The Houston [1st] Court of Appeals has thrown out a $300,000 award for mental anguish damages and $250,000 in plaintiff’s attorney’s fees in a Hurricane Harvey roof damage case.
Homeowners of America Insurance Company v. Emilio Menchaca (No. 01-23-00633-CV; July 31, 2025) arose from a dispute over a homeowner’s property damage claim. Menchaca suffered damage to his home during Hurricane Harvey. On August 31, 2017, he filed a claim under his policy with HAIC, who denied payment because the amount of damages, estimated at $3,688.54, did not exceed the deductible. Menchaca retained counsel following this decision, prompting HAIC to request a reinspection of the loss and documentation for any additional damages claimed under the policy. Additionally, the insurer advised that Menchaca was required to first invoke appraisal before filing suit, and that it reserved the right to request an examination under oath (EUO) from him or his appraiser.
Menchaca sent a demand notice letter to HAIC stating economic damages of $47,757.98, as estimated by his appraiser. The letter demanded payment of these damages, as well as $2,400 in attorney fees and $2,000 in expenses. It also stated that Menchaca would not be available for an EOU. Shortly thereafter, HAIC invoked the appraisal process under the policy, appointed an appraiser, reiterated its earlier request to Menchaca for supporting documentation, and again requested an EUO. When Plaintiff again resisted appearing for an EUO, HAIC filed a dec action seeking declarations that Plaintiff and his adjuster were required to submit to separate EUOs, the appraiser was not qualified, and Plaintiff had to appoint a qualified appraiser. HAIC also requested After some back and forth, Plaintiff eventually agreed, and the parties entered into a Rule 11 agreement under which Plaintiff agreed to submit to an EUO, withdraw his appraiser, and appoint a qualified appraiser.
Menchaca then answered HAIC’s dec action with a general denial and counterclaimed, alleging violations of the Texas Insurance Code, fraud, breach of contract, breach of the duty of good faith and fair dealing, and violations of the Texas Prompt Payment of Claims Act. He also sought attorney fees. HAIC responded with several affirmative defenses. Plaintiff then appointed a new appraiser and appeared for his EUO. Shortly after that HAIC’s appraiser and the agreed umpire signed an appraisal award setting the amount of loss for Plaintiff’s claim. Without admitting liability, HAIC issued a check to Plaintiff for $7,085.86 (actual cash value of $13,145.86, minus the deductible). It then moved for summary judgment on Plaintiff’s counterclaims, arguing that the award disposed of any breach of contract claim, and that any delay was the result of a bona-fide dispute, rather than bad faith. HAIC added that Menchaca’s counterclaim failed because he had not complied with conditions precedent under the policy.
Plaintiff’s response asserted that if his counterclaim had been eliminated by the appraisal award, so too would HAIC’s declaratory judgment action. He also argued that HAIC had breached the policy and violated § 541.060(7), Insurance Code, to which HAIC responded by asserting that the appraisal had disposed of Plaintiff’s counterclaims, except his claim for fees under the TPPCA. As to that claim, HAIC argued, Plaintiff’s noncompliance and noncooperation throughout the claims process and litigation demonstrated that his claim for penalty interest was not payable. Additionally, Plaintiff’s counterclaim for attorney’s fees under Chapter 542 failed as a mater of law because the $7,058.86 award payment on a $53,157.98 demand resulted in an amount less than 0.2. The trial court denied HAIC’s motion for summary judgment, as well as its motion for reconsideration. The case went to a jury, which awarded Plaintiff $300,000 in mental anguish damages, $250,000 in attorney’s fees, and $93,000 in pre-judgment interest. HAIC appealed.
In an opinion by Justice Guiney, the court of appeals reversed and rendered a take nothing judgment on Plaintiff’s counterclaims against HAIC. It was undisputed that HAIC and the umpire signed an appraisal award and HAIC paid it. Under Ortiz v. State Farm Lloyds, 589 S.W.3d 127 (Tex. 2019), “HAIC’s payment of the appraisal award in the face of Menchaca’s allegation of pre-appraisal underpayment forecloses liability on his breach-of-contract counterclaim.” Turning to Plaintiffs’ extracontractual bad faith claims, the court first observed that “mental anguish caused by this type of [alleged] claims-mishandling misconduct does not give rise to a recoverable ‘independent injury’ because mental anguish under these circumstances stems or flows from the denial of the claim for benefits” (citing Ortiz). Plaintiff attempted to sell the idea that he suffered mental anguish when HAIC sued him and allegedly cancelled his policy. The court didn’t buy it, and in any event, Plaintiff didn’t allege those additional bases for his mental anguish claim in his live pleading, only his amended answer and counterclaims (which the trial court struck before trial).
Having held that Ortiz took out Plaintiff’s claims for violations of § 541.060 and breach of the duty of good faith and fair dealing, the court turned to the jury award for Plaintiff’s attorney’s fees and treble damages under § 541.152(a)(1). Ortiz, the court ruled, barred recovery of these as well, since the statute premises an award of attorney’s fees or treble damages on an award of underlying actual damages. When HAIC paid the appraisal award pursuant to the policy, it extinguished Plaintiff’s claim for unpaid policy benefits. As to the $250,000 award for attorney’s fees, Plaintiff argued that he was entitled to that under the declaratory judgment action filed by HAIC. The court, however, wasn’t fooled. Chapter 542A, Insurance Code, applied to this case because Plaintiff’s counterclaims arose from weather-related damage to his house. Section 542A.007’s limitation on attorney’s fees caps the total amount that may be awarded and provides that “[t]he court may not award attorney’s fees to the claimant if the amount calculated under Subsection (a)(3)(A) is less than 0.2.” And in accordance with SCOTX’s response to the U.S. 5th Circuit’s certified question about the affect of an insurer’s payment of the full appraisal award plus any possible statutory interest, no attorney’s fees were owed to Plaintiff because HAIC paid the appraisal award plus any possible statutory interest. HAIC thus complied with its obligations under the policy and didn’t owe anything else.
HAIC’s first issue, which asserts error by the trial court in its judgment because HAIC did in fact comply with the policy by issuing the appraisal award. Their second issue argued that the trial court erred in awarding Menchaca $300,000 in mental anguish damages because such damages are not recoverable independent injuries. Justice Guiney addresses the two issues in tandem. June 1st saw the agreement of both parties on the amount of loss for Menchaca’s claim. There is no dispute of the payment of the appraisal award of $7,085.86 to Menchaca. Ortiz v. State Farm Lloyds is largely determinative. In this case, it was decided that absent a reason for disregarding an appraisal award, an insurer’s timely payment of the award forecloses breach of contract. The breach of contract counterclaim was subject to the insurer’s motion for summary judgment in this case, and because of the obvious similarities present in this case, so it is here as well. The court reversed and rendered a take nothing judgment.
This case didn’t end well for Plaintiff’s counsel, the Buzbee Law Firm. There can be no question that Chapter 542A remains one of the most important civil justice reforms of the last quarter century. It has taken most of the abuses and gamesmanship out of weather-related claims, although, as this case demonstrates, plaintiff’s lawyers keep trying.
TCJL Intern Satchel Williams researched and prepared the first draft of this article.
