Bad Faith State Farm

Here is a case that discusses bad faith accusations against State Farm. Insurance attorneys need to read the case. It is from 14th Court of Appeals. The style of the case is, State Farm Lloyds v. Candelario Fuentes and Maria Fuentes. The facts are set out here.
Hurricane Ike struck the Gulf Coast on September 12 and 13, 2008. The Fuenteses evacuated prior to the storm. When the Fuenteses returned home, they discovered that a tree had fallen through their roof over their master bedroom. Their home sustained exterior damage. According to the Fuenteses, their home also sustained interior damage from water leaking into their bedroom, as well as into their bathroom and laundry room.
On September 22, 2008, the Fuenteses’ daughter reported an insurance claim to State Farm for her primarily Spanish-speaking parents. State Farm assigned adjuster Dustin Namirr, who inspected the Fuenteses’ home on November 12, 2008. Namirr allowed for total replacement of the roof and covered damage to a backyard shed, the fence, a window, and a screen. Namirr inspected the interior of the home with the Fuenteses. The Fuenteses pointed out several areas of interior water damage from Hurricane Ike. Namirr’s log entry and notes do not mention an interior inspection, and he destroyed the two or three photos he took of the home’s interior. Namirr claimed that, based on his inspection, he determined that the interior damage was not caused by Hurricane Ike. He went to his truck, printed out an estimate of damages in English, and provided the Fuenteses with a check for $4988.63 for the exterior damage, as well as a check for $350 in “food loss.” State Farm closed its file on the same day. The Fuenteses did not receive any written explanation for State Farm’s denial of the claim for interior damage.
The Fuenteses filed suit against State Farm for breach of contract, Texas Insurance Code violations, breach of the duty of good faith and fair dealing, and fraud. The case was assigned to the Hurricane Ike MDL court, which presided over pretrial matters, and then was transferred to the trial court. The jury found:
1. Both the Fuenteses and State Farm failed to comply with the insurance policy.
2. The Fuenteses failed to comply first.
3. State Farm engaged in unfair or deceptive acts or practices by failing to promptly provide the Fuenteses a reasonable explanation for the denial of a claim; refusing to pay a claim without conducting a reasonable investigation with respect to a claim; and misrepresenting to the Fuenteses a material fact or policy provision relating to the coverage at issue.
4. The Fuenteses provided written notice of their claim to State Farm on September 22, 2008.
5. The Fuenteses provided all items, statements, and forms reasonably requested and required by State Farm as to their Hurricane Ike claim on November 12, 2008.
6. State Farm waived its right to written notice of a claim from the Fuenteses.
7. State Farm knowingly refused to pay a claim without conducting a reasonable investigation with respect to the claim.
8. State Farm failed to comply with its duty of good faith and fair dealing to the Fuenteses.
9. State Farm committed fraud against the Fuenteses.
10. The jury awarded the Fuenteses $18,818 as the difference between the amount paid by State Farm to the Fuenteses and the amount State Farm should have paid under the policy.
11. With regard to damages proximately caused by State Farm’s unfair or deceptive acts, by State Farm’s failure to comply with its duty of good faith and fair dealing, and by State Farm’s fraud, the jury awarded the Fuenteses $18,818 as the cost to repair property damages by Hurricane Ike less any amount previously paid by State Farm to repair the same damage; $8750 in past mental anguish sustained by Candelario; $8750 in past mental anguish sustained by Maria; $4750 in future mental anguish as to Candelario; and $4750 in future mental anguish as to Maria.
12. The jury awarded the Fuenteses an additional $7527 due to State Farm’s knowing conduct.
13. With regard to attorney’s fees, the jury awarded the Fuenteses $254,545 for trial court representation; $25,000 for appellate representation in the court of appeals; and $25,000 for representation in the Supreme Court of Texas: $7500 at the petition for review stage, $10,000 at the merits briefing stage, and $7500 through oral argument and completion of proceedings.
State Farm filed a motion to enter judgment. The Fuenteses filed a response and request for judgment in their favor. The trial court denied State Farm’s motion. The trial court disregarded the jury findings on prior material breach and rendered judgment in favor of the Fuenteses on the remaining findings. The final judgment awarded the Fuenteses $334,739.29, including past damages, additional damages, 5% prejudgment interest on their past damages, 18% enhanced interest on their economic damages, and trial attorney’s fees. The final judgment also awarded the Fuenteses court costs, conditional attorney’s fees for appellate proceedings, and postjudgment interest. State Farm filed a motion for remittitur or new trial, which was implicitly denied.
Next, the Court reviewed all the points of error alleged by State Farm and overruled them all.