Burson v. Evanston Insurance Company

Response in Opposition to Motion

W.D. Tex.November 9, 2017

__________________________________________________ PLAINTIFF'S RESPONSE IN OPPOSITION TO MOTION FOR SUMMARY JUDGMENT PAGE -1- IN THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF TEXAS WACO DIVISION BONNIE BURSON, § § Plaintiff, § § v. § Civil Action No. 6:17-cv-00040-RP-JCM § EVANSTON INSURANCE COMPANY, § § Defendant. § JURY PLAINTIFF BONNIE BURSON'S RESPONSE IN OPPOSITION TO DEFENDANT’S MOTION FOR SUMMARY JUDGMENT TO THE HONORABLE UNITED STATES DISTRICT COURT JUDGE: COMES NOW Plaintiff, BONNIE BURSON, and respectfully files this Response in Opposition to Defendant, EVANSTON INSURANCE COMPANY'S ("EVANSTON") Motion and Memorandum in Support of Summary Judgment.1 In support of the same, Plaintiff would respectfully show this Court as follows: I. PRELIMINARY STATEMENT 1.1 Defendant moved for traditional summary judgment against all of Ms. BURSON’s causes of action against Defendant on two theories: 1) Plaintiff’s breach of contract claim allegedly fails as a matter of law based upon Defendant's payment of its initial evaluation of the claim that its appraiser adopted and an umpire sign off on; and 2) the remainder of Plaintiff’s claims allegedly fail based upon the theory that without a breach of contract claim, extra-contractual claims must fail as well. 1 See Dkt. 26; 27. Case 6:17-cv-00040-RP-JCM Document 30 Filed 11/09/17 Page 1 of 17 __________________________________________________ PLAINTIFF'S RESPONSE IN OPPOSITION TO MOTION FOR SUMMARY JUDGMENT PAGE -2- II. SUMMARY OF ARGUMENT 2.1 Defendant’s entire summary judgment argument is based upon its initial payment of the claim for $11,657.44.2 After the parties proceeded into appraisal, Defendant's appraiser did not do an independent evaluation, but rather adopted Defendant's initial damage estimate to the penny, and used that estimate for his appraisal of the damages.3 As outlined in Plaintiff’s Motion to Set Aside Appraisal Award, the appraiser umpire was under the mistaken impression he had to agree with one of the appraisers instead of doing his own independent award.4 The umpire subsequently agreed with Defendant’s appraiser, who had adopted Defendant’s initial payment of the claim.5 Defendant’s position is that now that the umpire agreeing with Defendant’s initial evaluation of the claim amounts to a timely payment of an appraisal award, which it maintains subsequently prevents Plaintiff from maintaining a breach of contract or any statutory extra-contractual causes of action.6 For the reasons outlined in Ms. BURSON’s Motion to Set Aside the Appraisal award, the Court should grant Ms. BURSON’s requested relief, which would then moot the basis of Defendant’s Motion for Summary Judgment and necessitate the Court deny Defendant’s Motion for Summary Judgment in its entirety. However, if the Court denies Ms. BURSON’s motion, it would at that time be necessary to respond to the arguments contained in Defendant’s Motion for Summary Judgment, which Plaintiff does now in an abundance of caution. 2.2 As to Defendant’s first argument, the basis for the entire appraisal award is flawed.7 Furthermore, Defendant’s did not pay an appraisal award at all; it only paid an initial 2 Id. 3 Dkt. 23; 28; 28-3. 4 Dkt. 28; 23; 28-2. 5 Id. 6 Dkt. 26; 27. 7 Dkt. 28. Case 6:17-cv-00040-RP-JCM Document 30 Filed 11/09/17 Page 2 of 17 __________________________________________________ PLAINTIFF'S RESPONSE IN OPPOSITION TO MOTION FOR SUMMARY JUDGMENT PAGE -3- evaluation of the claim long before litigation or appraisal; which was adopted and rubber- stamped by Defendant’s appraiser and the umpire.8 As such, Defendant’s cannot now claim that its initial evaluation and payment of the claim was a timely payment of an appraisal award almost two years later. 2.3 Even should the Court determine this highly irregular situation classifies as a payment of an appraisal award, case law specifies the timely full payment of an appraisal award only potentially bars Plaintiff from using the difference in the amount of the appraisal award and the amount of the insurer's initial payment as evidence of the insurer's breach of contract.9 Plaintiff remains free to litigate her breach of contract claim using other evidence.10 Since Plaintiff’s breach of contract claims survives a summary judgment analysis, it negates Defendant's second arguments and contention that Plaintiff’s extra-contractual claims must fail given Plaintiff’s breach of contract claim fails as a matter of law. Furthermore, much of Defendant’s second argument revolves around the premise known as the “independent-jury rule” which has been interpreted to mean that a Plaintiff must have an independent-injury outside of the denial of policy benefits in order to maintain an extra-contractual causes of action; and that without a breach of contract all Plaintiff’s extra-contractual claims fail.11 The premise derives from older, seemingly contradictory precedent that the Texas Supreme Court recent cleared up with the April 7, 2017 USAA Tex. Lloyds Co. v. Menchaca opinion.12 The Menchaca Court clarified and distilled five distinct separate rules that govern the relationship between contractual and extra-contractual claims in the insurance context, that focuses on whether an insured was 8 Dkt. 28; 23; 28-2; 28-3. 9 Breshears v. State Farm Lloyds, 155 S.W.3d 340, 344 (Tex. App. Corpus Christi 2004); Graber v. State Farm Lloyds, No. 3:13-CV-2671-B, 2015 U.S. Dist. LEXIS 77361, at *11-12 (N.D. Tex. 2015); 10 Id.; Cavazos v. State Farm Lloyds, No. 7:14-CV-395, 2015, U.S. Dist. LEXIS 163287, at *9-11 (S.D. Tex. 2015). 11 See Dkt. 26; 27. 12 Id.; USAA Tex. Lloyds Co. v. Menchaca, No. 14-0721, 60 Tex. Sup. Ct. J. 672, 2017 Tex. LEXIS 361, at *10-11 (Apr. 7, 2017). Case 6:17-cv-00040-RP-JCM Document 30 Filed 11/09/17 Page 3 of 17 __________________________________________________ PLAINTIFF'S RESPONSE IN OPPOSITION TO MOTION FOR SUMMARY JUDGMENT PAGE -4- entitled to receive benefits under the policy, not whether the policy was breached.13 In this response, Plaintiff demonstrates how under “Entitled-to-Benefits Rule” of the new opinion she has a basis to recover her extra-contractual causes of action; creating genuine issues of material fact that bars summary judgment on this point. 2.4 The above creates significant issues of material fact that bars summary judgment on the points Defendant raised in its motion. Defendant has failed to carry its burden that it is entitled to judgment as a matter of law and that there are no genuine issues of material fact. As such, Defendant’s Motion for Summary Judgment should be denied in its entirety. III. FACTS 3.1 In early December of 2015, Ms. BURSON reported a severe hail and windstorm to Defendant that had occurred on or about May 10, 2015 at the Property.14 On claims paperwork, Defendant first erroneously noted the date of loss as the date Ms. BURSON reported it (December 9, 2015), then on its own, changed the date of loss again to May 25, 2015.15 Weather reports support the 2.75 inch hail that Ms. BURSON reported and remembers hitting her property on May 10, 2015.16 Ms. BURSON was dealing with personal health and family issues during the time period surrounding and immediately following the storm, which is why she did not report the claim until December 2015.17 3.2 Despite Defendant’s manipulation of Ms. BURSON’s date of loss in its paperwork, Defendant, through its adjuster Brush Country Claims, did find damage and coverage for the loss.18 However, Defendant undervalued the loss by assigning a replacement cost value 13 Id. 14 Dkt. 28; 28-4. 15 Dkt. 28; 28-4; 28-5; 28-3. 16 Dkt 28-6; 28-4. 17 Dkt. 28; 28-4. 18 Dkt. 28-3. Case 6:17-cv-00040-RP-JCM Document 30 Filed 11/09/17 Page 4 of 17 __________________________________________________ PLAINTIFF'S RESPONSE IN OPPOSITION TO MOTION FOR SUMMARY JUDGMENT PAGE -5- ("RCV") of $36,002.68, which it then depreciated by almost forty-seven percent for an actual cash value ("ACV") of $19,157.44; ultimately issuing a check to Ms. BURSON for $11,657.44 after subtracting a deductible.19 Ms. BURSON did not agree with Defendant’s loss evaluation, as Defendant wrote in the section of its motion entitled “Undisputed Factual Background.”20 Defendant would not issue any payment to Ms. BURSON until she signed their proof of loss forms, which she was forced to do to get a check. Ms. BURSON intended to fight the claim decision through an alternative process, which is why she hired counsel. 3.3 Ms. BURSON hired present counsel, who sent a letter of representation to Defendant on July 13, 2016; followed up by a Texas Deceptive Trade Practices Act (“DTPA”) and Insurance Code Demand on July 25, 2016. Defendant was incorrect when it specified in its motion it received Ms. BURSON’s Demand on July 25, 2017; one year later. The damage estimate with color photos submitted with Ms. BURSON’s demand contained a Replacement Cost Value (“RCV”) of the loss for $155,216.20. 3.4 Defendant’s former counsel asked Ms. BURSON to wait to file a lawsuit and for multiple extensions of time lasting several months to respond to her Demand, which Ms. BURSON’s counsel granted.21 At one time, Defendant’s counsel scheduled a mediation with Ms. BURSON’s counsel on her claims, before abruptly canceling it and invoking appraisal.22 Ms. BURSON filed the petition that she had held off on months for, and after Defendant removed the action to this Court, then filed a motion to compel mediation in accordance with local rules.23 Defendant filed a compel appraisal and stay the case, which the Court granted over 19 Id. 20 Dkt. 26; 27. 21 Dkt. 13. 22 Id. 23 Dkt. 7. Case 6:17-cv-00040-RP-JCM Document 30 Filed 11/09/17 Page 5 of 17 __________________________________________________ PLAINTIFF'S RESPONSE IN OPPOSITION TO MOTION FOR SUMMARY JUDGMENT PAGE -6- Ms. BURSON’s motion.24 3.5 Defendant filed a motion to appoint its own umpire, to which Ms. BURSON filed a motion for the Court to appoint its own neutral umpire. The Court appointed its umpire, attorney Brian K. Carroll, on August 21, 2017.25 3.6 Ms. BURSON named Mr. Randell Smith as her appraiser. Mr. Smith has been in the general contracting, roofing, and remodeling industry for forty-six years and has also served as an appraiser and umpire for over twenty years.26 Mr. Smith appraised the loss at an RCV of $177,231.40. Defendant named Mr. Rondi Perry, who did not do his own evaluation of the amount of the loss, but instead relied upon Defendant's Xactimate evaluation provided by Brush Country Claims for his position that the loss amounted to an RCV of $36,002.68 and ACV of $19,157.44.27 3.7 Mr. Perry, Mr. Smith, and Mr. Carroll met at the Property on October 2, 2017 to conduct an inspection.28 According to Mr. Smith, Mr. Carroll appeared very unfamiliar with the appraisal process and in his role as an umpire.29 Mr. Carroll did not know he had to enter an umpire award until being told by Mr. Perry, at which point Mr. Carroll made came under the impression his role as an umpire was to agree with one of the appraisers under a “baseball process.”30 Mr. Carroll’s own report, which he filed the next day, contained his impression of his role as an umpire in this case, as well as reasons he could not agree with Ms. BURSON’s appraiser.31 Mr. Carroll did not issue an award that Defendant’s appraiser Mr. Perry then signed 24 Dkt. 11; 12; 13; 15. 25 Dkts. 17-20; Dkt. Text entry on August 21, 2017. 26 Dkt. 28; 28-2. 27 Dkt. 23; 28; 28-3. 28 Dkt. 28; 28-2. 29 Id. 30 Id. 31 Dkt. 23 Case 6:17-cv-00040-RP-JCM Document 30 Filed 11/09/17 Page 6 of 17 __________________________________________________ PLAINTIFF'S RESPONSE IN OPPOSITION TO MOTION FOR SUMMARY JUDGMENT PAGE -7- in agreement; as specified in Defendant’s motion in the “Facts” section in its Memorandum.32 Mr. Carroll in fact signed Mr. Perry’s appraisal award, which had been emailed to him pre- signed and un-dated prior to the inspection, and then filed it with his report.33 In the award filed, it can be clearly seen that Mr. Perry's signature is a copy that was printed out without a date and then signed by Mr. Carroll in blue ink.34 3.8 Defendant filed its Motion for Summary Judgment which is the subject of this response. Ms. BURSON then filed the afore-mentioned Motion to Set Aside Appraisal Award. IV. SUMMARY JUDGMENT EVIDENCE 4.1 As evidence in opposition of Defendant’s Motion for Summary Judgment, Plaintiff submits all of the pleadings, motions, and exhibits on file: which are incorporated by reference. V. ARGUMENT AND AUTHORITIES 5.1 As this case was removed to federal court based upon diversity, Texas substantive law applies.35 The party moving for traditional summary judgment bears the burden to show that no genuine issue of material fact exists and that it is entitled to judgment as a matter of law.36 A fact issue exists if there is more than a scintilla of probative evidence.37 When evaluating a motion for summary judgment based on summary judgment evidence, the trial court must do the following: 1) take as true all evidence favorable to the nonmovant; 2) make every reasonable inference in favor of the non-movant; and 3) resolve any doubts about the existence of a genuine 32 Dkt. 27. 33 Dkt. 28; 28-2. 34 Dkt. 23. 35 Erie R.R. Co. v. Tompkins, 304 U.S. 64, 78- 80, 58 S. Ct. 817, 82 L. Ed. 1188 (1938) 36 Tex. R. Civ. P. 166a(c); Rhone-Poulenc, Inc. v. Steel, 997 S.W.2d 217, 222 (Tex. 1999); Provident Life & Accident Ins. Co. v. Knott, 128 S.W.3d 211, 216 (Tex. 2003); Haase v. Glazner, 62 S.W.3d 795, 797, 45 Tex. Sup. Ct. J. 141 (Tex. 2001). 37 Neely v. Wilson, 418 S.W.3d 52, 59 (Tex. 2013). Case 6:17-cv-00040-RP-JCM Document 30 Filed 11/09/17 Page 7 of 17 __________________________________________________ PLAINTIFF'S RESPONSE IN OPPOSITION TO MOTION FOR SUMMARY JUDGMENT PAGE -8- issue of material fact against the movant.38 When the movant does not meet its burden of proof, the burden does not shift to the non-movant unless and until the movant has 'established her entitlement to a summary judgment on the issues expressly presented to the trial court by conclusively proving all essential elements of her cause of action or defense as a matter of law.'39 Once the movant produces sufficient evidence to establish the right to summary judgment, the nonmovant must present evidence sufficient to raise a fact issue.40 A. The Court should grant Plaintiff’s Motion to Set Aside the Appraisal Award, which would moot Defendant’s basis for this motion. 5.2 Defendant’s entire summary judgment argument is based on the timely payment of an appraisal award, which it maintains subsequently prevents Plaintiff from maintaining a breach of contract or statutory extra-contractual causes of action. Ms. BURSON has filed a Motion to Set Aside the Appraisal Award.41 For the reasons outlined in that motion, the Court should grant Ms. BURSON’s requested relief, which would then moot the basis of Defendant’s Motion for Summary Judgment. B. The Umpire agreeing with Defendant’s initial evaluation of the claim does not amount to a “timely payment” of an appraisal award under Texas law, and as such Plaintiff should be allowed to proceed with litigation and discovery. 5.3 As outlined in Plaintiff’s Motion to Set Aside Appraisal Award, the appraisal umpire, Mr. Carroll, was under the mistaken impression he had to agree with one of the appraisers instead of doing his own independent award.42 The umpire subsequently agreed with Defendant’s appraiser, who had adopted Defendant’s initial payment of the claim of $11,657.44 38 Limestone Prods. Distrib. v. McMamara, 71 S.W.3d 308,311 (Tex. 2002); Neely at 60; Provident at 215. 39 State v. Durham, 860 S.W.2d 63, 68 (Tex. 1993). 40 Centeq Realty v. Siegler, 899 S.W.2d 195, 197 (Tex. 1995). 41 See Dkt. 28. 42 Dkt. 28; 23; 28-2. Case 6:17-cv-00040-RP-JCM Document 30 Filed 11/09/17 Page 8 of 17 __________________________________________________ PLAINTIFF'S RESPONSE IN OPPOSITION TO MOTION FOR SUMMARY JUDGMENT PAGE -9- to the penny.43 Defendant’s position is now that the umpire’s agreement with Defendant’s initial evaluation of the claim amounts to a timely payment of an appraisal award, which it maintains subsequently prevents Plaintiff from maintaining a breach of contract or any statutory extra- contractual causes of action.44 5.4 As outlined in Plaintiff’s Motion to Set Aside Appraisal Award, the basis for the appraisal award, as well as Defendant’s argument, are flawed.45 Mr. Carroll was not supposed to find reasons “to reach an agreement” with either appraiser.46 He was supposed to set a dollar amount as to the amount of loss by ruling on the appraisers’ differences, and then set out his own award independent of either appraiser.47 Mr. Carroll did not do that.48 Furthermore, Defendant did not pay an appraisal award at all; it only paid an initial evaluation of the claim long before litigation or appraisal; which was adopted and rubber-stamped by Defendant’s appraiser and the umpire.49 As such, Defendant cannot now claim that initial evaluation and payment of the claim was a timely payment of an appraisal award almost two years later. Nothing in Defendant’s motion supports such an interpretation of an initial payment on a claim being classified as a “timely payment” of appraisal award.50 As such, Plaintiff should be allowed to proceed with litigation and discovery to prove up breach of contract and extra-contractual causes of action against Defendant. 43 Dkt. 28; 23; 28-2; 28-3. 44 Dkt. 26; 27. 45 Dkt. 28. 46 Navarro v. State Farm Lloyds, No. 7:14-CV-372, 2015 U.S. Dist. LEXIS 182845, at *16 (S.D. Tex. 2015); Fisch, 356 S.W.2d at 189; Fisch v. Transcon. Ins. Co., 356 S.W.2d 186, 189 (Tex. Civ. App.—Houston 1962, writ ref'd n.r.e.); Dkt. 28; Dkt. 28-1. 47 Id.; Fisch, 356 S.W.2d at 190; Providence Lloyds Ins. Co. v. Crystal City Indep. Sch. Dist., 877 S.W.2d 872, 876 (Tex. App.—San Antonio 1994) (The duty of the umpire under the terms of the insurance policy was to ascertain and determine, in the exercise of his own best judgment, the cash value of the items of property about which the appraisers had disagreed, independent of the findings of the appraisers). 48 Dkt. 23; 28. 49 Dkt. 26; 27; 23. 50 Dkt. 26; 27. Case 6:17-cv-00040-RP-JCM Document 30 Filed 11/09/17 Page 9 of 17 __________________________________________________ PLAINTIFF'S RESPONSE IN OPPOSITION TO MOTION FOR SUMMARY JUDGMENT PAGE -10- C. The payment of the ACV value of an appraisal award does not prevent Plaintiff from litigating her breach of contract claim using other evidence. 5.5 Even if the Court determines Defendant’s initial payment of a claim classifies as a timely payment of an appraisal award, Plaintiff could still litigate her breach of contract claim using other evidence. 5.6 Defendant points to a variety of appellate decisions from other Texas districts to support its sole premise for summary judgment: that timely payment of an appraisal award means a breach of contract claim against it fails as a matter of law. Defendant seeks to apply a blanket rule, when in fact the cases Defendant cite have a very narrow holding: that timely payment of a full appraisal award only potentially bars Plaintiff from using the difference in the amount of the appraisal award and the amount of the insurer's initial payment as evidence of the insurer's breach of contract.51 In 2015, a Northern District of Texas decision reinforced that distinction after it applied Texas substantive law under the Erie Doctrine to a case removed under diversity jurisdiction.52 The Graber court, citing Breshears, held, "[a] full and timely paid appraisal award merely bars the insured from using the difference in the amount of the appraisal award and the amount of the insurer's initial payment as evidence of the insurer's breach of contract; it does not prevent the insured from litigating her breach of contract claim using other evidence.53 5.7 In Cavazos v. State Farm Lloyds, a Southern District of Texas court, again applying Texas law under Erie, refused to grant Defendant State Farm's Motion for Summary Judgment on Plaintiff's breach of contract claim in identical circumstances.54 State Farm moved for summary judgment after it timely paid the ACV of an appraisal award, suggesting a breach of 51 Breshears v. State Farm Lloyds, 155 S.W.3d 340, 344 (Tex. App. Corpus Christi 2004). 52 Graber v. State Farm Lloyds, No. 3:13-CV-2671-B, 2015 U.S. Dist. LEXIS 77361, at *11-12 (N.D. Tex. 2015). 53 Id. 54 Cavazos v. State Farm Lloyds, No. 7:14-CV-395, 2015, U.S. Dist. LEXIS 163287, at *9-11 (S.D. Tex. 2015). Case 6:17-cv-00040-RP-JCM Document 30 Filed 11/09/17 Page 10 of 17 __________________________________________________ PLAINTIFF'S RESPONSE IN OPPOSITION TO MOTION FOR SUMMARY JUDGMENT PAGE -11- contract claim must fail as a matter of law after payment of the award.55 Citing Graber, the Cavazos court held Plaintiff’s breach of contract claims survived summary judgment, as a genuine issue of material fact existed as to whether the breach could be proved through other means than the difference in the amount of the appraisal award and the amount of the insurer's initial payment.56 The Plaintiff's policy in Cavazos had a requirement that to receive additional payments for the replacement cost value of a loss, the repairs to the property had to be completed within two years after the date of the loss.57 The Cavazos court agreed with Plaintiff's position that the delay in payment of the appraisal award, one year after the date of loss to Plaintiff's property, made it impossible for Plaintiff to complete the repairs within two years to receive the withheld depreciation of the award.58 The Cavazos court held Defendant’s unilateral decision to give Plaintiff's more time to complete the repairs and receive their contractual $6,396.04 in withheld depreciation was not dispositive of whether State Farm was in breach of contract in the first place.59 5.8 As the above cases clearly demonstrate, payment of a full appraisal award only potentially bars Plaintiff from using the difference in the amount of the appraisal award and the amount of the insurer's initial payment as evidence of the insurer's breach of contract. The appraisal payment does not wash insurer Defendant's hands clean from having breached the insurance policy contract in the first place. Plaintiff remains free to litigate and prove her breach of contract claim using other evidence.60 5.9 In the instant case, Defendant never even paid an appraisal award, let alone a 55 Id. 56 Id. at *11-14. 57 Id. at *12. 58 Id. at *13. 59 Id. at *13-14. 60 Graber at *11-12. Case 6:17-cv-00040-RP-JCM Document 30 Filed 11/09/17 Page 11 of 17 __________________________________________________ PLAINTIFF'S RESPONSE IN OPPOSITION TO MOTION FOR SUMMARY JUDGMENT PAGE -12- timely one.61 It paid $11,657.44 as an initial evaluation of the claim after taking out a deductible and depreciating the RCV of its estimate by almost forty-seven percent.62 There is not even a difference in the amount of the appraisal award and the amount of the insurer's initial payment to be used as evidence of the insurer's breach of contract. However, Ms. BURSON should be allowed to use Defendant’s depreciation of her claim by almost half to prove up her breach of contract case. That amount of depreciation is not usual nor customary nor warranted in this case. 5.10 Ms. BURSON should also be allowed to use the changes to the date of loss by Defendant as evidence of Defendant’s breach of contract. Ms. BURSON reported the date of loss as May 10, 2017; a date that saw 2.75 inch hail hit her property.63 Defendant initially specified the date of loss as December 9, 2015; the day Ms. BURSON reported the claim.64 Defendant then changed the date of loss, on its own, to May 25, 2015.65 There was not a significant enough storm on either of those days to cause the amount and type of damage to Ms. BURSON’s property as she reported; a fact Defendant later attempted to use against her. Although it allowed for coverage and paid an undervalued amount on the claim, Defendant’s appraiser attempted to use the lack of significant storm activity on the two dates of loss that Defendant assigned as evidence that Ms. BURSON’s property was not actually hit by a storm. It is Plaintiff’s position that Defendant attempted to manipulate the date of loss for Ms. BURSON’s claim in order to minimize or devalue coverage for the loss. Ms. BURSON should be allowed to engage in discovery and to take depositions to get to the bottom of this date manipulation and to use the same to prove up her breach of contract case. 5.11 As outlined her Motion to Set Aside the Appraisal Award, Defendant’s evaluation 61 Dkt. 28; 23; 28-3; 26; 27. 62 Id. 63 Dkt. 28; 28-4; 28-5. 64 Dkt. 28; 28-5. 65 Dkt. 28; 28-3; 28-2. Case 6:17-cv-00040-RP-JCM Document 30 Filed 11/09/17 Page 12 of 17 __________________________________________________ PLAINTIFF'S RESPONSE IN OPPOSITION TO MOTION FOR SUMMARY JUDGMENT PAGE -13- called of the damage at the Property called to replace a commercial built-up roof with gravel ballast in a way that is impossible to do in commercial roofing and only cost $31,014.45.66 Ms. BURSON should be allowed to engage in discovery and put on evidence of this improper evaluation and investigation of the claim, which would then prove up her breach of contract case against Defendant. 5.12 There are certainly issues of material fact to be explored at every level. There are too many inconsistencies and anomalies in the way Defendant handled this claim from the very beginning, through Defendant’s appraiser’s findings and through Mr. Carroll’s actions, to allow Ms. BURSON to be railroaded out of Court on a motion for summary judgment without being able to get to the bottom of everything. Defendant has locked down producing any discovery to Ms. BURSON at all; not even the claims file. Ms. BURSON should be allowed to proceed forward with litigation and discovery. When taking as true all evidence favorable to the Ms. BURSON and with every reasonable inference in favor of the her, Defendant has failed to carry its burden that it is entitled to judgment as a matter of law and that no genuine issue of material fact exists. C. Plaintiff’s breach of contract claims survive a summary judgment analysis, negating Defendant's contention that Plaintiff’s extra-contractual claims must fail given that there is not a breach of contract claim as a matter of law. Furthermore, an independent injury outside of a breach of contract to maintain extra-contractual claims is only one if five separate ways to maintain extra-contractual claims; as clarified in a recent Texas Supreme Court decision. 5.13 Defendant's sole premise for summary judgment of Ms. BURSONs extra- contractual claims is that Plaintiff cannot succeed on her breach of contract claim due to Defendant's payment of the ACV of an appraisal award. Defendant's position is that since extra- contractual claims allegedly cannot survive without an injury independent of the policy claim, 66 Id. Case 6:17-cv-00040-RP-JCM Document 30 Filed 11/09/17 Page 13 of 17 __________________________________________________ PLAINTIFF'S RESPONSE IN OPPOSITION TO MOTION FOR SUMMARY JUDGMENT PAGE -14- Plaintiff’s extra-contractual claims should fail.67 5.14 Plaintiff has already proven in the above section how her breach of contract claim survives a summary judgment analysis, negating the basis for Defendant's motion for summary judgment of Plaintiff’s extra-contractual claims. Yet, even without considering the fact issues raised by Plaintiff regarding her breach of contract claim, the Ms. BURSON’s extra-contractual claims survive. In Vail v. Texas Farm Bureau, which some Texas courts interpreted to have been overruled by later decisions, the Texas Supreme Court held that an insured who is wrongfully denied policy benefits need not show any injury independent from the denied policy benefits.68 The United States Court of Appeals for the Fifth Circuit recently refrained from making a ruling on whether an independent injury outside the denied policy benefits was actually required, instead certifying the question to the Texas Supreme Court due to the seemingly contradictory Texas precedent.69 The Texas Supreme Court took up that question on another case with the April 7, 2017 opinion in USAA Tex. Lloyds Co. v. Menchaca.70 The Menchaca court reaffirmed Vail and laid out five distinct separate rules that govern the relationship between contractual and extra-contractual claims in the insurance context that focused on whether an insured was entitled to receive benefits under the policy, not whether the policy was breached.71 One of the rules dealt with the independent injury rule, the other four dealt with other separate basis for extra-contractual claims.72 The “Entitled-to-Benefits Rule,” for example, provides an insured who establishes a right to receive benefits under the policy can recover those benefits as 67 Dkt. 26; 27. 68 Cameron Int'l Corp. v. Liberty Ins. Underwriters, Inc. (In re Deepwater Horizon), 807 F.3d 689, 697 (5th Cir. 2015), citing Vail v. Tex. Farm Bureau Mut. Ins. Co., 754 S.W.2d 129, 136 (Tex. 1988). 69 In re Deepwater Horizon at 698 (stating, "[r]ather than second-guess our reading of current Texas law, we find it prudent to obtain clarity from Texas itself.") 70 USAA Tex. Lloyds Co. v. Menchaca, No. 14-0721, 60 Tex. Sup. Ct. J. 672, 2017 Tex. LEXIS 361, at *10-11 (Apr. 7, 2017). 71 Id. 72 Id.; Id. at *35. Case 6:17-cv-00040-RP-JCM Document 30 Filed 11/09/17 Page 14 of 17 __________________________________________________ PLAINTIFF'S RESPONSE IN OPPOSITION TO MOTION FOR SUMMARY JUDGMENT PAGE -15- actual damages under the Insurance Code if the insurer’s statutory violation causes the loss of the benefits.73 5.15 In the instant case, Defendant established Ms. BURSON’s right to receive benefits under the policy when it determined Ms. BURSON had damage from a covered loss.74 With the first prong satisfied of the “Entitled-to-Benefits Rule” satisfied, it is necessary to determine if the insurer’s statutory violation causes the loss of the benefits.75 Ms. BURSON brought causes of action for breaches of the common law duty of good faith and fair dealing for the Defendant’s failure to conduct a reasonable investigation of the loss to determine whether there was a reasonable basis for this denial.76 Ms. BURSON brought similar extra-contractual claims for breaches by Defendant under the Texas Deceptive Trade Practices Act and Insurance Code.77 If it is determined by a jury that Defendant’s violations caused the loss of the policy benefits, to whit Defendant’s failure to conduct a reasonable investigation into the loss resulted in an underpayment of the claim, then under Menchaca, Ms. BURSON can recover.78 This right to recover on these extra-contractual claims is irrespective of a breach of the contract policy.79 Whether Defendant’s violations actually caused the loss of the policy benefits is a genuine issue of material fact, not a question of law. This material fact alone prevents summary judgment from being granted on Ms. BURSON’s extra-contractual claims. 5.16 Ms. BURSON has shown how her breach of contract claim survives, negating the sole basis of Defendant’s motion for summary judgment on this point. She has also demonstrated how fact issues exist on this point. When taking as true all evidence favorable to 73 Id. at *24. 74 See Dkt. 41-4. 75 Menchaca, at *24 -25. 76 See Dkt. 1-2. 77 Id. 78 Menchaca, at *24 -25. 79 Id. Case 6:17-cv-00040-RP-JCM Document 30 Filed 11/09/17 Page 15 of 17 __________________________________________________ PLAINTIFF'S RESPONSE IN OPPOSITION TO MOTION FOR SUMMARY JUDGMENT PAGE -16- Ms. BURSON and with every reasonable inference in favor of Ms. BURSON, Defendant has failed to carry its burden that it is entitled to judgment as a matter of law and that no genuine issue of material fact exists. VI. CONCLUSION 6.1 Defendant did not pay an appraisal award at all; it only paid an initial evaluation of the claim long before litigation or appraisal; which was adopted and rubber-stamped by Defendant’s appraiser and the umpire almost two years later. Defendant cannot now claim its initial evaluation and payment of a claim almost two years prior counts as a “timely payment” of an appraisal award and operates as a basis for summary judgment of Ms. BURSON’s breach of contract claims. Even should the Court determine the initial payment counts as a payment of an appraisal award, Ms. BURSONS remains free to litigate her breach of contract claim using evidence other than the difference in the amount of the appraisal award and the amount of the insurer's initial payment. In doing so, Plaintiff has demonstrated several issues of material fact that bar summary judgment on this point. Since Plaintiff’s breach of contract claim survive, Defendant’s sole basis for summary judgment of Plaintiff’s extra-contractual claims fails. Furthermore, the question of whether an insurer who is wrongfully denied policy benefits needs to show any injury independent from the denied policy benefits has been recently clarified and expounded upon by the Texas Supreme Court; which in turn opined on four other bases for extra-contractual claims to exist regardless of a breach of policy contract claim. Plaintiff demonstrated how under the new opinion she has a basis to recover her extra-contractual causes of action; creating genuine issues of material fact that bars summary judgment on this point. When taking as true all evidence favorable to Plaintiff and with every reasonable inference in favor of Plaintiff, Defendant has failed to carry its burden that it is entitled to judgment as a Case 6:17-cv-00040-RP-JCM Document 30 Filed 11/09/17 Page 16 of 17 __________________________________________________ PLAINTIFF'S RESPONSE IN OPPOSITION TO MOTION FOR SUMMARY JUDGMENT PAGE -17- matter of law and that no genuine issue of material fact exists. VII. PRAYER WHEREFORE, PREMISES CONSIDERED, Plaintiff BONNIE BURSON respectfully prays this Court deny Defendant’s Motion for Summary Judgment in its entirety, and grant her any such other and further relief, at law or in equity, to which she may be justly entitled. Respectfully submitted, THE CORONA LAW FIRM, PLLC By: /s/ Jesse S. Corona Jesse S. Corona Texas Bar No. 24082184 521 N Sam Houston Pkwy E, Ste. 420 Houston, Texas 77060 Telephone: 281.882.3531 Facsimile: 713.678.0613 Jesse@theCoronaLawfirm.com ATTORNEY FOR PLAINTIFF CERTIFICATE OF SERVICE I hereby certify that on November 9, 2017, a true and correct copy of the foregoing was served on all counsel of record, via the below methods, as follows: Todd M. Tippett ZELLE, LLP 901 Main Street, Suite 4000 Dallas, TX 75202-3975 Telephone: (214) 742-3000 Facsimile: (214) 760-8994 Via Electronic Service By: /s/ Jesse S. Corona Jesse S. Corona Case 6:17-cv-00040-RP-JCM Document 30 Filed 11/09/17 Page 17 of 17