Recently, the San Antonio Court of Appeals agreed with other Texas courts in finding that an insurer’s timely tender of an appraisal award satisfies its contractual obligations and precludes extra-contractual claims. In Garcia v. State Farm Lloyds, No. 04-16-00209-CV, 2016 WL 7234064 (Tex. App. Dec. 14, 2016), the insured submitted a claim for hail damage to their residence. State Farm found that any storm related damage claimed was below the deductible and no payments were issued. The insured disagreed and filed a lawsuit alleging breach of contract, breach of duty of good faith and fair dealing, as well as violations of the Texas Prompt Payment of Claims Act, the Insurance Code, and the DTPA. The parties then agreed to an appraisal for the purpose of determining the amount of the loss. After completion of the appraisal, State Farm paid the appraisal award and moved for summary judgment on all claims. Garcia then amended her petition to ask that the appraisal award be set aside. The trial court rendered summary judgment in favor of State Farm disposing of all of Garcia's claims. Garcia appealed the trial court's summary judgment.
On appeal, Garcia first made the argument that summary judgment was improper because the original motion had not specifically addressed State Farm’s estoppel defense asserted in response to Garcia’s amended petition. The Court dispensed with this argument by noting that regardless of when Garcia raised this argument, the issue of whether the appraisal award should be overturned was a central issue in the summary judgment. Garcia also argued that the appraisal award was made without authority because it did not contain certain items that the original adjusters had included. The court found that the damage estimates prepared by Garcia's adjuster and by State Farm's adjuster no longer mattered once the appraisal process was complete and, Garcia’s efforts to set aside the appraisal award for other reasons relying on the same early estimates, also failed.
Garcia next argued that her refusal to accept payment of the appraisal award prevented State Farm from establishing their estoppel defense. The court found the insurance policy clearly specified an appraisal process was the remedy for any disagreement regarding the amount of loss and that the decision reached by the appraisers and umpire “will set the amount of the loss” and “shall be the amount of the loss.” Garcia chose to take advantage of the insurance policy's contractual, extra-judicial means of resolving the amount of loss; State Farm and Garcia participated in the appraisal process; and State Farm fully paid the amount of loss set by the appraisers. Accordingly, the court found that Garcia could not defeat an otherwise valid and binding appraisal award simply by rejecting payment of the award.
The court found that because State Farm timely tendered payment of the appraisal award, there was no breach of contract, and summary judgment was proper. As to the Chapter 542 Prompt Payment claims, the court followed a long line of cases holding that full and timely payment of an appraisal award under the policy precludes an insured from recovering penalties under the Act as a matter of law. As to the alleged common law breach of the duty of good faith and fair dealing, the Court found that summary judgment was proper because Garcia produced no evidence of an act so extreme that it caused injury independent of the policy claim. And because Garcia’s statutory bad faith claims arose from the same theory, summary judgment was proper as to those claims as well. Accordingly, the court overruled all of Garcia’s issues on appeal and affirmed the trial court’s judgment.