Court Opinion

ID: 4879976
Source: CourtListenerOpinion
Date Created: 2021-08-30 07:34:06.140767+00
Date Added: 2024-06-11T07:58:43.965654
License: Public Domain

NUMBER 13-18-00048-CV

                                COURT OF APPEALS

                     THIRTEENTH DISTRICT OF TEXAS

                        CORPUS CHRISTI – EDINBURG

FIRST UNITED
METHODIST CHURCH,                                                                  Appellant,

                                                    v.

CHURCH MUTUAL INSURANCE
COMPANY, BLAKE MEARS,
ZACHARY PIERCE AND LEADING
EDGE CLAIMS SERVICE,                                                               Appellees.

                     On appeal from the 414th District Court
                            of McLennan County.

                            MEMORANDUM OPINION1
               Before Justices Longoria, Hinojosa, and Tijerina
                  Memorandum Opinion by Justice Tijerina

        1
          This appeal was transferred from the Tenth Court of Appeals in Waco pursuant to a docket-
equalization order issued by the Texas Supreme Court. See TEX. GOV’T CODE ANN. § 74.001.
        Appellant First United Methodist Church (First United) appeals the trial court’s

summary judgment in favor of appellee Church Mutual Insurance Company (Mutual), and

the denial of its motion for partial summary judgment.2 By its sole issue, First United

contends that the trial court improperly determined that its claim for violation of the Texas

Prompt Payment of Claims Act (TPPCA) was not viable because Mutual paid an appraisal

award to First United.3 We affirm in part and reverse and remand in part.

                                           I.      BACKGROUND

        A storm damaged property belonging to First United, and it notified Mutual, its

insurance company, about the damages. Mutual sent an adjuster to inspect the property,

and the adjuster found damages in the amount of $6,361.34. Mutual withheld the

applicable deductible, and it paid First United $2,516.86 for the damages. First United

disagreed with the payment amount, and it hired an adjuster who calculated the damages

in the amount of $89,316.53. Upon receiving a request for a second inspection, Mutual

sent another adjuster who found additional damages than the previous adjuster.

Accordingly, Mutual paid First United an additional $2,858.01.

        2
          Although listed on the judgment, Blake Mears, Zachary Pierce, and Leading Edge Claims Service
are not parties to this appeal as First United nonsuited them prior to the final judgment.
        3
             Originally, by its first and second issues, First United challenged the trial court’s summary
judgment on the basis that its breach of contract and bad faith claims were viable. However, after the parties
filed their original briefs in our Court, the Texas Supreme Court issued an opinion which both parties now
agree in supplemental briefing apply to the facts of this cause. Ortiz v. State Farm Lloyds, 589 S.W.3d 127,
131 (Tex. 2019); see also Alvarez v. State Farm Lloyds, 601 S.W.3d 781 (Tex. 2020). In its supplemental
brief, First United concedes that, based on the supreme court’s precedent, it should not prevail on its original
first and second issues regarding its claims for breach of contract and bad faith. Accordingly, we need not
address First United’s original first two issues, as they are not dispositive of this appeal. See TEX. R. APP.
P. 47.1.

                                                       2
       First United sued Mutual for, among other things, violation of the TPPCA. Fifteen

months after First United filed its petition, Mutual moved to compel an appraisal. The trial

court ordered First United to participate in the appraisal process, and it did. The appraiser

agreed that the earlier damages calculations had been incorrect, and the appraiser

awarded the additional amount of $24,692.10 on a replacement cost basis and

$22,413.86 on an actual cash value basis. Two years after First United reported the

damages, Mutual paid First United an additional $22,413.86.

       First United filed a motion for partial summary judgment on its TPPCA claim.

Mutual filed a cross-motion for traditional summary judgment, asserting that its payment

of the appraisal award defeated, among other things, First United’s TPPCA claim as a

matter of law. The trial court denied First United’s motion for partial summary judgment

and granted Mutual’s motion for summary judgment in its entirety. This appeal followed.

                               II.    STANDARD OF REVIEW

       In a traditional motion for summary judgment, the movant has the burden to show

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

of law. TEX. R. CIV. P. 166a; Nixon v. Mr. Prop. Mgmt Co., 690 S.W.2d 546, 548 (Tex.

1985). If the movant’s motion and summary judgment proof facially establish a right to

judgment as a matter of law, the burden shifts to the non-movant to raise a material fact

issue sufficient to defeat summary judgment. Centeq Realty, Inc. v. Siegler, 899 S.W.2d

195, 197 (Tex. 1995). We review a summary judgment de novo to determine whether a

party’s right to prevail is established as a matter of law. Dickey v. Club Corp. of Am., 12

                                             3
S.W.3d 172, 175 (Tex. App.—Dallas 2000, pet. denied). When both sides move for

summary judgment and one is granted and the other denied, we determine all questions

presented and render the judgment the trial court should have rendered. Lubbock County

v. Trammel’s Lubbock Bail Bonds, 80 S.W.3d 580, 583 (Tex. 2002).

                                     III.    TPPCA

      Recently, the Texas Supreme Court established in Hinojos v. State Farm Lloyds,

that a TPPCA claim is not automatically barred if the insurer pays the appraisal value

outside of the statutory window. See 619 S.W.3d 651, 653 (Tex. 2021); see also TEX. INS.

CODE ANN. § 542.060. The court explained:

      Chapter 542, subchapter B, imposes liability when an insurance company
      misses a statutory payment deadline for a documented claim that it owes
      under an insurance policy. In the statute, the Legislature instructs that the
      subchapter’s provisions be “liberally construed to promote the prompt
      payment of insurance claims.”

      When an insurer receives a claim, it has fifteen days to acknowledge its
      receipt, begin an investigation, and request from the claimant all “items,
      statements, and forms” that the insurer reasonably believes are necessary
      to evaluate the claim. Within a further fifteen business days of receiving the
      “items, statements, and forms,” the insurer must inform the claimant, in
      writing, whether it accepts or rejects the claim. If an insurer accepts the
      claim, in whole or in part, it has five business days to pay the insured. To
      enforce these deadlines, Chapter 542 provides that a claimant may recover
      statutory interest and attorney’s fees, in addition to the amount of the claim,
      when an insurer violates the statute:

      if an insurer, after receiving all items, statements, and forms reasonably
      requested and required under Section 542.055, delays payment of the claim
      for a period exceeding the period specified by other applicable statutes or,
      if other statutes do not specify a period, for more than 60 days, the insurer
      shall pay damages and other items as provided by Section 542.060.

      Section 542.060(a), in turn, sets out that interest accrues at 18% per year

                                            4
       and assesses attorney’s fees against a liable insurer:

       if an insurer that is liable for a claim under an insurance policy is not in
       compliance with this subchapter, the insurer is liable to pay the holder of the
       policy . . . , in addition to the amount of the claim, interest on the amount of
       the claim at the rate of 18 percent a year as damages, together with
       reasonable and necessary attorney's fees.

Hinojos, 619 S.W.3d at 653 (internal citations omitted).

                                     IV.    DISCUSSION

       The facts here are identical to the facts in Hinojos. See id. at 654. Mutual initially

assessed the claim to be worth $6,361.34; First United objected; Mutual revised its

assessment and paid an additional amount toward the claim; appraisers eventually

determined that Mutual owed more on the claim than it had paid; and Mutual paid the

appraisal amount after the statutory window had passed. See id. at 655. Thus, like the

insurance company in Hinojos, Mutual accepted First United’s claim and paid some

money toward that claim within the statutory window, and Mutual fully paid the amount

that it owed to satisfy the claim after the statutory deadline had passed. See id. at 655;

see also Alvarez v. State Farm Lloyds, 601 S.W.3d 781, 783 (Tex. 2020) (holding that the

payment of the appraisal award did not bar the insured’s TPPCA claim). The Hinojos

Court held that the later payment of the appraisal award did not bar Chapter 542 liability.

Hinojos, 619 S.W.3d at 655. The court explained:

       Nothing in Chapter 542 discharges prompt payment liability based on the
       partial payment of the amount that “must be paid” under the policy.
       Otherwise, an insurer could pay a nominal amount toward a valid claim to
       avoid the prompt payment deadline that the Legislature has imposed. We
       rejected such a contention in Republic Underwriters Insurance Co. v. Mex-
       Tex, Inc., holding in that case that an insurer owes interest on the amount

                                              5
        of the claim it did not promptly pay when it makes a partial payment. The
        phrase “must be paid by the insurer” in the definition of “claim” includes the
        amount of the claim and “limits ‘claim’ to the amount ultimately determined
        to be owed, which of course would be net of any partial payments made
        prior to that determination.” We explained that “[t]his encourages insurers
        to pay the undisputed portion of a claim early, consistent with the statute’s
        purpose ‘to obtain prompt payment of claims made pursuant to policies of
        insurance.’”

        ... .

        By requiring insurers to promptly satisfy claims that they owe in their
        entirety, the Legislature incentivizes insurers to resolve disputes and invoke
        the appraisal process sooner rather than later. Although the statute says
        nothing about reasonableness, a reasonable payment should roughly
        correspond to the amount owed on the claim. When it does not, a partial
        payment mitigates the damage resulting from a Chapter 542 violation.
        Interest accrues only on the unpaid portion of a claim.[4]

        A significant delay in requesting an appraisal, as in this case, may cause
        additional interest to accrue. Although “[a]ccess to the appraisal process to
        resolve disputes is an important tool in the insurance claim context,” it is the
        insurer’s responsibility to seek prompt resolution of a disputed claim through
        appraisal to avoid statutory interest on amounts that were not promptly paid.

Id. at 656–58.

        Accordingly, because Mutual did not promptly pay the claim, First United is entitled

to interest and attorney’s fees as set out by the TPPCA. See id. at 658. Therefore, the

trial court erred by granting summary judgment on the basis that Mutual complied with

the TTCPA as a matter of law. We sustain First United’s sole issue.

        4
          We reject Mutual’s argument that First United’s TPPCA claim is not viable because its initial pre-
appraisal partial payment was reasonable. See Hinojos v. State Farm Lloyds, 619 S.W.3d 651, 657 (Tex.
2021).

                                                     6
                                           IV.     CONCLUSION

        We reverse the trial court’s judgment regarding First United’s TPPCA claim and

remand for trial court proceedings consistent with this memorandum opinion, and we

affirm the trial court’s judgment in all other respects.5

                                                                                    JAIME TIJERINA
                                                                                    Justice

Delivered and filed on the
26th day of August, 2021.

        5
          See id. at 658–59 (“This appeal from a summary judgment in State Farm’s favor does not address
Hinojos’s affirmative claim for relief under Chapter 542. To prevail on his claim, Hinojos must establish: (1)
the amount for which State Farm is contractually liable under the insurance policy; (2) that State Farm failed
to comply with statutory deadlines; and (3) statutory damages based on the amount contractually owed
less the amounts paid within the statutory deadline.”).

                                                      7