Nino v. State Farm Lloyds
Filing
57
OPINION AND ORDER re: 30 Motion for Partial Summary Judgment.(Signed by Judge Micaela Alvarez) Parties notified.(bgarces, 7)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF TEXAS
MCALLEN DIVISION
NORMA NINO,
Plaintiff,
VS.
STATE FARM LLOYDS,
Defendant.
§
§
§
§ CIVIL ACTION NO. 7:13-CV-318
§
§
§
§
OPINION AND ORDER
Pending before the Court is the motion for partial summary judgment, filed by State Farm
Lloyds (“Defendant”).1 Norma Nino (“Plaintiff”) filed a response in opposition,2 Defendant filed
a reply,3 Plaintiff filed a surreply,4 and Defendant filed a sur-surreply.5 After considering the
motion, responsive filings, record, and relevant authorities, the Court GRANTS Defendant’s
motion.
I.
BACKGROUND
The following facts are undisputed. On April 9, 2012, Plaintiff filed a claim with State
Farm, her property insurance company, for damage resulting from a hailstorm occurring on
March 29, 2012.6 On April 17, 2012, independent adjuster Charles Crump scheduled an
inspection of Plaintiff’s property on behalf of State Farm (“Crump Inspection”).7 At this initial
inspection, on May 1, 2012, Plaintiff advised Mr. Crump of stains in the living room and family
1
Dkt. No. 30 (“Motion”).
Dkt. No. 48 (“Response”).
3
Dkt. No. 45 (“Reply”).
4
Dkt. No. 46 (“Surreply”).
5
Dkt. Nos. 49 (“Sur-surreply”).
6
See Motion at p. 1, ¶¶ 1-2.
7
Id. at ¶ 3.
2
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room, which he inspected.8 Additionally, Mr. Crump inspected the roof of the property, noted
prior repair to the roof, and found no covered damage to the roof as a result of the 2012
hailstorm.9 Ultimately, Mr. Crump found minimal damage, totaling $2,311.75 and resulting in no
payment to Plaintiff after applying the deductible.10 Mr. Crump provided Plaintiff with a printed
copy of his damage estimate.11
After the Crump inspection, Plaintiff employed Bruce Wilson, a public adjuster, to adjust
the damages on a contingency fee basis.12 Mr. Wilson inspected the property, including the roof,
and found more significant damage, totaling $31,991.72 and including $10,051.22 in roof
repairs.13
On January 3, 2013, Defendant received a request for a re-inspection of the home from
Plaintiff’s counsel.14 By the same mailing, Defendant received a copy of the Wilson estimate.15
Responsive to Plaintiff’s re-inspection request, Defendant assigned the second inspection to
Richard Wallis, who performed the inspection on January 11, 2013 (“Wallis Inspection”).16
During this inspection, Plaintiff advised Mr. Wallis of stains in the master bedroom, in addition
to the living and family rooms, but was unsure when the former occurred.17 Like Mr. Crump, Mr.
Wallis inspected the roof of the property, noted previous repairs, and found no covered damage
to the roof.18 Mr. Wallis included the master-bedroom damage in his estimate, which totaled
8
See Motion, Exh. 3 (“Crump Declaration”) at p. 1.
Id. at p. 2.
10
See Motion, Exh. 4 (“Crump Estimate”).
11
See Crump Declaration at p. 3.
12
See Motion, Exh. 10 at p. 1 .
13
Id. at p. 12 (“Wilson Estimate”).
14
See Motion, Exh. 6.
15
Id.
16
See Motion, Exh. 7 (“Wallis Declaration”) at p. 1.
17
Id. at 2.
18
Id. at 1.
9
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$3,540.10 and resulted in a post-deductible payment of $1,209.10 to Plaintiff.19 Mr. Wallis
provided a copy of his estimate, as well as a denial letter, directly to Plaintiff’s counsel.20
After litigation commenced, both parties retained additional opinions on damage to the
property. For her part, Plaintiff hired Peter De la Mora, whose inspection reflects roof damage.21
State Farm hired Alan Berryhill, whose inspection revealed no roof damage and whose report
describes the previous State Farm estimate as “reasonable with respect to damage reasonably
attributable to the 2012 storms. . . .”22
II.
SUMMARY-JUDGMENT STANDARD
Under Federal Rule of Civil Procedure 56, summary judgment is proper when there is
“no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of
law.”23 A fact is “material” if its resolution could affect the outcome of the action,24 while a
“genuine” dispute is present “only if a reasonable jury could return a verdict for the nonmovant.”25 As a result, “[o]nly disputes over facts that might affect the outcome of the suit under
the governing laws will properly preclude the entry of summary judgment.”26
In a motion for summary judgment, the movant bears the initial burden of showing the
absence of a genuine issue of material fact.27 In this showing, “bald assertions of ultimate fact”
are insufficient.28 Absent a sufficient showing, summary judgment is not warranted, the analysis
19
See Motion, Exh. 8 (“Wallis Estimate”).
Id.; Motion, Exh. 9; Wallis Declaration at p. 2.
21
See Motion, Exh. 11 (“De La Mora Estimate”).
22
See Motion, Exh. 12 (“Berryhill Estimate”).
23
FED. R. CIV. P. 56(a).
24
Burrell v. Dr. Pepper/Seven UP Bottling Grp., Inc., 482 F.3d 408, 411 (5th Cir. 2007) (internal quotation marks
and citation omitted).
25
Fordoche, Inc. v. Texaco, Inc., 463 F.3d 388, 392 (5th Cir. 2006) (citation omitted).
26
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).
27
See Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986).
28
Gossett v. Du-Ra-Kel Corp., 569 F.2d 869, 872 (5th Cir. 1978) (citation omitted).
20
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is ended, and the non-movant need not defend the motion.29 On the other hand, the movant is
freed from this initial burden on matters for which the non-movant would bear the burden of
proof at trial; in that event, the movant’s burden is reduced to merely pointing to the absence of
evidence.30 If the movant meets its initial burden, the non-movant must then demonstrate the
existence of a genuine issue of material fact.31 This demonstration must specifically indicate
facts and their significance,32 and cannot consist solely of “conclusional allegations and denials,
speculation, improbable inferences, unsubstantiated assertions, and legalistic argumentation.”33
In conducting its analysis, the Court considers evidence from the entire record and views
that evidence in the light most favorable to the non-movant.34 Thus, although the Court refrains
from determinations of credibility and evidentiary weight, the Court nonetheless gives credence
to all evidence favoring the non-movant; on the other hand, regarding evidence that favors the
movant, the Court gives credence to evidence that is uncontradicted and unimpeachable, but
disregards evidence the jury is not required to believe.35
Rather than combing through the record on its own, the Court looks to the motion for
summary judgment and response to present the evidence for consideration.36 Parties may cite to
any part of the record, or bring evidence in the motion and response.37 By either method, parties
29
See Celotex Corp., 477 U.S. at 323.
See id. at 323-25; see also Transamerica Ins. Co. v. Avenell, 66 F.3d 715, 718-19 (5th Cir. 1995).
31
See id.
32
See Ragas v. Tenn. Gas Pipeline Co., 136 F.3d 455, 458 (5th Cir. 1998).
33
U.S. ex rel. Farmer v. City of Houston, 523 F.3d 333, 337 (5th Cir. 2008) (citing TIG Ins. Co. v. Sedgwick James
of Wash., 276 F.3d 754, 759 (5th Cir. 2002)).
34
See Moore v. Willis Indep. Sch. Dist., 233 F.3d 871, 874 (5th Cir. 2000) (citations omitted).
35
See id.
36
See FED.R.CIV. P. 56(e).
37
See FED. R. CIV. P. 56(c).
30
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need not proffer evidence in a form admissible at trial,38 but must proffer evidence substantively
admissible at trial.39
Finally, because federal jurisdiction is invoked on the basis of diversity of citizenship,40
this Court, Erie-bound, must adhere to grounds of relief authorized by the state law of Texas.41
Absent a decision by a state’s highest tribunal, the decisions by Texas courts of appeals are
controlling “unless [the Court] is convinced by other persuasive data that the highest court of the
state would decide otherwise.”42
III.
INITIAL MATTERS
The Court notes that the parties have failed to comply with the Federal Rules of Civil
Procedure with regard to the instant filings. Rule 7(b)(2) of the Federal Rules of Civil Procedure
provides that “[t]he rules governing captions and other matters of form in pleadings apply to
motions and other papers.”43 Rule 10(b) in turn provides that “[a] party must state its claims or
defenses in numbered paragraphs, each limited as far as practicable to a single set of
circumstances.”44 The parties’ filings largely lack numbered paragraphs,45 hindering the Court’s
reference to their arguments and evidence. The parties are cautioned that future submissions
should consistently number each paragraph to properly comply with the rules.
38
See Celotex Corp., 477 U.S. at 324 (“We do not mean that the nonmoving party must produce evidence in a form
that would be admissible at trial in order to avoid summary judgment.”).
39
See Bellard v. Gautreaux, 675 F.3d 454, 460 (5th Cir. 2012) (“the evidence proffered by the plaintiff to satisfy his
burden of proof must be competent and admissible at trial.”).
40
See Dkt. No. 1 at ¶ 5.
41
See Exxon Co. U.S.A, Div. of Exxon Corp. v. Banque De Paris Et Des Pays-Bas, 889 F.2d 674, 675 (5th Cir.
1989); see also Erie R.R. Co. v. Tompkins, 304 U.S. 64 (1938).
42
Id. (quoting West v. AT&T, 311 U.S. 223, 237 (1940)) (internal quotation marks omitted).
43
FED. R. CIV. P. 7(b)(2).
44
FED. R. CIV. P. 10(b) (emphasis added).
45
See Response at pp. 1-19; Motion at pp. 5-15.
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Further, the Court notes Plaintiff’s response fails to make reference to specific parts of
the attached evidentiary materials,46 despite Plaintiff filing her response nine times and the Court
previously ordering that Plaintiff re-submit the evidentiary attachments in appropriate format in
a manner consistent with the response’s reference to those attachments.47 Again, the Court
reiterates that it is the parties’ obligation to cite to specific parts of the record for the Court’s
consideration48 and emphasizes that Plaintiff’s failure to direct the Court to specific portions of
the exhibits, particularly given the significant length of each attachment, has hindered the
Court’s review of the issues presented.
IV.
DISCUSSION
Defendant’s motion is confined to summary judgment on Plaintiff’s bad-faith claims—
her claims for common law breach of the duty of good faith and fair dealing, and for statutory
violations of the Texas Insurance Code and Texas Deceptive Trade Practices Act (“DTPA”).49
As a result, the Court first discusses the relevant standard and its similar application to Plaintiff’s
bad-faith claims.
A. Texas Bad Faith Law
The Texas Supreme Court has held that a claim only crosses the boundary from breach of
contract to bad faith when the former “is accompanied by an independent tort.”50 Under Texas
law, the tort of bad faith has two elements: “that the insurer had no reasonable basis for denying
46
See, e.g., Response at p. 14, n. 106 (referencing generally a lengthy report by Peter De la Mora), p. 18, n. 125
(referencing generally State Farm’s Claim Handling Guidelines), and n. 128 (referencing generally Mr. Crump’s
lengthy deposition and Plaintiff’s declaration).
47
See Dkt. No. 47.
48
See FED. R. CIV. P. 56(c)(1).
49
See Motion at p. 7.
50
See Trans. Ins. Co. v. Moriel, 879 S.W.2d 10, 17 (Tex. 1994), superseded on other grounds by statute, Act of June
2, 2003, 78th Leg. R.S., ch. 204, § 13.02, 2003 Tex. Gen. Laws 887, as recognized in U-Haul Intern., Inc. v.
Waldrip, 380 S.W.3d 118 (Tex. 2012).
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or delaying payment of the claim, and that it knew or should have known that fact.”51 In other
words, “an insurer will be liable if the insurer knew or should have known that it was reasonably
clear that the claim was covered.”52 Whether liability was reasonably clear “must be judged by
the facts before the insurer at the time the claim was denied.”53
This standard is applicable to all of the claims upon which Defendant seeks summary
judgment. In Texas, the common-law bad faith standard for breach of the duty of good faith and
fair dealing is imputed to statutory liability under the DTPA and Texas Insurance Code; both
extra-contractual claims share the same predicate for recovery, such that evidentiary
insufficiency as to the former is dispositive as to the latter.54
i.
Reasonable Investigation
Plaintiff first claims that there is evidence that Defendant did not conduct a reasonable
investigation of her claim and, therefore, Defendant unreasonably denied coverage.55 The Texas
Supreme Court has held that an insurer cannot escape bad-faith liability by failing to reasonably
investigate a claim so that it can contend that liability was never reasonably clear.56 At the same
time, an insurer does not act in bad faith where a reasonable investigation merely shows “a bona
fide dispute about the insurer’s liability on the contract.”57 In the context of insurance disputes,
evidence does not support an independent tort if it merely shows “the insurer was incorrect about
the factual basis for its denial of the claim or about the proper construction of the policy;” nor is
51
Universe Life Ins. Co. v. Giles, 950 S.W.2d 48, 63 (Tex. 1997) (internal quotation marks and citation omitted).
Id. at 56.
53
Viles v. Sec. Nat. Ins. Co., 788 S.W.2d 566, 567 (Tex. 1990).
54
See Emmert v. Progressive Cnty. Mut. Ins. Co., 882 S.W.2d 32, 36 (Tex. App.—Tyler 1994, writ denied); Texas
Mut. Ins. Co. v. Sara Care Child Care Ctr., Inc., 324 S.W.3d 305, 317 (Tex. App.—El Paso 2010, review denied)
(citing Progressive County Mut. Ins. Co. v. Boyd, 177 S.W.3d 919, 922–23 (Tex. 2005) (per curiam)); Giles, 950
S.W.2d at 56; Higginbotham v. State Farm Mut. Auto. Ins. Co., 103 F.3d 456, 460 (5th Cir. 1997).
55
See Response at pp. 12-9.
56
Giles, 950 S.W.2d at 56, n. 5; see also Republic Ins. Co. v. Stoker, 903 S.W.2d 338, 344 (Tex. 1995) (quoting
Moriel and noting that indifference to facts or failure to investigate is sufficient to establish the tort of bad faith).
57
Moriel, 879 S.W.2d at 17.
52
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an independent tort supported by “simple disagreement among experts about whether the cause
of the loss is covered by the policy.”58
The Crump and Wallis Inspections
Plaintiff’s main argument is that the investigation of her claim was unreasonable because
the Crump and Wallis inspections were inadequate and results-oriented.59 The touchstone cases
on this issue are State Farm Fire & Cas. Co. v. Simmons60 and State Farm Lloyds v. Nicolau.61
In Simmons, the Texas Supreme Court held that an insurer breaches its duty of good faith and
fair dealing by denying an insured’s claim upon a “biased investigation intended to construct a
pretextual basis for denial.”62 Similarly, in Nicolau, the court held that evidence that an expert’s
report was not objectively prepared and based on inadequate information and that the insurance
carrier was aware of the report’s questionable validity supports a bad-faith finding.63
Collectively, these cases stand for the proposition that an insurance carrier may be liable for
breach of the duty of good faith and fair dealing when it knowingly ignores information that
would lead a reasonable insurer to conclude that liability is reasonably clear or that there is no
reasonable basis to deny the claim.64
In Simmons, the insureds filed a claim with their insurance carrier after their house was
destroyed in a fire.65 After conducting an investigation, the insurance company denied the
claim.66 In support of their claim that there was legally sufficient evidence to support bad faith
on behalf of the insurer, the insureds presented the following evidence: the insurer (1)
58
Id. at 18.
See Response at pp. 12-7.
60
State Farm Fire & Cas. Co. v. Simmons, 963 S.W.2d 42 (Tex. 1998).
61
State Farm Lloyds v. Nicolau, 951 S.W.2d 444 (Tex. 1997).
62
Simmons, 963 S.W.2d at 44.
63
Nicolau, 951 S.W.2d at 448.
64
See Provident Am. Ins. Co. v. Castaneda, 988 S.W.2d 189, 198 (Tex. 1998).
65
Simmons, 963 S.W.2d at 43.
66
Id. at 44.
59
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immediately deemed their claim suspicious without basis, (2) never attempted to locate or
contact potential suspects the insureds identified, (3) failed to identify any indicators of insurance
fraud, as described by their own adjusters, including any evidence of motive for arson, and (4)
failed to comply with investigative processes as described by the insurer’s own experts.67 The
court found the evidence legally sufficient to establish the investigation was pretextual and
materially deficient.68
Similarly, in Nicolau, the court found the evidence presented was legally sufficient to call
into question an insurer’s reliance on an expert’s report as the basis for denying a claim.69 After
noticing foundation damages in their home, the insureds hired a foundation repair contractor and
two engineers, all of whom concluded that there was a significant leak in the plumbing system
likely causing the damages.70 The insureds subsequently filed a claim and provided the insurance
company with their engineers’ report.71 The insurer hired an engineering company for a second
opinion, which issued a report concluding the leak did not affect the foundation.72 The insurance
company, relying on their engineering company’s report, denied the claim shortly thereafter.73
At trial, the insurance company argued that its reliance on an expert report conclusively
established that it did not act in bad faith.74 The insureds, however, presented evidence that (1)
the insurer’s engineering company performed up to ninety percent of its investigative work for
insurance companies, almost never concluded that a leak contributed to foundation movement,
and had a general view that plumbing leaks are unlikely to cause foundation damages, and (2)
67
Id. at 45-57.
Id. at 45.
69
Nicolau, 951 S.W.2d at 450.
70
Id. at 446-7.
71
Id. at 447.
72
Id.
73
Id.
74
Id. at 448.
68
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the insurer was aware of this general view and practice.75 Additionally, there was abundant
expert testimony noting the report was based on inadequate testing and information.76 The court
held that while a bona fide dispute among experts does not demonstrate bad faith, “an insurer’s
reliance upon an expert’s report, standing alone, will not necessarily shield the carrier if there is
evidence that the report was not objectively prepared or the insurer’s reliance on the report was
unreasonable.”77
Shortly after issuing both opinions, the court clarified:
Our use of the term “pretextual” in Nicolau and Simmons did not mean that an
insured is relieved from its burden of offering evidence that liability had become
reasonably clear or that there was no reasonable basis for denying the claim. We
did not redefine the common-law tort of bad faith . . . to include a mechanism by
which a factfinder could conclude that the denial was pretextual even though there
was a reasonable basis for denying the claim. The use of the concept “pretextual”
was another way of saying that there must be some evidence that there was no
reasonable basis for denying the claim or that liability was reasonably clear.78
Looking at the record in the light most favorable to Plaintiff, the Court will in turn analyze the
evidence at hand.
Unlike Simmons, Plaintiff has failed to proffer any evidence showing Defendant
knowingly and repeatedly ignored evidence presented by Plaintiff. In fact, it is undisputed that
Defendant sent more than one adjuster to inspect Plaintiff’s property at her request, and that each
adjuster inspected the rooms in Plaintiff’s home according to her advice. There is ample
evidence that Mr. Crump and Mr. Wallis, based on their expertise and inspection of the property,
determined the property damage was not caused by hail, contrary to the findings by Plaintiff’s
adjusters. Again, evidence that shows the insurer was incorrect about the factual basis for its
75
Id. at 448-9.
Id. at 449-50.
77
Id. at 448.
78
Castaneda, 988 S.W.2d at 198.
76
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denial of the claim is not evidence of bad faith, nor does a finding of hail damage by one expert
prove another expert’s contrary finding was based on an inadequate inspection.
Unlike Nicolau, Plaintiff does not provide any expert testimony, proof of standard
industry practices, or legal authority that Defendant’s adjusters relied on inadequate testing and
information. In contrast, Plaintiff attempts to create a genuine issue of material fact as to bad
faith by proffering her own unsubstantiated opinion about what adjusters should do when
conducting a property inspection and by opining that everything Mr. Crump and Mr. Wallis did
was unreasonable—e.g., by alleging without basis that the log notes were “vague” and provided
“very little information,” by opining that Mr. Crump “failed to make the proper inquiries,” by
claiming Mr. Crump failed to look into weather reports and old repairs or inspect the full interior
of the house “as a reasonable adjuster should,” and by claiming Mr. Crump’s explanations for
what is considered hail/non-hail damage is “confusing” and “unreliable.”79 There is no factual or
legal basis to equate Plaintiff’s opinion with expert testimony or reasonable industry standards
capable of challenging the reliability of an adjuster’s work. Indeed, adopting such amorphous
position, whereby any plaintiff can impute bad faith to an insurer by opining about the
unreasonableness of an adjuster’s actions, can only be problematic and result in absurd results.80
Plaintiff comes close to proffering some affirmative evidence that Defendant’s adjusters
conducted an inadequate inspection when she notes Mr. Crump and Mr. Wallis testified their
photographs were poor and could have been better,81 and Mr. Crump failed to follow
79
See Response at pp. 5, 14-7.
See Nicolau, 951 S.W.2d at 454 (J. Hecht, dissenting) (cautioning against the unintended consequences of
Nicolau, noting that the case could be read as allowing anyone, even the insured’s own trial lawyer, to testify that an
insurer acted unreasonably, thereby proving bad faith. “As such evidence is not hard to come by—the witness need
not be specially qualified, and plaintiff can testify himself if his lawyer is for some reason indisposed—the promise
of Aranda means no more than that an insurer will never be liable unless a jury finds it liable. This is not much of a
promise. It is not very helpful as a rule of law”).
81
See Response at p. 17.
80
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Defendant’s own policies and guidelines by failing to look into old repairs.82 As an initial matter,
the Court notes that Plaintiff substantially failed to direct the Court to the appropriate evidentiary
material in support of her claims. For example, Plaintiff contends Mr. Crump failed to look into
old repairs as required by State Farm policies and guidelines; however, she directs the Court to
Mr. Crump’s deposition as supporting evidence, without pointing to any portion of any policies
and guidelines.83 Similarly, she claims Mr. Wallis testified as to the quality of his photographs,
without directing the Court to Mr. Wallis’s testimony, let alone specific parts of his deposition.84
The Court is not responsible for locating the evidentiary support Plaintiff herself did not see fit to
adequately present.
When Plaintiff does cite to the correct attachment, she generally cites to what purports to
be a “Claim Handling and File Documentation Guidelines” belonging to Defendant.85 Even
reviewing that document in its entirety, the Court cannot locate any violation of company policy.
First, there is no indication that these are binding procedures on Defendant or its adjusters, but
rather company philosophy with respect to claim handling.86 The document offered by Plaintiff
merely notes what Defendant should do in order to better serve its “commitment to [its]
policyholders”—e.g. what file notes, client correspondence, diagrams, and photographs should
include, making many of the outlined tasks applicable when “appropriate,” “safe,” and
“practical.” There is simply nothing requiring Defendant or its experts to “look into old repairs”
when assessing a claim.
82
Id. at p. 15; see also id. at pp. 19-20.
Id. at p. 15, n. 111.
84
Id. at p. 17.
85
Id. at pp. 18, 20; Response, Exh. K.
86
See Response, Exh. K at p. 8.
83
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This leaves the Court with Mr. Crump’s and Mr. Wallis’s testimony that some of their
photographs “should have been better” and were not of the best quality.87 No reasonable jury
could find based on this evidence alone that Defendant’s investigation was unreasonable and
liability was reasonably clear. Further, unlike Nicolau, Plaintiff has failed to present evidence of
bias, of the adjusters’ predisposition to find non-hail damage in favor of the insurer, of
Defendant’s purposeful selection of these adjusters because of their general view on hailstorm
cases, or that Defendant was aware of the inspection’s questionable validity. Thus, there is no
factual or legal basis to conclude this evidence amounts to an unreasonable investigation or
evidence of bad faith.
Mr. Crump’s Experience and Training
Plaintiff attempts to bolster her argument by arguing Mr. Crump is not an experienced
adjuster, since “he only adjusted hail claims on two previous assignments.”88 Nonetheless,
Plaintiff does not attach any affirmative proof challenging Mr. Crump’s credentials or expertise,
or supporting her contention that this amount of experience makes him an “inexperienced”
adjuster.89 In fact, Plaintiff presents evidence that contradicts her position, noting Mr. Crump has
handled in excess of 1,200 hail and/or wind claims.90 More importantly, Plaintiff has failed to
provide any evidence supporting her allegation that Defendant was unreasonable in relying on
Mr. Crump based on his experience.
87
See Response, Exh. H (“Wallis Deposition”) at p. 81 and Exh. F (“Crump Deposition”) at p. 93.
See Response at p. 14.
89
Plaintiff only points to two pieces of evidence: Crump’s deposition testimony and a report prepared by Peter De la
Mora, whom Plaintiff hired after litigation commenced, detailing his findings on Plaintiff’s property damage. See
Response at p. 14, n. 106. However, Plaintiff only generally cites to De la Mora’s report, failing to articulate how
that piece of evidence supports Plaintiff’s conclusory arguments. In any event, the Court reiterates that while a
conflicting expert opinion may support the inference that Defendant was incorrect in his conclusion, it does not raise
a fact issue that Mr. Crump was inexperienced or establish bad faith on Defendant’s part. As to Mr. Crump’s
deposition, the Court finds the testimony does not relate to, let alone support, any of Plaintiff’s unsubstantiated
assertions. Nowhere in the cited portions of his deposition testimony does Mr. Crump even talk about his
credentials, experience, or training. See Response at p. 14, n. 106 (citing Crump Deposition at pp. 88-90, 104-107).
90
See Response at p. 4; Crump Declaration at p. 1 (noting Mr. Crump has handled “in excess of 1,200 hail and/or
wind claims prior to being assigned to handle claims in McAllen, Texas”).
88
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Plaintiff also implies Mr. Crump lacks objectivity since his hail identification experience
is limited to Defendant’s hail modules before assignments.91 However, there is no evidence that
such training was inadequate, biased, or unreasonable. Even if Mr. Crump was trained by
Defendant, this evidence alone does not raise an issue of bad faith. Texas law is clear: evidence
that an expert works primarily for insurance companies and an insurer’s awareness of an
adjuster’s particular view, standing alone, does not amount to a bad-faith finding.92
Defendant’s Investigatory Scheme
Last but not least, Plaintiff argues that Defendant knowingly “picks and chooses”
photographs taken by its adjusters to identify non-hail damage and uses independent adjusters for
catastrophes that handle a large volume of cases as an avenue to systemically deny hailstorm
claims.93 Despite this serious accusation, Plaintiff does not direct the Court to any evidence in
support of her claim.
In sum, Plaintiff has provided noting more than speculative and unsupported challenges
to Mr. Crump’s expertise and Defendant’s investigative practices, coupled with her personal
opinion that the inspections were faulty and insufficient. Accordingly, the Court finds no
reasonable jury could find that Defendant’s investigation was unreasonable and, therefore, that
liability was reasonably clear. Looking at the record in the light most favorable to Plaintiff, it is
clear that Plaintiff has failed to create a genuine issue of material fact on this point.
ii.
Misrepresentations
In yet another conclusory paragraph, Plaintiff argues there is enough evidence to deny
Defendant’s motion because State Farm made the following misrepresentations: (1)
misrepresented that it would provide Plaintiff a final claim determination letter, failing to do so
91
See Response at p. 14.
See Nicolau, 951 S.W.2d at 449.
93
See Response at p. 14.
92
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until counsel was retained; (2) misrepresented to Plaintiff that her hail and windstorm damages
were below her policy deductible; (3) conducted a results-driven investigation; (4)
misrepresented to Plaintiff that it had conducted a thorough investigation documented with an
accurate report, later admitting its own photographs were poor.94
First, Plaintiff points to no evidence—not even her own testimony—that Defendant
represented to her that it would provide a final claim determination letter; therefore, there is no
evidence of a misrepresentation. As to the second claim, whether or not the hailstorm damages
were below Plaintiff’s deductible is the central issue of Plaintiff’s breach of contract suit. Thus,
Plaintiff essentially mischaracterizes her breach of contract claim as evidence of a
“misrepresentation,” failing to support her argument with any evidence or legal authority. Lastly,
as to the third and fourth claims, the Court generally incorporates its previous analysis regarding
Defendant’s investigation of Plaintiff’s claim. The Court reiterates that Plaintiff has failed to
provide any evidence or valid explanation supporting her claim that Defendant’s investigation
was inadequate or results-oriented. The Court further notes Plaintiff has failed to explain how
Defendant’s report and investigation, even if deficient, amount to a misrepresentation.
iii.
Public Adjuster’s Correspondence
As further evidence that Defendant handled her claim unreasonably and purposely
delayed her claim, Plaintiff then argues that Defendant failed to acknowledge her public
adjuster’s estimate and letter of representation for three months.95 Defendant does not dispute
that it initially failed to acknowledge these materials; however, it notes the delay was due to
Defendant inadvertently mis-categorizing the estimate as outgoing correspondence, an
94
95
Response at p. 19.
Response at pp. 18-9.
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explanation both plausible and supported by documentation attached to its reply.96 Defendant
acknowledged a second copy of the estimate three months later, when it received a request for a
re-inspection of the home from Plaintiff’s counsel, on January 3, 2013.97
Beyond the mere lapse of time, Plaintiff offers no evidence of purposeful delay, nor has
she offered any evidence that the delay was intentional. While a delayed response from an
insurer may in some instances be evidence of unreasonable or purposeful conduct, there is no
such evidence here.
iv.
Written Notification
Plaintiff claims Defendant failed to deny her claim within a reasonable time in violation
of Section 542.056 of the Texas Insurance Code because Mr. Crump did not send her “an
acceptance or denial letter of coverage.”98 Section 542.056(a) requires an insurer to “notify a
claimant in writing of the acceptance or rejection of a claim not later than the 15th business day
after the date the insurer receives all items, statements, and forms required by the insurer to
secure final proof of loss.”99 If the insurer rejects the claim, it must state the reasons for the
rejection.100
Defendant notes that Mr. Crump handed Plaintiff a written estimate upon completion of
his inspection, which satisfies the requirement of Section 542.056 because it “explains line-byline what [Defendant] is paying for,” “has information for the homeowner about their claim,”
and expressly notes no storm-related damage was found on the roof.101 Plaintiff does not dispute
that she received the Crump estimate or a denial letter by Mr. Wallis; rather, she argues the
96
See Reply at p. 5; Reply, Exh. 7.
See Reply at p. 5; Motion, Exh. 6.
98
Response at p. 17.
99
Tex. Ins. Code Ann. § 542.056(a) (West 2005).
100
Id. § 542.056(c).
101
Reply at p. 2; see Crump Estimate.
97
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Crump estimate is not compliant because it does not discuss coverage, so Mr. Crump was
required to send a “follow-up letter” to Plaintiff.102
Based on the evidence presented, the Court finds Mr. Crump did not violate Section
542.056, as the estimate is a timely written document presented to Plaintiff that discusses the
basis for denial of her claim—e.g., no storm-related damage in parts of the property, total
replacement cost value, and no resulting payment after applying the deductible. Plaintiff’s
contention that Mr. Crump wrongfully failed to send a follow-up letter has no basis in law or
fact.
B. Exemplary Damages
Lastly, Defendant argues that there is no evidence that it committed any knowing
violations of the Texas Deceptive Trade Practices Act or Texas Insurance Code and, therefore, is
entitled to judgment as a matter of law on any claim for exemplary damages.103 Plaintiff offers
the following as evidence that Defendant acted knowingly:
Interior: Defendant was aware of interior damages, but knowingly failed to
inspect Plaintiff’s entire home. Defendant knew water had leaked into the interior
but failed to determine the cause of such damage. Defendant knowingly took poor
pictures of the interior. He admitted that he reviewed the photos when he inserted
the descriptions.
Exterior: Defendant was aware of repairs made to Plaintiff’s roof, but knowingly
did not inquire about such repairs and knowingly did not check for further
damages. Defendant was aware that there were other markings on Plaintiff’s roof,
but knowingly disregarded them as unrelated to hail. Defendant knowingly did
not acknowledge wind damage to Plaintiff’s siding. Defendant was aware that
many shingles on Plaintiff’s roof were unsealed, but knowingly disregarded the
possibility that the shingles had been damaged by wind. Defendant was aware that
his notes were poor as to his characterization of “old wind damage.”104
102
Surreply at p. 2, ¶ 2; see Motion, Exh. 9 (“Wallis Letter”).
Motion at p. 14; see Giles, 950 S.W.2d at 54 (noting that a finding of bad faith does not automatically entitle a
plaintiff to exemplary damages; a party seeking punitive damages must prove that “the insurer was actually aware
that its action would probably result in extraordinary harm . . . such as death, grievous physical injury, or financial
ruin. This relatively stringent standard of proof ensures that punitive damages will ordinarily be available only in
exceptional cases”).
104
Response at pp. 21-2.
103
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Once again, Plaintiff’s assertions are nothing but conclusory claims, as there is no reference to
any evidentiary support. In any event, these paragraphs basically re-state Plaintiff’s unsupported
arguments about the inadequacy of the Crump and Wallis inspections, merely adding more
unsubstantiated claims of knowing conduct.
Plaintiff further claims that Defendant knowingly violated its own handling practices
guidelines.105 Nonetheless, Plaintiff merely copy-pasted provisions of the purported guidelines
and failed to articulate how this amounts to proof of knowing violations of the Texas Deceptive
Trade Practices Act or Texas Insurance Code. As the Court previously noted, there is no
evidence of Defendant’s failure to follow the guidelines and comply with company policies.
Lastly, Plaintiff asserts “Defendant knowingly did not send [her] a claim determination letter,
even though Defendant’s own policies require such letter” and “Defendant was aware that
Plaintiff’s public adjuster had sent a letter of representation and knowingly did not respond to
such a letter and reopen the claim.”106 Again, Plaintiff does not direct the Court to any evidence
supporting her conclusory statements, and in fact, misrepresents to the Court that company
policies require a letter of denial.107
105
Id. at pp. 19-20
Response at p. 22.
107
See Response, Exh. K at p. 13. The Claim Handling and File Documentation Guidelines provide, in relevant part:
Denials of coverage may be made orally in person or by telephone and followed by a detailed
letter to the insured . . . There are states and/or provinces where regulations may require the basis
for denial . . . of a claim in writing. These jurisdictions may also require a written explanation in
situations where no damage is found. Follow the law in the jurisdiction.
106
In jurisdictions where the law does not require written follow up to the denial of the claim,
consideration should be given to communicating our position both verbally and in writing . . .
(emphasis added).
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V.
EVIDENTIARY OBJECTIONS
In her surreply, Plaintiff objects to the introduction of records of Wells Fargo, her
mortgage company, because they were produced after the discovery period.108 In its reply,
Defendant introduced the records as evidence that “Plaintiff’s roof was declared a total loss as a
result of [Hurricane] Dolly, and the Plaintiff’s then-insurance company paid her to replace the
roof.”109 The Court finds it unnecessary to resolve this objection for purposes of this order, as the
Wells Fargo records do not affect the Court’s disposition of the partial motion for summary
judgment.
VI.
HOLDING
The Court finds Plaintiff has failed to raise a genuine issue of material fact as to her
common law and statutory bad-faith claims. Additionally, Plaintiff has presented no evidence
that Defendant knowingly violated the Texas Deceptive Trade Practices Act or Texas Insurance
Code. In turn, the Court finds that Defendant is entitled to judgment as a matter of law and
GRANTS Defendant’s partial motion for summary judgment. Accordingly, Plaintiff’s claims for
common law breach of the duty of good faith and fair dealing and for statutory violations of the
Texas Insurance Code and DTPA are dismissed with prejudice.
IT IS SO ORDERED.
DONE this 24th day of November, 2014, in McAllen, Texas.
_______________________________
Micaela Alvarez
UNITED STATES DISTRICT JUDGE
108
109
Surreply at p. 4.
Reply at p. 4.
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