Texas Supreme Court to Decide If Attorney Fees Owed After Appraisal Award

A federal appellate court, facing contradictory rulings from federal courts, has sought the intervention of the Texas Supreme Court to settle the question of whether attorney fees can be awarded to claimants when insurers pay appraisal awards plus owed interest for delayed payments.

The 5th Circuit Court of Appeal panel made the decision on Wednesday, referring the certified question for resolution in a lawsuit brought by homeowner Mario Rodriguez against Safeco Insurance Co. of Indiana. The question posed was, "In an action under Chapter 542A of the Texas Prompt Payment of Claims Act, does an insurer’s payment of the full appraisal award plus any possible statutory interest preclude recovery of attorney’s fees?"

Rodriguez initiated the lawsuit against Safeco when the insurer paid only $1,295.55 for damages caused by a tornado that hit his Plainview home in May 2019. He requested an additional $29,500, but Safeco failed to respond.

Following Rodriguez’s lawsuit, Safeco invoked the policy’s appraisal provision. In April 2022, an appraisal panel determined that the replacement cost value of the damage amounted to $36,514.52. Safeco paid $32,447.43, which accounted for the award after factoring in policy limits, deductibles, and the prior payment.
Additionally, Safeco paid an extra $9,458.40, asserting that it covered any potential interest owed under the TPPCA (Texas Prompt Payment of Claims Act).

Safeco subsequently filed a motion for summary judgment with the US District Court in Dallas, arguing that, under the TPPCA as amended by the state legislature in 2017, it had fulfilled its payment obligations for Rodriguez’s claim. The District Court granted the motion, noting that the legislature’s intention was to limit attorney fees when insurers pay appraisal awards. Rodriguez appealed the decision.

The 5th Circuit panel acknowledged in its opinion that federal courts have diverged in their rulings on whether attorney fees are warranted when an insurer pays an appraisal award plus any required TPPCA interest.