The Houston [1st] Court of Appeals has mandamused a trial court for denying an insurer’s Rule 91 motion where the insurer timely paid the appraisal award in full.
In re American Risk Insurance Company, Inc. (No. 01-25-00575-CV; November 25, 2025) arose from a dispute between homeowners and their insurer over a claim for damage from a water leak. Plaintiff obtained an insurance policy covering a residential property in Spring, Texas. The relevant coverage period was June 12, 2022, to June 12, 2023. Plaintiff homeowners filed an insurance claim alleging a loss from a water leak caused by a washing machine on the residential property. The loss occurred on February 6, 2023, and they submitted the claim four days later. The insurer assigned the investigation of the claim to an independent adjuster, who after the inspection sent a letter to Plaintiffs stating that the file would remain open because the adjuster was “waiting for the plumber’s report to be obtained by [Plaintiffs].” Upon receiving the plumber’s report on May 15, the insurer provided Plaintiffs with the independent adjuster’s estimate and issued a check for $9,500.51 for the claim.
A few months later, Plaintiffs sent a pre-suit demand letter to the relator for $38,719.17 for actual damages and $750 for attorney’s fees. In response, the insurer conducted a new inspection of the property and issued an additional payment of $12,774.36 with $1,064.64 in statutory interest and $1,000 in attorney fees. Plaintiffs invoked appraisal as provided by the policy. The appraisers concluded that the replacement cost for the damages was $56,934.65. The insurer issued an actual cash payment of $20,505.38, representing the replacement value as determined by the appraisers, the insurer’s prior payments, depreciation, and the deductible required by the policy. Additionally, the insurer paid statutory interest of $4,479.70. Plaintiffs nevertheless filed suit, alleging violation of Chapters 541 and 542, Insurance Code.” The insurer moved to dismiss pursuant to TRCP 91a. In response, plaintiffs amended their pleading, adding a cause of action for breach of the common law duty of good faith and fair dealing. In response, the insurer filed an amended Rule 91a motion to dismiss, arguing that the claims asserted by the plaintiffs had “no basis in law or fact” because the relator “timely paid the appraisal award in full.” After a virtual oral argument, the trial court denied the insurer’s motion. The insurer sought mandamus relief.
In an opinion by Justice Guerra, the court of appeals granted the writ. SCOTX has held that where a trial court erroneously denies a Rule 91a motion to dismiss, “mandamus relief is appropriate to spare the parties and the public the time and money spent on fatally flawed proceedings.” (See In Re Essex Ins. Co., 450 S.W.3d 524, 528(Tex. 2014); see also In re Farmers Tex. Cnty. Mut. Ins. Co., 621 S.W.3d 261, 276-77 (Tex. 2021). The insurer argued in its petition that the trial court abused its discretion because “Texas law plainly states that payment of an appraisal award constitutes full compliance with the contract,” and the “effect of an appraisal provision is to estop one party from contesting the issue of damages in a suit on the insurance contract.” Additionally, the insurer asserted that, absent an independent injury, which the plaintiffs failed to argue, the payment of the appraisal award “should have concluded the coverage dispute.”
The court agreed that the trial court erred in denying the motion because “the causes of action asserted by [plaintiffs] lacked a basis in law or fact as the causes of action were barred due to the relator’s payment of the appraisal award under the policy.” Plaintiffs then argued that the prohibition against double recovery in insurance disputes does not apply in their situation because § 541.453, Insurance Code. “limits application of the common law rule prohibiting double recovery for purposes of the statute to allow an insured to recover damages under the statute and another law unless those damages are for the same prohibited act or practice.” In other words, Plaintiffs claimed that they were entitled to both the appraisal award and statutory damages under the Texas Insurance Code. Plaintiffs pointed to a SCOTX ruling that “an insured who establishes a right to receive benefits under an insurance policy can recover those benefits as ‘actual damages’ under the statute if the insurer’s statutory violation causes the loss of benefits” (USAA Tex. Lloyds Co. v. Menchaca, 545 S.W.3d 479, 495 (Tex. 2018)). The court pointed out that Menchaca appraisal was not invoked or paid, unlike in this case. Plaintiffs thus received “all the benefits [they were] entitled to receive under the policy,” and “cannot satisfy the entitlement-to-benefits rule.” See Bonner v. Allstate Vehicle and Prop. Ins. Co., No. 3:23-CV-158, 2024 WL 718202, at *3 (S.D. Tex. Jan. 3, 2024)(mem. op. and order).
Accordingly, the court concluded that Plaintiffs were not entitled to double recovery under the entitlement-to-benefits rule and the appraisal award foreclosed any further damages, absent an independent injury. And, as far as the issue of “independent injury” was concerned, the court observed that although Texas case law stipulates that “if an insurer’s statutory violation causes an injury independent of the insured’s right to recovery policy benefits, the insured may recover damages for that injury even if the policy does not entitle the insured to receive benefits” (Menchaca, 545 S.W.3d at 499.), it also recognizes that “a successful independent-injury claim would be rare, and we in fact have yet to encounter one.” (Id. at 500). Here Plaintiffs “did not attempt to establish, either to the trial court or this Court, that they sustained an independent injury which would entitle them to further damages.” The court thus reversed the trial court and instructed it to dismiss the case.
TCJL Legal Intern George E. Christian researched and prepared the first draft of this article.
