In a home insurance policy dispute stemming from a 2020 plant explosion, the 14th Court of Appeals has affirmed a Harris County Civil Court at Law’s summary judgment order pertaining to Plaintiff’s extracontractual claims but reversed and remanded with respect to her breach of contract.
Kelly Mallady v. Homeowners of America Insurance Company (No. 14-24-00147-CV; August 7, 2025) began after Plaintiff filed a claim for damages to her property and contents caused by the Watson Grinding & Manufacturing Company explosion in January 2020. Following an independent adjustment estimating property damage of $13, 014.79 to the dwelling and fence and after deducting the policy deductible, Defendant tendered payment of $10,656.79. Mallady’s inspector, however, assessed her property damage at $104,093.04. Defendant’s second adjuster estimated $53,059.45, which, after applying the deductible, the prior payment, and recoverable depreciation, paid Plaintiff $36,546.49. Plaintiff invoked appraisal in July 2020, asserting the independent adjusters failed to adequately inspect the property. In turn, she demanded $247,860.40 for the recoverable cost value of damages to property and contents, plus $10,000 in attorney’s fees. Defendant rejected the demand and designated an appraiser. The two parties’ appraisers appointed an umpire, who set the damage amounts for dwelling at $24,000 replacement cost value and $21,900 actual cost value.
Unbeknownst to the umpire and Plaintiff’s appraiser however, Defendant’s appraiser immediately printed and signed the award. Plaintiff’s appraiser emailed Umpire later that evening pointing out that the amount awarded was less than the $53,059.45 estimated by Defendant’s second adjuster. The umpire voided the April award and re-appraised the damages at $215,616.65 and $145,778.70 actual cash value, now including damages to contents as well as the dwelling and fence. Defendant requested Plaintiff and her appraiser to submit to examination under oath, which were rescheduled. Although Plaintiff’s examination ultimately occurred, her appraiser’s never did. Plaintiff filed suit in January 2022, alleging breach and anticipatory breach of contract, breach of common law duty of good faith and fair dealing, violations of the DTPA and Prompt Payment of Claims Act, bad faith, and fraud. Defendant moved to confirm the April award over the June award, asserting that the umpire lacked authority to rescind it once the Defendant’s appraiser had signed it. Defendants further moved for no-evidence and traditional summary judgment on grounds that they paid the appraisal award in full. The trial court granted the motions. Plaintiff appealed.
In an opinion by Justice Antú, the court affirmed in part and reversed and remanded in part. Plaintiff first argued that the the June award was enforceable because it was signed by her appraiser and the umpire, and the trial court erred by setting it aside. The court rejected this argument, holding that the evidence showed that Defendant made two payments on Plaintiff’s claim before she invoked appraisal, that the umpire issued an April award, which he signed and sent to the parties and which Defendant’s appraiser also signed, and that Defendant produced an award signed by two of three appraisers in accordance with the policy. Summary judgment was thus proper on that issue. But because the April award did not set the amount of loss for contents, covering only damages to the dwelling, the court held that the April award was binding only as it related to damages to the dwelling. Plaintiff thus raised a genuine issue of material fact that she suffered damages aside from those covered by the April award. The trial court thus erred by awarding summary judgment as to damages to the contents.
Plaintiff further alleged that her extracontractual claims for mental health consequences, psychological injuries, and attorney’s fees were independent injuries supporting those claims. Defendant countered that Plaintiff failed to differentiate between mental anguish damages attributable to the explosion from damages attributable to Defendant’s alleged non-payment of her claim. Plaintiff produced a report prepared by a licensed therapist and her own affidavit in support of the mental anguish claim (which stated that Plaintiff suffered depression before the plant explosion), but all that evidence showed “establishe[d] her mental anguish stem[med] from the denial of policy benefits” and, consequently, were not independent of her right to receive policy benefits. This ruling likewise ruled out her recovery of attorney’s fees, since she identified no basis of recovery. The court further concluded that the trial court erred in granting Defendant’s motion to compel the examination of Plaintiff’s appraiser because the policy did not require it, only Plaintiff’s examination.
TCJL Intern Shaan Rao Singh researched and prepared the first draft of this article.
