HOUSTON – The 14th Court of Appeals has upheld a dismissal of a case against First Community Insurance Co. filed by a homeowner in a dispute with the insurer regarding a claim.
The appellate court ruled Feb. 13 that the trial court did not err when it granted summary judgment in favor of the insurance company.
Haiquan Zhu, owner of a house in Sugar Land, had a homeowner’s insurance policy from First Community Insurance Co., according to the 14th Court of Appeals. After a storm in 2014 allegedly damaged Zhu’s property, he filed a claim on the policy.
First Community’s adjuster, Command Claims, estimated the damage to be worth $2,726.14 and gave Zhu a payment of $226.14 after applying the deductible, according to the appeals court.
According to the insurance policy cited by the court in its opinion, if Zhu and First Community don't agree on the amount of the loss, either party could ask for an appraisal.
After First Community invoked the appraisal provision in 2014, the appraisal panel agreed that "the amount of the loss was $17,384.30 in replacement cost, depreciation of $3,500, and an actual cash value of $13,884.30," according to the appeals court.
The appraisal panel said the award only refers to items where there was a disagreement about the “amount of the loss” and it wasn't intended to cover items "for which there was a disagreement as to whether there was damage at all.”
"First Community issued a check to Zhu and his counsel for $11,158.16, an amount equal to the actual cash value in the appraisal award, less than the $2,500 deductible and First Community’s prior payment of $226.14," the appeals court said.
Zhu later sued First Community on allegations of breach of contract, violation of the Prompt Payment of Claims Act, violations of Insurance Code chapter 541 and violation of the Deceptive Trade Practice Act, the appeals court said.
According to the Texas Insurance Code chapter 541, the goal of the chapter is to prohibit “unfair method[s] of competition or unfair or deceptive act[s] or practice[s].”
For the trial court, First Community argued in its motion for summary judgment that Zhu’s allegations of violation of Insurance Code chapter 541 and violation of the DTPA should be dismissed for two reasons.
First, it said it “fully and timely paid the claim based on the appraisal award.” Second, it stated that “Zhu must show he suffered damages above and beyond failure to receive policy proceeds, but Zhu seeks damages based only on his alleged failure to receive the correct amount under the policy,” the opinion states.
The appeals court agreed with the trial court’s decision to dismiss violation of Insurance Code chapter 541 and violation of the DTPA.
“Zhu has not alleged that he sustained an independent injury as a result of First Community’s conduct that allegedly violated Insurance Code chapter 541 and the DTPA, and First Community established its entitlement to summary judgment on these claims,” the appeals court said.
In regards to Zhu’s allegations of violation of the Prompt Payment of Claims Act, the appeals court said First Community didn’t commit a violation when it issued a check to Zhu seven days after the appraisal award was signed.
“No provision of the policy required that First Community issue the check more promptly, and First Community’s tender of payment was timely,” the appeals court said.
In response to the breach of contract claim, First Community stated its argument in a letter to the appeals court. In the letter to the court filed May 30, 2017, First Community said Zhu should be stopped from making a breach of contract claim because he had accepted its payment of the appraisal award.
Since Zhu believed the appraisal panel incorrectly excluded some items in determining the amount of the loss, the appeals court said it was his responsibility to set aside the appraisal award.
“In the trial court, Zhu did not amend his petition to assert that the trial court should set aside the appraisal award or to plead one or more of the recognized grounds for setting aside the appraisal award,” the 14th Court of Appeals said. “Zhu did not assert that the Appraisal Panel lacked authority to make the appraisal award, or that the appraisal award resulted from fraud, accident, or mistake, or that the award failed to comply with the insurance policy’s requirements.”