Bad faith handling of a claim by an insurance company is not as clear as many people believe. This issue is discussed in 2025 opinion from the Northern District of Texas, Fort Worth Division. The opinion is styled, Cowboy Christian Missions v. Church Mutual Insurance Company, SI.
A tornado destroyed numerous building owned by Cowboy Christian that were insured by Church Mutual. A claim was made and Church Mutual made payments but Cowboy Christian alleges the claim was underpaid and filed suit for breach of contract and bad faith for various violations of the Texas Insurance Code. Church Mutual filed for summary judgment on the bad faith claims.
Insurance companies have a duty to deal fairly and in good faith with an insured in the processing of claims. A plaintiff may sue for a breach of this duty if its insurer denies or delays their claim without any reasonable basis for the denial or delay. But under Texas law, “evidence establishing only a bona fide coverage dispute does not demonstrate bad faith.” This means that “as long as the insurer has a reasonable basis to deny or delay payment of a claim, even if that basis is eventually determined by the fact finder to be erroneous, the insurer is not liable for the tort of bad faith.” In other words, a genuine dispute over the scope of insurance coverage is an inherently reasonable basis for denying coverage.
To carry its initial burden, Defendant points to record evidence that it believes establishes only a bona fide coverage dispute about the actual cost to repair covered damage. First, Defendant argues that the opinions of one of Plaintiff’s experts “cannot support Plaintiff’s bad faith claims as they are based on Defendant’s disagreement with an estimate with which Plaintiff’s own causation expert disagrees.” “Even more tellingly,” Defendant argues, “Plaintiff’s loss consultant, Henry Labrie, . . . recently testified that the dispute in this case is limited to a ‘difference in opinion’ between the adjusters and consultants involved.
In response, Plaintiff asserts that Defendant failed to conduct a reasonable investigation by ignoring evidence supporting coverage and failing to timely pay out claims. Specifically, Plaintiff contends that: (1) Defendant’s own expert, Timothy Molony, found that Defendant underpaid the claim, and Defendant has made no attempt to pay the difference in five months; (2) Defendant failed to investigate or consider evidence supporting coverage—namely, Charles Norman’s engineering reports and Susan Lewis’s damage estimate; and (3) Defendant did not investigate or adjust Plaintiff’s claim for relocation expenses or coverage of non-salvageable items damaged in the subject loss.
This back-and-forth seen in the two preceding carried over into other issues in the case and can be gleamed from reading the opinion. The Court then discussed as follows.
Here, Plaintiff does not attempt to list its relocation expenses, so the Court cannot determine which expenses were “necessary.” Instead, Plaintiff refers generally to “American Express charges” and “an invoice from M&M Construction” that Plaintiff submitted to Defendant, which Plaintiff’s representative, Kort Weldon, was asked about in his deposition. And, according to Plaintiff, “Mr. Weldon testified that these were expenses incurred when Cowboy Christian had to relocate to another building to resume operations.” But absent an itemized list and specific support for each item, Plaintiff’s contention that it incurred “extra expenses” is an unsubstantiated legal conclusion.
As to Plaintiff’s separate contention that Defendant failed to investigate any non-salvageable contents that might be covered, the record evidence shows that Defendant sent a third-party inspector to investigate whether the audio-visual equipment in the sanctuary was damaged. However, to the extent that Plaintiff argues that Cavalry conducted an inventory of all non-salvageable items and Defendant never produced that inventory, then Defendant should produce that inventory if it was requested. But this fact alone does not create a genuine dispute of fact that Defendant acted in bad faith, because Plaintiff fails to provide any legal authority or industry standard that says it is the insurer’s obligation to document the damaged contents in the first instance. If Plaintiff has since produced a more exhaustive contents list, Defendant is obligated to investigate those claims.
Accordingly, the Court GRANTS Defendant’s Motion with respect to Plaintiff’s claim for common-law breach of duty of good faith and fair dealing.