654 S.W.3d 488
Tex. App.2022Background
- Ahmed's home sustained hail damage in April 2015; Texas FAIR Plan initially estimated losses below the $9,506 deductible.
- Ahmed sued under the Prompt Payment Act alleging undervaluation and late payment; Texas FAIR Plan demanded appraisal.
- Appraisers issued an agreed award of $22,699.78 (October 19, 2016); FAIR Plan paid $13,193.78 (award minus deductible) on November 4, 2016.
- After the Texas Supreme Court decided Barbara Technologies (2019), FAIR Plan paid an additional $6,458.26 (characterized as statutory interest, prejudgment interest, and $2,500 estimated attorney’s fees) and sought summary judgment.
- The trial court granted Ahmed’s traditional and no-evidence summary-judgment motions, awarded statutory interest and substantial attorney’s fees; FAIR Plan appealed.
- The court of appeals held that payment of an appraisal award plus estimated statutory interest does not entitle an insurer to summary judgment under the Prompt Payment Act, and that Ahmed had not established insurer liability as a matter of law; it reversed and remanded.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether payment of an appraisal award plus payment of estimated statutory interest bars a Prompt Payment Act claim or entitles insurer to summary judgment | Ahmed: Payments do not extinguish PPA claim; at most they permit offset | FAIR Plan: Paying the appraisal and estimated statutory interest discharges liability and warrants summary judgment | Court: No. Such payments may support an offset but do not conclusively eliminate PPA liability or entitle insurer to summary judgment (issue 1 overruled) |
| Whether FAIR Plan ‘‘accepted’’ the claim (admitted liability) so Ahmed was entitled to traditional summary judgment | Ahmed: FAIR Plan’s communications accepted the claim and thus admitted liability under §542.060 | FAIR Plan: Letters accepted coverage for damage but said loss was below deductible; no clear admission to pay | Court: Ahmed failed to prove acceptance/admission of liability as a matter of law; fact issue exists—trial court’s grant of Ahmed’s SJ reversed (issue 2 sustained) |
| Whether the awarded attorney’s fees are excessive or include nonrecoverable items | Ahmed: Fees are reasonable and recoverable under the Act | FAIR Plan: Fees excessive and include unrecoverable amounts | Court: Not reached—moot after reversal; issues dismissed |
| Whether judgment must be reformed to eliminate amounts not in controversy | Ahmed: Judgment proper | FAIR Plan: Certain awards exceed amounts in controversy and should be reformed | Court: Not reached—moot after reversal; issues dismissed |
Key Cases Cited
- Barbara Technologies Corp. v. State Farm Lloyds, 589 S.W.3d 806 (Tex. 2019) (an insurer’s payment of an appraisal award after the statutory deadline does not automatically avoid Prompt Payment Act damages)
- Valence Operating Co. v. Dorsett, 164 S.W.3d 656 (Tex. 2005) (standard for reviewing competing summary-judgment motions)
- State Farm Lloyds v. Johnson, 290 S.W.3d 886 (Tex. 2009) (discussion of appraisal clauses in property insurance policies)
- Mapco, Inc. v. Carter, 817 S.W.2d 686 (Tex. 1991) (requirements for a judicial admission to be conclusive)