UNITED STATES DISTRICT COURT EASTERN DISTRICT OF TEXAS

 

FIRST BAPTIST CHURCH DAISETTA 

TEXAS,

 Plaintiff, 

versus

CHURCH MUTUAL INSURANCE 

COMPANY,

 Defendant. 

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 NO. 1:23-cv-00193-MAC-ZJH

ORDER OVERRULING OBJECTIONS AND ADOPTING MAGISTRATE JUDGE’S 

REPORT AND RECOMMENDATION

On May 26, 2023, the court referred this case to the Honorable Zack Hawthorn, United 

States Magistrate Judge, for pretrial management. Doc. No. 8. Pending before the court is 

Defendant Church Mutual Insurance Company (“Church Mutual”)’s Motion for Summary 

Judgment. Doc. No. 13. On May 29, 2024, Judge Hawthorn issued his Report and 

Recommendation (Doc. No. 16), which recommends granting Defendant’s Motion for Summary 

Judgment (Doc. No. 13). On June 24, 2024, Plaintiff First Baptist Church Daisetta Texas (“First 

Baptist”) timely filed its Objections. Doc. No. 18. On July 15, 2024, Defendant Church Mutual 

filed its Response to Plaintiff’s Objections. Doc. No. 21. 

A party who files timely written objections to a magistrate judge’s report and 

recommendation is entitled to a de novo determination of those findings or recommendations to 

which the party specifically objects. 28 U.S.C. § 636(b)(l)(c); FED. R. CIV. P. 72(b)(2)–(3). 

The court has conducted a de novo review of Judge Hawthorn’s Report and Recommendation 

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and has carefully considered First Baptist’s objections. The Court finds that Judge Hawthorn’s 

findings and conclusions of law are correct and that First Baptist’s objections are without merit. 

1. Objection I: Plaintiff is not required to prove an injury independent of policy

benefits to recover tort damages.

First Baptist does not object to any specific finding or conclusion in Judge Hawthorn’s

Report and Recommendation regarding whether it was required to prove an independent injury 

to recover on its bad faith claims. See generally Doc. No. 18 at 1–3. Rather, it merely restates 

its prior argument that it need not provide evidence of an independent injury to succeed on its 

Chapter 541 claims because the entitled-to-benefits rule allows an insured to recover policy 

benefits as damages in tort. Id. at 2 (citing Lyda Swinerton Builders, Inc. v. Oklahoma Sur. 

Co., 903 F.3d 435, 450 (5th Cir. 2018)). Judge Hawthorn considered and rejected this argument

in his Report and Recommendation, and it is therefore unavailing. Doc. No. 16 at 7–10.

Judge Hawthorn correctly noted that an insurer’s full payment of an appraisal award, 

which occurred here, “forecloses an insurer’s liability for common law and statutory bad faith 

unless the insured suffered an independent injury.” Id. at 8. Thus, Judge Hawthorn correctly 

concluded that because Church Mutual paid First Baptist the entire appraisal award, First Baptist

cannot recover damages on an entitlement-to-benefits theory. Id. Moreover, Judge Hawthorn 

correctly concluded that First Baptist failed to allege “an independent injury that is ‘truly 

independent’ of its right to receive policy benefits.” Id. at 9. Accordingly, the court overrules 

this objection. 

2. Objection II: Church Mutual’s payment of the appraisal award does not bar First

Baptist from recovering damages in tort under the entitled-to-benefits rule.

First Baptist fails to object to any specific finding or conclusion in Judge Hawthorn’s

Report regarding its ability to recover tort damages despite Church Mutual’s payment of the 

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appraisal award. Rather, First Baptist generally contends that an insurer’s payment of an 

appraisal award does not bar an insured from proceeding on an entitled-to-benefits theory to 

recover damages in tort because an insurer’s payment of an appraisal award complies with only 

its contractual duties owed to its insureds. Doc. No. 18 at 3–4. This is merely a restatement of 

its prior argument in its Response (Doc. No. 14 at 8), which was considered and rejected by 

Judge Hawthorn in his Report and Recommendation. 

Judge Hawthorn correctly noted that for bad faith claims under Chapter 541, an insured 

can either (1) establish it sustained actual damages by not receiving benefits under an insurance 

policy to which it is entitled and that such damages were caused by the insurer’s statutory 

violation; or (2) show it sustained actual damages for a statutory violation that caused an injury 

independent from the loss of benefits. Doc. No. 16 at 7–8. The court agrees with Judge 

Hawthorn’s finding that First Baptist fails to establish that it suffered any actual damages other 

than the withholding of policy benefits under either theory. Id. at 8, 10. As Judge Hawthorn 

correctly concluded in his Report, it is undisputed that Church Mutual paid the entire appraisal 

award and First Baptist has received all benefits under the policy to which it is entitled, and First 

Baptist’s vague, conclusory allegations that First Baptist suffered “actual damages” are not 

sufficient to establish an independent injury. Id. at 8–9. The Court agrees with Judge 

Hawthorn’s conclusion that First Baptist has not identified a genuine dispute of material fact as 

to whether it suffered actual damages apart from the withholding of policy benefits. Id. at 10. 

Accordingly, this objection is overruled. 

It is, therefore, ORDERED that Plaintiff First Baptist Church’s Objections to the 

Magistrate Judge’s Report and Recommendation (Doc. No. 18) are OVERRULED. 

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It is further ORDERED that Judge Hawthorn’s Report and Recommendation (Doc. No. 

16) is ADOPTED. Defendant Church Mutual’s Motion for Summary Judgment (Doc. No. 13)

is GRANTED. Accordingly, Plaintiff First Baptist’s claims against Defendant Church Mutual 

are DISMISSED WITH PREJUDICE. The Court will enter a Final Judgment separately. 

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