William R. and Susan M. Knoderer v. State Farm Lloyds, Penni Perkins, and Tom Roberts, 515 S.W.3d 21

Background

Feb 20, 2008: PEX pipe separated from a SharkBite fitting in the Knoderers’ home, causing extensive water damage; State Farm handled the claim, later denied coverage alleging intentional loss and concealment/fraud.
William produced six photographs purporting to show the removed fitting; forensic analysis later indicated the photos were fabricated and taken long after the loss.
William resisted producing native digital files and, despite a court preservation order, erasure/wiping programs were run on his computer hard drives.
On remand from an earlier appeal that vacated death-penalty sanctions, the trial court assessed lesser monetary sanctions ($333,157.57) against William for discovery abuse, tried the misrepresentation claim under Tex. Ins. Code §541.061, and submitted a spoliation instruction to the jury.
Jury found for State Farm on misrepresentation and related defenses (intentional acts; concealment/fraud); trial court awarded State Farm additional attorney’s fees under Tex. Ins. Code §541.153 and reaffirmed sanctions.
On appeal this court affirmed sanctions, held spoliation evidence and instruction were erroneously admitted but harmless, found jury-charge errors (if any) harmless, held Rios‑testimony objection unpreserved, and reversed the attorney‑fee award under §541.153 because State Farm waived the fee claim.

Issues

Issue	Plaintiff's Argument (Knoderer)	Defendant's Argument (State Farm)	Held
1. Monetary sanctions for discovery abuse	Sanctions improperly reach community property and are excessive; lesser sanctions (exclusion) would suffice	William fabricated evidence, disobeyed court orders, and forced State Farm to incur segregated fees tied to the misconduct	Sanctions against William upheld; not an abuse of discretion; community property may be liable though Susan not personally sanctionable
2. Admission of spoliation-related evidence and spoliation jury instruction	Admission of testimony about destroyed hard‑drive files and the spoliation instruction was improper and prejudicial	Evidence about the fabricated photos and metadata was relevant to defenses and impeachment; instruction appropriate given court findings	Admission of testimony about destruction of hard drives and giving the instruction was erroneous under Brookshire framework, but error was harmless on this record
3. Jury charge and instructional errors (damages, extra‑contractual language, defenses submitted)	Charge contained misstatements and inapplicable instructions that could mislead jury	Charge instructions were proper or, at most, harmless because jury found for State Farm on liability/defenses	Any charge errors were harmless because jury defeated plaintiffs’ claims; specific instructional additions (Castaneda principle) were appropriate
4. Admissibility of State Farm expert Rios (alleged Private Security Act violation)	Rios acted without investigations‑company license; his testimony should be excluded	Objection was untimely/waived; Rios may testify as an expert in litigation	Objection not preserved; appellate review refused on the merits
5. Award of attorney fees to State Farm under Tex. Ins. Code §541.153	Trial court erred in awarding fees; prior appellate findings preclude finding claims meritless; State Farm failed to present fees to jury	Section 541.153 authorizes fees where a court finds claims groundless/bad faith; trial court may decide entitlement	Reversed: State Farm treated §541.153 fee request as a counterclaim but failed to present evidence or submit a jury issue on reasonable and necessary fees; waiver—award deleted

Key Cases Cited

Cire v. Cummings, 134 S.W.3d 835 (Tex. 2004) (standard for abuse of discretion review)
American Flood Research, Inc. v. Jones, 192 S.W.3d 581 (Tex. 2006) (two‑part inquiry for discovery sanctions: relation to misconduct and excessiveness)
TransAmerican Nat. Gas Corp. v. Powell, 811 S.W.2d 913 (Tex. 1991) (sanctions must remedy prejudice and target the true offender)
Brookshire Bros., Ltd. v. Aldridge, 438 S.W.3d 9 (Tex. 2014) (framework limiting admissibility of spoliation evidence and court’s role in spoliation determinations)
Wackenhut Corp. v. Gutierrez, 453 S.W.3d 917 (Tex. 2015) (harm analysis for improper spoliation instructions)
Donwerth v. Preston II Chrysler–Dodge, Inc., 775 S.W.2d 634 (Tex. 1989) (court determines whether claim is groundless/bad faith under comparable fee statutes)
Bocquet v. Herring, 972 S.W.2d 19 (Tex. 1998) (distinction between court’s entitlement finding and jury’s role on reasonableness/necessity of fees)
City of Garland v. Dallas Morning News, 22 S.W.3d 351 (Tex. 2000) (same allocation of issues between court and jury on fee awards)