Court Opinion

ID: 3128754
Source: CourtListenerOpinion
Date Created: 2015-10-16 16:05:32.829887+00
Date Added: 2024-06-11T07:38:27.143881
License: Public Domain

OPINION
                                       No. 04-09-00705-CV

                      SOUTHLAND LLOYDS INSURANCE COMPANY,
                                    Appellant

                                                  v.

                           David Onofre CANTU and Guadalupe Cantu,
                                          Appellees

                    From the 293rd Judicial District Court, Zavala County, Texas
                                Trial Court No. 05-11-11164-ZCV
                           Honorable Cynthia L. Muniz, Judge Presiding

Opinion by:      Sandee Bryan Marion, Justice

Sitting:         Catherine Stone, Chief Justice
                 Sandee Bryan Marion, Justice
                 Steven C. Hilbig, Justice

Delivered and Filed: March 30, 2011

REVERSED AND RENDERED; REMANDED

                                         BACKGROUND

           On April 4, 2004, David and Guadalupe Cantu’s house was damaged in a hailstorm. The

Cantus’ house was insured under a policy with Southland Lloyds Insurance Co. Southland sent

an independent adjustor, Bobby Arnold, to the Cantus’ home to inspect the damage on April 13,

2004. On April 27, 2004, Southland mailed to the Cantus a copy of Arnold’s repair estimate and

a letter advising them that a claim check in the amount of $2,036.85 would be sent to their
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insurance agent within seven working days. On April 29, 2004, the check was sent to the

Cantus’ insurance agent at SAS-Lowery Insurance Agency. The Cantus cashed the check, but

did not otherwise respond to Southland regarding the Arnold estimate. However, in June 2004,

the Cantus notified Southland by letter that they had employed Joe Ortiz as a “building

consultant” to investigate the extent of loss to their home. In the letter, the Cantus authorized

Ortiz and/or Marcus Stites to act on their behalf. However, because Ortiz never returned Mr.

Cantu’s telephone calls, the Cantus later decided to hire an attorney.          On July 10, 2004,

Southland received an estimate prepared by Stites for Joatmon Loss Services in the amount of

$6,855.66. Southland, unaware that the Cantus were dissatisfied with Ortiz and had hired an

attorney, asked Arnold to contact Stites to determine why the estimate was so high. Southland

never received a response from Joatmon or Stites. In June 2006, Bob Barton of Barton Claim

Service inspected the Cantus’ house at their request. He prepared a report that concluded most

of the interior and exterior surfaces of the house had to be replaced for a total of $65,000.

       The Cantus eventually sued Southland on claims for breach of contract and bad faith.

Southland generally denied and also pled accord and satisfaction on the grounds that it had paid

$2,036.85 in satisfaction of the “covered losses” under the policy. A jury found in favor of the

Cantus. Southland now appeals.

                                       CANTUS’ EXPERT

       At trial, Bob Barton did not testify. Instead, Art Boutin, who adopted Barton’s estimate,

testified on the Cantus’ behalf regarding the extent of damage to their house caused by the

hailstorm. In its first issue, Southland raises several complaints regarding Boutin’s testimony.

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1.         Relevance and Reliability

           Under the policy, Southland’s liability was limited to the lesser of the following: (1) the

actual cash value at the time of loss determined with proper deduction for depreciation; (2) the

cost to repair or replace the damaged property with material of like kind and quality, with proper

deduction for depreciation; or (3) the specified limit of liability of the policy. According to

Southland, Boutin’s opinion that the hailstorm caused more than $65,000 in damage was not

relevant because (1) he did not review the policy; (2) he did not intend to opine on whether the

damage was covered by the terms of the policy; (3) he made no effort to determine whether any

of the losses were “covered losses” under the policy; (4) his estimate was not economically

feasible because the Cantus’ house was valued at only $40,000; 1 and (5) he did not verify

whether the items listed as damages in Barton’s report were actually damaged. Thus, Southland

concludes, Boutin’s opinion is not relevant because he ignored what Southland characterizes as

the “essential measure of damages in this case,” which is “actual cash value [of the cost of

repairs at the time of the loss] less depreciation.” Southland also asserts Boutin’s opinion is

unreliable because it was speculative and there is too wide an analytical gap between his

testimony and the Barton report on which he relied.

           An expert’s testimony is admissible under Texas Rule of Evidence 702 if the expert is

qualified, 2 and the expert’s opinion is relevant to the issues in the case and based upon a reliable

foundation. TEX. R. EVID. 702; Gammill v. Jack Williams Chevrolet, Inc., 972 S.W.2d 713, 720

(Tex. 1998); E.I. du Pont de Nemours & Co. v. Robinson, 923 S.W.2d 549, 556 (Tex. 1995).

Rule 702’s reliability requirement focuses on the principles, research, and methodology

1
 This “value” is taken from a section entitled “Coverages” contained in Southland’s “Homeowners’/Fire Quick
Quote By Fax.”
2
    Southland does not challenge Boutin’s qualifications.

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underlying an expert’s conclusions. Exxon Pipeline Co. v. Zwahr, 88 S.W.3d 623, 629 (Tex.

2002). Under this requirement, expert testimony is unreliable if it is not grounded in the methods

and procedures of science and is no more than subjective belief or unsupported speculation.

Robinson, 923 S.W.2d at 557. Expert testimony is also unreliable if there is too great an

analytical gap between the data the expert relies upon and the opinion offered. Gammill, 972
S.W.2d at 727. In applying this reliability standard, however, the trial court does not decide

whether the expert’s conclusions are correct; rather, the trial court determines whether the

analysis used to reach those conclusions is reliable. Id. at 728. Although the trial court serves as

an evidentiary gatekeeper by screening out irrelevant and unreliable expert evidence, it has broad

discretion to determine the admissibility of evidence. Zwahr, 88 S.W.3d at 629. Accordingly,

we review the trial court’s decision to admit Boutin’s testimony for an abuse of discretion. See

Gammill, 972 S.W.2d at 718-19; Robinson, 923 S.W.2d at 558.

       Boutin, an independent insurance adjuster, testified he adopted Barton’s report as his

estimate of the cost to repair the damage to the Cantus’ home that was caused by the hailstorm.

He stated the manner in which the Barton report was prepared was no different from any

estimate he would have prepared for an insurance company. Boutin said that if he had been

asked by the Cantus to prepare the report, his investigation would have been the same as

Barton’s.   Boutin explained that the software used to prepare the Barton report is called

Exactimate and is accepted by most insurance companies. Exactimate has a large database for

materials and labor for specific geographic areas, and he has used Exactimate for seven years.

Boutin spoke with Mr. Cantu, who provided him with an overview of the damage sustained

during the storm. Boutin spent approximately ninety minutes at the house, and with the Barton

report in hand, he went inside the house, room-by-room, to take measurements. He also took

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measurements outside, including on the roof. He said he independently verified the damage to

the house as represented in the Barton report. He saw no damage to the house other than the

damage caused by the hailstorm. He was aware the Cantus had already made some exterior

repairs to the house, but he did not know if any interior repairs had been made.

       Barton prepared his report in June 2006, and Boutin went to the Cantu home for the first

time in January 2009. Boutin said his ability to adopt Barton’s estimate or his ability to prepare

his own report would not have been affected by his not going to the house until 2009. When

asked why, he responded that “In the past I’ve been asked to adopt other estimates with

insurance companies doing inspection[s], and it’s much the same process. You go out and do the

measurements and it was virtually the same process.” When asked to explain a repair estimate of

$65,000 on a home insured for only $42,000, Boutin stated that the amount of work that must be

done to repair damage to the house has nothing to do with the amount for which the house is

insured.   Boutin said one of the reasons this happens is because the cost of any required

demolition work, such as removal of debris, may account for up to fifty percent of the value of

the repair work. The Barton report calls for replacing the fascia boards, siding, and insulation on

the outside of the house, as well as replacing everything related to the roof. Although Mr. Cantu

said that hail damaged only two sides of the house, Boutin agreed with Barton that all four sides

should be replaced because “it’s an industry standard that if 50 percent or more is damaged, you

replace all of the siding” to ensure the siding matched on all four sides of the house, and he

followed this rule when he worked for insurance companies. He said the same rule applied to

roof damage. When asked why he would estimate repair work to the outside of the house even

though Mr. Cantu had already done some of the exterior repairs, Boutin replied that an estimate

is based on an assumption that no repair work has been done.

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       As to the interior of the house, the report calls for extensive repair work in almost every

room throughout the house—such as replacing ceiling insulation, removing kitchen cabinets,

replacing dry wall, and replacing and removing electric outlets—because all those areas were

damaged by the storm. When asked how he knew these areas had been damaged by the storm,

Boutin replied, “It’s consistent with damage that I’ve seen in the past.” He said he saw the

interior damage when he inspected the Cantus’ house. He also said the fifty percent rule did not

necessarily apply to interior work. When asked why all the interior work was needed, Boutin

stated, “Because when the ceilings are damaged, to take the ceiling down, you are going to

damage the walls as you remove them.” From his inspection, he knew there would be ceiling

damage from roof leaks. As to why all the kitchen cabinets had to be replaced when there was

no evidence water had gotten into the cabinets, Boutin explained that in the process of removing

the cabinets to replace drywall, they could be damaged.

       Boutin said he had no problem with the insurance company applying a fifty percent

depreciation on the material to replace the Cantus’ roof because fifty percent is an industry

standard. He explained that the amount of depreciation on a roof is more than on materials for

other parts of the house, such as siding, because a roof does not last as long. However, he

believed the amount Southland paid to the Cantus would replace only part of the roof. Although

the Arnold estimate prepared for Southland applied depreciation to both labor and materials,

Boutin said that in the thousands of times he has applied depreciation, he has never taken

depreciation on labor because labor is not a “material” that loses value over time.

       On cross-examination, Boutin admitted he had not seen the Southland insurance policy

issued to the Cantus. However, Boutin said he did not intend to opine on whether the damages

were covered by the terms of the policy; instead, he intended to opine about the cost to repair the

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damage caused by the hailstorm. As to Barton’s report, Boutin said he never spoke to Barton

about the report. Boutin acknowledged that the storm damage occurred in 2004, but Barton’s

report was not prepared until 2006. Boutin was not aware of anyone adjusting the Exactimate

2006 cost estimate to reflect 2004 numbers. However, he did not believe there was a significant

difference in cost between 2004 and 2006. The estimate called for the existing roof to be

replaced with a twenty-five-year composition shingle roof, but Boutin did not know whether the

original roof had twenty-year or twenty-five-year shingles. He conceded that replacing a twenty-

year shingle roof with a twenty-five-year shingle roof would place the owner in a better position

than he was in before the storm. He did not know what portion of the roof or roof decking

needed to be replaced. He did not know the pre-storm quality of the fascia and whether it was

the same as the quality of fascia called for in the report. He did not know the size of the air

conditioner before the storm, although the Barton report included a large unit. The report called

for insulation in the walls, although Boutin did not know if the walls were insulated prior to the

storm. And if there was pre-existing insulation, he did not know whether it had gotten wet and,

therefore, needed to be replaced. However, he said he did not need to check the insulation

because he knew the dry wall and almost the entire ceiling throughout the house were wet and,

therefore, the insulation was wet. On redirect, Boutin stated he saw water damage from the

hailstorm to the ceiling, walls, and floor of the house.

       Boutin was called as an expert to opine only on the estimated cost to repair any damage

to the Cantus’ home caused by the hailstorm. For that purpose, we conclude he was required

only to determine what damage was attributable to hail and it was not necessary for him to (1)

review the policy; (2) opine on whether the damage was covered by the terms of the policy; or

(3) determine whether any of the losses were “covered losses” under the policy. We disagree

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with Southland’s argument that his estimate was not economically feasible because the Cantus’

house was valued at only $40,000, because Boutin adequately explained that the amount of work

that must be done to repair a house has nothing to do with the amount of insurance available to

pay for those repairs. Finally, we conclude Southland’s argument that Boutin did not verify

whether the items listed as damages in Barton’s report were actually damaged goes to the weight

of the evidence and not its relevance or reliability.

2.     “Parroting” the Opinion of Another Expert

       As an expert, Boutin was permitted to testify as to relevant matters about which he had

personal knowledge, TEX. R. EVID. 402, 602, 703, and to state his opinion based upon his

personal knowledge of the facts and the evidence, TEX. R. EVID. 703.             Boutin was also

authorized to rely on facts or data contained in the Barton report in forming his own opinion as to

the evidence examined, regardless of the admissibility of such facts or data.

       On appeal, Southland argues Boutin’s testimony lacked relevance and reliability because

he merely adopted Bob Barton’s report. Southland argues that federal rules of evidence similar

to Texas Rule of Evidence 703 “do not extend so far as to allow experts to simply parrot or recite

the opinions of other experts, as Boutin did here.” Southland relies on several federal cases for

the proposition that “experts are permitted to rely on opinions of other experts to the extent that

they are of the type that would be reasonably relied upon by other experts in the field.” See

Malletier v. Dooney & Bourke, Inc., 525 F. Supp. 2d 558, 664 (S.D.N.Y. 2007). “But in doing

so, the expert witness must in the end be giving his own opinion. He cannot simply be a conduit

for the opinion of an unproduced expert.” Id.

       In Malletier, an expert, Weston Anson, based his conclusion on a regression analysis

conducted on Louis Vuitton sales data. Id. But Anson did not conduct the regression analysis

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himself; instead, it was conducted by Anson’s company’s senior analyst, Fernando Torres, who

was not produced at trial. The court held that “[w]hile Mr. Torres was probably qualified to

conduct a regression analysis . . . Anson was not presented as and was demonstrably unqualified

to be an expert on statistical analysis.” Id. (emphasis added). At his deposition, Anson testified

that “in simplistic terms” he knew how to conduct a regression analysis. “But that asserted

ability was based on studying statistics in graduate school 30 years earlier, and no good faith

argument can be made that 30 year-old course study is a sufficient qualification to testify as a

statistician.” Id. Anson admitted he “essentially had nothing to do with the preparation of the

regression analysis” and instead, it was his practice to “turn this over to an economist.” Id. The

court concluded “Anson’s occasional use of statistics in his daily life simply does not qualify

him as an expert on that complex subject.” Id. Therefore, “[b]ecause Anson is not qualified to

conduct or interpret statistical analyses, the regression analysis could only be admissible if

Anson is permitted to give an opinion by relying completely on Torres’s opinion.” Id. The court

held that a “‘scientist, however well credentialed he may be, is not permitted to be the

mouthpiece of a scientist in a different specialty.’” Id. at 665 (quoting Dura Auto. Sys. v. CTS

Corp., 285 F.3d 609, 614 (7th Cir. 2002)). “In the words of the Dura court, Torres exercised

‘independent judgment’ that was ‘beyond [Anson’s] ken.’” Id. at 665-66 (quoting Dura, 285
F.3d at 613). 3 “With respect to the regression analysis, Anson was not an expert but rather a

3
  The Dura court determined that the assistants of the challenged expert “did not merely collect data for him to
massage or apply concededly appropriate techniques in a concededly appropriate manner, or otherwise perform
routine procedures, and that he himself lacks the necessary expertise to determine whether the techniques were
appropriately chosen and applied.” 285 F.3d at 615 (emphasis added). In this case there were two “crucial issues”:
“the map of the capture zone and whether, if CTS’s plant was within it, how much if any of the contamination of the
well field was due to the groundwater running beneath that plant.” Id. The court concluded the expert “was not
competent to opine on the first issue, and without an expert opinion on that issue Dura could not get to the second
and so could not prevail.” Id.

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‘mouthpiece.’ Louis Vuitton thus produced the wrong expert to prove the reliability of the

regression analysis.” Id. at 666.

       Southland also relies on Matter of James Wilson Associates, 965 F.2d 160 (7th Cir.

1992), in which evidence of a building’s state of repair was obtained by a consulting engineer

retained by the insurer’s expert witness, an architect who planned to testify about the physical

condition of the building as reported to him by the consulting engineer. The court first noted that

an expert is “permitted to testify to an opinion formed on the basis of information that is handed

to rather than developed by him—information of which he lacks first-hand knowledge and which

might not be admissible in evidence no matter by whom presented.” Id. at 172. “But the judge

must make sure that the expert isn’t being used as a vehicle for circumventing the rules of

evidence.” Id. at 173. “The fact that inadmissible evidence is the (permissible) premise of the

expert’s opinion does not make that evidence admissible for other purposes, purposes

independent of the opinion.” Id. The court stated as follows:

       If for example the expert witness (call him A) bases his opinion in part on a fact
       (call it X) that the party’s lawyer told him, the lawyer cannot in closing argument
       tell the jury, “See, we proved X through our expert witness, A.” That was the kind
       of hand-off attempted in this case. The issue was the state of the building, and the
       expert who had evaluated that state-the consulting engineer-was the one who
       should have testified. The architect could use what the engineer told him to offer
       an opinion within the architect’s domain of expertise, but he could not testify for
       the purpose of vouching for the truth of what the engineer had told him—of
       becoming in short the engineer’s spokesman. Why [the insurer] did not call the
       engineer as a witness is unexplained, but it is improper to use an expert witness as
       a screen against cross-examination (though the other side could always call him as
       an adverse witness, and cross-examine him).

Id. at 173 (emphasis added).

       Finally, in In re Sulfuric Acid Antitrust Litigation, the court stated “Analysis becomes

more complicated if the assistants exercise professional judgment that is beyond the expert’s

ken.” 446 F. Supp. 2d 910, 916 (N.D. Ill. 2006). “In that context, it must be determined whether

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the disclosed expert is genuinely formulating an opinion based in part on the underlying data or

whether he is acting as the ‘mouthpiece’ for the non-testifying individual on whose data he is

relying.” Id. “If the latter, the hearsay rule prohibits the testimony unless the non-testifying

individual also testifies.” Id.

        We do not believe Boutin was merely “parroting” the Barton opinion.               Barton’s

professional judgment was within Boutin’s knowledge—they are both experienced insurance

adjusters and Boutin is familiar with and has used the Exactimate software used by Barton to

prepare his report. Boutin’s qualifications as an insurance adjuster are undisputed. He stated the

manner in which the Barton estimate was prepared was no different from any estimate he would

have prepared for an insurance company. Boutin has adjusted approximately forty claims with

Barton, and he said that if he had been asked by the Cantus to prepare the report, his

investigation would have been the same as Barton’s.         Boutin spoke with Mr. Cantu, who

provided him with an overview of the damages sustained during the storm, and he independently

inspected and verified the damage to the house as represented in the Barton report. He saw no

damage to the house other than the hail damage. Based on this record, we conclude Boutin was

“genuinely formulating an opinion based in part on the underlying data” supplied by Barton.

                                     BAD FAITH CLAIM

        In answer to question number four, the jury found Southland engaged in unfair or

deceptive acts or practices by (1) refusing to pay a claim without conducting a reasonable

investigation of the claim based on all available information; (2) failing to attempt in good faith

to effectuate a prompt, fair, and equitable settlement of a claim when the insurer’s liability has

become reasonably clear; and (3) compelling the Cantus to institute a lawsuit to recover amounts

due under their policy by offering substantially less than the amounts ultimately recovered. In

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answer to question number seven, the jury found that Southland engaged in such conduct

“knowingly.” In its second and fourth issues, Southland asserts the evidence is legally and

factually insufficient to support these bad faith findings or that it acted with “actual awareness of

the falsity, deception, or unfairness of the conduct in question.”

       A breach of the duty of good faith and fair dealing may give rise to a cause of action in

tort that is separate from any cause of action for breach of the underlying insurance contract.

Transp. Ins. Co. v. Moriel, 879 S.W.2d 10, 17 (Tex. 1994). “The contract aspect of a coverage

dispute concerns either the factual basis for the claim, the proper legal interpretation of the

policy, or both.” Id. If the loss is covered, the insurer must pay the claim pursuant to the terms

of the insurance contract. Id. An insurer’s failure to pay a covered claim is ordinarily a breach

of contract that does not alone entitle a plaintiff to mental anguish or exemplary damages. Id.

       “The threshold of bad faith is reached when a breach of contract is accompanied by an

independent tort.” Id. In Arnold v. National County Mutual Fire Ins., the Texas Supreme Court

addressed whether insurers have a common law duty to deal fairly and in good faith with their

insureds. 725 S.W.2d 165, 167 (Tex. 1987). Holding that such a duty does exist, the Arnold

Court held that a “cause of action for breach of the duty of good faith and fair dealing is stated

when it is alleged that there is no reasonable basis for denial of a claim or delay in payment or a

failure on the part of the insurer to determine whether there is any reasonable basis for the denial

or delay.” Id.

       Almost ten years later, the Texas Supreme Court clarified the standard for imposing

liability for breach of the duty of good faith and fair dealing in Universe Life Ins. Co. v. Giles,

950 S.W.2d 48, 54 (Tex. 1997) (stating that “‘no reasonable basis’ element of tort has injected

needless complexity into no-evidence review of bad faith claims”). Noting that the Texas

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Insurance Code defined unfair insurance settlement practices to include “‘failing to attempt in

good faith to effectuate a prompt, fair, and equitable settlement of a claim with respect to which

the insurer’s liability has become reasonably clear . . . ,’” the Court concluded this standard

would “prove workable in” common law bad faith claims. Id. at 55-56 (quoting predecessor to

TEX. INS. CODE ANN. § 541.060(a)(2)(A) (West 2009)). According to the Giles Court, the

“‘reasonably clear’ standard recasts the liability standard in positive terms, rather than the current

negative formulation. Under this standard, an insurer will be liable if the insurer knew or should

have known that it was reasonably clear that the claim was covered.” Id. at 56. The Giles Court

also noted that an insurer cannot escape liability merely by failing to investigate a claim so that it

can contend liability was never reasonably clear. Id. at n.5. Instead, the Court reaffirmed that an

insurance company may also breach its duty of good faith and fair dealing by failing to

reasonably investigate a claim. Id. Whether an insurer acted in bad faith because it failed to

attempt in good faith to effectuate a prompt, fair, and equitable settlement of a claim after its

liability became reasonably clear is a question for the factfinder. Id. at 56.

       In this case, the trial court submitted the case under the “reasonably clear” standard by

asking whether Southland engaged in unfair or deceptive acts or practices by failing to attempt in

good faith to effectuate a prompt, fair, and equitable settlement of a claim when the insurer’s

liability had become reasonably clear. The trial court also submitted the case under the standard

set forth in the Insurance Code by asking whether Southland (1) refused to pay a claim without

conducting a reasonable investigation of the claim based on all available information, or (2)

compelled the Cantus to institute a lawsuit to recover amounts due under their policy by

offering substantially less than the amounts ultimately recovered.           TEX. INS. CODE ANN.

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§§ 541.060(a)(7), 542.003(b)(5) (West 2009). The jury answered affirmatively to each question;

therefore, we consider the sufficiency of the evidence in support of each finding.

       In reviewing the evidence, we must distinguish between the evidence supporting the

contract issue and the tort issue. The issue of bad faith does not focus on whether the claim was

valid. Lyons v. Millers Cas. Ins. Co., 866 S.W.2d 597, 601 (Tex. 1993). “The evidence must

relate to the tort issue of [whether the insurer’s liability had become reasonably clear], not just to

the contract issue of coverage.” Id. at 600. “This focus on the evidence and its relation to the

elements of bad faith is necessary to maintain the distinction between a contract claim on the

policy, and a claim of bad faith delay or denial of that claim, which arises from the tort duty . . .

imposed on insurers . . . . ” Id. Courts and juries do not weigh the conflicting evidence that was

before the insurer; rather, they decide whether evidence existed to justify denial of the claim.

State Farm Lloyds, Inc. v. Polasek, 847 S.W.2d 279, 285 (Tex. App.—San Antonio 1992, writ

denied).   In other words, the issue under a no-evidence review is whether there is “some

evidence” that the insurer’s liability had become reasonably clear. See id. at 284-85.

       Evidence that shows only a bona fide coverage dispute does not, standing alone,

demonstrate bad faith. State Farm Lloyds v. Nicolau, 951 S.W.2d 444, 448 (Tex. 1997); Moriel,
879 S.W.2d at 17. “Nor is bad faith established if the evidence shows the insurer was merely

incorrect about the factual basis for its denial of the claim, or about the proper construction of the

policy.” Moriel, 879 S.W.2d at 18. “A simple disagreement among experts about whether the

cause of the loss is one covered by the policy will not support a judgment for bad faith.” Id. On

the other hand, the mere fact that an insurer relies upon an expert’s report to deny a claim does

not automatically foreclose bad faith recovery as a matter of law. Nicolau, 951 S.W.2d at 448.

Instead, an insurer’s reliance on an expert’s report, standing alone, will not necessarily shield the

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carrier if there is evidence that the report was not objectively prepared or the insurer’s reliance

on the report was unreasonable. Id. Evidence casting doubt on the reliability of the insurer’s

expert’s opinions may support a bad faith finding. Id. Whether the insurer’s liability had

become reasonably clear, however, must be judged by the facts before the insurer at the time the

claim was denied. Viles v. Sec. Nat’l Ins. Co., 788 S.W.2d 566, 567 (Tex. 1990).

       The Cantus did not argue at trial that Southland hired Arnold because of any lack of

objectivity on his part; however, on appeal, the Cantus assert Southland sent Arnold to perform

an outcome-oriented investigation. But to show bad faith, the Cantus were required to produce

evidence showing “behavior more egregious than merely hiring a firm whose reports generally

feature an outcome favored by its recipient.” See Travelers Pers. Sec. Ins. v. McClelland, 189
S.W.3d 846, 854 (Tex. App.—Houston [1st Dist.] 2006, no pet.); see also Nicolau, 951 S.W.2d

at 449 (“All experts presumably have certain general views and expertise, and an insurer’s mere

awareness of such views is not necessarily an indication of bad faith.”).

       The only evidence in the record as to why Southland retained Arnold comes from the

testimony of Roy Hignight, the Southland employee who handled the Cantus’ claim and who

hired Arnold. Hignight stated that Arnold had adjusted claims for Southland for about ten years,

and he knew Arnold to be an experienced independent insurance adjuster. Thus, nothing in the

record indicates Southland hired Arnold based on any view he personally held. See Nicolau, 951
S.W.2d at 448 (concluding evidence supported logical inference that State Farm obtained reports

from Haag Engineering because of Haag’s general view that plumbing leaks (a covered loss) are

unlikely to cause foundation damage). Mr. Cantu testified Arnold spent only about forty-five

minutes at the house and the jury heard Arnold’s own testimony that he inspected twelve to

thirteen houses on one day for Southland. Arnold testified that over the past ten years he had

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worked for more than two dozen different insurance companies. However, the record contains

no evidence as to Arnold’s general view of claims work for either Southland specifically or other

insurance companies generally. See State Farm Lloyds v. Hamilton, 265 S.W.3d 725, 735 (Tex.

App.—Dallas 2008, pet. dism’d) (record contained evidence that insurer’s expert never testified

against insurer’s interest and derived a large part of his business from insurer). Because the

Cantus produced no evidence that would support an inference that Arnold’s report was not

objectively prepared, we next consider whether Southland’s reliance on Arnold’s report was

reasonable.

       The Cantus contend the reasonableness of Southland’s decision to pay what it did is

called into question by (1) its reliance on Arnold’s “slip-shot” inspection and “low-ball”

estimate, and (2) the fact that, when faced with evidence “purportedly” from the Cantus that the

estimate it paid was not sufficient and that Southland had missed significant elements of the

covered damages in its own estimates, Southland did nothing. The Cantus’ argument focuses on

the depth of the investigation into the damage that resulted from the hailstorm. The Cantus

contend Arnold spent only about forty-five minutes at the house, he did not document in his

report all the damage they allege was caused by the storm, and he took an inappropriate amount

of depreciation. Although Arnold disputed Mr. Cantu’s estimate of the length of time he spent at

the house, it was for the jury to decide whose testimony to accept on this question. There is no

dispute that Arnold did not photograph all the damage in the house. However, Arnold testified

he documents only damage that results from a covered loss, and Hignight agreed it would not be

possible for adjusters to document every single damaged item in a structure without regard to

whether the damage resulted from a covered loss. For example, Arnold photographed one stain

on the ceiling but not a second stain because the Cantus told him the second stain pre-existed the

                                              - 16 -
                                                                                     04-09-00705-CV

hailstorm. The Cantus denied this, and testified both ceiling stains appeared after the storm. The

Cantus rely on Barton’s report to allege there was water and hail damage throughout the house to

a greater extent than that documented in Arnold’s report. Again, the jury was free to credit the

Cantus’ testimony and Barton’s report over that of Arnold. However, to establish bad faith,

rather than a mere breach of contract, the Cantus were required to show more than a “simple

disagreement among experts about whether the cause of loss is one covered by the policy . . . .”

Moriel, 879 S.W.2d at 18. A conflict between the carrier’s expert and other experts may or may

not, standing alone, be sufficient to allow a “bad faith” claim to go to a jury. Guajardo v. Liberty

Mut. Ins. Co., 831 S.W.2d 358, 365 (Tex. App.—Corpus Christi 1992, writ denied). “In addition

to the conflicting expert opinion, the party alleging bad faith must also bring direct or

circumstantial evidence showing that the carrier’s expert’s opinion was questionable and that the

carrier knew or should have known that the opinion was questionable.” Id.

       The depth of Arnold’s investigation was the same as Barton’s in that both inspected the

inside and outside of the house and took various measurements. Mr. Cantu conceded he had

conversations with both men about the extent of the damage. Southland received two estimates

before the lawsuit was filed: one from Arnold in the amount of $4,390.50 that included damage

to both the inside and outside of the house, and one from Stites in the amount of $6,855.66 that

included damage only to the outside of the house. Southland received the third estimate from

Barton after the lawsuit was filed in the amount of $65,000 that included damage to both the

inside and outside of the house, but no depreciation.         Regardless of the reasons for the

disagreement amongst the three adjusters, the fact remains that they disagreed and provided

Southland with three widely varying estimates. That Arnold’s estimate was lower than Stites’

estimate, which, in turn, was lower than Barton’s estimate “only establishes the estimates

                                               - 17 -
                                                                                    04-09-00705-CV

differed.” Johnson v. Essex Ins. Co., No. 04-00-00745-CV, 2002 WL 112561, at *8 (Tex.

App.—San Antonio Jan. 30, 2002, no pet.) (mem. op.). “Similarly, evidence that the scope of

repairs in [Arnold’s] report ‘does not come close to matching’ [Barton’s] report is not evidence

of unreasonableness.” Id. Therefore, we also look to Southland’s actions with regard to the

differing reports and whether Stites’s pre-lawsuit estimate of damage cast doubt on the reliability

of Arnold’s estimate of damage.

       Roy Hignight first received the claim on April 5, 2004, the day after the storm. The next

day, Hignight informed the Cantus by letter that Southland had received their claim and an

adjuster would contact them. The letter provided the Cantus with Robert Arnold’s name and

telephone number. Although Mr. Cantu testified he did not remember receiving the letter,

Hignight testified the letter was mailed to the Cantus and was never returned to Southland as not

delivered. Arnold arrived at the house about seven days after the storm. Arnold’s estimate for

total loss amounted to $4,390.50, less depreciation of $1,933.65 and the deductible of $420, for a

net claim amount of $2,036.85.

       Hignight testified that when he reviewed Arnold’s report, he saw nothing wrong with it,

except he did not believe the spot on the ceiling needed to be repaired. However, because

Arnold’s estimate allowed for the cost of repair, Hignight did not contest the repair estimate, and

he paid the claim in the amount recommended by Arnold. By letter dated April 27, 2004,

Hignight enclosed a copy of Arnold’s estimate and informed the Cantus that a claim check in the

amount of $2,036.85 would be mailed to their agent within seven working days. Hignight said

that the check was cashed and he never heard from the Cantus or SAS-Lowery until he received

                                               - 18 -
                                                                                                04-09-00705-CV

a June 17, 2004 letter purportedly4 signed by the Cantus. In this letter, the Cantus expressly

authorized Ortiz and/or Stites to act on their behalf with respect to the claim and appointed Ortiz

and/or Stites as their agent to meet with Southland, its employees, and adjustors “to discuss this

loss and work toward a mutually satisfactory settlement of this claim.” The Cantus reserved to

themselves the right to enter into a final settlement of the claim, but asked that Joe A. Ortiz,

Building Consultant, be named as a co-payee on any drafts or checks. The letter ended by

stating that “[i]n the unlikely event that the services of an attorney become necessary, [the

Cantus ] will provide you with the name of [their] attorney.” Hignight believed the letter meant

the Cantus wanted him to work directly with Ortiz or Stites as their agent. When Hignight

received the letter, he forwarded a copy to Arnold. On July 9, 2004, Hignight received a copy of

a June 16, 2004 estimate prepared by Stites for Joatmon Loss Services, Inc., which estimated the

cost of repairs at $6,855.66. Hignight sent Arnold a copy of the estimate and asked Arnold to

contact Stites and ask for an explanation as to why the unit costs were so high and to see if they

could work things out. The next day, Arnold faxed a copy of the Stites estimate to both Hignight

and Stites with Arnold’s handwritten notes on various line items in the estimate. Arnold also

faxed a copy of his own estimate to Stites.               On the fax coversheet to Hignight, Arnold

characterized the Stites estimate as “excessive” and he stated he was awaiting Stites’ response.

On the fax coversheet to Stites, Arnold wrote as follows:

        We have recvd & revwd your repair bid for the above referenced insured. (your
        estimate attached) We found your estimate to be very high, much above industry
        standard for unit costs. We are faxing you our repair estimate to review and go
        by.
               Please call me or fax me your reply.

4
  Mr. Cantu testified he and his wife hired Ortiz after a community meeting, but he claimed he and his wife only
signed a blank sheet of paper. The letter has the Cantus’ names and address in the letterhead and is addressed to
SAS-Lowery Insurance Agency, which forwarded the letter to Hignight.

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                                                                                  04-09-00705-CV

Southland was not aware of the Cantus’ dissatisfaction with Ortiz and neither Arnold nor

Hignight received a response from Stites, Ortiz, or anyone at Joatmon.

       The Stites estimate, which did not account for depreciation or the Cantus’ deductible,

called for replacing the roof, painting the exterior fascia, and final cleanup for a total of

$6,855.66, compared to Arnold’s pre-depreciation/deductible estimate of $4,390.50. Hignight

explained his interpretation of the Stites estimate as follows:

       It showed me that it was the same scope as Bobby Arnold’s estimate.

                                              ...

               Well, the areas that Marcus Stites allowed for was [sic] the same areas
       Bobby Arnold allowed for, with the exception that Bobby Arnold allowed for
       interior damage and repairs to the air conditioning and windows and which
       Marcus Stites did not allow that.

                                              ...

              I interpreted [Stites’ not allowing for interior damage] as that Mr. Stites
       did not have any issues with the interior allowance made by Mr. Arnold; that his
       concern was on the — on the roof and other exterior items that Bobby Arnold
       allowed for.

When asked why Stites’s estimate was almost $2,000 more than the Arnold estimate, Hignight

responded that some of the items on Stites’s report appeared “to be extremely high.”

       The next and last time Hignight heard anything about the Cantus’ claim was December

20, 2004 when Arnold faxed to him a letter signed by the Cantus and mailed to Arnold. In the

letter, which was dated October 12, 2004 but not received by Arnold until December 20, 2004,

the Cantus “invoke[d] the appraisal process” because they believed “the funds that Colonial

Lloyds Insurance Company estimated to repair [their] house are not sufficient.”        Hignight

testified that Southland and Colonial Lloyds Insurance Company are not the same company.

Hignight also said that language in the letter that referenced the appraisal process was not

                                                - 20 -
                                                                                        04-09-00705-CV

language contained in the policy Southland issued to the Cantus. Hignight thought the Cantus

were referencing an entirely different policy on other property they owned. However, Hignight

conceded that the policy number referenced in the letter was the Cantus’ Southland policy and

the claim number referenced the hailstorm claim. He admitted that despite his confusion he did

not attempt to contact the Cantus or anyone working on their behalf.

           Hignight said that until the Cantus sued in November 2005, he knew only of the Stites

estimate, which was a couple of thousand dollars more than the Arnold estimate. In mid-

November 2005, Hignight received the Cantus’ petition in which they alleged they “sustained

covered losses in the form of accidental plumbing or air condition leaks and discharges, water

damage, and damage resulting therefrom including damage to the architectural finishes of the

home . . . .” The petition did not specifically mention the April 2004 hailstorm, nor did the

petition complain specifically about the manner in which Southland handled the hailstorm claim.

Upon receiving the petition, Hignight contacted the Cantus’ insurance agent at SAS-Lowery,

Olga Lopez, because Southland had never heard of a problem with the accidental discharge of

water, and Lopez informed him SAS-Lowery had received a hand-written letter dated October 3,

2005 from the Cantus asserting additional water damage. 5 Hignight asked Lopez why the

October 3 letter had not been immediately sent to Southland, and Lopez said she did not know

what the letter was in reference to. Hignight said he finally realized the lawsuit was filed in

connection with the hailstorm when he received a copy of the Barton estimate in October 2006,

almost one year after the lawsuit was filed. Hignight characterized the Barton estimate as

“excessive” because “[v]irtually every surface area on the house is damaged to include decking,

flooring, interior walls, kitchen cabinetry, bathrooms, bedrooms, exterior siding, everything on

the house is claimed to be damaged in this scope.”
5
    Mr. Cantu testified the letter was hand-written for him at his attorney’s office.

                                                            - 21 -
                                                                                    04-09-00705-CV

         Southland paid considerably less than what the Cantus believed their losses to be;

however, the evidence shows the Cantus cashed Southland’s check without complaint. Two

months later, Southland received a letter in which the Cantus authorized Ortiz and/or Stites to act

on their behalf, and appointed Ortiz and/or Stites to meet with Southland’s adjusters and

employees to discuss the loss “and work toward a mutually satisfactory settlement of” their

claim.    Although Mr. Cantu testified he later became dissatisfied with Ortiz, he never

communicated this dissatisfaction to either Southland or Arnold. Therefore, acting in accordance

with the terms of the letter, Southland attempted to communicate only with Stites. When

Southland received Stites’s estimate and attempted to contact Stites regarding his estimate,

Southland never received a response.

         The fact of liability for damage caused by the hailstorm was clear, and Southland

promptly issued a check to cover repairs for storm damage as determined by its adjuster.

Pursuant to the terms of the insurance contract, Southland was not liable for normal wear and

tear. The question, thus, became a coverage dispute: whether all of the damage alleged by the

Cantus was the result of the hailstorm, and if caused by the storm, the extent of repair versus

replacement necessary to put the Cantus back into the position they were in before the storm.

Liability as to this question was not reasonably clear at the time Southland paid the claim and

was ultimately decided by the jury in this case. Therefore, we conclude there is no evidence that

Southland’s reliance on Arnold’s report was unreasonable, nor is there any other evidence from

which a factfinder could infer that Southland failed to attempt in good faith to effectuate a

prompt, fair, and equitable settlement when its liability had become reasonably clear or that

Southland failed to conduct a reasonable investigation based on all available information. For

these same reasons, we also conclude there is no evidence the Cantus were compelled to institute

                                               - 22 -
                                                                                                    04-09-00705-CV

a lawsuit to recover amounts due under their policy because Southland offered substantially less

than the amounts ultimately recovered.               Accordingly, we conclude the evidence is legally

insufficient to support a finding on bad faith. 6

                                         BREACH OF CONTRACT

         The jury awarded the Cantus $30,000 as compensation for Southland’s failure to pay for

covered physical loss to their home. In its third issue, Southland contends the Cantus are not

entitled to recover on their breach of contract claim because they failed to segregate what was a

“covered loss” under the policy from what was not a “covered loss” in Barton’s report.

         The premise of Southland’s argument, with which we agree, is that an insured is entitled

to recover only that portion of the damage caused solely by a covered peril. See Wallis v. United

Servs. Auto. Assoc., 2 S.W.3d 300, 302-03 (Tex. App.—San Antonio 1999, pet. denied).

However, Wallis and the other opinions upon which Southland relies all involved cases in which

the jury was asked to allocate damage attributable to a peril specifically covered under the

insurance policy versus damage attributable to a peril specifically excluded under the policy. For

example, in Wallis, USAA determined the foundation damage to the insureds’ house was caused

by a combination of several excluded perils, including settlement, poor surface drainage, the

topography of the lot, and surrounding vegetation. Id. at 301-02. Plumbing leaks, which were

covered perils under the policy, were also detected; however, based on soil testing and continued

earth settlement following repair of the insureds’ plumbing system, USAA concluded the leaks

were negligible and had not caused or contributed to the complained-of damage.                               USAA

believed improper compaction of the fill dirt upon which the insureds’ foundation rested was the

primary source of the problem. Experts for the insureds did not refute USAA’s evidence

6
 We, therefore, do not reach the issue of whether there is evidence to support the jury’s finding that Southland acted
with “actual awareness of the falsity, deception, or unfairness of the conduct in question.”

                                                        - 23 -
                                                                                   04-09-00705-CV

regarding the excluded perils. They did, however, challenge the conclusion drawn regarding the

effect of the plumbing leaks, and claimed instead that the leaks could not be excluded as a

contributing cause of the damage. Id. at 302.

       At trial, the jury was asked to determine whether perils excluded under the policy caused

the damage.    The jury was also charged with determining whether “accidental discharge,

leakage, or overflow of water from within a plumbing system” contributed to the damage. The

jury answered both questions affirmatively and found that thirty-five percent of the damage was

caused by plumbing leaks. In its motion for judgment notwithstanding the verdict, USAA

asserted its entitlement to judgment on several grounds, including that even if damage caused by

a plumbing leak is covered, the insureds failed to produce any evidence to demonstrate what

portion of the loss was caused solely by the plumbing leak. The trial court disregarded the jury’s

answer to question two, granted USAA’s motion for judgment notwithstanding the verdict, and

entered a take-nothing judgment in favor of USAA.

       On appeal, a panel of this court concluded the record contained evidence from which the

jury could conclude that plumbing leaks had contributed to the loss. Id. at 303. However, the

insureds’ engineers could not indicate the extent to which this peril damaged the home, and this

was “fatal” to the insureds’ claim. Id. at 304. This court held there was no basis from which the

jury could reasonably infer that thirty-five percent of the damage was caused by the plumbing

leaks. Id. “The jury heard no testimony regarding how much of the . . . damage was caused by

the plumbing leaks. It learned only that plumbing leaks were found.” Id. Because there was no

evidence upon which the jury could determine that thirty-five percent of the damage was caused

by plumbing leaks, this court concluded the trial court properly granted a take-nothing judgment

in favor of USAA.

                                                - 24 -
                                                                                      04-09-00705-CV

        Here, there was no dispute that damage from a hailstorm was a covered peril and the jury

was not presented with other possible excluded perils. Instead, in this case, the only dispute was

the extent of the damage caused by the covered peril, and the evidence went beyond merely

informing the jury that hail damage was “found.” Unlike in Wallis, the jury heard testimony

regarding how much of the Cantus’ damage was caused by the hailstorm: the Barton report

itemized the damage and the Cantus and Boutin testified that all of the itemized damage was

caused by hail. Southland’s expert claimed some of the damage he saw—when he went to the

house two years after the hailstorm—was caused by “chronic water damage” such as from air

conditioning condensation drainage or the use of water sprinklers. Therefore, unlike in Wallis,

the jury here was not required to guess what percentage of the damage was caused by the

hailstorm; instead, the jury was faced with a credibility question: the Cantus claimed all the

damage itemized in Barton’s report was due to hail, while Southland claimed some of the

damage was caused by ordinary wear and tear. The jury apparently believed the Cantus and their

expert, and we defer to that determination. Accordingly, we overrule Southland’s third issue.

                                        ATTORNEY’S FEES

        In its fifth issue, Southland asserts the award of attorney’s fees should be reversed for the

following reasons: (1) there is no recovery for breach of contract or violation of the Insurance

Code, and (2) the Cantus failed to make a pretrial disclosure of the manner of calculation of the

fees in response to a request for disclosure.           Because we overrule Southland’s complaint

regarding the Cantus’ breach of contract claim, the Cantus are entitled to attorney’s fees. See

TEX. CIV. PRAC. & REM. CODE ANN. § 38.001(8) (West 2008) (“A person may recover

reasonable attorney’s fees from an individual or corporation, in addition to the amount of a valid

claim and costs, if the claim is for . . . an oral or written contract.”).

                                                   - 25 -
                                                                                    04-09-00705-CV

       As to Southland’s second argument, SAS-Lowery’s pretrial request for disclosure asked

the Cantus for “the amount and any method of calculating economic damages.” See TEX. R. CIV.

P. 194.2(d) (“A party may request disclosure of . . . the amount and any method of calculating

economic damages.”). In response, the Cantus stated they would “be seeking the following

damages”: (1) actual damages, (2) compensatory damages, (3) mental anguish, (4) attorney’s

fees, and (5) punitive, exemplary, and/or treble damages. In response to a question regarding the

identity of any testifying expert, the Cantus stated they might call Matthew Pearson or Marc

Gravely, who would “testify about the reasonable and necessary attorney’s fees incurred by [the

Cantus] in prosecuting this action. [The Cantus’] counsel does not keep detailed billing records

for contingent fee cases but generally charges [sic] $250.00 an hour for insurance cases of this

type.” On appeal, Southland contends that despite its Rule 194.2(d) request, prior to trial the

Cantus never disclosed any amount of attorney’s fees accrued or gave any means by which the

fees would be calculated. Southland argues that because the Cantus failed “to make, amend, or

supplement a discovery response in a timely manner [they] may not introduce in evidence the

material or information that was not timely disclosed, or offer the testimony of a witness (other

than a named party) who was not timely identified . . . .” See TEX. R. CIV. P. 193.6(a).

       We disagree with Southland. The Cantus’ response to the discovery request identified

the attorneys and stated that the attorneys did not track their hours in contingent fees cases, but

for insurance cases such as the one here charged $250 per hour. Under the circumstances of this

                                               - 26 -
                                                                                                04-09-00705-CV

case, we conclude this response was sufficient. 7 Therefore, the trial court did not abuse its

discretion by allowing the Cantus’ attorney to testify about his fees.

                                MOTION TO COMPEL APPRAISAL

        After the lawsuit was filed, Southland asked the Cantus to submit to an appraisal process

to determine the amount of damage that occurred in the hailstorm. The Cantus did not respond

and Southland filed a motion to compel, which the trial court denied after a hearing. At trial, the

court excluded evidence offered by Southland of the Cantus’ alleged refusal to participate in the

appraisal process. In its sixth issue, Southland asserts the trial court erred by denying the motion

for an appraisal and excluding the evidence at trial.

        Appraisal provisions are included in most property insurance policies and are

enforceable. See State Farm Lloyds v. Johnson, 290 S.W.3d 886, 888 (Tex. 2009). However,

“[p]rovisions of an insurance policy requiring proof of loss and appraisal are inserted for the

insurer’s benefit and may be waived by it.” Int’l Serv. Ins. Co. v. Brodie, 337 S.W.2d 414, 415

(Tex. Civ. App.—Fort Worth 1960, writ ref’d n.r.e.).

        Waiver is ordinarily a question of fact, but when the facts are admitted or clearly

established, it becomes a question of law. Tenneco, Inc. v. Enter. Prods. Co., 925 S.W.2d 640,

643 (Tex. 1996); cf. In re Acadia Ins. Co., 279 S.W.3d 777, 780 (Tex. App.—Amarillo 2007,

orig. proceeding) (denying mandamus relief where trial court resolved factual dispute concerning

whether insurer waived its right to appraisal).               Here, there does not appear to be any

disagreement about the facts concerning the actions leading to Southland’s demand for an

7
  “[A]ttorney fees are not economic damages.” McCarthy v. Padre Beach Homes, Inc., No. 13-01-846-CV, 2003
WL 22025858, at *4 (Tex. App.—Corpus Christi Aug. 29, 2003, no pet.) (mem. op.); see also TEX. GOV’T CODE
ANN. § 25.0003(c) (West 2004) (excluding attorney’s fees from calculation of county court’s jurisdictional amount
in controversy). Damages are defined as compensation in money imposed by law for loss or injury. Geters v. Eagle
Ins. Co., 834 S.W.2d 49, 50 (Tex. 1992) (noting that statute allowed for recovery of both damages and attorney’s
fees, and because statute did not define “damages,” court turned to dictionary definition). “Recovery of attorney
fees, on the other hand, is permitted by statute, rules of procedure, a contract between the parties, or equity.”
McCarthy, 2003 WL 22025858, at *4.

                                                     - 27 -
                                                                                     04-09-00705-CV

appraisal. Therefore, we must determine whether the trial court correctly applied the law to

these undisputed facts.

       In a letter dated October 12, 2004 but not received by Southland until December 20,

2004, the Cantus “invoke[d] the appraisal process” because they believed “the funds that

Colonial Lloyds Insurance Company estimated to repair [their] house are not sufficient.”

Hignight testified that Southland and Colonial Lloyds Insurance Company are not the same

company and language in the letter that referenced the appraisal process was not language

contained in the policy Southland issued to the Cantus. The letter ends with this sentence:

“Please forward this information to the individual you choose to represent Southland Lloyds

Insurance Company in this appraisal.”

       The Southland appraisal provision, and the language quoted in the October 2004 letter are

identical in all but two respects. The first sentence of the Southland provision states: “If you and

we fail to agree on the actual cash value, amount of loss, or the cost of repair, either can make a

written demand for appraisal.” The first sentence contained in the letter states: “If you and we

fail to agree on the actual cash value, amount of loss, or the cost of repair or replacement, either

can make a written demand for appraisal” (emphasis added).           The letter also contains the

following additional language not contained in the Southland provision:

       If you or we request that they do so, the appraisers will also set:
       a) the full replacement cost of the dwelling
       b) the full replacement cost of any other building upon which loss is claimed
       c) the full cost of repair or replacement of loss to such building without deduction
       for depreciation.

       Southland never responded to the Cantus’ letter. The Cantus filed suit almost one year

later, on November 7, 2005. On April 9, 2007, Southland filed its motion to compel the

                                               - 28 -
                                                                                                      04-09-00705-CV

appraisal process, which was denied after a hearing. Southland did not attempt to obtain relief

via a petition for writ of mandamus. Trial commenced in April 2009.

         Silence or inaction for an unreasonable period of time may show an intention to yield a

known right. Tenneco, 925 S.W.2d at 643-44 (finding waiver of operating agreement’s terms by

three-year silence after transfer of shares). However, “the date of disagreement, or impasse, is

the point of reference to determine whether a demand for an appraisal is made within a

reasonable time.” In re Slavonic Mut. Fire Ins. Ass’n, 308 S.W.3d 556, 562 (Tex. App.—

Houston [14th Dist.] 2010, orig. proceeding). Here, Southland received a copy of the letter in

which the Cantus invoked the appraisal process on December 20, 2004.                               Southland never

responded to this letter. The Cantus filed suit on November 7, 2005. Following this date,

Southland waited another sixteen months to file its motion, which was almost two and one-half

years after the Cantus’ letter invoking the appraisal process. 8 For these reasons, we conclude the

trial court did not err in denying Southland’s motion for an appraisal. 9

                                BROAD-FORM DAMAGES QUESTION

         In question number two, the jury was asked what sum of money would compensate the

Cantus for damages to their home resulting from Southland’s failure to pay for covered physical

loss. The jury awarded $30,000. In its seventh and last issue, Southland contends this broad

form question was error. Southland contends the jury’s answer could have been based on

8
  We agree with Southland that it did not waive any error on the trial court’s part by not filing a petition for writ of
mandamus. However, Southland’s not pursuing relief by mandamus is relevant to the issue of whether it waived its
right to appraisal. The Slavonic court held that the insurance company had no adequate remedy by appeal because
denying the right to an appraisal denied the insurance company “the development of proof going to the heart of its
case . . . .” Id. at 564. Here, Southland did not file a petition for writ of mandamus, but instead continued with
discovery and went to trial.
9
 Because we conclude the trial court did not err in denying Southland’s motion for an appraisal, we do not address
Southland’s related complaint that the court erred by not allowing into evidence the Cantus’ alleged refusal to
participate in the appraisal process.

                                                         - 29 -
                                                                                     04-09-00705-CV

evidence that did not qualify as a covered loss, such as replacing all the drywall in a room

because there was a water stain on the ceiling, or replacing all the siding when only two sides of

the house were damaged. Southland asserts that without separate answer blanks as to each type

of repair that the jury found amounted to a total of $30,000, it is impossible to tell what “losses”

the jury included within the $30,000. Therefore, Southland concludes that under Crown Life Ins.

v. Casteel, 22 S.W.3d 378 (Tex. 2000), it is deprived of any meaningful appellate review.

       In Casteel, the trial court submitted a single broad-form question on the issue of Crown’s

liability to Casteel. The question requested a single answer on Crown’s liability, which the jury

answered affirmatively. Id. at 387. The Supreme Court concluded the trial court erred in

submitting four of the five DTPA grounds for liability because the plaintiff did not have standing

to bring those claims. Id. at 387-88. The Supreme Court held: “When a single broad-form

liability question erroneously commingles valid and invalid liability theories and the appellant’s

objection is timely and specific, the error is harmful when it cannot be determined whether the

improperly submitted theories formed the sole basis for the jury’s finding.”            Id. at 389.

Recognizing that broad-form submission should be used when feasible, the Court explained that

granulated submission should be used when a liability theory is uncertain. Id. at 390. The

Supreme Court later extended the Casteel holding to broad-form questions that commingle

damage elements when an element is unsupported by legally sufficient evidence. See Harris

County v. Smith, 96 S.W.3d 230, 235 (Tex. 2002). In that case, as to awarding damages to one

plaintiff, the jury considered (a) physical pain and mental anguish, (b) loss of earning capacity,

(c) physical impairment, and (d) medical care. Id. at 231. As to the other plaintiff’s potential

damages, the jury could consider (a) physical pain and mental anguish, (b) physical impairment,

and (c) medical care. Id. at 232. The defendant objected to both questions, asked that the trial

                                               - 30 -
                                                                                 04-09-00705-CV

court submit each damage element separately, and complained there was no evidence of loss of

earning capacity as to the first plaintiff and no evidence of any physical impairment as to the

second plaintiff.   The Supreme Court concluded the trial court erred in overruling Harris

County’s objection to the charge, “which mixed valid and invalid elements of damages in a

single broad-form submission, and that such error was harmful because it prevented the appellate

court from determining ‘whether the jury based its verdict on an improperly submitted invalid

element of damage.’” Id. at 234.

       We do not believe Casteel and Harris County apply here because the court’s charge did

not contain a broad-form damage question that commingled multiple damage elements or

theories of recovery. Instead, we believe the analysis in Matbon, Inc. v. Gries, 288 S.W.3d 471

(Tex. App.—Eastland 2009, no pet.) applies. In that case, the plaintiffs sought future medical

damages. At trial, the court admitted into evidence an expert’s testimony that the plaintiffs

would need a new home and the services of a financial advisor. The defendants objected that

future medical expenses are limited to actual medical expenses, and therefore, the cost of a new

home and the fees for a financial advisor are not recoverable as future medical expenses. Id. at

483. The Eastland Court of Appeals agreed with the defendants. The court then examined

whether the error was harmful. Relying on Casteel and Harris County, the plaintiffs asserted the

defendants waived this contention because they did not ask the trial court to include in the

court’s charge separate damage questions for each of the challenged items of future medical

damages that the plaintiffs sought. The court of appeals concluded those cases were inapplicable

because the court’s charge did not contain a broad-form damage question that commingled

multiple damage elements. Id. at 484. Because “[a] claim for future medical damages is a

separate element of damages available to a personal injury claimant,” the court rejected the

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plaintiffs’ contention that the future medical damages question should be broken down into

separate sub-parts whenever some of the items sought to be recovered as future medical damages

are challenged.” Id.

       Here, this is not a case where the single broad-form question commingled multiple

damage elements or theories of recovery; for example, compensation for loss to the Cantus’

home and mental anguish. Instead, the only type of damage submitted was compensation for

physical damage to the home, which is a separate element of damages available to the Cantus.

The jury had before it Barton’s estimate, which itemized the damage and the cost to repair each

line item of damage. Therefore, the trial court was not required to list all the various types of

physical damage the Cantus alleged were caused by the hailstorm.

                                        CONCLUSION

       The Cantus elected to recover under their bad faith claim, rather than their breach of

contract claim. We conclude the evidence in support of the jury’s bad faith findings is legally

insufficient; therefore, we reverse the trial court’s judgment on that claim and render a take-

nothing judgment in favor of Southland on the Cantus’ bad faith claim. However, because we

overrule Southland’s issue on the breach of contract claim, we render judgment in the amount of

$30,000 in favor of the Cantus on that claim.           Finally, because we overrule Southland’s

challenge to the award of attorney’s fees, we render judgment in favor of the Cantus for the

amount of fees as stated in the trial court’s judgment. We remand this cause to the trial court for

entry of a judgment that is consistent with this opinion and that includes a re-calculation of the

award of prejudgment interest.

                                                  Sandee Bryan Marion, Justice

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