975 F.3d 504
5th Cir.2020Background
- Jesus and Margaret Agredano sued State Farm Lloyds after State Farm denied their homeowners’ windstorm-damage claim.
- The district court granted summary judgment for State Farm on several claims but a jury found for the Agredanos on breach of contract damages.
- Plaintiffs sought attorney’s fees and 18% statutory interest under Texas Insurance Code § 542.060 (TPPCA); the district court initially awarded § 542 relief but later rescinded that award.
- The district court rescinded after relying on Chavez v. State Farm Lloyds, concluding Plaintiffs had not properly pled § 542.060 relief (no citation of the statute) and that Chavez barred recovery without surviving statutory bad-faith claims.
- The Fifth Circuit held Plaintiffs’ pleadings were adequate (they expressly sought “18% penalty interest pursuant to Ch. 542”) and that State Farm was not surprised; the court further concluded Chavez is inconsistent with Texas Supreme Court precedent treating the TPPCA as a strict-liability timing statute.
- The Fifth Circuit reversed the district court’s denial of § 542.060 relief and remanded for entry of judgment consistent with its opinion.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Plaintiffs adequately pleaded entitlement to 18% TPPCA interest and attorney’s fees | Agredano pleaded entitlement to an “18% [p]enalty [i]nterest pursuant to Ch. 542” and attorney’s fees, giving fair notice | State Farm argued Plaintiffs failed to specifically plead § 542.060 (no statute citation or magic words) | Pleading was adequate under Twombly/Iqbal and fair-notice standards; State Farm was not surprised |
| Whether recovery under § 542.060 requires a separate statutory bad-faith violation | Plaintiffs argued TPPCA requires only (1) insurer liability under the policy and (2) delay in paying beyond statutory deadline | State Farm argued Plaintiffs must show violation of other bad-faith provisions (per Chavez) | Court held TPPCA is a strict-timing statute; bad-faith statutory violations are not a prerequisite to § 542.060 relief |
| Whether Chavez controls and bars § 542.060 relief here | Plaintiffs argued Chavez is inconsistent with Texas Supreme Court precedent and subsequent decisions | State Farm relied on Chavez to justify denying § 542 relief | Court held Chavez is no longer good law on this point and reversed the district court’s denial of § 542.060 relief |
Key Cases Cited
- Ashcroft v. Iqbal, 556 U.S. 662 (U.S. 2009) (pleading must meet plausibility standard)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (U.S. 2007) (Iqbal/Twombly pleading framework)
- Lamar Homes, Inc. v. Mid-Continent Cas. Co., 242 S.W.3d 1 (Tex. 2007) (TPPCA awards interest and fees where insurer is liable and delayed)
- Barbara Techs. Corp. v. State Farm Lloyds, 589 S.W.3d 806 (Tex. 2019) (TPPCA liability does not depend on bad-faith finding)
- Ortiz v. State Farm Lloyds, 589 S.W.3d 127 (Tex. 2019) (same principle reaffirmed)
- Biasatti v. GuideOne Nat'l Ins. Co., 601 S.W.3d 792 (Tex. 2020) (analyzing TPPCA separately from bad-faith claims)
- Weiser-Brown Operating Co. v. St. Paul Surplus Lines Ins. Co., 801 F.3d 512 (5th Cir. 2015) (did not require bad-faith showing for TPPCA relief)
- Chavez v. State Farm Lloyds, [citation="746 F. App'x 337"] (5th Cir. 2018) (non-precedential decision relied on by the district court)
- Littell v. Hous. Indep. Sch. Dist., 894 F.3d 616 (5th Cir. 2018) (complaint must give fair notice of claims)
- Jacked Up, L.L.C. v. Sara Lee Corp., 854 F.3d 797 (5th Cir. 2017) (fair-notice pleading standard)