SUMMARY JUDGMENT ON PROPERTY DAMAGE CLAIM UPHELD BECAUSE INSURED FAILED TO ADVISE CARRIER OF ADDITIONAL CLAIMS

In Maria v. State Farm Lloyds, No. 7:14-CV-536, 2015 WL 8618435 (SD Tex. December 14, 2015), State Farm filed a motion for summary judgment on Plaintiff’s first party property coverage claim because State Farm did not breach it insurance contract and because the extra-contractual claims were “derivative of their defunct breach of contract claim.” The motion was granted and upheld.

The Court found no breach of contract because after State Farm tendered payment to repair or replace the damaged property.  While Plaintiffs contend the payments were insufficient, they never told State Farm they had completed the repairs (which the policy required in order to receive additional payments) nor did they notify State Farm of any deficiency in the payments after the work was completed.  The Court expressly recognized State Farm did not have a general duty under the policy to pay damages, and the insured failed to comply with the policy conditions in order to trigger additional duties under the contract.

The Court held there was no breach of the common law duty of good faith and fair dealing because the bad faith claims “relate solely to property damage that Plaintiff’s failed to notify State Farm of before filing suit.”  Likewise, Plaintiff’s claims under the prompt payment of claims chapter failed because “it is undisputed here that State Farm tendered payment pursuant to the Policy, the same day it completed its inspection.  Again, Plaintiffs failed to notify State Farm of their additional claims.”