Prompt Payment Penalty Calculation

Texas insurance law lawyers need to be able to calculate how the Prompt Payment Act when calculating damages. A 2008, Fort Worth Court of Appeals case is good to read for guidance. The style of the case is, GuideOne Lloyds Insurance Company v. First Baptist Church of Bedford. Here is some of the relevant information.
First Baptist brought suit against GuideOne for hail damage to the roof of its church building. GuideOne’s engineer concluded the roof had to be replaced and could not be repaired. GuideOne solicited an estimate to repair the roof anyway, and the church obtained an estimate for the replacement cost, including a statutorily required insulation upgrade. GuideOne agreed to pay only its repair estimate and did not include any cost for the required insulation upgrade. The jury awarded the church approximately $286,000 for the covered losses, $60,000 in damages on the church’s bad faith claim, and $30,000 in compensatory and $55,000 in exemplary damages for a knowing violation, along with $100,000 in attorneys’ fees, and $188,000 based on the 18% interest penalty under the Prompt Pay Act for untimely payment of claims. The jury found that GuideOne had made an unconditional tender of $155,000 to the church after the church had filed suit. GuideOne argued that the trial court erred in disregarding the jury’s finding regarding its unconditional offer and that the interest penalty should not have been calculated without subtracting the $155,000 that the jury found it had unconditionally offered after the suit was filed. GuideOne also challenged certain questions on the jury charge as erroneous.
This appeals court held the trial court erred in disregarding the jury’s finding that GuideOne had unconditionally offered $155,000 to settle the claim because there was some evidence to support the jury’s finding. In applying the offer to arrive at a new interest calculation, the court applied the $155,000 tender first to the accrued prejudgment interest on the amount of the coverage with the balance applied the principle coverage amount owed, and then use the adjusted principle to calculate the 18% interest penalty for untimely payment. The court rejected GuideOne’s argument that First Baptist had not received a finding on the accrual date for its Prompt Pay claim because the accrual date was undisputed and need not be submitted to the jury.
With regard to the jury charge issues, the court found that submission of multiple alternative definitions of an “unfair or deceptive act or practice” was harmless even if erroneous, and that a question on “false, misleading or deceptive” acts was not duplicative of the question about “unfair or deceptive acts or practices.” Other challenges to the jury’s findings were not erroneous because the judgment was not based on the challenged findings and otherwise waived its challenges to the jury charge.

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