                                                                                    ACCEPTED
                                                                                04-16-00209-CV
                                                                    FOURTH COURT OF APPEALS
                                                                         SAN ANTONIO, TEXAS
                                                                           8/12/2016 2:17:55 PM
                                                                                 KEITH HOTTLE
                                                                                         CLERK

                       CASE NO. 04-16-00209-CV

                                                               FILED IN
                                                        4th COURT OF APPEALS
                                                         SAN ANTONIO, TEXAS
                                IN THE                  08/12/2016 2:17:55 PM
                                                            KEITH E. HOTTLE
                                                                 Clerk

                         COURT OF APPEALS
                    FOR THE FOURTH DISTRICT
                        SAN ANTONIO, TEXAS



                  CANDELARIA GARCIA—Appellant
                                    v.
        STATE FARM LLOYDS and SYLVIA GARZA—Appellees



                          APPELLEES' BRIEF


Dan K. Worthington SBN 00785282      Linda J. Burgess      SBN 03381300
dkw@atlashall.com                    lburgess@winstead.com
Sofia A. Ramon       SBN 00784811    Elliot Clark          SBN 24012428
sramon@atlashall.com                 eclark@winstead.com
Elizabeth Cantu      SBN 24013455    WINSTEAD PC
ecantu@atlashall.com                 401 Congress Ave., Suite 2100
ATLAS, HALL & RODRIGUEZ, LLP         Austin, Texas 78701
P. O. Drawer 3725                    (512) 370-2800 telephone
818 Pecan (78501)                    (512) 370-2850 telecopier
McAllen, Texas 78502
(956) 682-5501 telephone
(956) 686-6109 telecopier

                    ATTORNEYS FOR APPELLEES
                   ORAL ARGUMENT REQUESTED
                            CASE NO. 04-16-00209-CV



                                    IN THE

                              COURT OF APPEALS
                           FOR THE FOURTH DISTRICT

                             SAN ANTONIO, TEXAS



                     CANDELARIA GARCIA—Appellant
                                      v.

         STATE FARM LLOYDS and SYLVIA GARZA—Appellees



                              APPELLEES' BRIEF



TO THE HONORABLE COURT OF APPEALS:

      Appellees, State Farm Lloyds ("State Farm") and Sylvia Garza, ask the

Court to affirm the trial court's judgment that Appellant Candelaria Garcia

("Garcia") take nothing.




                                      -i-
                                        TABLE OF CONTENTS
TABLE OF CONTENTS .......................................................................................... ii
TABLE OF AUTHORITIES ................................................................................... iii
INTRODUCTION ................................................................................................... xi
STATEMENT OF THE CASE ............................................................................... xii
RESPONSE ISSUES PRESENTED ..................................................................... xiii
STATEMENT OF FACTS ........................................................................................1
SUMMARY OF THE ARGUMENT ........................................................................4
ARGUMENT .............................................................................................................7
         I.       The summary judgment grounds are broad enough to contemplate
                  Garcia's later-pled defense to set aside the appraisal award, and State
                  Farm was not required to pre-emptively negate Garcia's defense. .......7
         II.      No material fact issues existed. ...........................................................11
         III.     Garcia cannot avoid summary judgment by choosing not to cash her
                  appraisal award check. ........................................................................16
         IV.      Under Texas law, the fact that an appraisal award is greater than an
                  earlier estimate is no evidence of a breach of contract. ......................21
         V.       Payment of the appraisal award disposes of Garcia's prompt payment
                  claims as a matter of law. ....................................................................22
                  A.       The overwhelming majority of courts have found that TPPCA
                           claims do not survive payment of an appraisal award ..............23
                  B.       Graber relies on distinguishable authority that did not involve
                           appraisal ....................................................................................25
                  C.       The facts here are distinguishable from Graber .......................27
                  D.       Garcia has not raised a fact issue ..............................................28
         VI.      Without a valid breach of contract claim, all of Garcia's extra-
                  contractual claims fail. ........................................................................28
CONCLUSION AND PRAYER .............................................................................34
CERTIFICATE OF COMPLIANCE .......................................................................36




                                                         - ii -
                                      TABLE OF AUTHORITIES

CASES                                                                                                        PAGE(S)
AKB Hendrick, LLP v. Musgrave Enters.,
  380 S.W.3d 221 (Tex. App.—Dallas 2012, no pet.) ............................................ 9

Amine v. Liberty Lloyds of Tex. Ins.,
  No. 01-06-00396-CV, 2007 Tex. App. LEXIS 6280 (Tex. App.—
  Houston [1st Dist.] 2007, no pet.).......................................................................25
Anderson v. American Risk Ins. Co.,
  No. 01-15-00257-CV, 2016 Tex. App. LEXIS 6538 (Tex. App.—
  Houston [1st Dist.] June 21, 2016, no pet. h.) .............................................passim

Barry v. Allstate Tex. Lloyds,
  No. 4:14-cv-00870, 2015 U.S. Dist. LEXIS 40953 (S.D. Tex. Mar. 31,
  2015) .........................................................................................................5, 24, 32
Bernstein v. Safeco Ins. Co. of Ill.,
   No. 05-13-01533-CV, 2015 Tex. App. LEXIS 6699 (Tex. App.—Dallas,
   June 30, 2015, no pet.) ........................................................................................25
Bluebonnet Petroleum, Inc. v. Kolkhorst Petroleum Co.,
   No. 14-07-00380-CV, 2008 Tex. App. LEXIS 7724 (Tex. App.—
   Houston [14th Dist.] Oct. 9, 2008, pet. denied)..................................................15
Blum's Furniture Co. v. Certain Underwriters at Lloyds London,
   No. H-09-3479, 2011 U.S. Dist. LEXIS 20604 (S.D. Tex. March 2, 2011)
   affirmed by 459 Fed. Appx. 366 (5th Cir. 2012) ................................................23

Blum's Furniture Co. v. Certain Underwriters at Lloyds London,
   459 Fed. Appx. 366 (5th Cir. 2012).............................................................passim

Breshears v. State Farm Lloyds,
   155 S.W.3d 340 (Tex. App.—Corpus Christi 2004, pet. denied) ...............passim
Burks v. Metro Lloyds Ins. Co. of Tex.,
  No. H-14-591, 2015 U.S. Dist. LEXIS 88729
  (S.D. Tex. July 8, 2015) ......................................................................5, 24, 29, 32

Cameron Int'l Corp. v. Liberty Ins. Underwriters, Inc. (In re Deepwater
  Horizon), 807 F.3d 689 (5th Cir. 2015) ........................................................30, 31

                                                         - iii -
Cantu v. S. Ins. Co.,
  No. 03-14-00533-CV, 2015 Tex. App. LEXIS 8847 (Tex. App.—Austin
  Aug. 25, 2015, no pet.) .......................................................................................11

Caso v. Allstate Tex. Lloyds,
  No. 7:12-CV-478, 2014 U.S. Dist. LEXIS 15279 (S.D. Tex. Feb. 7,
  2014) ............................................................................................................passim
Cater v. United Servs. Auto. Ass'n,
  27 S.W.3d 81 (Tex. App.—San Antonio 2000, pet. denied) ..............................26

Cavazos v. State Farm Lloyds,
  No. 7:13-CV-00252 (S.D. Tex. Oct. 27, 2015) ......................................24, 31, 32

Cavazos v. State Farm Lloyds,
  No. 7:14-CV-395, 2015 U.S. Dist. LEXIS 163287 (S.D. Tex. Dec. 4,
  2015) ...................................................................................................................31

Church on the Rock North v. Church Mut. Ins. Co.,
  No. 3:10-CV-0975-L, 2013 U.S. Dist. LEXIS 17849 (N.D. Tex. Feb. 11,
  2013) .............................................................................................................18, 19
Cissne v. Robertson,
   82 S.W.2d 912, 918 (Tex. App.—Dallas 1989, writ denied) ............................... 8

Continental Ins. Co. v. Guerson,
  93 S.W.2d 591 (Tex. Civ. App.—San Antonio 1936, writ dism'd) ...................12

Cook Composites v. Westlake Styrene Corp.,
  15 S.W.3d 124 (Tex. App.—Houston [14th Dist.] 2000, pet. dism'd) ............... 10

Corpus v. State Farm Lloyds,
  No. 7:14-CV-00383 (S.D. Tx. Oct. 27, 2015) ....................................................24

Devonshire Real Estate & Asset Management, L.P. v. American Insurance
  Co., No. 3:12-CV-2199-B,
  2014 U.S. Dist. LEXIS 135939 (N.D. Tex. Sep. 26, 2014) ...................18, 19, 20
Dizdar v. State Farm Lloyds,
   No. 7:14-CV-402, 2016 U.S. Dist. LEXIS 13355 (S.D. Tex. Feb. 4,
   2016) ...................................................................................................................32



                                                           - iv -
Dizdar v. State Farm Lloyds,
   No. 7:14-CV-514, 2016 U.S. Dist. LEXIS 49839 (S.D. Tex. Apr. 13,
   2016) ...................................................................................................................32

Dizdar v. State Farm Lloyds,
   No. 7:14-CV-664, 2016 U.S. Dist. LEXIS 20871 (S.D. Tex. Feb. 22,
   2016) ...................................................................................................................32
Douglas v. State Farm Lloyds,
  37 F.Supp.2d 532 (S.D. Tex. 1999) ....................................................................32

Farah v. Magrige & Kormanik,
  927 S.W.2d 663 (Tex. App.—Houston [1st Dist.] 1996, no writ) ...................8, 9

Fitzhugh 25 Partners, L.P. v. KILN Syndicate,
   501, 261 S.W.3d 861 (Tex. App.—Dallas 2008, pet. denied)............................20
Franco v. Slavonic Mut. Fire Ins.,
   154 S.W.3d 777 (Tex. App.—Houston [14th Dist.] 2004, no pet.) ... xi, 5, 11, 19
Gabriel v. Allstate Texas Lloyds,
  No. 7:13-CV-181, 2013 U.S. Dist. LEXIS 186032 (S.D. Tex. Nov. 1,
  2013) ............................................................................................................passim

Gardner v. State Farm Lloyds,
  76 S.W.3d 140 (Tex. App.—Houston [1st Dist.] 2002, no pet.) .......................... 5
Graber v. State Farm Lloyds,
  No. 3:13-CV-2671-B, 2015 U.S. Dist. LEXIS 77361 (N.D. Tex. June 15,
  2015) reconsideration denied (August 6, 2015)...............................23, 24, 25, 27

Gronik v. Chubb Indem. Ins. Co.,
  10-CV-954, 11-CV-697, 2015 U.S. Dist. LEXIS 157266
  (E.D. Wis. Nov. 20, 2015) ..................................................................................13
Guerra v. State Farm Lloyds,
  No. 7:14-CV-00381 (S.D. Tex. Oct. 27, 2015) ..................................................24
Gulf Ins. Co. of Dallas v. Pappas,
  73 S.W.2d 145 (Tex. Civ. App.—San Antonio 1934, writ ref'd) .......................12




                                                           -v-
Hernandez v. Allstate Texas Lloyds,
  No. 7:12-CV-480, 2014 U.S. Dist. LEXIS 15276 (S.D. Tex. Feb. 7,
  2014) .............................................................................................................19, 24

Higginbotham v. State Farm Mutual Automobile Ins. Co.,
   103 F.3d 456 (5th Cir. 1997) ............................................................25, 26, 27, 32
Home Ins. Co. v. Walter,
  230 S.W. 723 (Tex. Civ. App.—Dallas 1921, no writ) ......................................12

Hudgens v. Allstate Texas Lloyd's, No. H-11-2716,
  2012 U.S. Dist. LEXIS 97446 (S.D. Tex. July 13, 2012) ......................11, 12, 13
In re Allstate County Mut. Ins. Co.,
    85 S.W.3d 193 (Tex. 2002).................................................................................10

In re Slavonic Mut. Fire Ins. Ass'n,
    308 S.W.3d 556 (Tex. App.—Houston [14th Dist.] 2010, no pet.) ...... 23, 24, 25
Judwin Prop., Inc. v. Griggs & Harrison,
   911 S.W.2d 498 (Tex. App.—Houston [1st Dist.] 1995, no writ) ....................... 8
Key Life Ins. Co. of S.C. v. Davis,
  509 S.W.2d 403 (Tex. Civ. App.—Beaumont 1974, no writ)............................26

Lampasas v. Spring Center, Inc.,
  988 S.W.2d 428 (Tex. App.—Houston [14th Dist.] 1999, no pet.) .................8, 9

Liberty National Fire Insurance. Co. v. Akin,
   927 S.W.2d 627 (Tex. 1996) ........................................................................28, 29

Lumbermens Mut. Cas. Co. v. Klotz,
  251 F.2d 499 (5th Cir. 1958) ..............................................................................26

Lundstrom v. USAA,
  192 S.W.3d 78 (Tex. App.—Houston [14th Dist.] 2006, pet. denied) .....5, 11, 14

Mackie v. McKenzie,
  900 S.W.2d 445 (Tex. App.—Texarkana 1995, writ denied) .............................. 8

Mag-Dolphus, Inc. v. Ohio Cas. Ins. Co.,
  906 F. Supp. 2d 642 (S.D. Tex. 2012) ......................................................6, 24, 32



                                                         - vi -
McIntyre v. Wilson,
  50 S.W.3d 674 (Tex. App.—Dallas 2001, pet. denied)........................................ 7

Medistar Twelve Oaks Partners, Ltd. v. Am. Econ. Ins. Co.,
  No. H-09-3828, 2011 US. Dist. LEXIS 82846 (S.D. Tex. July 27, 2011) ......... 24

Michels v. Safeco Ins. Co. of Ind.,
  544 Fed. Appx. 535 (5th Cir. 2013)................................................................5, 16

Michels v. Safeco Ins. Co. of Indiana,
  No. A-12-CA-511-SS (W.D. Tex. March 13, 2013) affirmed by 544 Fed.
  Appx. 535, 542-543 (5th Cir. 2013) ...................................................................24
MLCSV10 v. Stateside Enters.,
  866 F. Supp. 2d 691 (S.D. Tex. 2012) ....................................................11, 13, 16

Moore v. Allstate Texas Lloyds,
  No. 7:12-CV-479, 2014 U.S. Dist. LEXIS 15277 (S.D. Tex. Feb. 7,
  2014) .............................................................................................................19, 24
O'Quinn v. Gen. Star Indem. Co.,
  No. 1:13-CV-471, 2014 U.S. Dist. LEXIS 107484 (E.D. Tex. Aug. 5,
  2014) ...................................................................................................................33

Providence Lloyds Ins. Co. v. Crystal City Indep. Sch. Dist.,
   877 S.W.2d 872 (Tex. App—San Antonio 1994, no writ) ................. xi, 4, 14, 34
Providence Wash. Ins. Co. v. Farmers Elevator Co.,
   141 S.W.2d 1024 (Tex. Civ. App.—Amarillo 1940, no writ)............................12

Provident Am. Ins. Co. v. Castaneda,
   988 S.W.2d 189 (Tex. 1998) ..............................................................................30

Quibodeaux v. Nautilus Ins. Co.,
  No. 1:10-CV-739, 2015 U.S. Dist. LEXIS 39324 (E.D. Tex. Mar. 10,
  2015) aff'd by 2016 U.S. App. LEXIS 12643 (5th Cir. Jul. 7, 2016)................. 24

Republic Ins. Co. v. Stoker,
  903 S.W.2d 338 (Tex. 1995) ............................................................28, 29, 31, 32

Richardson East Baptist Church v. Philadelphia Indemnity Ins. Co.,
   No. 05-14-01491-CV, 2016 Tex. App. LEXIS 3267 (Tex. App.—Dallas
   March 30, 2016) ....................................................................................................5

                                                          - vii -
Rios v. State Farm Lloyds,
   No. 7:13-CV-00187 (S.D. Tex. Aug. 17, 2015) .................................................24

Russell v. Scottsdale Ins. Co.,
  No. 4:10-CV-3057, 2014 U.S. Dist. LEXIS 143882 (S.D. Tex. Sept. 30,
  2014) ...............................................................................................................5, 32
Saenz v. J.D. Rodriguez Produce & Trucking Co.,
   No. 04-99-00867-CV, 2000 Tex. App. LEXIS 8596 (Tex. App.—San
   Antonio Dec. 29, 2000, pet. denied) ...................................................................15

Scalise v. Allstate Texas Lloyds,
   No. 7:13-CV-178, 2013 U.S. Dist. LEXIS 179692 (S.D. Tex. Dec. 20,
   2013) ............................................................................................................passim
Smith v. Heard,
  980 S.W.2d 693 (Tex. App.—San Antonio 1998, pet. denied)......................8, 10

Solis v. State Farm Lloyds,
   No. 7:13-cv-00149 (S.D. Tex. Oct. 27, 2015) ....................................................24
Spicewood Summit Office Condominiums Ass'n, Inc. v. Amer. First Lloyd's
   Ins. Co.,
   287 S.W.3d 461 (Tex. App.—Austin 2009, pet. denied) ...................................32
Stewart v. Geovera Specialty Ins. Co.,
   No. H-14-3162 (S.D. Tex. October 21, 2015) ....................................................24

Strasser v. Sulzer Medica U.S.A., Inc.,
   No. 01-01-00610-CV, 2002 Tex. App. LEXIS 5463 (Tex. App.—
   Houston [1st Dist.] July 25, 2002, pet. denied) ..............................................8, 10

Studer v. State Farm Lloyds,
   No. 4:13-CV-413, 2016 U.S. Dist. LEXIS 99883 (E.D. Tex. July 29,
   2016) ...................................................................................................................24
Tabor v. State Farm Lloyds,
  No. 7:14-cv-389 (S.D. Tex. April 9, 2015) ..................................................23, 24

Tex. Mut. Ins. Co. v. Sara Care Child Care Ctr., Inc.,
   324 S.W.3d 305 (Tex. App.—El Paso 2010, pet. denied) ..................................32



                                                          - viii -
Texas Dep't. of Pub. Safety v. Mendoza,
   952 S.W.2d 560 (Tex. App.—San Antonio 1997, no writ) ................................12

TMM Invs., Ltd. v. Ohio Cas. Ins. Co.,
  730 F.3d 466 (5th Cir. 2013) ..............................................................................16

Toonen v. United Servs. Auto Ass'n,
  935 S.W.2d 937 (Tex. App.—San Antonio 1996, no writ) .......................xi, 4, 18

Tremago, L.P. v. Euler-Hermes Am. Credit Indem. Co.,
   602 Fed. Appx. 981 (5th Cir. 2015)....................................................... 25, 26, 27

USAA Texas Lloyds Co. v. Menchaca,
  No. 13-13-00046-CV, 2014 Tex. App. LEXIS 8250 (Tex. App.—Corpus
  Christi July 31, 2014, pet. filed) (mem. op.) ......................................................30

United National Insurance Co. v. AMJ Investments, LLC
  447 S.W.3d 1 (Tex. App.—Houston [14th Dist.] 2014, pet dism'd) .................. 29
United Neurology, P.A. v. Hartford Lloyd's Ins. Co.,
  101 F. Supp. 3d 584 (S.D. Tex. 2015), affirmed by 624 Fed. Appx. 225
  (5th Cir. 2015).........................................................................................17, 19, 24
Vail v. Texas Farm Bureau Mutual Ins. Co.,
   754 S.W.2d 129 (Tex. 1988) ..............................................................................33
Villanueva v. State Farm Lloyds,
   No. 7:13-CV-00601 (S.D. Tex. Oct. 27, 2015) ..................................................24
Waite Hill Services, Inc. v. World Class Metal Works, Inc.,
  959 S.w.2d 182 (Tex. 1998) ...............................................................................33
Walters v. Metro Lloyds Ins. Co.,
  4:16-CV-307, 2016 U.S. Dist. LEXIS 91244 (E.D. Tex. July 14, 2016)........... 33
Waterhill Cos. v. Great Am. Assur. Co.,
  No. H-05-4080, 2006 U.S. Dist. LEXIS 15302 (S.D. Tex. March 16,
  2006) ...............................................................................................................5, 24

Wells v. American States Preferred Ins. Co.,
  919 S.W.2d 679 (Tex. App.—Dallas 1996, writ denied) ...................................14




                                                          - ix -
STATUTES
Chapter 541 of the Texas Insurance Code ...........................................................x, 32

Chapter 542 of the Texas Insurance Code .......................................... xii, x, 7, 22, 28

OTHER AUTHORITIES
Brad E. Brewer & James W. Holbrook, II, Graber v. State Farm Is a Texas
   Prompt Payment Outlier, Law 360, August 10, 2015,
   http://www.law360.com/articles/686001/graber-v-state-farm-is-a-texas-
   prompt-payment-outlier (last visited July 28, 2016) .........................................25




                                                 -x-
                                 INTRODUCTION
      This is a hail case that was resolved by the contractual appraisal process.

Broadly speaking, the appraisal provision allows either party to invoke a process in

which the amount of the loss is determined by agreement of appraisers selected by

the insured and insurer and, if necessary, an umpire jointly chosen and mutually

agreed to by the appraisers or appointed by the court. Garcia made a claim for

damage to her house under her State Farm Homeowners Policy. State Farm found

damage that was below the Policy deductible. Garcia disagreed and filed a lawsuit.

State Farm invoked the appraisal provision in the Policy. Garcia appointed an

appraiser, as did State Farm, and the parties proceeded to appraisal without

objection. The appraisers agreed on the amount of loss without the need for an

umpire. State Farm paid the appraisal award within three (3) business days of

receipt. State Farm then moved for summary judgment on the broadly stated

ground that "payment of the appraisal award resolves and disposes of all claims in

this lawsuit." Before the summary judgment hearing, and following a hearing on

Garcia's Motion for Continuance of the summary judgment, Garcia amended her

petition to request, for the first time, that the appraisal award be set aside, and then

argued to postpone the trial court's ruling on the dispositive appraisal issues based

on her new defense. The court heard arguments and, after reviewing the briefing,

granted the summary judgment.



                                         - xi -
                           STATEMENT OF THE CASE
Nature of the Case:         In connection with an insurance claim for damage to
                            her dwelling, Plaintiff Candelaria Garcia asserted
                            causes of action against Defendants State Farm and
                            Sylvia Garza for breach of contract, bad faith,
                            violations of Chapters 541 and 542 of the Texas
                            Insurance Code, and violations of the DTPA. Garcia
                            later requested the appraisal award signed by her
                            designated appraiser be set aside.
Trial Court:                County Court at Law of Starr County, Texas, the
                            Honorable Romero Molina
Course of Proceedings:      The case was stayed by agreement while the parties
                            engaged in the contractual appraisal process. An
                            appraisal award was signed, and State Farm paid the
                            award. State Farm moved for summary judgment
                            dismissing all of Garcia's claims based on its payment
                            of the appraisal award.

Trial Court Disposition:    Summary Judgment was granted dismissing all of
                            Garcia's claims.




                                       - xii -
                           RESPONSE ISSUES PRESENTED
      The trial court, following established Texas precedent,1 correctly granted
summary judgment because payment of the appraisal award disposed of all of
Garcia's claims.

        Issue 1: Under Texas law, if summary judgment grounds are broad enough
to contemplate later-pled causes of action, a court can render summary judgment
on all causes of action without requiring an amended or supplemental motion for
summary judgment. And a movant for summary judgment is not required to pre-
emptively negate a non-movant's defenses to the movant's grounds. Here, the
grounds for the summary judgment expressly stated: "Payment of the appraisal
award resolves and disposes of all claims in this lawsuit," 2 and concluded that "a
binding appraisal award was issued" and paid by State Farm leaving "no remaining
issues."3 Garcia defended by seeking to set aside and disregard the award. The
trial court did not err by granting summary judgment dismissing all claims because
the grounds for summary judgment—which centered around the appraisal award—
were broad enough to contemplate Garcia's later-pled and unsupported defense that
the appraisal award is invalid.

       Issue 2: A party seeking to set aside an appraisal award has the burden to
overcome the presumption in favor of enforcing awards. There was no evidence
that the appraisers acted without authority or signed the award based on fraud,
mistake, or accident. Garcia's arguments and suspicions about a possible mistake
are not evidence and did not create a genuine fact issue to avoid summary
judgment.

1
    Toonen v. United Servs. Auto Ass'n, 935 S.W.2d 937, 940 (Tex. App.—San Antonio
    1996, no writ) (holding insurer was entitled to summary judgment on breach of
    contract claim because it tendered appraisal award pursuant to the contract);
    Providence Lloyds Ins. Co. v. Crystal City Indep. Sch. Dist., 877 S.W.2d 872, 875
    (Tex. App—San Antonio 1994, no writ) (holding trial court erred by allowing a trial
    of a breach of contract claim after insurer promptly paid an appraisal award and
    rendering judgment that insured take nothing); Breshears v. State Farm Lloyds, 155
    S.W.3d 340, 344 (Tex. App.—Corpus Christi 2004, pet. denied) (insurer complied
    with every requirement of contract where it participated in appraisal process and paid
    amount set by appraisers and umpire); Franco v. Slavonic Mut. Fire Ins., 154 S.W.3d
    777, 787 (Tex. App.—Houston [14th Dist.] 2004, no pet.) (holding summary
    judgment dismissing contract claim was proper when insurer paid appraisal award).
2
    CR 68 (emphasis added).
3
    CR 76.

                                         - xiii -
      Issues 3: Payment of an appraisal award disposes of a contract claim as a
matter of law. Courts have rejected the argument that an insured can avoid
summary judgment dismissal by refusing to accept payment of an award. Garcia's
refusal to cash her check is not grounds for reversal.

       Issue 4: Payment of an appraisal award disposes of a contract claim as a
matter of law. Courts have rejected the argument that the difference between the
amount of an appraisal award and the amount of a carrier's estimate is evidence of
a breach of contract. Garcia fails to raise a genuine fact issue by relying on the
difference between the award and State Farm's estimate.

       Issue 5: Payment of an appraisal award precludes recovery of penalties
under Chapter 542 of the Texas Insurance Code as a matter of law. Garcia does
not raise a fact issue to avoid summary judgment.

       Issue 6: The Texas Supreme Court has held that without a breach of
contract, there is no bad faith, unless the insured proves the insurer committed an
act so extreme it caused injury independent of the policy claim or the insurer failed
to timely investigate the insured's claim. Statutory bad faith and DTPA claims
require the same predicate for recovery and will fail if a common law bad faith
claim fails. The undisputed evidence conclusively demonstrates there was no
extreme act by State Farm or adjuster Garza that caused independent injury and the
claim was timely investigated. The trial court did not err by dismissing all of
Garcia's extra-contractual claims against State Farm and adjuster Garza.




                                       - xiv -
                              STATEMENT OF FACTS
       Garcia's dwelling in Rio Grande City, Starr County, Texas was insured for

approximately $88,000.00 (Coverage A dwelling limits) at the time of the loss

under a State Farm Texas Homeowners Policy. 4 On or about January 22, 2015,

Garcia reported an insurance claim for her house due to damage from a storm on or

about May 28, 2014.5 Sylvia Garza, on behalf of State Farm, contacted Garcia on

January 22, 2015 to get additional information regarding the loss and schedule an

inspection of the dwelling, which took place on February 28, 2015. 6                After

inspecting the property, State Farm prepared an estimate of damage finding

$902.37 in storm-related damage, which was below the Policy's deductible.7

       Garcia filed suit against State Farm and adjuster Garza 8 on or about April 8,

2015, without making a pre-suit demand.9             On July 21, 2015, State Farm

demanded appraisal under the Policy, appointing Lee Moynahan as appraiser. 10




4
     CR 79-137 (Homeowners Policy, with Business Records Affidavit).
5
     CR 139 (Burrell Affidavit at ¶ 5).
6
     CR 139 (Burrell Affidavit at ¶ 6).
7
     CR 139 (Burrell Affidavit at ¶ 6).
8
     Garcia's claims against Garza are derivative of, and based on, the same alleged facts
     asserted against State Farm.
9
     CR 10-38 (Plaintiff's Original Petition).
10
     CR 139 (Burrell Affidavit at ¶ 7); CR 168-69 (Appraisal Demand Letter).

                                           -1-
On July 27, 2015, Garcia responded to State Farm's appraisal demand and

appointed James Wesselski as appraiser.11

       An appraisal award was issued setting the amount of loss at $7,835.70, on a

replacement cost basis, and $6,142.92, on an actual cash value basis. 12 Appraiser

Moynahan and appraiser Wesselski both signed the award.13 No umpire was

needed because the appraisers agreed on the amount of the loss. State Farm

received the appraisal award on September 23, 2015. 14 Three (3) business days

later, on September 28, 2015, State Farm timely tendered payment of the award

(minus depreciation and deductible) in the amount of $4,382.92. 15

       State Farm moved for summary judgment on December 14, 2015, asserting

broadly that payment of the appraisal award resolved all of Garcia's causes of

action. 16 A hearing was set on the summary judgment for January 28, 2016. 17 On

January 21, 2016, the deadline for Garcia to respond to the summary judgment,

Garcia moved to continue the summary judgment hearing, arguing that she needed




11
     CR 140 (Burrell Affidavit at ¶ 7); CR 173 (Appraisal Response Letter).
12
     CR 140 (Burrell Affidavit at ¶ 8); CR 174-182 (Appraisal Award).
13
     CR 140 (Burrell Affidavit at ¶ 8); CR 174 (Appraisal Award).
14
     CR 140 (Burrell Affidavit at ¶ 8).
15
     CR 140 (Burrell Affidavit at ¶ 9); CR 183-84 (Letter Issuing Appraisal Payment).
16
     CR 68-202.
17
     CR 203.

                                          -2-
time to conduct discovery. 18 The continuance motion said nothing about setting

aside the appraisal award.       State Farm responded to Garcia's motion for

continuance, noting that Garcia failed to identify facts or discovery needed that

could raise a material fact issue related to the summary judgment. 19 The trial court

heard arguments on Garcia's Motion for Continuance on January 28, 2016. 20 The

court took the matter under advisement and denied the Motion for Continuance on

February 9, 2016. 21    Garcia does not appeal the denial of the Motion for

Continuance.

       After the continuance was denied, the summary judgment was reset for

hearing on March 3, 2016.22       On February 25, 2016, seven days before the

summary judgment hearing, Garcia filed her First Amended Petition 23 and her

Response to Defendants' Motion for Summary Judgment. 24 The First Amended

Petition still listed the same theories of liability in Section VII—"Cause of Action

for Breach of Contract," 25 "Cause of Action for Violation of Section 542,"26


18
     CR 205-217.
19
     CR 218-226.
20
     1 RR 4-20.
21
     CR 226.
22
     CR 232.
23
     CR 234-248.
24
     CR 249-744.
25
     CR 239.
26
     CR 240.

                                        -3-
"DTPA Cause of Action," 27 "Cause of Action for Unfair Insurance Practices,"28

and "Cause of Action for Breach of Duty of Good Faith and Fair Dealing."29

Separately, and not identified as a cause of action, the First Amended Petition

added a new section, "VIII.        Request to Set Aside and Disregard Appraisal

Award." 30

       The trial court heard the motion for summary judgment on March 3, 2016.31

The court granted the motion on March 10, 2016, and entered a final judgment that

Garcia take nothing on all of her claims. 32 Garcia appealed.

                        SUMMARY OF THE ARGUMENT
       This Court has recognized that payment of an appraisal award disposes of an

insured's claims, and summary judgment dismissing those claims is appropriate.33




27
     CR 240.
28
     CR 242.
29
     CR 243.
30
     CR 244.
31
     2 RR 4-18.
32
     CR 751.
33
     Toonen v. United Servs. Auto Ass'n, 935 S.W.2d 937, 940 (Tex. App.—San Antonio
     1996, no writ) (holding insurer was entitled to summary judgment on breach of
     contract claim because it tendered appraisal award pursuant to the contract);
     Providence Lloyds Ins. Co. v. Crystal City Indep. Sch. Dist., 877 S.W.2d 872, 875
     (Tex. App—San Antonio 1994, no writ) (holding trial court erred by allowing a trial
     of a breach of contract claim after insurer promptly paid an appraisal award and
     rendering judgment that insured take nothing).

                                          -4-
Many other Texas courts 34 and Federal courts in Texas 35 have held the same.

Garcia first tries to avoid this settled law by arguing a technical, procedural issue—


34
     Anderson v. American Risk Ins. Co., No. 01-15-00257-CV, 2016 Tex. App. LEXIS
     6538, at *11 (Tex. App.—Houston [1st Dist.] June 21, 2016, no pet. h.) (affirming
     summary judgment dismissing all claims based on payment of appraisal award);
     Breshears, 155 S.W.3d at 344 (affirming summary judgment dismissing contractual
     and extra-contractual claims after payment of appraisal award); Franco, 154 S.W.3d
     at 787 (holding summary judgment dismissing contract claim was proper when
     insurer paid appraisal award); Gardner v. State Farm Lloyds, 76 S.W.3d 140, 143-44
     (Tex. App.—Houston [1st Dist.] 2002, no pet.) (holding trial court properly rendered
     summary judgment for insurer based on appraisal award that required no payment to
     be made); Lundstrom v. USAA, 192 S.W.3d 78, 87, 95 (Tex. App.—Houston [14th
     Dist.] 2006, pet. denied) (affirming summary judgment dismissing breach of contract
     claim based on appraisal award); Richardson East Baptist Church v. Philadelphia
     Indemnity Ins. Co., No. 05-14-01491-CV, 2016 Tex. App. LEXIS 3267, at *7-12
     (Tex. App.—Dallas March 30, 2016) (affirming summary judgment dismissing
     breach of contract claim based on appraisal award).
35
     Blum's Furniture Co. v. Certain Underwriters at Lloyds London, 459 Fed. Appx.
     366, 369 (5th Cir. 2012) (affirming summary judgment dismissing breach of contract
     claim following payment of appraisal award and noting "it seems clear that Lloyds
     did not breach its contract with Blum's"); Michels v. Safeco Ins. Co. of Ind., 544 Fed.
     Appx. 535, 542 (5th Cir. 2013) (affirming district court's granting of summary
     judgment after payment of appraisal award); Burks v. Metro Lloyds Ins. Co. of Tex.,
     No. H-14-591, 2015 U.S. Dist. LEXIS 88729, at *9-11 (S.D. Tex. July 8, 2015)
     (granting summary judgment after payment of appraisal award); Scalise v. Allstate
     Texas Lloyds, No. 7:13-CV-178, 2013 U.S. Dist. LEXIS 179692, at *13-16 (S.D.
     Tex. Dec. 20, 2013) (granting summary judgment dismissing breach of contract
     claim based on payment of appraisal award); Russell v. Scottsdale Ins. Co., No. 4:10-
     CV-3057, 2014 U.S. Dist. LEXIS 143882, *17 (S.D. Tex. Sept. 30, 2014) (granting
     summary judgment because insured is estopped from asserting breach of contract
     when insurer pays appraisal award); Barry v. Allstate Tex. Lloyds, No. 4:14-cv-
     00870, 2015 U.S. Dist. LEXIS 40953, at *8-11 (S.D. Tex. Mar. 31, 2015) (granting
     summary judgment after payment of appraisal award); Caso v. Allstate Tex. Lloyds,
     No. 7:12-CV-478, 2014 U.S. Dist. LEXIS 15279, at *14-24 (S.D. Tex. Feb. 7, 2014)
     (granting summary judgment because insurer's payment of appraisal award estopped
     insured's breach of contract claim); Waterhill Cos. v. Great Am. Assur. Co., No. H-
     05-4080, 2006 U.S. Dist. LEXIS 15302, at *8 (S.D. Tex. March 16, 2006) (granting
     summary judgment after insurer paid appraisal award); Gabriel v. Allstate Texas
     Lloyds, No. 7:13-CV-181, 2013 U.S. Dist. LEXIS 186032, at *12 (S.D. Tex. Nov. 1,

                                            -5-
that Garcia amended her petition seven days before the hearing, requiring an

amended or supplemental summary judgment to be filed and the hearing reset. But

Garcia did not assert a new cause of action, and Texas courts recognize an

exception to this general rule when the grounds stated in the original summary

judgment are broad enough to include the newly pled claim. Here, that is the case.

Payment of the valid appraisal award was the basis of the summary judgment

motion. Also, Garcia's request to set aside was raised as a defense to State Farm's

estoppel defense based on the appraisal award. Thus, State Farm, as the movant

for summary judgment, was not required to pre-emptively negate Garcia's defense

to summary judgment.

      Garcia also argues the substantive issues. Garcia speculates that the award

was made without authority or was the result of fraud, accident, or mistake,

rendering it invalid. But there is no evidence that the appraisers acted without

authority or were tainted by fraud, accident, or mistake. Garcia did not offer an

affidavit from her own appraiser—who signed the award—saying he had made a

mistake or acted improperly.      Garcia's position is based on arguments, not

evidence. Garcia makes other arguments—that she can refuse to accept State

Farm's payment of the award to avoid summary judgment, that the difference


   2013) (granting summary judgment after payment of appraisal award); Mag-Dolphus,
   Inc. v. Ohio Cas. Ins. Co., 906 F. Supp. 2d 642, 652 (S.D. Tex. 2012) (granting
   summary judgment after payment of appraisal award).

                                       -6-
between State Farm's original estimate and the later appraisal award is evidence of

a breach of contract, that she should be allowed to recover Chapter 542 penalties

on top of the award amount, and that her extra-contractual claims survive even if

she has no breach of contract claims. But all of these arguments have been made

before by many other parties, and they have been rejected before by many other

courts. 36

                                      ARGUMENT

I.        The summary judgment grounds are broad enough to contemplate
          Garcia's later-pled defense to set aside the appraisal award, and State
          Farm was not required to pre-emptively negate Garcia's defense.
          Garcia's primary argument seeks to avoid the substantive issues in this

appeal based on a technical issue. But Garcia fails to address or even acknowledge

that Texas courts recognize an exception to the general rule upon which Garcia

relies:

          Although summary judgment generally may not be granted on a claim
          not addressed in the summary judgment proceeding, it may be granted
          on later pleaded causes of action if the grounds asserted in the motion
          show that the plaintiff could not recover from the defendant on the
          later pleaded cause of action. 37

                                          ***

          This Court has recognized an exception to the rule that a movant must
          amend or supplement its summary judgment motion expressly to
          address claims pled after the original motion's filing. If the summary

36
     See Argument Sections III, IV, V, and VI, supra.
37
     McIntyre v. Wilson, 50 S.W.3d 674, 684-85 (Tex. App.—Dallas 2001, pet. denied).

                                           -7-
       judgment grounds are broad enough to contemplate all causes of
       action later pled, then summary judgment may properly be rendered
       on the later claims even without an amended or supplemental
       motion.38

This Court adopted the exception in Smith v. Heard:

       Courts have granted summary judgments on causes of action not
       specifically addressed in a movant's motion if the movant has
       conclusively disproven an ultimate fact which is central to all causes
       of action alleged, or the unaddressed causes of action are derivative of
       the addressed cause of action. 39

       The genesis of the general rule upon which Garcia relies is based on the

language in Rule 166a(c) that requires a party to state the specific grounds upon

which they are entitled to judgment. 40 Generally, if a plaintiff adds new causes of

action after a summary judgment is filed, the movant could not have known to

include grounds on the new cause of action. But if the summary judgment is

sufficiently broad, "it may be deemed to cover additional causes of action under

appropriate fact situations." 41 Thus, in Farah v. Mafrige & Kormanik, the court


38
     Strasser v. Sulzer Medica U.S.A., Inc., No. 01-01-00610-CV, 2002 Tex. App. LEXIS
     5463, at *6 (Tex. App.—Houston [1st Dist.] July 25, 2002, pet. denied).
39
     See Smith v. Heard, 980 S.W.2d 693, 697 (Tex. App.—San Antonio 1998, pet.
     denied) (citing TIMOTHY PATTON, SUMMARY JUDGMENTS IN TEXAS--
     PRACTICE, PROCEDURE AND REVIEW § 3.06[3] (2d ed. 1996); Judwin Prop.,
     Inc. v. Griggs & Harrison, 911 S.W.2d 498, 502-503 (Tex. App.—Houston [1st
     Dist.] 1995, no writ); Mackie v. McKenzie, 900 S.W.2d 445, 451 (Tex. App.—
     Texarkana 1995, writ denied); Cissne v. Robertson, 782 S.W.2d 912, 918 (Tex.
     App.—Dallas 1989, writ denied)).
40
     Lampasas v. Spring Center, Inc., 988 S.W.2d 428, 435-36 (Tex. App.—Houston
     [14th Dist.] 1999, no pet.).
41
     Lampasas, 988 S.W.2d at 436.

                                        -8-
held that a summary judgment motion seeking to dismiss fraud claims was broad

enough to include a later-added claim for negligent misrepresentation. 42 But the

court also found that a newly pleaded cause of action for promissory estoppel was

not within the summary judgment grounds. 43 In AKB Hendrick, LLP v. Musgrave

Enters., the court affirmed summary judgment dismissing a later pleaded negligent

misrepresentation claim because the grounds asserted against the plaintiff's fraud

claim showed the plaintiff could not recover on the negligent misrepresentation

claim. 44

       Here, the validity of the appraisal award is central to State Farm's and

adjuster Garza's motion for summary judgment. The entire basis of the motion was

State Farm's payment of a valid appraisal award. It stretches credulity for Garcia

to now argue that these grounds "were not addressed in the motion for summary

judgment." 45 And this is contrary to Garcia's previous acknowledgment that the

validity of the appraisal award was already squarely before the trial court as part of

State Farm's summary judgment. 46 State Farm offered the signed appraisal award



42
     927 S.W.2d 663, 671-672 (Tex. App.—Houston [1st Dist.] 1996, no writ).
43
     Id.
44
     380 S.W.3d 221, 237-38 (Tex. App.—Dallas 2012, no pet.).
45
     Appellant's Brief at p. 8.
46
     2 RR 14 ("If the appraisal--if there's a question about the validity of the Appraisal
     Award, then that raises questions about whether they can even prove the first element
     of their estoppel defense, whether there's a valid and binding Appraisal Award.").

                                           -9-
in evidence,47 and alleged that it was a binding award.48 Under Texas law, the

award is presumed valid. 49 State Farm met its burden.

       It is questionable whether Garcia's later-amended petition even qualifies

under the general rule requiring a summary judgment to be amended. Garcia did

not add a cause of action, but rather a "Request to Set Aside and Disregard

Appraisal Award" separate from her "Causes of Action," and it was plead as a

defense to State Farm's estoppel defense and summary judgment. 50 In Smith, this

Court implicitly recognized that the general rule may not apply when a plaintiff

pleads an affirmative defense as opposed to a cause of action.51 And courts

recognize that a summary judgment movant is not required to address the non-

movant's defenses, because it is incumbent upon the non-movant to raise a genuine

material fact issue on the elements of the non-movant's defense.52 Once State

Farm proved its defense to Garcia's claims based on its payment of the binding



47
     CR 174.
48
     CR 76 ("Appraisal has concluded and a binding appraisal award was issued setting
     the amount of loss.").
49
     In re Allstate County Mut. Ins. Co., 85 S.W.3d 193, 195 (Tex. 2002).
50
     See, e.g., Strasser, 2002 Tex. App. LEXIS 5463, at *17 (recognizing that fraudulent
     concealment is a defense to a defendant's limitations defense).
51
     Smith, 980 S.W.2d at 697 (noting that failure of consideration in amended pleading
     was a defense not a cause of action, but applying general rule to other newly added
     cause of action under Texas Debt Collection Practices Act).
52
     Cook Composites v. Westlake Styrene Corp., 15 S.W.3d 124, 139 (Tex. App.—
     Houston [14th Dist.] 2000, pet. dism'd).

                                         - 10 -
appraisal award, it was Garcia's burden to plead and raise a fact issue on her

defense that the award is invalid.

        The validity of the appraisal award raised by Garcia in her First Amended

Petition was already central to State Farm's summary judgment motion. Thus, the

trial court did not err by ruling on the substantive merit of the parties' claims and

defenses.

II.     No material fact issues existed.
        Texas law presumes the appraisal award is valid, and it was Garcia's burden

to prove a valid ground for setting aside the award.53 When a party does not

produce evidence showing grounds to set aside the appraisal award, the award is

presumed valid and should be enforced as a matter of law. 54 Garcia argues that the

award should be set aside because the award was made without authority or was




53
      Franco, 154 S.W.3d at 786; Lundstrom, 192 S.W.3d at 87.
54
      See Hudgens v. Allstate Texas Lloyd's, No. H-11-2716, 2012 U.S. Dist. LEXIS
      97446, at *27 (S.D. Tex. July 13, 2012) (granting insurer's post-appraisal motion for
      summary judgment after finding that "Plaintiff has failed to produce any evidence
      showing the grounds required to set aside the appraisal award"); Cantu v. S. Ins. Co.,
      No. 03-14-00533-CV, 2015 Tex. App. LEXIS 8847, at *20 (Tex. App.—Austin Aug.
      25, 2015, no pet.) ("Cantu produced no evidence that the appraisers and umpires did
      not comply with the requisite procedure and did not meet that burden [to set the
      award aside]"); MLCSV10 v. Stateside Enters., 866 F. Supp. 2d 691, 708 (S.D. Tex.
      2012) (granting summary judgment for insurer, finding that insured had presented no
      evidence that award was invalid); Breshears, 155 S.W.3d at 344 ("Thus, because
      there is no evidence showing grounds to set aside the appraisal award, the trial court
      did not err in granting summary judgment on this issue").


                                           - 11 -
the result of fraud, accident, or mistake. But Garcia only offers arguments, not

evidence.55 She did not meet her burden to raise a genuine issue of material fact.

       To set aside an award on the ground of fraud, accident, or mistake, Garcia

must prove that the award was not the intended result of the appraisers who signed

the award or the appraisers were incompetent, interested, or partial. 56 There is no

evidence that the award does not reflect the intent of appraiser Wesselski or

appraiser Moynahan.57 Garcia speculates that because the appraisal award's scope

differs in some ways from the State Farm estimate, the award does not reflect the

intent of the appraisers. But allegations and speculation are not evidence. For

example, in Hudgens, the court held that the plaintiff's allegations of misconduct in




55
     Texas Dep't. of Pub. Safety v. Mendoza, 952 S.W.2d 560, 564 (Tex. App.—San
     Antonio 1997, no writ) ("argument of counsel is not evidence.").
56
     See Providence Wash. Ins. Co. v. Farmers Elevator Co., 141 S.W.2d 1024, 1026-27
     (Tex. Civ. App.—Amarillo 1940, no writ) (trial court judgment setting aside an
     award by two appraisers and an umpire reversed and rendered in part because there
     was no mistake—award was intended result); Continental Ins. Co. v. Guerson, 93
     S.W.2d 591, 594 (Tex. Civ. App.—San Antonio 1936, writ dism'd) (court cannot
     concern itself where the award embodies the appraisers real judgment); Gulf Ins. Co.
     of Dallas v. Pappas, 73 S.W.2d 145, 146-47 (Tex. Civ. App.—San Antonio 1934,
     writ ref'd) (court will not substitute its own award for that of the appraisers unless the
     mistake is one by which the award fails to operate in a way the appraisers intended);
     Home Ins. Co. v. Walter, 230 S.W. 723, 724 (Tex. Civ. App.—Dallas 1921, no writ)
     (an award which is the result of fraud, mistake or accident means one which was
     made by appraisers who were incompetent, interested or partial).
57
     Garcia makes no argument that either appraiser committed fraud, was incompetent,
     interested, or partial.

                                            - 12 -
the appraisal were not competent evidence, and that the plaintiff therefore failed as

a matter of law to satisfy its burden of proof to set aside the award. 58

       To set aside an award for lack of authority, Garcia had the burden to prove

that the appraisers made improper legal determinations of what is or is not a

covered loss.59 Garcia offers no legal support for the proposition that appraisers

are bound by prior estimates or must use them as a starting point when determining

the extent or amount of loss. A federal court in Wisconsin has expressly rejected

this argument: "Once the appraisal was confirmed, any previous estimates from

[the insurer's restoration company] or anyone else became meaningless, and the

only damages estimate that mattered was the appraisal award." 60 Under the Policy,

the appraisers are not bound by pre-appraisal estimates, but rather have a duty to

make an independent determination of the amount of loss:

              4. Appraisal. …If either makes a written demand for
              appraisal, each shall select a competent, disinterested
              appraiser…. The appraisers shall then set the amount of
              the loss. If the appraisers submit a written report of



58
     Hudgens, 2012 U.S. Dist. LEXIS 97446, at *26-27; see also Scalise, 2014 U.S. Dist.
     LEXIS 49419, at *7 (where an award was valid on its face, court "could not have
     discerned from the appraiser estimates and award made part of the summary
     judgment record whether either individual impermissibly refused to inspect or
     consider the damages…").
59
     MLCSV10, 866 F.Supp.2d at 705-06.
60
     Gronik v. Chubb Indem. Ins. Co., 10-CV-954, 11-CV-697, 2015 U.S. Dist. LEXIS
     157266, at *8 (E.D. Wis. Nov. 20, 2015).

                                         - 13 -
              an agreement to us, the amount agreed upon shall be
              the amount of loss…. 61

       The Policy requires the appraisers to make a disinterested evaluation of the

loss and clearly states that the appraisers' agreement—not prior estimates—"shall

be the amount of loss." In other words, the appraisal award controls over the prior

estimates. 62 Garcia's reliance on Wells v. American States Preferred Ins. Co. 63 and

Lundstrom v. United Services Auto Association—CIC64 is misplaced.65 In Wells,

the appraisal panel expressly made coverage decisions as part of the award. 66 That

did not happen here. In Lundstrom, the court affirmed the summary judgment on

the ground that appraisal resolved the contract claim and rejected the plaintiff's

broad interpretation of Wells, noting no coverage issues were before the appraisal

panel.67 Garcia's opinion that the award should have included additional items is


61
     CR 106 (emphasis added).
62
     Similarly, when appraisers disagree, an umpire is not constrained to choose between
     them, but must exercise her independent judgment. See, e.g., Providence Lloyds Ins.
     Co., 877 S.W.2d at 877-878 ("we find that in acting independently as to the disputed
     values, the umpire did not exceed the authority conferred upon him. On the contrary,
     it was the duty of the umpire under the terms of the contract of insurance to ascertain
     and determine, in the exercise of his own judgment and as the result of his own
     investigation, the cost values of the disputed items, independent of the findings of the
     appraisers, or either of them.").
63
     919 S.W.2d 679, (Tex. App.—Dallas 1996, writ denied).
64
     192 S.W.3d 78 (Tex. App.—Houston [14th Dist.] 2006, pet. denied).
65
      Appellant's Brief at pp. 16-17.
66
     Wells, 919 S.W.2d at 685 (umpire and appraiser exceeded authority by determining
     foundation movement was not caused by a plumbing leak).
67
     Lundstrom, 192 S.W.3d at 87-89.

                                           - 14 -
not evidence that the award was made without authority and does not reflect that

the award was the result of fraud, accident, or mistake.

       Garcia argues the appraisers either made coverage decisions without

authority or made a mistake because they did not award her $397.72 for three items

that were in State Farm's original estimate. Garcia had seventy-three days from the

day that State Farm moved for summary judgment until her evidentiary deadline

seven days before the March 3, 2016 summary judgment hearing to support her

speculation with evidence—such as an affidavit from appraiser Wesselski (whom

she appointed) that he was mistaken or that he made coverage decisions. But

Garcia offered no such evidence. Instead, Garcia relies only on her arguments and

speculation about what the appraisers might have done or intended by comparing

what is in the award and what is in State Farm's original estimate. But summary

judgment cannot be avoided by a non-movant when the "application of . . .

evidence relies upon speculation rather than reasonable inference." 68 That the

appraisal award did not include a $43 turtle vent or $354 for ceiling paint in two

68
     Bluebonnet Petroleum, Inc. v. Kolkhorst Petroleum Co., No. 14-07-00380-CV, 2008
     Tex. App. LEXIS 7724, at *26-27 (Tex. App.—Houston [14th Dist.] Oct. 9, 2008,
     pet. denied) (affirming summary judgment dismissing conspiracy claim because no
     evidence of content of phone calls was offered and the proffered application of
     evidence—i.e., that the existence of the phone calls was circumstantial evidence that
     the parties conspired—relied upon speculation rather than reasonable inference); see
     also Saenz v. J.D. Rodriguez Produce & Trucking Co., No. 04-99-00867-CV, 2000
     Tex. App. LEXIS 8596, at *20 (Tex. App.—San Antonio Dec. 29, 2000, pet. denied)
     (argument that summary judgment evidence raised a reasonable inference was merely
     suspicion and speculation).

                                          - 15 -
rooms is no evidence that the appraisers acted without authority or signed an award

as a result of fraud, accident or mistake. Garcia only speculates that is the case. 69

But her speculation does not raise a genuine fact issue.

III.     Garcia cannot avoid summary judgment by choosing not to cash her
         appraisal award check.
         State Farm tendered payment under the appraisal award within three

business days of receiving the award.70 Garcia's counsel purported to reject the

payment, arguing that State Farm needed to confess "to their liability" before

Garcia would accept the check and that Garcia should have received the amount of

the appraisal award originally without having to go to appraisal.71 Garcia now

argues that her refusal to accept payment prevents summary judgment from being

entered against her.        Numerous courts have found that a party cannot avoid

69
       Even if the Court were to indulge Garcia's speculation (which State Farm asserts is
       without merit), the $397 amount is a minor discrepancy that does not justify setting
       aside the award. Michels, 544 Fed. Appx. at 541 ("minor discrepancies in the
       appraisal process or award do not invalidate the award"); TMM Invs., Ltd. v. Ohio
       Cas. Ins. Co., 730 F.3d 466, 472 (5th Cir. 2013) ("minor mistakes that do not taint
       the entire award should not frustrate the parties' intent to be bound by the appraisal
       provision of their contract."). And if Garcia's speculation about the $397 could
       justify setting aside the award (which State Farm asserts is without merit), only that
       portion of the award would be set aside. See MLCSV10, 866 F. Supp. 2d at 707-708
       (noting that only part of the appraisal award might be set aside and "there is,
       however, no basis for setting aside the entire award or any other part of it."). Thus,
       the remainder of the award would remain intact, all of Garcia's ensuing causes of
       action related to those parts of the award would still be disposed of by summary
       judgment, and at most Garcia would go to trial seeking to prove the $397 amount not
       in the award was omitted without authority or by fraud, accident, or mistake.
70
       CR 183.
71
       CR 729.

                                            - 16 -
summary judgment by refusing to accept payment of an appraisal award. In

United Neurology, P.A. v. Hartford Lloyd's Ins. Co., the federal court pointed out

that several courts have rejected Garcia's argument:

       United Neurology now argues that the third element required to estop
       its breach of contract claim was not met because it did not accept the
       payment of the appraisal award tendered to it by Hartford. A number
       of courts have addressed the issue of the insured's rejection of a timely
       and full payment of the appraisal award amount by the insurer under
       Texas law and determined that if the appraisal award has been reached
       in accordance with the terms of the insurance policy and the insurer
       has timely tendered the full amount awarded by the appraisers, that
       conduct is legally sufficient to entitle the insurer to summary
       judgment on the breach-of-contract claim against it. This Court, too,
       finds that United Neurology and Hartford are in substantial
       compliance with the appraisal award clause in the Policy, that the
       award is binding and enforceable, and that despite United Neurology's
       refusal to accept the payment tendered, it has failed to show that
       Hartford breached the contract.72

       In Devonshire Real Estate & Asset Management, L.P. v. American

Insurance Co., the court rejected the argument advanced by Garcia that she can

block a summary judgment by not accepting payment:

       Finally, the Court refuses to accept Devonshire's argument that
       American cannot raise an estoppel defense because Devonshire never
       accepted payment of the appraisal award issued by American. . . . The
       Court therefore concludes that so long as there is a binding and
       enforceable appraisal award and the insurer timely and full[ly] pays




72
     United Neurology, P.A. v. Hartford Lloyd's Ins. Co., 101 F. Supp. 3d 584, 619-20
     (S.D. Tex. 2015).

                                        - 17 -
       the resulting award, estoppel should apply regardless of whether the
       insured actually accepts payment. 73

       Similarly, in Caso v. Allstate Texas Lloyds, the court granted summary

judgment notwithstanding the insured's rejection of payment:

       Plaintiffs do not dispute the first and second elements, but attack the
       third, i.e. acceptance of the award, by asserting that Plaintiffs' non-
       acceptance of Allstate's tender of the appraisal award prevents
       estoppel. In support, Plaintiffs cite language from a district court
       decision, Church of the Rock North v. Church Mut. Ins. Co., providing
       that estoppel via appraisal only results where the plaintiff accepts
       payment of the appraisal amount from the insurer. However, the
       Church of the Rock requirement of acceptance for estoppel
       effectiveness was due to distinguishable facts of that case . . . the
       award remains both binding and enforceable until it is set aside,
       notwithstanding Plaintiffs' rejection of Allstate's tender, an
       apparently-baseless rejection for which Plaintiffs have not offered an
       explanation. 74

       Like the insured in Caso, Garcia relies on Church on the Rock North v.

Church Mut. Ins. Co.75 to support her position. The Court in Caso explained that

Church on the Rock was distinguishable due to peculiar language in that appraisal

clause and unique factual disputes about the enforceability of the award, which was

not signed.76 Notably, the court in Caso relied on this Court's opinion in Toonen to

reject the argument that an insured has to accept the check:



73
     Devonshire Real Estate & Asset Mgmt., L.P. v. Am. Ins. Co., No. 3:12-CV-2199-B,
     2014 U.S. Dist. LEXIS 135939, at *51, *53 (N.D. Tex. Sep. 26, 2014).
74
     No. 7:12-CV-478, 2014 U.S. Dist. LEXIS 15279, at *18-20 (S.D. Tex. Feb. 7, 2014).
75
     No. 3:10-CV-0975-L, 2013 U.S. Dist. LEXIS 17849 (N.D. Tex. Feb. 11, 2013).
76
     Caso, 2014 U.S. Dist. LEXIS 15279, at *18.

                                        - 18 -
       Regarding a factually-similar situation in Toonen v. United Servs.
       Auto. Ass'n, a Texas court of appeals rejected a similar argument,
       writing:
          In this case, USAA's motion and supporting proof are legally
          sufficient to establish (1) Toonen's claim had been appraised
          pursuant to the Policy, and (2) USAA had tendered the amount
          awarded by the appraisers. Accordingly, USAA was entitled to
          summary judgment in its favor on Toonen's breach of contract
          claim unless Toonen raised an issue of fact as to a ground for
          setting aside the appraisal award.77

       The court in Devonshire also explained that the reasoning in Church on the

Rock was based on an over-reading of Franco, which "did not expressly state, as

Church on the North Rock and Blum's Furniture appear to suggest, that the

insured's acceptance of payment was a necessary condition for estoppel to apply." 78

Several other cases have likewise rejected an insured's attempt to avoid summary

judgment by not accepting payment and citing Church on the Rock. 79

       Garcia also argues that she rejected the appraisal payment because it was for

the Actual Cash Value of the award, instead of the full Replacement Cost Value.80

Actually, Garcia never raised this issue at the trial court. She tries to add the new

argument on appeal—saying "it can be reasonably inferred" from her letter that she


77
     Caso, 2014 U.S. Dist. LEXIS 15279, at *20-21.
78
     Devonshire Real Estate, 2014 U.S. Dist. LEXIS 135939, at *52.
79
     See Moore v. Allstate Texas Lloyds, No. 7:12-CV-479, 2014 U.S. Dist. LEXIS
     15277, at *18 (S.D. Tex. Feb. 7, 2014); Hernandez v. Allstate Texas Lloyds, No.
     7:12-CV-480, 2014 U.S. Dist. LEXIS 15276, at *18 (S.D. Tex. Feb. 7, 2014); United
     Neurology, 101 F. Supp. 3d at 620, n.37.
80
     Appellant's Brief at p. 23.

                                        - 19 -
speculated State Farm might not later pay replacement cost benefits if she

completed repairs, and therefore, she rejected the payment. This argument (even if

it had been properly raised by Garcia) has also been rejected. In Devonshire, the

court held that "the plain terms of the policy only required American to pay the

actual cash value of the appraisal award, because Devonshire had not completed

repairs."81 Garcia offers no argument or evidence that she completed repairs.

Accordingly, she is not entitled to replacement cost benefits under the policy. 82

       Garcia argues (again) that State Farm cannot defeat her claims by estoppel

because it cannot show the existence of a valid appraisal award. 83              Garcia

incorporates the earlier sections of her brief, arguing State Farm did not amend its

motion after Garcia amended her petition and that fact issues exist on her grounds

to set aside the award. 84 State Farm, in turn, incorporates its prior arguments on

these points.     The broadly stated summary judgment grounds covered the

enforceability of the award, and State Farm did not have to pre-emptively negate

Garcia's defense. 85 And Garcia offers no evidence to raise a fact issue, only


81
     2014 U.S. Dist. LEXIS 135939, at *49.
82
     Fitzhugh 25 Partners, L.P. v. KILN Syndicate, 501, 261 S.W.3d 861, 863 (Tex.
     App.—Dallas 2008, pet. denied) ("Courts across the country have universally held
     that [a replacement cost provision] requires repair or replacement of the destroyed
     property before the insured is entitled to recover replacement cost damages.")
83
     Appellant's Brief at p. 22.
84
     Id.
85
     See Argument Section I, supra.

                                         - 20 -
arguments.86 State Farm satisfied its burden by offering the signed appraisal

award, which is presumed valid. It is Garcia's burden of proof to set aside the

award. She cannot shift the burden to State Farm to pre-emptively disprove her

defense.

IV.     Under Texas law, the fact that an appraisal award is greater than an
        earlier estimate is no evidence of a breach of contract.
        Under Texas law, the fact that an insurer paid less under its original estimate

than it later paid under a signed appraisal award cannot be used to argue the insurer

breached the contract. 87 Garcia tries to make exactly this argument. 88 Garcia

points to the differences between her public adjuster's estimate, State Farm's

estimate, and the appraisal award. 89 Garcia also complains that State Farm did not

include overhead and profit in its estimate, but the appraisers did. 90 But attacking




86
      See Argument Section II, supra.
87
      Gabriel, 2013 U.S. Dist. LEXIS 186032, at *11; Breshears, 155 S.W.3d at 343 ("The
      Breshears may not use the fact that the appraisal award was different than the amount
      originally paid as evidence of breach of contract, especially when the contract they
      claim is being breached provides for resolution of disputes through appraisal.").
88
      Appellant's Brief at pp. 24-27.
89
      Id. at p. 25.
90
      Id. at pp. 25-26. As discussed in footnote 91 below, an incongruity between an
      estimate and an appraisal award is not germane to the issues presented in this appeal.
      Nevertheless, it is important to note that Garcia misrepresents the TDI Bulletins cited
      in her brief. Appellant's Appendix I. The bulletins do not stand for the proposition
      that overhead and profit be included in every loss estimate. They only express TDI’s
      opinion that depreciation and overhead and profit cannot both be deducted from
      replacement cost value when calculating actual cash value.

                                            - 21 -
the original estimate as being insufficient does not raise a fact issue when the

appraisal award later sets the amount of loss and is paid. 91

       The Houston Court of Appeals in Anderson recently rejected the argument

that the award can prove the insurer breached the contract: "The fact that ARIC did

not pay the amount of the award earlier, alone, does not raise a fact issue on

Anderson's claim for breach of contract." 92 Garcia failed to prove any fact issues

prevented summary judgment dismissing her contract claim.

V.     Payment of the appraisal award disposes of Garcia's prompt payment
       claims as a matter of law.
       Garcia argues that a cause of action under the Texas Prompt Payment of

Claims Act, Chapter 542 Tex. Ins. Code ("TPPCA"), can be maintained after an

insurer timely pays an appraisal award. Courts have already decided that issue,

recognizing that "Texas courts have constantly held that 'full and timely payment

of an appraisal award under the policy precludes an award of penalties under the




91
     Gabriel, 2013 U.S. Dist. LEXIS 186032, at *11 ("For her part, Gabriel argues that
     Breshears is 'easily distinguished' from this case since the Breshears plaintiffs
     asserted claims 'because the amount of the appraisal award was different from the
     amount initially offered by the insurance company.' Gabriel goes on, however, to
     describe the same basis for her own claims, albeit with different wording: Allstate
     breached the contract when it 'failed to correctly determine the amount of the loss
     that led to the coverage dispute.'").
92
     2016 Tex. App. LEXIS 6538, at *11.

                                         - 22 -
Insurance Code's prompt payment provisions as a matter of law.'" 93 Garcia relies

on a recent interlocutory Order from a Northern District of Texas case that was

voluntarily dismissed by the plaintiff, Graber v. State Farm Lloyds, 94 that is at

odds with Fifth Circuit precedent, Southern, Eastern and Western District

precedent, and precedent from Texas courts of appeals.

       A.     The overwhelming majority of courts have found that TPPCA
              claims do not survive payment of an appraisal award.
       The Fifth Circuit, in Blum's Furniture Co. v. Certain Underwriters at Lloyds

London, upheld the summary judgment dismissal of the plaintiff insured's

contractual and extra-contractual claims, affirming the district court's summary

judgment. 95 The district court held that "under Texas law, 'full and timely payment

of an appraisal award under the policy precludes an award of penalties under the

Insurance Code's prompt payment provisions as a matter of law.' Because Lloyds

made full and timely payment of the appraisal award in this case, Plaintiffs' Prompt

Payment claim fails as a matter of law." 96



93
     Tabor v. State Farm Lloyds, No. 7:14-cv-389, at pp. 15-16 (S.D. Tex. April 9, 2015)
     (quoting In re Slavonic Mut. Fire Ins. Ass'n, 308 S.W.3d 556, 563 (Tex. App.—
     Houston [14th Dist.] 2010, no pet.)).
94
     Graber v. State Farm Lloyds, No. 3:13-CV-2671-B, 2015 U.S. Dist. LEXIS 77361
     (N.D. Tex. June 15, 2015) reconsideration denied (August 6, 2015) (dismissed
     voluntarily by plaintiff).
95
     459 Fed. Appx. at 368.
96
     Blum's Furniture Co. v. Certain Underwriters at Lloyds London, No. H-09-3479,
     2011 U.S. Dist. LEXIS 20604, at *11 (S.D. Tex. March 2, 2011) affirmed by 459

                                         - 23 -
       District courts for the Southern District of Texas routinely grant summary

judgment dismissing TPPCA claims (and all other claims) after the carrier pays the

appraisal award. 97 And so do district courts in the Eastern District,98 and the

Western District.99

       Graber finds no support among Texas state courts either. Courts that have

addressed these claims have also held that payment of an appraisal award means



     Fed. Appx. 366 (5th Cir. 2012) (emphasis added) (quoting In re Slavonic, 308
     S.W.3d at 563-64).
97
     Gabriel, 2013 U.S. Dist. LEXIS 186032, at *12, *20-21 (S.D. Tex. Nov. 1, 2013);
     Tabor, No. 7:14-cv-389, at pp. 15-16; Moore, 2014 U.S. Dist. LEXIS 15277, at *14-
     30; Hernandez, 2014 U.S. Dist. LEXIS 15276, at *14-30; Caso, 2014 U.S. Dist.
     LEXIS 15279, at *14-24; Cavazos v. State Farm Lloyds, No. 7:13-CV-00252, Minute
     Entry of 10/27/15 (S.D. Tex. Oct. 27, 2015); Corpus v. State Farm Lloyds, No. 7:14-
     CV-00383, Minute Entry of 10/27/15, (S.D. Tex. Oct. 27, 2015); Guerra v. State
     Farm Lloyds, No. 7:14-CV-00381, Minute Entry of 10/27/15, (S.D. Tex. Oct. 27,
     2015); Solis v. State Farm Lloyds, No. 7:13-cv-00149, Minute Entry of 10/27/15
     (S.D. Tex. Oct. 27, 2015); Villanueva v. State Farm Lloyds, No. 7:13-CV-00601,
     Minute Entry of 10/27/15, (S.D. Tex. Oct. 27, 2015); Rios v. State Farm Lloyds, No.
     7:13-CV-00187, Minute Entry of 8/17/15 (S.D. Tex. August 17, 2015); Scalise, 2013
     U.S. Dist. LEXIS 179692, at *11 (S.D. Tex. Dec. 20, 2013); Stewart v. Geovera
     Specialty Ins. Co., No. H-14-3162 at p. 8 (S.D. Tex. October 21, 2015); Burks, 2015
     U.S. Dist. LEXIS 88729, at *5, *12-16; Barry, 2015 U.S. Dist. LEXIS 40953, at *15;
     United Neurology, P.A. v. Hartford Lloyd's Ins. Co., 101 F. Supp. 3d 584 (S.D. Tex.
     2015) affirmed by 624 Fed. Appx. 225 (5th Cir. 2015); Mag-Dolphus, 906 F. Supp.
     2d at 652; Medistar Twelve Oaks Partners, Ltd. v. Am. Econ. Ins. Co., No. H-09-
     3828, 2011 US. Dist. LEXIS 82846, at *31, *23-24 n.8 (S.D. Tex. July 27, 2011);
     Waterhill, 2006 U.S. Dist. LEXIS 15302, at *10.
98
     Studer v. State Farm Lloyds, No. 4:13-CV-413, 2016 U.S. Dist. LEXIS 99883 (E.D.
     Tex. July 29, 2016); Quibodeaux v. Nautilus Ins. Co., No. 1:10-CV-739, 2015 U.S.
     Dist. LEXIS 39324, at *25-26 (E.D. Tex. Mar. 10, 2015) affirmed by 2016 U.S. App.
     LEXIS 12643 (5th Cir. Jul. 7, 2016).
99
     Michels v. Safeco Ins. Co. of Indiana, No. A-12-CA-511-SS, Slip Op. at p. 9 (W.D.
     Tex. March 13, 2013) affirmed by 544 Fed. Appx. 535, 542-543 (5th Cir. 2013).

                                         - 24 -
that TPPCA claims must be dismissed—as a matter of law. 100 As one legal article

characterized it, Graber is an "outlier." 101 Graber was voluntarily dismissed by the

Plaintiff before an appeal of the District Court's interlocutory order.

        B.     Graber relies on distinguishable authority that did not involve
               appraisal.
        Graber relied on Higginbotham v. State Farm Mutual Automobile Ins. Co.102

to disregard a long line of cases finding that timely payment of an appraisal award

precludes a prompt payment claim. But Higginbotham is distinguishable because

it was not an appraisal case and the insurer in that case was found liable for breach

of contract by a jury after it denied a claim. 103 The distinction is crucial. Not only

was there no finding of State Farm's liability in Graber—there was actually a

finding that State Farm was not liable to the Plaintiff for breach of contract when

the Court granted State Farm's motion for summary judgment on the plaintiff's

breach of contract claim. The Fifth Circuit recently explained in Tremago that


100
      Anderson, 2016 Tex. App. LEXIS 6538, at *13; Bernstein v. Safeco Ins. Co. of Ill.,
      No. 05-13-01533-CV, 2015 Tex. App. LEXIS 6699, at *3 (Tex. App.—Dallas, June
      30, 2015, no pet.); In re Slavonic Mut. Fire Ins. Ass'n, 308 S.W.3d 556, 563-64 (Tex.
      App.—Houston [14th Dist.] 2010, no pet.); Amine v. Liberty Lloyds of Tex. Ins., No.
      01-06-00396-CV, 2007 Tex. App. LEXIS 6280, at *13-15 (Tex. App.—Houston [1st
      Dist.] 2007, no pet.); Breshears, 155 S.W.3d at 343.
101
      Brad E. Brewer & James W. Holbrook, II, Graber v. State Farm Is a Texas Prompt
      Payment         Outlier,        Law         360,         August       10,       2015,
      http://www.law360.com/articles/686001/graber-v-state-farm-is-a-texas-prompt-
      payment-outlier (last visited July 28, 2016).
102
      103 F.3d 456 (5th Cir. 1997).
103
      Id. at 461.

                                           - 25 -
when there is no prospect for a finding of liability for breach of contract,

Higginbotham is inapposite:

        Here, there has been no such liability determination. Similarly, this
        court has made clear that an insurer was liable under the Prompt
        Payment Act "when it was found liable for breach of contract."
        Higginbotham v. State Farm Mutual Automobile Ins. Co., 103 F.3d
        456, 461 (5th Cir. 1997). Since Euler has never been found liable for
        breach of contract, nor will it ever face such a liability determination
        because the breach of contract claim was settled, these cases are
        inapposite. Summary judgment on Continental's Prompt Payment Act
        claim was appropriate. 104

        Tremago is consistent with Higginbotham in that a good faith defense will

not avoid statutory penalties "as long as the insurer is finally judged liable."105

Tremago is also consistent with earlier Fifth Circuit law recognizing (under a

predecessor statute) that "the penalty is due if the Insurer is ultimately held liable

on the policy." 106 Because there was no final judgment of liability under the

insurance contract against State Farm, and never could be since the contract claim



104
      Tremago, L.P. v. Euler-Hermes Am. Credit Indem. Co., 602 Fed. Appx. 981, 983-84
      (5th Cir. 2015) (emphasis added).
105
      Higginbotham, 103 F.3d at 461 (citing Key Life Ins. Co. of S.C. v. Davis, 509 S.W.2d
      403, 405 (Tex. Civ. App.—Beaumont 1974, no writ)) (emphasis added); see also
      Cater v. United Servs. Auto. Ass'n, 27 S.W.3d 81, 84 (Tex. App.—San Antonio 2000,
      pet. denied) ("The Fifth Circuit [in Higginbotham] recognized that courts that
      interpreted article 3.62 [the predecessor of art. 21.55] consistently found that an
      insurance company's good faith defense did not relieve the insured from liability for
      damages for late payment, as long as the insurer is finally found liable for the
      claim.") (emphasis added).
106
      Lumbermens Mut. Cas. Co. v. Klotz, 251 F.2d 499, 509 (5th Cir. 1958) (emphasis
      added).

                                           - 26 -
was dismissed by summary judgment, the Court in Graber should have dismissed

the plaintiffs' TPPCA claim.

        C.    The facts here are distinguishable from Graber.
        The Graber court explained it was not holding "that payment of an appraisal

award automatically establishes an insurer's liability for [a TPPCA] claim." 107 The

court's ruling hinged (incorrectly) on language in State Farm's letter issuing

payment of the appraisal award that said "the cost to repair or replace those items

of damage that State Farm has determined are covered by the Homeowners

policy." 108 Contrary to Higginbotham and Tremago, the district court incorrectly

concluded this language was evidence of State Farm's "liability" for purposes of

the TPPCA. Thus, the key fact in Graber that lead to the Court's erroneous

decision is not present in this case. State Farm's letter issuing payment of the

appraisal award does not contain any language "accepting coverage" based on the

award.109 State Farm paid the appraisal award to resolve the claim—which is the

purpose of appraisal.110




107
      Graber, 2015 U.S. Dist. LEXIS 77361, at *25, n.3.
108
      Id.
109
      CR 183 (Letter Tendering Payment of Appraisal Award).
110
      Scalise, 2013 U.S. Dist. LEXIS 179692, at *11.

                                         - 27 -
        D.     Garcia has not raised a fact issue.
        Garcia argues that the evidence demonstrates State Farm is liable under the

TPPCA. 111 That is not the case. State Farm timely investigated Garcia's claim.

The claim was reported January 22, 2015, and State Farm contacted Garcia on the

same day. 112 The parties scheduled an inspection of Garcia's dwelling on February

26, 2015.113 State Farm sent Garcia its estimate on March 2, 2015, within two

business days of inspecting Garcia's property. 114 There was no violation of any of

the provisions of Chapter 542.

VI.     Without a valid breach of contract claim, all of Garcia's extra-
        contractual claims fail.
        The general rule in Texas is that an insured cannot prove a bad faith claim

absent a breach of contract.115 In Liberty National Fire Insurance. Co. v. Akin,116

the Texas Supreme Court cited with approval its earlier decision in Republic

Insurance Co. v. Stoker and held that an insured cannot prevail on a bad faith claim

without first showing a breach of contract.117 In Stoker, the Supreme Court noted

the only recognized exceptions to this rule are if the insurer "commit[s] some act,


111
      Appellant's Brief at p. 29.
112
      CR 139.
113
      CR 139; 142-43.
114
      CR 141.
115
      Republic Ins. Co. v. Stoker, 903 S.W.2d 338, 341 (Tex. 1995).
116
      927 S.W.2d 627 (Tex. 1996).
117
      Id. at 629.

                                           - 28 -
so extreme, that would cause injury independent of the policy claim" or fails "to

timely investigate the insured's claim." 118 The Fifth Circuit—in Blum's—adopted

Akin and Stoker in an appraisal case. 119

        Garcia argues that the Stoker independent injury exception does not apply in

this case because the claim was covered. 120 This argument has been expressly

rejected in an appraisal case:

        Plaintiffs argue that the Akin rule generally prohibiting bad faith
        claims without a breach of contract should be limited to cases where
        in fact there is no insurance coverage. Such a distinction has not been
        found in the Texas cases and appears entirely unwarranted, especially
        in light of the Fifth Circuit's persuasive opinion applying the Akin rule
        in Blum's Furniture. The court there held that the insured raised no
        genuine issue of material fact on its bad faith claims when the insurer,
        as here, did not deny coverage and paid the appraisal amount, which
        the insured accepted. 121

        Garcia relies on United National Insurance Co. v. AMJ Investments, LLC to

argue that the Stoker independent injury exception does not apply to her.122 But

AMJ was not an appraisal case. In that case, the insured succeeded on its breach of

contract claim at trial. Here, Garcia's contract claim is barred by State Farm's

timely payment of the appraisal award. AMJ is inapposite. It does not hold that



118
      Stoker, 903 S.W.2d at 341.
119
      Blum's, 459 Fed. Appx. at 368.
120
      Appellant's Brief at p. 31.
121
      Burks, 2015 U.S. Dist. LEXIS 88729, at *12 (citations omitted).
122
      447 S.W.3d 1, 11–12 (Tex. App.—Houston [14th Dist.] 2014, pet dism'd).

                                         - 29 -
when a breach of contract claim fails, the insured may recover for bad faith without

proving independent injury.

        Garcia also cites USAA Texas Lloyds Co. v. Menchaca, but that case did not

involve the payment of an appraisal award. 123 And it squarely conflicts with the

Texas Supreme Court's holding in Provident Am. Ins. Co. v. Castaneda that a

failure to properly investigate cannot support an award of policy benefits. 124 The

persuasive value of Menchaca is also highly questionable because it is currently

pending before the Texas Supreme Court, where briefing on the merits has been

requested.

        Garcia points out that an independent injury exception case had been

certified to the Texas Supreme Court. 125 But the Deepwater Horizon case has been

dismissed by agreement.126 Even if settlement had not rendered Garcia's reliance

on the case moot, that case is distinguishable because it is not an appraisal case and

the court found the insurance company breached the contract by denying policy

benefits.




123
      No. 13-13-00046-CV, 2014 Tex. App. LEXIS 8250 (Tex. App.—Corpus Christi July
      31, 2014, pet. filed) (mem. op.).
124
      988 S.W.2d 189, 198 (Tex. 1998).
125
      Appellant's Brief at p. 52.
126
      Cameron Int'l Corp. v. Liberty Ins. Underwriters, Inc. (In re Deepwater Horizon),
      807 F.3d 689 (5th Cir. 2015) (dismissed by agreement).

                                         - 30 -
        Garcia mischaracterizes an interlocutory order in Cavazos v. State Farm

Lloyds 127 as rejecting the independent-injury rule. 128 Judge Alvarez did not decide

the issue in Cavazos; she only noted that the Deepwater Horizon case had been

certified.129 But she also noted that the breach of contract claim survived, which

impacted the decision. 130 In fact, Judge Alvarez has followed Blum's and the

application of the Stoker independent injury exception in other appraisal cases,

dismissing extra-contractual claims by summary judgment:

        In light of the Court's determination regarding the breach of contract
        claim, Plaintiffs' common law or statutory bad faith claims survive the
        summary analysis only if Plaintiffs raise a genuine issue of material
        fact as to either of two exceptions recognized in Republic Ins. Co. v.
        Stoker: (1) the insurer's failure to timely investigate the insured's
        claim; or (2) the insurer's commission of "some act, so extreme, that
        would cause injury independent of the policy claim." The end result,
        recognized by the Fifth Circuit in Blum's Furniture Co., Inc. v.
        Certain Underwriters at Lloyds London, is that a plaintiff "cannot
        maintain an action for bad faith where the breach of contract claim
        fails, and neither exception applies." 131

        And even after Cavazos, Judge Alvarez continues to dismiss extra-

contractual claims based on Blum's and Stoker, and rejects parties' attempts to rely




127
      No. 7:14-CV-395, 2015 U.S. Dist. LEXIS 163287 (S.D. Tex. Dec. 4, 2015).
128
      Appellant's Brief at p. 32.
129
      Cavazos, 2015 U.S. Dist. LEXIS 163287, at *15.
130
      Id. at *14-15.
131
      Caso, 2014 U.S. Dist. LEXIS 15279, at *25-26; see also Gabriel, 2013 U.S. Dist.
      LEXIS 186032, at *15-22.

                                        - 31 -
on Cavazos, as Garcia does. 132 Other courts in the Southern District have also

rejected Garcia's argument that she does not have to show independent injury. 133

The Houston Court of Appeals in Anderson also applied Stoker in a recent

appraisal case.134

        Garcia's statutory claims against State Farm and adjuster Garza under

Chapter 541 of the Texas Insurance Code and under the DTPA fail for the same

reasons.     Numerous courts have recognized that these statutory claims are

reviewed under the same standard as a common law bad faith claim, and require

the same predicate for recovery. 135 "When an insured joins claims under the Texas

Insurance Code and the DTPA with a bad faith claim, all asserting a wrongful

denial of policy benefits, if there is no merit to the bad faith claim, there can be no

132
      Dizdar v. State Farm Lloyds, No. 7:14-CV-402, 2016 U.S. Dist. LEXIS 13355, at
      *17 n.71 (S.D. Tex. Feb. 4, 2016); Dizdar v. State Farm Lloyds, No. 7:14-CV-664,
      2016 U.S. Dist. LEXIS 20871, at *18-19 n.75 (S.D. Tex. Feb. 22, 2016); Dizdar v.
      State Farm Lloyds, No. 7:14-CV-514, 2016 U.S. Dist. LEXIS 49839, at *16-17 n.67
      (S.D. Tex. Apr. 13, 2016).
133
      Burks, 2015 U.S. Dist. LEXIS 88729, at *11-15; Scalise, 2013 U.S. Dist. LEXIS
      179692, at *20-23; Russell, 2014 U.S. Dist. LEXIS 143882, at *18-22; Mag-
      Dolphus, Inc., 906 F. Supp. 2d at 649-50; Barry, 2015 U.S. Dist. LEXIS 40953, at
      *11-14.
134
      Anderson, 2016 Tex. App. LEXIS 6538, at *15.
135
      See Anderson, 2016 Tex. App. LEXIS 6538, at *18; Tex. Mut. Ins. Co. v. Sara Care
      Child Care Ctr., Inc., 324 S.W.3d 305, 317 (Tex. App.—El Paso 2010, pet. denied);
      Spicewood Summit Office Condominiums Ass'n, Inc. v. Amer. First Lloyd's Ins. Co.,
      287 S.W.3d 461, 468 (Tex. App.—Austin 2009, pet. denied); Douglas v. State Farm
      Lloyds, 37 F.Supp.2d 532, 544 (S.D. Tex. 1999); Higginbotham v. State Farm Mut.
      Auto. Ins. Co., 103 F.3d 456, 460 (5th Cir. 1997) (holding Texas courts have ruled
      DTPA and Insurance Code claims require same predicate for recovery as bad faith
      causes of action).


                                          - 32 -
liability on either statutory claim." 136 Here, there is no merit to Garcia's bad faith

claim.

         Garcia conflates the independent injury issue in her discussion of the claims

against adjuster Garza, arguing that because adjuster Garza had no contract with

Garcia, those claims survive. They do not. They were, as State Farm alleged,

derivative of, and based on the same facts asserted against State Farm. 137 Garcia

alleged no specific conduct by adjuster Garza that caused an independent injury. 138

Allegations, like Garcia's, that an adjuster assigned to a claim did not thoroughly

investigate the claim and conducted an outcome-oriented investigation do not

establish a valid cause of action against the adjuster individually. 139 Absent an

independent injury, Garcia has no bad faith or statutory claims against State Farm

or adjuster Garza. 140




136
      Anderson, 2016 Tex. App. LEXIS 6538, at *18 (quoting O'Quinn v. Gen. Star Indem.
      Co., No. 1:13-CV-471, 2014 U.S. Dist. LEXIS 107484 (E.D. Tex. Aug. 5, 2014)).
137
      CR 70; see also CR 234-39 (First Amended Petition).
138
      CR 234-39 (First Amended Petition).
139
      Walters v. Metro Lloyds Ins. Co., 4:16-CV-307, 2016 U.S. Dist. LEXIS 91244, at *7
      (E.D. Tex. July 14, 2016).
140
      Confusingly, Garcia cites Waite Hill Services, Inc. v. World Class Metal Works, Inc.,
      959 S.w.2d 182 (Tex. 1998) and Vail v. Texas Farm Bureau Mutual Ins. Co., 754
      S.W.2d 129 (Tex. 1988), in support of her argument that she can recover policy
      benefits from adjuster Garza individually. Appellant's Brief at p. 34. But both of
      those cases involved claims only against an insurance company; neither case
      involved an individual adjuster defendant. The cases do not support Garcia's
      argument.

                                           - 33 -
        There is no independent injury, and Garcia does not argue that there is.

"Here, [Garcia] has made only those fairly routine allegations of a substandard

(albeit timely) investigation and initial undervaluation of [her] covered claim, the

entirety of which was timely paid upon issuance of the appraisal award."141

Garcia's extra-contractual claims are foreclosed by the timely payment of the

appraisal award.

                           CONCLUSION AND PRAYER
        Texas law is settled that payment of an appraisal award resolves an insured's

claims. Here, as in many other cases in state and federal courts in Texas, the trial

court properly disposed of the resolved claims by summary judgment. As this

Court recognized in Providence Lloyds Ins. Co. v. Crystal City I.S.D., it would

have been error to allow the claims to proceed to trial after the appraisal award was

paid.142 Garcia cannot circumvent settled Texas law by her technical, procedural

arguments to delay summary judgment. The denial of her continuance request was

not appealed. And Texas law did not require State Farm to reset the summary

judgment hearing in order to modify or supplement its motion after Garcia

amended her petition to add the new defense that the award should be set aside.

The summary judgment grounds before the Court were already broad enough to



141
      Scalise, 2013 U.S. Dist. LEXIS 179692, at *22-23.
142
      Providence Lloyds Ins. Co., 877 S.W.2d at 875.

                                          - 34 -
include, and in fact were based upon, the validity of the paid appraisal award.

There was no error. The trial court's judgment should be affirmed.

      State Farm and adjuster Garza pray that the Court affirm the trial court's

take-nothing judgment against Garcia and that State Farm and adjuster Garza be

awarded all other relief to which they are entitled.

                                        Respectfully submitted,

                                        WINSTEAD PC
                                        401 Congress Avenue, Suite 2100
                                        Austin, Texas 78701
                                        512-370-2854 telephone
                                        512-370-2850 telecopier

                                        By:      /s/ Elliot Clark
                                                 Linda J. Burgess    SBN 03381300
                                                 Elliot Clark        SBN 24012428

                                        Dan K. Worthington       SBN 00785282
                                        Sofia A. Ramon           SBN 00784811
                                        Elizabeth Cantu          SBN 24013455
                                        ATLAS, HALL & RODRIGUEZ, LLP
                                        P. O. Drawer 3725
                                        818 Pecan (78501)
                                        McAllen, Texas 78502
                                        (956) 682-5501 telephone
                                        (956) 686-6109 telecopier

                                        ATTORNEYS FOR APPELLEES




                                        - 35 -
                         CERTIFICATE OF COMPLIANCE
       I certify that the word count for this filing, excluding portions of the brief
that need not be counted under Rule 9.4(i)(1) and including the Introduction at is
9,757 according to the Microsoft Word 2010 word count feature, within the 15,000
word limit set for merits briefing by Rule 9.4(i)(2)(B).



                                       /s/ Elliot Clark
                                       Elliot Clark


                             CERTIFICATE OF SERVICE

      I hereby certify that on the 12th day of August, 2016, I electronically filed
the foregoing with the Clerk of the Court and same was sent to the following
counsel of record.

      Bernie Kray
      bkray@anglawfirm.com
      Troy A. Glander
      M. Alex Nava
      ALLAN, NAVA, GLANDER & HOLLAND, PLLC
      serveone@anglawfirm.com
      825 W. Bitters Road, Suite 102
      San Antonio, Texas 78216
      (210) 305-4220 – Phone
      (210) 305-4219 – Fax



                                       /s/ Elliot Clark
                                       Elliot Clark




                                       - 36 -
         4827-2867-6404v.3 25249-698
