Delay In Paying Claim And Prompt Pay

Here is a case where the Prompt Payment of Claims Act was not violated, even though at first glance it appears it was violated.  Knowing how the facts and the law square on these issues is important in evaluating a case.  This 2018, case is from the Amarillo Court of Appeals and is styled, Steven Biasatti And Paul Gross D/B/A Topdog Properties v. GuideOne National Insurance Company and John Karl Graves.

TopDog was insured with GuideOne and suffered property damage during a storm.  A claim was made and GuideOne adjusted the loss as being $1,896.88.  TopDog requested an additional inspection.  GuideOne retained an engineer who confirmed the adjuster’s findings.  TopDog wished to proceed with an appraisal and GuideOne responded that only they, GuideOne, could invoke the appraisal process.

TopDog filed this lawsuit and then GuideOne invoked the appraisal clause in the insurance contract.  The trial court ordered appraisal, the parties designated appraisers, and the court appointed an umpire.  The umpire filed the appraisal award, in which the parties’ appraisers and the umpire unanimously set the amount of loss at $168,808.

TopDog filed a motion for partial summary judgement against GuideOne, asserting that GuideOne breached its contract and failed to timely pay TopDog’s claim as required by the Prompt Payment of Claims Act (PPCA).  GuideOne filed a motion for summary judgement asserting because GuideOne paid the appraisal award, TopDog could no longer maintain any of its claims against GuideOne.

In its traditional motion for summary judgment, GuideOne asserted that (1) it did not breach the contract because it paid the amount of loss determined by the appraisal process, and (2) TopDog had not sustained any damages.  In its no-evidence motion for summary judgment, GuideOne contended that TopDog presented no evidence of breach and no evidence of damage by any breach.
TopDog’s breach of contract claim is premised on evidence that the appraisal award was substantially higher than the amount set in GuideOne’s initial investigation.
However, it is undisputed that (1) the parties contractually agreed that, in the event of a disagreement as to the amount of the loss, GuideOne could invoke the appraisal process to set that amount; (2) the process was invoked; and (3) GuideOne then tendered payment to TopDog in the amount of the appraisal award, less the deductible and depreciation.  Therefore, while there was a substantial
difference between the appraisal award and the amount of damage GuideOne initially found, GuideOne paid that difference following appraisal.  Because the benefits available to TopDog under the policy have already been paid, the court  concluded that TopDog did not offer evidence sufficient to create a material issue of fact on the element of damages.
The appraisal clause in TopDog’s policy of insurance with GuideOne specifies that the purpose of the appraisal process is to “set the amount of the loss.”  Therefore, GuideOne wins on the breach of contract claim filed by TopDog.