Insurer’s Motion for Summary Judgment Granted Due to Insured’s Failure to Provide Evidence of Bad Faith
The court granted the insurer's motion for summary judgment when the insured failed to raise a genuine issue of material fact as to whether he insurer acted in bad faith. Dillen v. QBE Ins. Corp. 2025 U.S. Dist. LEXIS 24742 (S.D. Texas Feb. 11, 2025).
The insureds were away from their home when their pipes froze and burst. The claim was reported to their insurer, QBE Insurance Corporation, the day they returned home. QBE inspected the property and issued a check for $24,412.97, representing the replacement cost value estimated by the field adjuster minus the deductible. The insureds submitted to QBE their own estimate totalling $62,200. QBE reinspected the property and prepared a supplemental estimate totalling $81,613.05. Based on this estimate QBE issued a check for $38,978.63, representing the new Replacement Cost Value of $81,613.05 minus $15,721.45 in depreciation and the prior $24,412.97 payment. Further inspections led to yet another patent by ABE in the amount of $34,249.02.
The insureds invoked the policy's appraisal provision. An appraisal award totalled $192,292.69 for the insureds. QBE then issued two new payments of $71,639.46 and $22,854.85. In total, QBE paid $192,292.69. The insureds conceded that QBE paid the amounts contractually owed.
Nevertheless, the insureds filed suit for statutory violations of bad faith and a breach of the common law duty of good faith. QBE filed a motion for summary judgment.
The court applied the independent-injury rule applicable in Texas. The rule stated that an insurer's statutory violation did not permit the insured to recover any damages beyond policy benefits unless the violation caused an injury that was independent from the loss of benefits. The insureds did not bring statutory claims to recover the policy benefits they were entitled to because they acknowledged that all policy benefits were paid. Instead, they sought damages in addition to the policy benefits for expenses that they alleged were caused by QBE's violation of the Texas Insurance Code.
The insureds failed to suggest how they were injured independent from their right to receive policy benefits, nor did they provide such evidence. The insureds claimed that QBE issued payments weeks after an inspection occurred. They also argued that their emails often went unresponded to. The insureds stated they were injured, including claims of mental anguish, because QBE improperly withheld payment of the claim. There was no evidence, however, of damages that did not flow or stem from the denial of policy benefits. Once the benefits were paid, Texas law held that the cause of action could no longer survive without a separate and independent injury. While the claim might be independent from any contractual dispute, the injury was not. Therefore, summary judgment was granted to QBE on the Texas Insurance Code claims.
Regarding the common law claims for bad faith, the insureds did not offer any evidence that QBE acted either in bad faith or unreasonably in the coverage of their claim. Instead, the insureds only showed evidence of a bona fide coverage dispute which, standing alone, did not demonstrate bad faith. Therefore, QBE's motion regarding a breach of its common law shut of good faith and fair dealing was also granted.
