SAN ANTONIO COURT OF APPEALS FINDS INSURED’S BREACH OF CONTACT AND EXTRA-CONTRACTUAL CLAIMS FAIL TO SURVIVE TIMELY PAID APPRAISAL AWARD

Last week, in a permissive appeal of a Webb County trial court’s denial of an insurer’s motion for summary judgment, and following review of the “five distinct but interrelated rules that govern the relationship between contractual and extra-contractual claims in the insurance context” recently propounded by the Supreme Court of Texas in USAA Lloyds v. Menchaca, 60 Sup. Ct. J. 672, 2017 WL 1311752 (Tex. Apr. 7, 2017 reh’g granted Dec. 15, 2017), the San Antonio court of Appeals found that the insured’s contractual and extra-contractual claims did not survive the insurer’s timely payment of an appraisal award.

In Wellington Insurance Company v. Banuelos, 2018 WL 626534 (Tex. App. – San Antonio January 31, 2018), the insured presented a claim for storm damage to the insured residence. An independent adjuster inspected the loss and found minor damage to vents that totaled $902.40. And based on the adjuster’s findings, the insurer denied coverage for the roof and a shed.  No payment was issued because the damage was less than the deductible and the file was closed. The insured filed suit alleging breach of contract, breach of the duty of good faith and fair dealing and statutory violations of the Texas Insurance Code and the Texas Deceptive Trade Practices Act. The insurer then invoked the appraisal clause and through the process, an award was issued for $10,797.62, including damage to the roof and shed. After applying depreciation and the insured’s deductible, Wellington timely paid the insured $8,946.70.

After paying the appraisal award, Wellington filed a motion for summary judgment which the trial court denied. But in light of recent case law developments, Wellington asked the trial court to allow a permissive appeal presenting the sole issue of “whether an insured’s breach of contract and extra-contractual claims survive a timely paid appraisal award.” After analyzing a series of recent decisions; Ortiz v. State Farm Lloyds, 2017 WL 5162315 (Tex. App. – San Antonio Nov. 8, 2017), Garcia v. State Farm Lloyds, 514 S.W.3d 257 (Tex. App. - San Antonio 2016, pet. denied); and the guidance recently provided by the Texas Supreme Court’s Menchaca decision, the court held that the trial court erred in denying Wellington’s motion for summary judgment and reversed the decision rendering summary judgment in favor of Wellington and the independent adjuster.