Opinion ID: 2654478
Heading Depth: 2
Heading Rank: 2

Heading: Prompt Payment Statute

Text: Alterra claims that the district court erroneously ordered Alterra to pay an 18% penalty to Rowland, in addition to the amount of the claim and attorney fees, and that the district court improperly calculated the date from which the interest would accrue. The Texas Insurance Code includes a subchapter providing for the “Prompt Payment of Claims.” See Tex. Ins. Code Ann. §§ 542.051–.061 (“Prompt Payment Statute”). In the event an insurance carrier fails to meet its obligations under the statute, such as by refusing to timely pay a valid claim, the claimant is entitled to 18% interest as damages and reasonable attorney’s fees. Id. § 542.060. By its terms, the Prompt Payment Statute only applies to first-party claims. Id. § 542.051. Alterra argues that Rowland’s claim is a third-party claim, so the statute does not apply. The Prompt Payment Statute does not define first-party claims, but Texas law distinguishes between first-party and third-party claims “based on the claimant’s relationship to the loss.” Evanston Ins. Co. v. ATOFINA Petrochemicals, Inc., 256 S.W.3d 660, 674 (Tex. 2008). In a first-party claim, the insured “seeks recovery for the insured’s own loss”; in a third-party claim, the insured “seeks coverage for injuries to a third party.” Id. at 674 (internal quotation marks and citations omitted). Because a bailee has an insurable interest in the bailed goods, see Cumis Ins. Soc’y, Inc., 480 S.W.2d at 766, insurance claims to recover for losses to the bailed goods are first-party claims, cf. United Nat’l, 2014 WL 260595, at . Rowland’s claim is a first-party claim because Rowland has an insured interest in the game consoles. Thus, the Prompt Payment Statute applies. Alterra also claims that the district court’s imposition of the penalty with an accrual date of April 11, 2011, is improper because it claims that it was not 9 Case: 13-20341 Document: 00512541689 Page: 10 Date Filed: 02/24/2014 No. 13-20341 presented with proof of the value of the stolen cargo until March 15, 2013. Rowland contends that the accrual date of April 11, 2011, is appropriate because Alterra had sixty days from when Alterra issued its February 9, 2011 report to pay the claim, and Alterra’s own report showed that the loss exceeded the $300,000 policy limit. Since Alterra was fully aware that the loss exceeded the policy limit as of April 11, 2011, we find that the district court did not abuse its discretion in awarding prejudgment interest accruing as of this date. Jauch, 470 F.3d at 214.