Dallas Fort Worth Insurance Lawyer Blog
Bad faith is asserted in most lawsuits against an insurance company. Here is another 2025 opinion the Court’s have issued on the issue of whether or not there is any bad faith in the claims handling process. The opinion is styled, Sal Guerrero v. State Farm Lloyds. This is from the Eastern District of Texas, Beaumont Division.
A reading of the case will put forth the undisputed summary judgement evidence in this case. Guerrero alleges that State Farm violated its common law duty of good faith and fair dealing, the DTPA, and Chapter 541 of the Texas Insurance Code. State Farm moves for summary judgment on these “extracontractual claims,” arguing that Guerrero has shown nothing more than a bona fide coverage dispute marked by an absence of requisite bad faith.
Under Texas law, there is a duty on the part of the insurer to deal fairly and in good faith with an insured in the processing of claims. A plaintiff may sue for breach of the duty of good faith and fair dealing if their insurer denies or delays their claim without any reasonable basis for the denial or delay in the processing of claims.
Guerrero’s claims under the Texas DTPA and the Texas Insurance Code all share the same predicate for recovery: a showing of common law bad faith.
The focus of a bad faith inquiry is on the reasonableness of the insurer’s conduct in rejecting or delaying payment of the claim, which is determined by viewing the facts available to the insurer at the time of denial. An insurer breaches its duty of good faith if it denies a claim when its liability has become reasonably clear. But 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. Guerrero therefore must demonstrate that State Farm had no “reasonable basis for denying or delaying payment” of his claim. This standard is exacting.
Evidence establishing only a bona fide coverage dispute does not demonstrate bad faith. In other words, differing valuations of damage by an insurer and the insured is not alone evidence of bad faith. That said, an insurer cannot escape liability by failing to investigate a claim so that it can contend that liability was never reasonably clear; it breaches the duty of good faith and fair dealing by failing reasonably to investigate a claim.
Here, Guerrero does not satisfy his “exacting” burden because the competent summary judgment evidence only establishes a bona fide coverage controversary. Then Court then picked apart all aspects of the summery judgment evidence to conclude there was no bad faith and granted State Farms motion.