Settlement Offer In Insurance Case

The “Offer of Settlement Rule” is relatively new to Texas law and is codified in the Texas Civil Practice & Remedies Code, Section 42.002.  This rule was discussed to a small degree in a case from the Corpus Christi Court of Appeals.  The case is styled, Israel Salinas and Hilda Salinas v. State Farm Lloyds and Truman Dale Crews.

In June of 2014 the Salinas filed suit against State Farm alleging multiple cause of action resulting from hail storm damage to their home.  On September 14, 2014, State Farm offered the Salinas $29,500 under the Offer of Settlement Rule and the Salinas did not respond to the offer.

The case went to trial.  The jury found that State Farm breached the contract with the Salinas and awarded the Salinas $10,500 for breach of contract and $10,500 as punishment due to the knowing and intentional conduct of State Farm.  The Judge signed a judgment awarding those amounts plus, $9,066.82 as prejudgment interest, $10,500 for attorney fees, and $8,097.05 for costs of court, for a total of $38,163.87.

State Farm filed a motion to modify the judgment arguing that application of Texas Civil Procedure Rule 167 required the court to enter a take-nothing judgment for the Salinas.  State Farm said its settlement offer triggered an offset that exceeds the Salina’s monetary recovery at trial because the amount the Salinas were awarded was less than 80% of what State Farm originally offered to the Salinas as a settlement.

The court ultimately signed a judgment saying the Salinas take nothing by calculating what the jury awarded as damages and then looking at the amount State Farm had offered on September 14, 2014.

Being aware of the Offer of Settlement Rule and reading how this court applied the rule is a must for insurance lawyers.