Texas Prompt Payment Of Claims Act – Texas Supreme Court

The Texas Supreme Court has rendered an opinion which concerns the Texas Prompt Payment of Claims Act (TPPCA).  The opinion issued on June 8, 2019, and is styled, Barbara Technologies Corporation v. State Farm Lloyds.

In this case, the Texas Supreme Court reversed the appeals court judgment, which had granted summary judgment in favor of State Farm, and remanded the case to the trial court for further proceedings.

This case arose out of a wind and hail storm that damaged Barbara Tech’s property on March 31, 2013.  Tech filed a claim with State Farm on October 17, 2013, pursuant to the insurance policy, requesting coverage of the cost of repairs.  State Farm promptly inspected the costs of repair and denied Tech’s claim based on the assertion that the damage totaled $3,153.75, which was less than Tech’s $5,000 deductible.  Tech requested a second inspection and State Farm conducted another inspection finding no additional damage.

Tech filed suit on July 14, 2014, alleging violations of the TPPCA, among other claims.  On January 9, 2015, State Farm invoked the appraisal provision in the policy.  On August 18, 2015, the appraisers agreed to an appraisal value of $195,345.63.  State Farm received the appraisal on August 19 and paid Tech on August 25.  Tech accepted the payment and amended its lawsuit to include claims for violations of the TPPCA.    Both, State Farm and Tech filed motions for summary judgment.  State Farm’s was granted and Tech’s was denied.

This Court spend much time analysing the cases that deal with the TPPCA, making this case a must read for insurance law attorneys.

The TPPCA’s purpose relates specifically to prompt payment of claims.  It also contains specific requirements and deadlines for responding to, investigating, and evaluating claims.  Both the payment deadlines and the non-payment deadlines and requirements are enforceable under the TPPCA, and damages can be imposed for any such violation under sections 542.058 and 542.060.

After much discussion the Court ruled that neither party had met its burden of establishing that it was entitled to judgment as a matter of law.  Tech did not establish that State Farm is liable for TPPCA damages as a matter of law.  Nor, did State Farm show that TPPCA damages are foreclosed as a matter of law, as tender of the appraisal amount does not preclude TPPCA damages.  Under the TPPCA, an insurance company can avoid damages if it is not liable under the insurance policy, if it complied with all requirements and deadlines, or if the claim is invalid and should not have been paid, which State Farm did not show in their motion for summary judgment.