Opinion ID: 30554
Heading Depth: 2
Heading Rank: 6

Heading: Texas Insurance Code Claim for Statutory Penalties

Text: 53 We now consider whether the district erred in granting Mid-Continent summary judgment on Performance's final extracontractual claim, its claim for statutory penalties. 54 Performance argues that the district court erred in granting summary judgment for Mid-Continent because Mid-Continent improperly denied coverage. Mid-Continent argues that summary judgment was proper on each of the three claims, so no statutory penalties are warranted. The district court rejected Performance's statutory claim for damages because it found that Mid-Continent properly denied coverage on all of the claims. 55 The Texas Insurance Code provides for statutory damages for failure to pay an insurance claim within a specified time if an insurer is found liable under a policy, even if the insurer had a reasonable basis for denying coverage. See Tex. Ins.Code Ann. art. 21.55, §§ 3(f), 6 (Vernon 1981 & Supp.2003); see also St. Paul Reinsurance Co. v. Greenberg, 134 F.3d 1250, 1255 (5th Cir.1998) ([T]he Texas penalty applies automatically if the claim is not paid within the period allowed.). Statutory damages apply if the insurer has delayed payment of a valid claim for more than sixty days. See Higginbotham, 103 F.3d at 461; Tex. Ins.Code Ann. art. 21.55, § 3(f). 21 56 The sole basis for finding liability under Article 21.55, then, is that the requisite time has passed and the insurer was ultimately found liable for the claim. Because we find that the district court properly granted summary judgment for Mid-Continent on each of Performance's three claims, we affirm the district court's grant of summary judgment on this issue as well.