Insurer’s Payment of Full Appraisal Award and Statutory Attorney’s Fees Precludes Recovery of Attorney’s Fees Under Tex. Ins. Code § 542A.007(a)(3)(A)
By Ramy P. Elmasri and Erin K. Rutherford
In Rodriguez v. Safeco Ins. Co. of Indiana, the Supreme Court of Texas held that in an action under Chapter 542A of the Texas Prompt Payment of Claims Act, the plain language of 542A.007 mandates that an insurer’s payment of the full appraisal award plus any possible statutory interest precludes recovery of attorney’s fees.
A dispute arose over reimbursement for damages to Rodriguez’s home after a tornado. After a year of litigation and unsuccessful mediation, Safeco invoked the policy’s appraisal provision, which led to a valuation of damages at $36,447.73. After accounting for prior payments and other amounts, Safeco issued a check for $32,447.73 as a full payment of the appraisal amount due under the policy and paid an additional $9,458.40 to cover any interest possibly owed on the appraised amount. Safeco contended that its payments foreclosed Rodriquez’s request for attorney’s fees.
The Court agreed, reasoning that the plain language of 542A.007 is clear and unambiguous and application of the mathematical equation set out in 542A.007(a)(3) equates to no amount of permissible attorney’s fees. The Court explains that this result is both contemplated and affirmed by 542A.007(c) which prohibits courts awarding attorney’s fees if the quotient of subsection (a)(3)(A) is less than 0.2, as was the case here. The Court concluded that under the language of 542.007(a) a plaintiff’s right to attorney fees is lost “because the insured received payment of the appraisal award which covers his claim under the insurance policy, he necessarily has no remaining claim under his insurance policy.”
The case is Rodriguez v. Safeco Ins. Co. of Indiana, No. 23-0534 (Tex. February 2, 2024).