behalf of Nationwide and 

issued his report dated August 11, 2020, in which he concluded the TPO roofing 

system was not damaged or fractured by hail. Id., ECF No. 143-1 at 338. 

Nationwide also retained Teasdale to reinspect the property after Highway 67 filed 

suit. Teasdale found no hail damage to the TPO roofing system. Id., ECF No. 143-

1 at 11. 

Because Nationwide has produced summary judgment evidence that there 

was no hail damage to the TPO roofing system at the Arlington Property, a genuine 

dispute of material fact remains concerning whether Nationwide underpaid the 

claim and is liable under the Policy for additional amounts following the Corrected 

Appraisal Award. Accordingly, the Court should deny Highway 67’s motion for 

summary judgment on its breach of contract claim. 

b. The Court should deny Nationwide’s motion for summary 

judgment as to Highway 67’s claim that it is liable for breach of 

contract.

Nationwide contends that it is “entitled to summary judgment because 

plaintiff has not segregated damages during the policy period from non-covered 

damages that fell outside the policy period.” Def.’s Summ. J. Br. 20. Nationwide 

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relies upon the concurrent causation doctrine to form the basis of this argument 

for summary judgment. See id. 

i. Allocation under the Concurrent Cause Doctrine

Under the concurrent causation doctrine, “when covered and non-covered 

perils combine to create a loss, the insured is entitled to recover that portion of the 

damage caused solely by the covered peril. The burden of segregating the damage 

attributable solely to the covered event is a coverage issue for which the insured 

carries the burden of proof. Failure to segregate covered and noncovered perils is 

fatal to recovery.” Advanced Indicator and Manufacturing, Inc. v. Acadia Ins. Co., 

50 F.4th 469, 476-77 (5th Cir. 2022)12; see also Lyons v. Miller Cas. Ins. Co. of 

Tex., 866 S.W.2d 597, 601 (Tex. 1993). Segregation of damages is generally an issue 

of fact for the jury. An insured may meet its burden of proof by presenting evidence 

demonstrating the alleged loss came entirely from a covered cause or evidence by 

which a jury may reasonably segregate covered and non-covered losses. Advanced 

Indicator, 50 F.4th at 476-77; Travelers Indem. Co. v. McKillip, 469 S.W.2d 160, 

12 The Fifth Circuit has noted that “there are substantial gaps” in the doctrine of 

concurrent causation and has made multiple attempts to certify questions 

involving the doctrine to the Supreme Court of Texas. See Overstreet v. Allstate 

Vehicle and Prop. Ins. Co., 34 F.4th 496, 497 (5th Cir. 2022), certified question 

accepted May 27, 2022, certified question dismissed Sept. 16, 2022; Frymire 

Home Servs., Inc. v. Ohio Sec. Ins. Co., 12 F.4th 467 (5th Cir. 2021), certified 

question accepted Sept. 10, 2021, certified question dismissed Dec. 3, 2021; see 

also Advanced Indicator & Mfg., Inc. v. Acadia Ins. Co., 50 F.4th 469, 476 n.4 (5th 

Cir. 2022) (noting that Overstreet and Frymire both settled after certification, so 

the court’s questions regarding when the concurrent doctrine applies and the 

plaintiff’s burden of proof under it remain unanswered).

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162 (Tex. 1971). Expert allocation of damages between covered and excluded risks 

is not necessarily required; “circumstantial evidence can suffice.” Lyons, 866 

S.W.2d at 601 (finding that testimony of insured and her neighbors that there was 

no preexisting damage to the staircase or brick veneer constituted some evidence 

of the extent of damage attributable solely to the windstorm rather than to settling 

foundation, an excluded peril under which insurer denied coverage). 

In the context of summary judgment, to satisfy its burden under the 

concurrent causation doctrine, an insured must present evidence which raises a 

genuine dispute of material fact whether the alleged loss is a covered loss or 

present evidence from which a jury may “reasonably segregate covered and noncovered losses.” See Advanced Indicator, 50 F.4th at 476-77. As in Advanced 

Indicator, the question before this Court is whether Highway 67 presents sufficient 

summary judgment evidence to create a disputed issue of material fact whether the 

damage to the Arlington Property was caused solely by the June 27, 2020 

hailstorm, which occurred during the subject Policy period, or evidence from 

which a jury may “reasonably segregate covered and non-covered losses.”

To defend against summary judgment on this basis, Highway 67 first 

presents summary judgment evidence consisting of a declaration from Jake 

Jordan, one of the owners of the Arlington Property. See Pl.’s Summ. J. Resp. App., 

ECF No. 150-2 at 16-19 (Jordan Decl.). 

In his Declaration, Jordan states that “[a]fter purchasing the [Arlington] 

Property, Highway 67 secured a new anchor tenant, Channel Control Merchants of 

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Texas, LLC d/b/a Dirt Cheap I, LLC (Dirt Cheap) on or about March 8, 2017.” Id.

at 16, Jordan Decl. ¶ 3. Attached to Jordan’s Declaration is a copy of the lease 

agreement between Highway 67 and Dirt Cheap, which states that as a condition 

to delivering the property to the new tenant, Highway 67 was required to “ensure 

the roof is free of leaks” and put on a new overlay over the roof. Id. at 17, Jordan 

Decl. ¶ 3 and Exh. 1 (Lease).

Jordan states that prior to the lease commencing, Highway 67 retained DW 

Gold Construction Company to complete the roof repairs needed to satisfy the 

lease agreement. Id. at 17, Jordan Decl. ¶ 4. The roof work, which was completed 

in May 2018, included both ensuring that the roof was free of leaks and installation 

of the TPO roof overlay before occupancy. Id. Highway 67 also retained an HVAC 

company to replace the existing HVAC units prior to the commencement of the 

work. Id. Based on the completion of this work, the lease with the new tenant 

commenced on August 8, 2018. Id.

Jordan attaches to his Declaration a photograph he took on June 17, 2018, 

of the interior of the Arlington Property, “document[ing] that there were no roof 

leaks at that property.” Id. at 17, Jordan Decl. ¶ 5 and Exh. 2. He also states that 

“Nationwide could have inspected [the property] before binding insurance 

coverage but chose not to.” Id. at 18, Jordan Decl. ¶ 5.

According to his Declaration, Jordan personally inspected the roof at the 

Arlington Property and its HVAC units on a regular basis since Highway 67 

purchased the property in 2017. Id. at 18, Jordan Decl. ¶ 8. He saw “no damage 

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during [his] inspections of the [Arlington Property] roof and HVAC units after the 

June 5, 2018 hailstorm or any other prior hailstorms.” Id.

Jordan states that as part of a regular maintenance program at the Arlington

Property, Highway 67 immediately repaired any water leak and addressed every 

complaint or incident regarding the roof and/or the HVAC units prior to the April 

27, 2020 hailstorm. Id. at 19, Jordan Decl. ¶ 10. He states that the June 17, 2018 

photograph he took “shows the June 5, 2018 hailstorm did not cause damage to 

the [Arlington] Property sufficient to cause a water leak through the interior ceiling 

tiles and there was no need for a full replacement of the roof and indicates that no 

repairs were needed of any kind to the roof.” Id. at 18, Jordan Decl. ¶ 9. He states 

that “the photograph also demonstrates the roof remained watertight after the 

June 5, 2018 hailstorm.” Id.

Further, Jordan asserts that “[p]rior to the April 27, 2020 hailstorm, the roof 

. . . and HVAC units were fully operational and in good condition. After the April 

27, 2020 hailstorm, the roof leaked and the HVAC stopped functioning properly.” 

Id. at 19, Jordan Decl. ¶ 11. Finally, Jordan attaches copies of photographs of the 

interior of the Arlington Property taken after the April 27, 2020 hailstorm 

“showing the water leakage through the interior ceiling tiles following the April 27, 

2020 hailstorm.” Id. at 19, Jordan Decl. ¶ 12 and Exh. 3.

The Court finds that Jordan’s Declaration, alone, presents evidence from 

which a reasonable jury could conclude the April 27, 2020 hailstorm caused 

significant damage that required property repair and/or replacement of the roof 

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irrespective of any damage caused by a previous storm outside the Policy period.

See, e.g., B&L Env’t v. Travelers Lloyds Ins. Co., 2023 WL 4707995, at *4 (E.D. 

Tex. July 24, 2023) (denying insurer’s summary judgment motion based on 

concurrent cause doctrine where summary judgment evidence presented by 

insured included the declaration of an individual with personal knowledge of the 

property’s pre-storm condition who stated that the damage occurred during the 

policy period). 

In addition, Highway 67 presents the expert report of its roof expert, Jeff 

Seaton, as well as his Declaration. Pl.’s Summ. J. Resp. App., ECF No. 150-2 at 150-

58 (Seaton Decl.).

Seaton inspected the Arlington Property on February 23, 2023. The purpose 

of the inspection was to determine the extent of damage caused by hail events that 

occurred on April 27, 2020. Id. at 150, 155, Seaton Decl. ⁋⁋ 2, 10. Seaton concluded 

from his inspection and testing that as a result of the April 27, 2020 hailstorm, the 

integrity of the roof membrane had been compromised and the TPO membrane 

needed to be stripped down to the decking and replaced. Id. at 154, Seaton Decl. ⁋

7. 

In reaching this opinion, Seaton concluded that no prior hailstorm 

(including the June 5, 2018 hailstorm) that pre-dated the April 27, 2020 hailstorm 

caused damage to the roof at the Arlington Property to the extent it necessitated 

the removal of all layers of the roof and a full replacement of the roof. Id. at 152-

57, Seaton Decl. ¶¶ 6-13. 

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Viewing this evidence in the light most favorable to Highway 67, a 

reasonable jury could find the April 27, 2020 storm caused damage to the roof of 

the Arlington Property and a reasonable jury could apportion any damage caused 

by this storm if it determined some damage occurred outside the Policy period. 

See, e.g., Bible Baptist Church v. Church Mut. Ins. Co., 2023 WL 1931912, at *7 

(N.D. Tex. Jan. 18, 2023)(Reno, J.), accepted by 2023 WL 1931350 (N.D. Tex. Feb. 

10, 2023) (Kacsmaryk, J.) (denying insurer’s motion for summary judgment 

predicated on concurrent causation doctrine finding that “Bible Baptist has met its 

burden of allocation” based on the declaration of its roofing contractor that roof 

required complete replacement based on storm within policy period rather than a 

prior storm outside the policy period). 

While Nationwide offers evidence to the contrary, this evidence serves only 

to create a factual dispute for a jury and does not warrant summary judgment in 

its favor. See Advanced Indicator, 50 F.4th at 476-77. See also Bible Baptist 

Church, 2023 WL 1931912, at *7. 

ii. Concurrent versus Independent Causes

A final issue remains relating to the doctrine of concurrent causation that 

the Court must consider. Highway 67 contends that Nationwide improperly 

applies the concurrent cause doctrine because it has raised a genuine dispute of 

material fact that “the covered hail loss is the independent cause of its damages to 

the exclusion of any prior weather event.” Pl.’s Summ. J. Resp. Br. 34. 

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“Texas courts have long recognized that for causes to be concurrent, one 

must ‘[contribute] to the damage produced by the other cause.’” Bible Baptist 

Church, 2023 WL 1931912, at *7 (quoting Cagle v. Commercial Standard Ins. Co., 

427 S.W.2d 939, 944 (Tex. Civ. App.—Austin 1968, no writ)). Therefore, an insurer 

only escapes liability under the doctrine when a covered peril and an excluded peril 

concurrently cause a loss, meaning they must act in concert in some way. Id. (citing 

Guaranty Nat. Ins. Co. v. North River Ins. Co., 909 F.2d 133, 137 (5th Cir. 1990); 

Seahawk Liquidating Trust v. Certain Underwriters at Lloyds London, 810 F.3d 

986, 994-95 (5th Cir. 2016)).

In Bible Baptist Church, the insured similarly argued that the concurrent 

causation doctrine did not apply because replacing the church roof was necessary 

as a result of an entirely independent cause, a 2019 storm that took place during 

the policy period (rather than a 2017 storm that took place prior to the policy 

period). Citing to the “declaration from Johnny Widener, Bible Baptist’s pastor, 

that the roof areas in question ‘were in good order and fully functional’ prior to the 

2019 storm[,]” the court concluded that “there remains [] a genuine dispute on 

[whether there were two independent or concurrent causes] to such a degree that 

summary judgment is not appropriate.” Id. at *8. 

Here, Highway 67 argues that “[r]egardless of any prior hailstorm that may 

or may not have even impacted the area surrounding or nearby the [Arlington]

Property roof, there is a genuine issue of material fact as to the April 27, 2020 

hailstorm being the independent cause of the failure of the roof system and the 

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need for replacement.” Pl.’s Summ. J. Resp. Br. 34. As in Bible Baptist Church, in 

this case, Jordan is his Declaration states that “[p]rior to the April 27, 2020 

hailstorm, the roof . . . and HVAC units were fully operational and in good 

condition. After the April 27, 2020 hailstorm, the roof leaked and the HVAC 

stopped functioning properly.” Pl.’s Summ. J. Resp. App., ECF No. 150-2 at 19, 

Jordan Decl. ¶ 11. 

Viewing all evidence in the light most favorable to Highway 67, the nonmoving party, the Court finds that Highway 67 has a raised a genuine dispute of 

material fact as to whether there were two independent or concurrent causes to 

such a degree that summary judgment is not appropriate.

3. Both parties’ motions for summary judgment on Highway

67’s claim for violations of the TPPCA should be denied. 

The parties have filed cross-motions for summary judgment on Highway

67’s claim that Nationwide violated the TPPCA. Highway 67 contends that 

“Nationwide is liable for violating the [TPPCA] by not paying the full amount of 

interest and attorney’s fees owed for its failure to pay the [Corrected] Appraisal 

Award timely and in full.” Pl.’s Summ. J. Br. 7. It seeks partial summary judgment 

on its claim that Nationwide violated §§ 542.056(a), 542.058, and 542.060 of the 

TPPCA as a matter of law. Id. 

In response, Nationwide contends that the Court should deny Highway 67’s 

motion for summary judgment on its claim under the TPPCA because (i) Highway

67 has failed to establish Nationwide’s liability under the Policy, thereby 

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precluding summary judgment on its extracontractual claim; and (ii) Nationwide 

has produced evidence that it complied with all statutory deadlines. Def.’s Summ. 

J. Resp. Br. 31-32, 32-33. Nationwide has filed a cross-motion for summary 

judgment on Highway 67’s claim that it violated the TPPCA, making the same 

arguments as in its response brief. Def.’s Summ. J. Br. 24-26.

To prevail on a Chapter 542 cause of action, Highway 67 must prove “(1) a 

claim under an insurance policy; (2) that the insurer is liable for the claim; and (3) 

that the insurer has failed to follow one or more sections of [the Prompt-Payment 

Statute] with respect to the claim.” Weiser-Brown Operating Co. v. St. Paul 

Surplus Lines Ins. Co., 801 F.3d 512, 518 (5th Cir. 2015) (quoting GuideOne Lloyds 

Ins. Co. v. First Baptist Church of Bedford, 268 S.W.3d 822, 830-31 (Tex. App.—

Fort Worth 2008, no pet.)).

As set forth in the previous section, Highway 67 has not established that 

Nationwide is liable for the claim at this summary judgment stage of litigation 

because it has not carried its burden of establishing the absence of a genuine 

dispute of material fact as to Nationwide’s liability under the Policy. Accordingly, 

the District Court should deny Highway 67’s motion for partial summary judgment 

on its claims for violations of the TPPCA. See Harris v. Am. Prot. Ins. Co., 158 

S.W.3d 614, 623 (Tex. App.—Fort Worth 2005, no pet.) (“An insurer will not be 

held liable for violating [the TPPCA] unless it is found liable for the underlying 

insurance claim.”). Whether Defendant wrongfully delayed payment need not be 

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considered unless and until a jury determines that Nationwide is liable under the 

Policy for amounts in excess of what it has already paid on the claim. 

Further, as the Court has already determined that Highway 67’s breach of 

contract claim will proceed to trial, the Court concludes that summary judgment 

in Nationwide’s favor on this claim is premature and, therefore, Nationwide’s 

motion for summary judgment on this claim should also be denied.

4. Nationwide’s motion for summary judgment on Highway 67’s 

claims for breach of the duty of good faith and fair dealing

and violations of Chapter 541 of the Texas Insurance Code and 

of the DTPA should be denied.

Nationwide seeks summary judgment on Highway 67’s claims for violations

of Chapter 541 of the Texas Insurance Code and the DTPA, as well as for breach of 

the duty of good faith and fair dealing. In support, Nationwide contends it is 

entitled to summary judgment because (1) Highway 67 has not “establish[ed] a 

right to receive benefits under the policy or an injury independent of a right to 

benefits”; and (2) “even if [Highway 67] was able to establish some evidence-based 

dispute over amounts owed on the policy, [it] cannot recover on its extracontractual claims because it cannot establish anything more than a bona fide 

dispute exists over the amounts allegedly owed on the claim.” Def.’s Summ. J. Br. 

27. 

Under Texas law, “[a]n insurer has a duty to deal fairly and in good faith with 

its insured in the processing and payment of claims.” Republic Ins. Co. v. Stoker, 

903 S.W.2d 338, 340 (Tex. 1995); see also Medical Care Am., Inc. v. Nat’l Union 

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Fire Ins. Co., 341 F.3d 415, 425 (5th Cir. 2003). “A breach of the duty of good faith 

and fair dealing is established when: (1) there is an absence of a reasonable basis 

for denying or delaying payment of benefits under the policy and (2) the carrier 

knew or should have known that there was not a reasonable basis for denying the 

claim or delaying payment of the claim.” Casey v. State Farm Lloyds, 2022 WL 

3702024, at *5 (N.D. Tex. Aug. 26, 2022) (Lindsay, J.) (citation omitted); see also 

Universe Life Ins. Co. v. Giles, 950 S.W.2d 48, 55-56 (Tex. 1997) (“An insurer 

breaches its duty of good faith and fair dealing when the insurer had no reasonable 

basis for denying or delaying payment of [a] claim, and the [insurer] knew or 

should have known that fact.”) (internal quotations omitted).

Whether an insurer’s liability has become reasonably clear is a question of 

fact. See Giles, 950 S.W.2d at 56 (“[W]e reject the suggestion that whether an 

insurer’s liability has become reasonably clear presents a question of law for the 

court rather than a fact issue for the jury.”). On the other hand, “[e]vidence 

establishing only a bona fide coverage dispute does not demonstrate bad faith.” 

State Farm Fire & Cas. Co. v. Simmons, 963 S.W.2d 42, 44 (Tex. 1998); see also 

State Farm Lloyds v. Nicolau, 951 S.W.2d 444, 448 (Tex. 1997) (evidence that 

shows a “bona fide coverage dispute does not, standing alone, demonstrate bad 

faith.”). Stated another way, “an insurer will not be faced with a tort suit for 

challenging a claim of coverage if there was any reasonable basis for denial of that 

coverage.” Higginbotham v. State Farm Mut. Auto. Ins. Co., 103 F.3d 456, 460 

(5th Cir. 1997).

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Texas courts have ruled that these extra-contractual tort claims require the 

same predicate for recovery as bad faith causes of action in Texas. See Hall Arts 

Ctr. Office, LLC v. Hanover Ins. Co., 327 F. Supp. 3d 979, 999 (N.D. Tex. 2018)

(Fitzwater, J.) (citation omitted); see also Casey, 2022 WL 3702024, at *5 (quoting 

Nat’l Sec. Fire & Cas. Co. v. Hurst, 2017 WL 2258243, at *6 (Tex. App.—Houston 

[14th Dist.] May 23, 2017) (“extra-contractual tort claims pursuant to the 

Insurance Code [ ] require the same predicate for recovery as a bad faith claim 

under a good faith and fair dealing violation.” “When an insured joins claims under 

the Texas Insurance Code [ ] with a bad faith claim, all asserting a wrongful denial 

of policy benefits, if there is no merit to the bad faith claim, there can be no liability 

on either statutory claim.” Id. (quoting O’Quinn v. General Star Indem. Co., 2014 

WL 3974315, at *8 (E.D. Tex. Aug. 5, 2014)). The Court, therefore, examines 

Highway 67’s extracontractual claims for violation of Chapter 541 of the Texas 

Insurance Code, DTPA, and breach of the common law duty of good faith and fair 

dealing simultaneously.

Because the Court has already concluded that Highway 67’s breach of 

contract claim should proceed to trial, see supra, it should also deny Nationwide’s 

motion for summary judgment as to Highway 67’s extracontractual claims. 

Nationwide’s primary basis for summary judgment is that Highway 67 cannot 

recover policy benefits for a statutory violation under the Texas Insurance Code if 

the insured does not have a right to benefits under the Policy. See Def.’s Summ. J. 

Br. 27. The District Court should reject this argument because, as set forth above, 

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Highway 67 has raised a genuine dispute of material fact as to whether it may still 

recover under the Policy.

The only additional argument for summary judgment on Highway 67’s 

extracontractual claims is that Highway 67 cannot prove Nationwide’s bad faith 

where the parties had a bona fide dispute over coverage. See id. at 27-31. The 

District Court should still deny the request for summary judgment. The summary 

judgment evidence reflects that, despite uncontested evidence that its own 

appraiser, Lochridge, concluded that a full roof replacement was required at the 

Arlington Property and that he had appraised the loss at $621,361.8, see Pl.’s 

Summ. J. App. at 166, Nationwide declined to pay for replacement and instead 

calculated, without any references to the Policy or prior payments or Lochridge’s 

own estimate of the appraisal loss, that Nationwide owed an additional payment 

of only $135,004.0749 (ACV) plus $16,177.65 in prompt penalty interest, for a total 

of $151,181.72.50. See Def.’s Summ. J. App., ECF No. 144 at 1; id., ECF No. 143-1 

at 179-86. This raises the issue of whether it was reasonable for Nationwide to 

ignore its own appraiser and opt instead to pick and choose which line items of the 

Corrected Appraisal Award it believed were covered under the Policy. 

Further, Nationwide did not have an engineer inspect the roof at the 

Arlington Property until after it issued payment in the amount of $18,758.32 on 

June 26, 2020, and after its insured invoked appraisal. An insurer may breach its 

duty of good faith and fair dealing by failing to reasonably investigate a claim. 

Giles, 950 S.W.2d at 56 & n.5. 

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And, while a payment summary shows Nationwide issued payment in the 

amount of $18,758.32 on June 26, 2020, unlike with the North Richland Hills

Property, absent from the claim file is any written communication documenting 

that Nationwide provided an estimate to Highway 67 or any of its representatives 

or any explanation of the basis for the $18,758.32 payment as to what items were 

covered or not covered under the Policy. 

Finally, Nationwide never challenged the appraisal award or the authority of 

Umpire Brown to issue the award on the North Richland Hills Property (for which 

Umpire Brown agreed with Lochridge’s appraisal) but only the Arlington Property 

(for which Umpire Brown agreed with Laczynski’s appraisal). This inconsistency is 

not explained.

On this summary judgment record, if the fact finder agrees there was not a 

reasonable basis for refusing to pay the entire amount of the Corrected Appraisal 

Award, a reasonable factfinder could conclude that Nationwide acted in bad faith 

in paying only a portion of the award as to the Arlington Property. For these 

reasons, the District Judge should deny Nationwide’s motion for summary 

judgment on Highway 67’s claims for violations of Chapter 541 of the Texas 

Insurance Code and the DTPA, as well as for breach of the duty of good faith and 

fair dealing.

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5. Nationwide’s motion for summary judgment as to 

consequential damages should be denied.

Highway 67 argues it is entitled to consequential damages for its anchor 

tenant’s early lease termination, including lost rents, broker fees, tenant 

improvement allowances, and a finance charge from restructuring its loan on the 

property. See Third Am. Compl. ¶ 29. Highway 67 contends these damages were a 

foreseeable result of Nationwide’s failure to pay the full amount of the Corrected 

Appraisal Award, which included amounts for roof replacement at the Arlington

Property. 

Highway 67 has introduced evidence that its anchor tenant, Dirt Cheap, 

terminated the lease before its expiration due—in part—to the unrepaired water 

and roof damages allegedly caused by the hailstorm at issue. See Pl.’s Summ. J. 

Resp. App., ECF No. 150-2 at 253-56 (e-mail from Frasinetti to Jordan dated April 

13, 2023). 

Nationwide contends it is entitled to summary judgment with respect to 

consequential damages because Highway 67 “cannot establish the claimed 

damages were foreseeable at the time of contracting.” Def.’s Summ. J. Br. 35. It 

also argues that the damages are too remote and “not directly traceable to the 

wrongful act.” Id. at 36.

Texas law requires that consequential damages be foreseeable at the time of 

contracting. Signature Indus. Servs., LLC v. Int’l Paper Co., 638 S.W.3d 179, 184 

(Tex. 2022); accord Basic Cap. Mgmt., Inc. v. Dynex Com., Inc., 348 S.W.3d 894, 

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901 (Tex. 2011) (“Foreseeability is a fundamental prerequisite to the recovery of 

consequential damages for breach of contract.”). “A loss that is not the probable 

consequence of the breach, from the breaching party’s perspective at the time of 

contracting, is not foreseeable.” Signature Indus. Servs., 638 S.W.3d at 186

(quotation omitted); accord id. (“[C]onsequential damages are not recoverable 

unless the parties contemplated at the time they made the contract that such 

damages would be a probable result of the breach.”) (quoting Stuart v. Bayless, 

964 S.W.2d 920, 921 (Tex. 1998)). In addition, consequential damages “must be 

directly traceable to the wrongful act and result from it . . . . [I]f damages are too 

remote, too uncertain, or purely conjectural, they cannot be recovered.” Arthur 

Andersen & Co. v. Perry Equip. Corp., 945 S.W.2d 812, 816 (Tex. 1997).

Instructive here is the case of Standard Fire Ins. Co. v. Fraiman, 588 S.W.2d 

681, 684 (Tex. Civ. App. 1979). In Fraiman, an appraiser was appointed, an award 

was made, and the insurer paid the appraised amount of the loss. Id. at 683. 

Fraiman then sued the insurer, Standard, for damages resulting from the insurer’s 

breach of the appraisal provision by refusing to submit the amount of loss caused 

by fire to the apartment complex to the appraisal process. Id. A jury awarded 

Fraiman consequential damages, including lost apartment rentals and “telephone 

and travel expenses.” Id. On appeal, the insurer contended that the submitted 

“consequential damages” were not recoverable under a standard fire insurance 

policy and that the only amounts contemplated by the parties were those covered 

fire losses that the insurer had contracted to pay as set out in the policy. Id. The 

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court of appeals disagreed. Id. at 684. Noting that the insurer had not repudiated 

its obligation to pay under the policy, the court characterized the suit as based upon 

a “procedural provision” of the policy, not upon the terms of the policy itself and 

that “a party clearly breaching an appraisal clause of an insurance policy should be 

liable in damages caused by such breach.” Id. The Fraiman court held that with 

the presence of bad faith or a controlling statute (which would include a DTPA 

claim) the plaintiff could recover consequential damages for breach or repudiation 

of an appraisal provision in an insurance policy. Id. at 684. 

On this record, the Court rejects Nationwide’s argument that it is entitled to 

judgment as a matter of law on Highway 67’s claim for consequential damages. The 

Court finds that Highway 67 has raised a genuine dispute of material fact regarding 

whether its lost tenant damages were foreseeable following Nationwide’s decision 

to not pay the full amount of the Corrected Appraisal Award. And, whether the 

damages are directly traceable to its actions is a disputed issue for the jury. In 

addition, the Court rejects Nationwide’s contention that Highway 67’s lost tenant 

damages are remote or cannot be determined. Highway 67 set forth its damage 

calculations in its Supplemental Rule 26 Disclosures as well in other filings. See

ECF No. 35 at 4-5; ECF No. 164-1 at 3. 

For these reasons, the District Judge should deny Nationwide’s motion for 

summary judgment as to Highway 67’s claim that it is entitled to consequential 

damages stemming from its anchor tenant’s lease termination. 

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Order and Recommendation

For the above-stated reasons, the undersigned DENIES Defendant’s 

Renewed Motion to Strike or Limit Plaintiff’s Retained Expert Jeff Seaton (ECF 

No. 138). Further, the undersigned recommends that the District Judge: 

(1) GRANT in part and DENY in part Plaintiff’s Motion for Partial 

Summary Judgment (ECF No. 135). Specifically, the District Judge 

should GRANT Highway 67’s motion with respect to its claim that 

the Corrected Appraisal Award is valid and enforceable and its claim 

that Nationwide’s Affirmative Defense No. 17 should be dismissed

insofar as it seeks to set aside the Corrected Appraisal Award and 

DENY its Motion for Partial Summary Judgment with respect to its 

claim that Nationwide is liable for breach of contract for failing to 

pay the full amount of the Corrected Appraisal Award and for 

violations of the Texas Prompt Payment of Claims Act; and 

(2) DENY Defendant’s Motion for Summary Judgment and, in the 

Alternative, Motion to Set Aside Appraisal Award (ECF No. 141).

SO ORDERED and RECOMMENDED. 

June 17, 2024. 

 ____________________________

REBECCA RUTHERFORD

UNITED STATES MAGISTRATE JUDGE

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INSTRUCTIONS FOR SERVICE AND

NOTICE OF RIGHT TO APPEAL/OBJECT

A copy of this report and recommendation shall be served on all parties in 

the manner provided by law. Any party who objects to any part of this report and 

recommendation must file specific written objections within 14 days after being 

served with a copy. See 28 U.S.C. § 636(b)(1); Fed. R. Civ. P. 72(b). To be specific, 

an objection must identify the specific finding or recommendation to which 

objection is made, state the basis for the objection, and specify the place in the 

magistrate judge’s report and recommendation where the disputed determination 

is found. An objection that merely incorporates by reference or refers to the 

briefing before the magistrate judge is not specific. Failure to file specific written 

objections will bar the aggrieved party from appealing the factual findings and legal 

conclusions of the magistrate judge that are accepted or adopted by the district 

court, except upon grounds of plain error. See Douglass v. United Servs. Auto. 

Ass’n, 79 F.3d 1415, 1417 (5th Cir. 1996). 

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