Payment of Appraisal Award Defeats Claim of Bad Faith
Post 5163
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Hurricane Damage to Dwelling Established by Appraisal Award
In Homeowners Of America Insurance Company v. Emilio Menchaca, No. 01-23-00633-CV, Court of Appeals of Texas, First District (July 31, 2025) after a hurricane Homeowners of America Insurance Company (“HAIC”) estimated that the cost of covered repair to Menchaca’s house was $3,688.54, which was less than his deductible, and therefore no payment would be made.
FACTS
After Menchaca retained counsel HAIC advised that, under the terms of the policy, Menchaca was required to first invoke the appraisal process prior to filing suit, and that HAIC reserved the right to request that Menchaca and any adjuster hired on his behalf submit to an Examination Under Oath (“EUO”).
On August 23, 2018, Menchaca’s counsel sent a demand notice letter to HAIC stating that Menchaca had sustained $48,757.98 in economic damages based on an estimate prepared by Henry Sienema, Vice President of Case Strategies Group. The letter demanded that HAIC pay $48,757.98 in actual damages, $2,400 in attorney’s fees, and $2,000 in expenses, totaling $53,157.98, to resolve the matter without litigation.
HAIC Invoked the Appraisal Process
HAIC’s appraiser and the agreed umpire signed an appraisal award setting the amount of loss for Menchaca’s claim. On June 4, 2021, without admitting liability, HAIC issued a check to Menchaca in the amount of $7,085.86- the actual cash value of $13,145.86 assigned by the appraisers minus the $6,060 deductible under Menchaca’s policy.
Trial began and the jury returned a verdict for Menchaca. The trial court rendered final judgment on the jury’s verdict on May 31, 2023, ordering that Menchaca recover from HAIC $300,000 in mental anguish damages, $250,000 for his reasonable and necessary attorney’s fees, and $93,000 in pre- judgment interest. This appeal followed.
KEY POINTS OF CASE
- Initial Claim and Appraisal:
Menchaca’s initial claim was denied as the estimated repair cost was less than his deductible . Menchaca then demanded $48,757.98 in damages, leading HAIC to invoke the appraisal process .
- Legal Proceedings:
HAIC filed for declaratory judgment, questioning the qualifications of Menchaca’s appraiser and requesting an Examination Under Oath (EUO) from Menchaca . Menchaca counterclaimed, alleging violations of the Texas Insurance Code, fraud, breach of contract, and bad faith .
- Jury Verdict:
The jury found in favor of Menchaca, awarding him $300,000 in mental anguish damages, $250,000 in attorney’s fees, and $93,000 in pre-judgment interest .
- Appeal:
HAIC appealed, arguing that it had complied with its obligations under the policy by paying the appraisal award and that Menchaca’s mental anguish damages were not recoverable as an “independent injury”. The Court of Appeals agreed with HAIC, reversing the trial court’s judgment and ruling that Menchaca take nothing on his counterclaims.
DISCUSSION
The only actual damages Menchaca sought were lost policy benefits which HAIC paid when it paid the appraisal award. The only “actual damages” Menchach sought are the policy benefits wrongfully withheld, and those benefits have already been paid pursuant to the policy. The trial court erred in rendering judgment in favor of Menchaca on his contractual and extracontractual claims and awarding him $300,000 in mental anguish damages.
HAIC discharged its liability under the policy by paying the appraisal amount in full, along with statutory interest, and complied with its obligations under the policy. Because HAIC has paid the full appraisal award and any possible statutory interest, Menchaca cannot recover attorney’s fees and the trial court erred in awarding him such. The Court of Appeals also sustained HAIC’s claims that trial court’s May 31, 2023 final judgment was erroneous and rendered judgment that Menchaca take nothing on his counterclaims against HAIC.
ZALMA OPINION
It is axiomatic that an appraisal award sets the amount of loss in accordance with the terms and conditions of the contract of insurance. The jury was either improperly instructed or ignored the law when it was established that the insurer paid the full amount of the appraisal award in full with interest. An insurer that pays everything it owes under the terms of the policy cannot be held for tort and bad faith damages.
(c) 2025 Barry Zalma & ClaimSchool, Inc.
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Anti-Public Adjuster Clause Is Effective in New York
Post number 5301
Read the full article at https://www.linkedin.com/pulse/public-adjusters-attempt-represent-insured-subject-zalma-esq-cfe-rubfc, see the video at and at and at https://zalma.com/blog plus more than 5300 posts.
Insurers May Contractually Prevent an Insured from Hiring a Public Adjuster
In Peter Barbato & North Jersey Public Adjusters Inc. v. Interstate Fire & Casualty Company, et al, No. 25-cv-5312 (JGK), United States District Court, S.D. New York (December 15, 2025) the plaintiffs, Peter Barbato and North Jersey Public Adjusters, Inc. (“NJPA”), filed suit against several insurance companies, including Interstate Fire & Casualty Company, Independent Specialty Insurance Company, and certain Underwriters at Lloyd’s of London.
FACTS
NJPA is a New Jersey-based public adjusting firm licensed in New York. The dispute centers on ...
Anti-Public Adjuster Clause Is Effective in New York
Post number 5301
Read the full article at https://www.linkedin.com/pulse/public-adjusters-attempt-represent-insured-subject-zalma-esq-cfe-rubfc, see the video at and at and at https://zalma.com/blog plus more than 5300 posts.
Insurers May Contractually Prevent an Insured from Hiring a Public Adjuster
In Peter Barbato & North Jersey Public Adjusters Inc. v. Interstate Fire & Casualty Company, et al, No. 25-cv-5312 (JGK), United States District Court, S.D. New York (December 15, 2025) the plaintiffs, Peter Barbato and North Jersey Public Adjusters, Inc. (“NJPA”), filed suit against several insurance companies, including Interstate Fire & Casualty Company, Independent Specialty Insurance Company, and certain Underwriters at Lloyd’s of London.
FACTS
NJPA is a New Jersey-based public adjusting firm licensed in New York. The dispute centers on ...
Proof of Highly Contaminated Water is Required for Extra Payments
Post number 5300
Read the full article at https://www.linkedin.com/pulse/acting-your-own-lawyer-foolish-barry-zalma-esq-cfe-mbg0c, see the video at and at and at https://zalma.com/blog plus more than 5300 posts.
Acting as Your Own Lawyer is Foolish
Evidence of Breach of Contract Survives Dismissal of All Other Charges
In Lee Lifeng Hsu and Jane Yuchen Hsu v. State Farm Fire And Casualty Company, C. A. No. N24C-09-020 CLS, Superior Court of Delaware (February 27, 2026) a claim to State Farm who paid approximately $61,000 after assessments but denied coverage for additional items including ceramic tiles, the kitchen floor ceiling, underlayment plywood, and numerous personal property items resulted in suit by the Hsu’s acting in pro per.
Facts
Lee Lifeng Hsu and Jane Yuchen Hsu (“Plaintiffs”) purchased a homeowners’ insurance policy from State Farm Fire...
Insurance Condition Requires Following the Intent of the Parties
Post number 5307
Principles of Contract Interpretation Compels Reading Contract as Written
Read the full article at https://www.linkedin.com/pulse/portable-storage-containers-buildings-barry-zalma-esq-cfe-fkg1c and at https://zalma.com/blog.
In Eastside Floor Supplies, Ltd. v. SCS Agency, Inc., Hanover Insurance Company, et al., No. 2024-01501, Index No. 609883/19, 2026 NY Slip Op 01488, Supreme Court of New York, Second Department (March 18, 2026)
In May 2019, a fire damaged business personal property belonging to the plaintiffs, which was stored in portable storage containers at their Manhattan premises. At the time of the fire, the plaintiffs were insured under a businessowners insurance policy (BOP) issued by the defendant Hanover Insurance Company which provided general coverage for business personal property, and which included a specific extension for “Business Personal Property Temporarily in Portable Storage Units” (the portable storage ...
ERISA Saves Fraudulent Claims Suit
Post number 5306
Read the full article at https://www.linkedin.com/pulse/failure-provide-well-pled-facts-defeats-most-action-zalma-esq-cfe-b4zuc and at https://zalma.com/blog plus more than 5300 posts.
Allegations of Fraudulent Insurance Billing Must be Pleaded with Specificity
In Genesis Laboratory Management LLC v. United Healthcare Services, Inc. and Oxford Health Plans, Inc., No. 21cv12057 (EP) (JSA), United States District Court, D. New Jersey (March 13, 2026) Genesis Laboratory Management LLC (“Genesis”), a New Jersey-based molecular diagnostic and anatomic pathology laboratory, provided COVID-19 related testing services and submitted claims for reimbursement as an out-of-network provider to United Healthcare Services, Inc. (“United”) and Oxford Health Insurance, Inc. (“Oxford”). Metropolitan Healthcare Billing, LLC (“Metropolitan”), owned by the same individual as Genesis, handled the billing for Genesis.
FACTUAL BACKGROUND
United and Oxford, who administer both ERISA and ...
ERISA Saves Fraudulent Claims Suit
Post number 5306
Read the full article at https://www.linkedin.com/pulse/failure-provide-well-pled-facts-defeats-most-action-zalma-esq-cfe-b4zuc and at https://zalma.com/blog plus more than 5300 posts.
Allegations of Fraudulent Insurance Billing Must be Pleaded with Specificity
In Genesis Laboratory Management LLC v. United Healthcare Services, Inc. and Oxford Health Plans, Inc., No. 21cv12057 (EP) (JSA), United States District Court, D. New Jersey (March 13, 2026) Genesis Laboratory Management LLC (“Genesis”), a New Jersey-based molecular diagnostic and anatomic pathology laboratory, provided COVID-19 related testing services and submitted claims for reimbursement as an out-of-network provider to United Healthcare Services, Inc. (“United”) and Oxford Health Insurance, Inc. (“Oxford”). Metropolitan Healthcare Billing, LLC (“Metropolitan”), owned by the same individual as Genesis, handled the billing for Genesis.
FACTUAL BACKGROUND
United and Oxford, who administer both ERISA and ...
