Southeast Texas Record

Thursday, April 9, 2020

Trial court properly disregarded jury findings in Ike suit against State Farm, justices conclude

Attorneys & Judges

By David Yates | Feb 25, 2020

Insurance 04

HOUSTON – A Texas appellate court has concluded a trial court properly disregarded a jury’s findings in a Hurricane Ike lawsuit brought against State Farm Lloyds.

In September 2010, two years after Hurricane Ike made landfall, Candelario and Maria Fuentes filed suit against State Farm, alleging breach of contract, fraud and violations of the Texas Insurance Code.

For nearly six years now, the case has been up on appeal. The Texas Supreme Court recently remanded the case back to the 14th Court of Appeals.

On initial review, the 14th Court overruled State Farm’s issue challenging the trial court’s disregard of two jury findings, concluding the insurer failed to attack an independent ground supporting the judgment and waived briefing of the argument that breach of contract is a prerequisite to extra-contractual claims.

On Feb. 25, the 14th Court once again affirmed the lower court’s decision, court records show.

The case

Candelario and Maria Fuentes allege that water intrusion through their roof caused damage to the interior of their home – an allegation made for the first time when they filed suit, according to State Farm.

And though State Farm paid them to completely replace their roof and to repair or replace several other items, they allege that they were not adequately compensated – also an allegation made for the first time when they filed suit.

Following the hurricane, the plaintiffs’ property was inspected. The damages were estimated at $7,856.75, plus $350 for food loss.

State Farm maintains the plaintiffs understood that they were being compensated for exterior damage, including replacement of the roof.

The plaintiffs deposited both checks but declined to replace or repair their roof, court records show.

Even at the time of trial in 2013, the plaintiffs had still not replaced their roof.

In November 2010, two months after the suit was filed, the plaintiffs’ counsel, The Mostyn Law Firm, sent a letter demanding $230,000 in economic damages, $50,000 in mental anguish damages and $112,000 for attorney’s fees and expenses.

Court records show State Farm has paid Mostyn Law nearly three times more than what any other law firm has been paid on hurricane lawsuits.

Despite the demand, at trial the plaintiffs only claimed economic damages of $61,761.75 -- $18,000 of which were for unrepaired exterior damages, including the plaintiffs’ roof, and $240 for attorney’s fees.

In response to the demand letter, State Farm had pled the excessive demand defense. However, the trial court excluded all evidence and testimony regarding the demand letter, court records show.

On July 30, 2013, the trial court entered a directed verdict in State Farm’s favor on the personal property claims. On that same day, the jury returned its verdict, finding that both the plaintiffs and State Farm had failed to comply with the insurance policy, but that plaintiffs’ breach of the policy occurred first.

The jury awarded $18,818 as the difference between the amount paid by State Farm to the plaintiffs and the amount State Farm should have paid under their policy. The jury also awarded $27,000 in mental anguish damages, $7,527 in unfair competition damages, and $254,545 in attorney’s fees for representation through trial.

On Aug. 23, 2013, State Farm filed a motion to enter judgment, arguing that, given the jury’s finding that the plaintiffs materially breached the policy first, State Farm was entitled to judgment as a matter of law.

On Sept. 15, 2014 (13 months later) the trial court entered judgment in favor of the plaintiffs, stating that it was disregarding the jury’s answers without providing an explanation as to why.

On Oct. 15, 2014, State Farm filed a motion for new trial and remittitur, arguing that it was entitled to a new trial because no reasonable jury could have found that State Farm was liable for interior damage. State Farm also argued that it was entitled to remittitur or a new trial regarding attorney’s fees under the excessive demand doctrine.

Court records show State Farm’s motion was denied as a matter of law because the trial court did not act on it.

On appeal, State Farm argued the trial court erred in disregarding the jury’s findings in order to deny its motion for judgment and enter judgment for the plaintiffs.

State Farm further argued the trial court erred in denying its offer of evidence in support of its excessive demand defense and in denying its motion for new trial or remittitur.

Court records show that State Farm had made an offer of $70,000 following the demand letter, which the plaintiffs rejected.

The plaintiffs reply brief states that they are a primarily Spanish speakers and that when they returned home following Ike, they found a tree had fallen through the roof of over their master bedroom, causing water to pour into the bedroom.

The plaintiffs assert that the inspector’s notes make no mention of any interior inspection and deny that they “came to an understanding” with the inspector.

After the inspection, the inspector printed out an estimate of damages in English for the plaintiffs. The plaintiffs cannot read English and contend the inspector could have printed the document in Spanish but did not.

Neither the inspector nor State Farm ever provided the plaintiffs with a written explanation of the denial of their claim for interior damages, the plaintiffs’ brief states.

Because the 14th Court did not find any error in the trial court judgment mandating reversal, justices declined State Farm’s request to remand the case for new trial.

In addition to Mostyn Law, the plaintiffs are also represented by the Weller, Green, Toups & Terrell law firm in Beaumont.

The two firms are currently locked in litigation over past work they did together.

State Farm is represented by Melissa Lorber and Craig Enoch, attorneys for the Austin law firm Enoch Kever.

Appeals case No. 14-14-00824-CV

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