Bass

UNITED STATES DISTRICT COURT August 04, 2026

SOUTHERN DISTRICT OF TEXAS Nathan Ochsner, Clerk

HOUSTON DIVISION

RYAN BASS AND CHRIS ANNA BASS, §

Plaintiffs, §

§

v. § CIVIL ACTION NO. 4:23-CV-1277

§

AMERICAN ECONOMY INSURANCE CO. §

D/B/A SAFECO INSURANCE, §

Defendant. §

MEMORANDUM AND RECOMMENDATION

This insurance dispute involving property damage from Winter Storm Uri in

February 2021 is before the Court on Defendant’s Motion for Summary Judgment.1

ECF 83. Having considered the parties’ submissions and the law, the Court

recommends that Defendant’s Motion be GRANTED.2

I. Background

Plaintiffs are the insureds under homeowner’s insurance policy Number

OY8333123 issued by Defendant and effective February 10, 2021 to February 10,

2022 (Policy). ECF 62-4. Plaintiffs made a claim under the Policy on or about

February 23, 2021 for damage caused by burst pipes. ECF 1-4, ¶¶ 8-9. In their

1 The District Judge referred this case to the undersigned Magistrate Judge pursuant to 28 U.S.C.

§ 636(b)(1)(A) and (B), the Cost and Delay Reduction Plan under the Civil Justice Reform Act,

and Federal Rule of Civil Procedure 72. ECF 10.

2 Plaintiff’s Amended Motion for Partial Summary Judgment (ECF 68) is addressed in a separate

Memorandum and Recommendation.

lawsuit, Plaintiffs complain of Defendant’s conduct during the investigation, claim

handling, and repair process during the eighteen-month period following the initial

claim. Id. ¶¶ 10-50. Between March 2021 and July 2022 Defendant made several

payments to Plaintiffs totaling less than Plaintiffs claim they are due. Id. ¶¶ 44, 51;

ECF 62-7. On August 16, 2022, Defendant’s representative informed Plaintiffs that

it would not make any further payments because Plaintiffs had failed to provide an

itemized breakdown of their damages. ECF 1-4 ¶¶ 51-52. Plaintiffs’ attorney sent

Defendant a pre-suit demand letter on September 27, 2022, along with a statement

of Plaintiffs’ claimed losses. Id. ¶¶ 53-54.

Like “virtually every property insurance policy,”3 the Policy contains a

provision allowing either party to demand appraisal. ECF 62-4 at 71 (Special

Provisions—Texas Policy Endorsement § 1 ¶ 7). About a year and a half after

receiving the demand letter on September 29, 2022, Plaintiffs filed their initial claim,

and Defendant invoked the appraisal clause under the Policy. ECF 62-48. Prior to

invoking appraisal, Defendant had paid Plaintiffs $40,659.98. ECF 64.

Plaintiffs filed suit in Texas State Court on February 13, 2023, asserting

claims for breach of contract, breach of the duty of good faith and fair dealing, and

Texas Insurance Code violations. ECF 1-4. Defendant removed the case to federal

court on the basis of diversity jurisdiction. ECF 1 at 3. On November 21, 2023, the

3 State Farm Lloyds v. Johnson, 290 S.W.3d 886, 888 (Tex. 2009).

Court granted Defendant’s Motion to Abate discovery until completion of the

appraisal process. ECF 16. The appraisers ultimately issued a Final Appraisal

Award on June 29, 2024, as amended on July 18, 2024, establishing the total

Replacement Cost Value (RCV) of Plaintiffs’ loss as $110,956.66, and the Actual

Cost Value (RCV less depreciation) of Plaintiffs’ loss as $102,025.70. ECF 62-49.

Defendant made three payments on the Appraisal award totaling $63,369.29, for

total claim payments to Plaintiffs of $104,029.27. ECF 64. After accounting for the

$2,406.00 deductible, the total unpaid portion of the appraisal award for RCV is

$4,521.39, about half of the amount of depreciation accounted for in the ACV award.

Id. The Court lifted the stay on September 19, 2024. ECF 40. The parties engaged

in some limited discovery and Defendant filed the instant Motion for Summary

Judgment on May 6, 2026. ECF 83.

II. Legal Standards

A. Summary Judgment Standards

Summary judgment is appropriate if no genuine issues of material fact exist,

and the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P.

56(a). The party moving for summary judgment has the initial burden to prove there

are no genuine issues of material fact for trial. Provident Life & Accident Ins. Co.

v. Goel, 274 F.3d 984, 991 (5th Cir. 2001). Dispute about a material fact is

“genuine” if the evidence could lead a reasonable jury to find for the nonmoving

party. Hyatt v. Thomas, 843 F.3d 172, 177 (5th Cir. 2016). “An issue is material if

its resolution could affect the outcome of the action.” Terrebonne Parish Sch. Bd.

v. Columbia Gulf Transmission Co., 290 F.3d 303, 310 (5th Cir. 2002). If the

moving party meets its initial burden, the nonmoving party must go beyond the

pleadings and must present evidence such as affidavits, depositions, answers to

interrogatories, and admissions on file to show “specific facts showing that there is

a genuine issue for trial.” Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986).

The Court construes the evidence in the light most favorable to the nonmoving

party and draws all reasonable inferences in that party’s favor. R.L. Inv. Prop., LLC

v. Hamm, 715 F.3d 145, 149 (5th Cir. 2013). In ruling on a motion for summary

judgment the Court does not “weigh evidence, assess credibility, or determine the

most reasonable inference to be drawn from the evidence.” Honore v. Douglas, 833

F.2d 565, 567 (5th Cir. 1987). However, “[c]onclus[ory] allegations and denials,

speculation, improbable inferences, unsubstantiated assertions, and legalistic

argumentation do not adequately substitute for specific facts showing a genuine

issue for trial.” U.S. ex rel. Farmer v. City of Houston, 523 F.3d 333, 337 (5th Cir.

2008) (citation omitted).

B. Texas Prompt Payment of Claims Act

The Texas Prompt Payment of Claims Act (TPPCA) “imposes procedural

requirements and deadlines on insurance companies to promote the prompt payment

of insurance claims,” and “also contains specific requirements and deadlines for

responding to, investigating, and evaluating insurance claims.” Barbara Techs.

Corp. v. State Farm Lloyds, 589 S.W.3d 806, 812 (Tex. 2019). To succeed on a claim

for violation of the TPPCA a plaintiff must prove: 1) a claim under an insurance

policy; 2) the insurer is liable for the claim; and 3) the insurer has failed to follow

one or more sections of the TPPCA with respect to the claim. Id.; Urb. Oaks Builders

LLC v. Gemini Ins. Co., No. 4:19-CV-4211, 2020 WL 7064791, at *8 (S.D. Tex. Dec.

2, 2020) (citations omitted), report and recommendation adopted, No. 4:19-CV-

4211, 2021 WL 517036 (S.D. Tex. Feb. 11, 2021).

The second element of a TPPCA claim, Plaintiffs must show the insurer

“accepts liability or is adjudicated liable under the policy.” Lakeside FBBC, LP v.

Everest Indem. Ins. Co., No. SA-17-CV-491-XR, 2020 WL 1814405, at *11 (W.D.

Tex. Apr. 8, 2020) (emphasis added). “Nowhere does the TPPCA mention appraisals

or how invocation of an appraisal process affects the TPPCA's deadlines and

requirements.” Barbara Techs. Corp., 589 S.W.3d at 814.

C. Legal Effect of Full Payment of an Appraisal Award

State and federal courts in Texas generally agree that full payment of an

appraisal award eliminates both an insured’s claim for breach of the insurance

contract and extracontractual claims under the prompt payment and unfair settlement

practices provisions of the Texas Insurance Code, the Texas Deceptive Trade

Practices Act, and common law bad faith claims. National Sec. Fire &Cas. Co. v.

Hurst, 523 S.W.3d 840, 845-48 (Tex. App.—Houston [14th Dist.] 2017, pet. denied);

Rios v. Homesite Ins. Co., No. 5:23-CV-00006, 2024 WL 4984446, at *5 (S.D. Tex.

Sept. 26, 2024). For example, in Hurst, the Texas Court of Appeals reversed and

remanded a jury verdict in a case in which the insurance company had paid the full

appraisal award (less amounts already paid) within thirty days of the award. The

plaintiff had not moved to set aside the award and plaintiff’s breach of contract and

extracontractual claims were tried to a jury after which the court entered an award

in plaintiff’s favor. In reversing and remanding the trial court’s judgment, the Texas

appellate court wrote that “Hurst has received the benefits to which he was entitled

under the policy and had not alleged any act so extreme as to cause independent

injury.” Hurst, 523 S.W. 2d at 848.

The following year the Texas Supreme Court in USAA Texas Lloyds Co. v.

Menchaca, 545 S.W.3d 479, 488 (Tex. 2018) took the “opportunity to provide clarity

regarding the relationship between claims for an insurance-policy breach and

Insurance Code violations.” In Menchaca, which did not involve the appraisal

process, the Supreme Court held that unless the insured had a contractual right to

benefits under the insurance policy, as a general rule it cannot “recover policy

benefits as ‘actual damages’” caused by an insurer’s statutory violation. Id. at 489.

The Supreme Court set forth in Menchaca “five distinct but interrelated rules that

govern the relationship between contractual and extra-contractual claims in the

insurance context.” Id. Briefly, the rules are as follows:

(1) The General Rule: “an insured cannot recover policy benefits as damages

for an insurer’s statutory violation unless the insured has a right to those

benefits under the policy;”

(2) The Entitled-to-Benefits Rule: an insured who has a right to benefits under

the policy can recover benefits as actual damages “if the insurer’s statutory

violation causes the loss of benefits;”

(3) The Benefits-Lost Rule: an insured who does not have a contractual right to

policy benefits can recover benefits as actual damages “if the insurer’s

statutory violation caused the insured to lose that contractual right;”

(4) The Independent-Injury Rule: an insured who does not have a contractual

right to policy benefits may recover actual damages “if an insurer’s statutory

violation causes an injury independent of the loss of policy benefits;” and

(5) The No-Recovery Rule: an insured cannot recover any damages for an

insurer’s statutory violation if (i) the insured does not have a contractual right

to policy benefits and (ii) the insured did not sustain an “injury independent

of a right to benefits.”

Id. at 489-501. When preserving an insured’s right to recover actual damages for an

independent injury, the Texas Supreme Court noted that such injuries would be rare

and refused “to speculate what would constitute a recoverable independent injury.”

Id. at 500.

In Ortiz v. State Farm Lloyds, 589 S.W.3d 127, 131-133 (Tex. 2019), a case

which involved an appraisal award that had been paid in full, the Texas Supreme

Court reaffirmed the Independent-Injury Rule established by Menchaca. Ortiz

argued the insurer breached the policy because the appraisal award was higher than

the amount the insurer had offered. Id. The Texas Supreme Court rejected that

claim, noting that Texas Appellate Courts “have unanimously rejected [Ortiz’s]

argument and held that an insurer’s payment of an appraisal award in the face of

similar allegations of pre-appraisal underpayment forecloses liability on a breach of

contract claim.” Id. With respect to Ortiz’s bad faith claims, State Farm argued that

after payment of the appraisal award Ortiz had received all the benefits to which he

was entitled under the Policy and had failed to present evidence of an independent

injury as required by Menchaca for the recovery of damages for breach. Id. at 133.

Ortiz argued he was entitled to recover fees and expenses incurred as a result of State

Farm’s unreasonable investigation of his claim. Id. at 134. The Court concluded

that: Ortiz’s fees and expenses were not “actual damages;” Ortiz’s only actual

damages were policy benefits; and Oritz could not maintain a statutory or common

law bad faith claim after payment of the appraisal award. Id. at 135. The Court

remanded Ortiz’s TPPCA claim for further consideration in light of its opinion issued

the same day in Barbara Techs. Corp. v. State Farm Lloyds, 589 S.W.3d 806 (2019).

Id. at 136.

Barbara Techs. addressed whether an insured can prevail on a TPPCA claim

for damages after an insurer has paid an appraisal award. 589 S.W.3d at 809. After

conducting two inspections, State Farm denied Barbara Techs.’s claim under the

policy, stating the damage sustained was less than the policy deductible. Id. Barbara

Techs. sued, asserting a TPPCA and other claims. State Farm invoked the policy’s

appraisal provision and paid the appraisal award less the depreciation and deductible

within a few days of the appraisal award. Id. at 810. Barbara Techs. amended its

Petition to seek only statutory damages under the TPPCA. Id.

The Barbara Techs. Court disapproved of other decisions by Texas courts

holding that “full and timely payment of an appraisal award precludes an insured

from recovering damages under the TPPCA as a matter of law.” Id. at 818 (citations

omitted). The Court noted that “[n]othing in the TPPCA would excuse an insurer

from liability for TPPCA damages if it was liable under the terms of the policy but

delayed payment beyond the applicable statutory deadline, regardless of use of the

appraisal process.” Id. at 819. According to the Texas Supreme Court, “[u]nder the

TPPCA, use of the appraisal process to resolve a dispute has no bearing on any

deadlines or enforcing any missed deadlines.” Id. at 817-18. However, damages

under section 542.060 of the TPPCA are not available absent an acknowledgment or

finding of the insurer’s liability and, significantly, “payment in accordance with an

appraisal is neither an acknowledgment of liability nor a determination of liability

under the policy for purposes of TPPCA damages under section 542.060.” Id. at

820. Considering these legal principals together—that appraisal does not toll

TPPCA deadlines and that TPPCA damages require a determination of liability—the

Supreme Court held that “payment of the appraisal value neither established liability

under the policy nor foreclosed TPPCA damages under section 542.060.” Id. at 823.

In sum, the Texas Supreme Court held that “neither State Farm’s invocation of the

policy’s appraisal process for resolution of a dispute as to the amount of loss, nor

State Farm’s payment based on the appraisal amount, exempts State Farm from

TPPCA damages as a matter of law.” Id. at 829.

More recently, the Texas Supreme Court addressed the recovery of attorney

fees on a TPPCA claim after payment of an appraisal award. In Rodriguez v. Safeco

Ins. Co. of Indiana, 684 S.W.3d 789, 790 (Tex. 2024), the Fifth Circuit certified the

following question to the Texas Supreme Court:

In an action under Chapter 542A of the Texas Prompt Payment of

Claims Act, does an insurer's payment of the full appraisal award plus

any possible statutory interest preclude recovery of attorney's fees?

Id. The Texas Supreme Court answered “yes.” Id. The Court based its decision on

a strict interpretation of the express language of section 542A.007 of the Texas

Insurance Code, which sets forth a formula for the calculation of attorney fees. The

Court reasoned that the statute allows fees only when the insured secures a judgment

on a claim under the policy. Id. at 793. (emphasis added). The Rodriguez court

recognized that an insurer who pays an appraisal award still may be subject to a

judgment on claims other than a claim under the policy but held that section

542A.007 does not permit recovery of attorney fees on such other claims. Id. at 794

(citing Barbara Techs., 589 S.W.3d at 827 and Ortiz, 589 S.W.3d at 132-33).

Multiple federal courts applying Texas law have addressed similar issues

since the Texas Supreme Court’s decisions in Menchaca, Ortiz, and Barbara Techs.

For example, in Mirelez v. State Farm Lloyds, 127 F.4th 949, 950 (5th Cir. 2025),

after the invocation of appraisal and issuance of the award, the parties continued to

dispute the amount owed. Mirelez filed suit and State Farm “tendered the actual

cash value amount as provided in the appraisal award, minus the deductible and the

prior payment issued to Mirelez, plus what State Farm calculated as the maximum

amount of accrued interest.” Id. As a result, “Mirelez conceded that summary

judgment was appropriate on his breach of contract and TPPCA claims.” Id.

Mirelez’s concession was reasonable because both the Fifth Circuit and district

courts within the Fifth Circuit uniformly hold that payment of an appraisal award

precludes an insurer’s right to recovery on a breach of contract claim. See, e.g.,

Martinez v. State Farm Lloyds, No. 4:23-CV-00641, 2024 WL 1348439, at *3-4

(S.D. Tex. Mar. 29, 2024); Rios v. Homesite Ins. Co., No. 5:23-CV-00006, 2024

WL 4984446, at *5 (S.D. Tex. Sept. 26, 2024); Dijkman v. AmGuard Ins. Co., No.

4:23-CV-01430, 2024 WL 4520130, at *2 (S.D. Tex. Oct. 17, 2024); Peterson v.

Safeco Ins. Co. of Indiana, No. 3:21-CV-02186-K, 2024 WL 3378393, at *3 (N.D.

Tex. July 11, 2024); Vernon v. State Farm Lloyds, No. 3:23-CV-2142-E, 2025 WL

3635577, at *6 (N.D. Tex. Oct. 29, 2025), report and recommendation adopted, No.

3:23-CV-2142-E, 2025 WL 3634191 (N.D. Tex. Dec. 12, 2025).

Likewise, post-Barbara Techs. federal courts in the Fifth Circuit have held

that TPPCA claims are barred when the insurer has paid statutory interest in

connection with the appraisal award. See Martinez v. State Farm Lloyds, No. 4:23-

CV-00641, 2024 WL 1348439, at *5 (S.D. Tex. Mar. 29, 2024) (stating that “many

Texas and federal courts who have addressed this issue have concluded that

summary judgment is appropriate on a Plaintiff's TPPCA claim where a plaintiff has

failed to offer any summary judgment evidence demonstrating that they would be

entitled to any greater amount of interest than what was paid by the insurer.”).

The Fifth Circuit, like the Texas Supreme Court, has held that extra-

contractual bad faith claims are not barred as a matter of law by payment of an

appraisal award; however, the recovery of damages requires proof of an independent

injury. Mirelez v. State Farm Lloyds, 127 F.4th 949, 952 (5th Cir. 2025) (affirming

summary judgment because plaintiff’s only actual damages were compensation for

the value of the claimed property loss, which do not constitute “an independent loss,

like those contemplated by the Texas Supreme Court in Ortiz.”). The Fifth Circuit

addressed and affirmed this holding in Mirelez multiple times in 2025. See Senechal

v. Allstate Vehicle & Prop. Ins. Co., 127 F.4th 976, 979 (5th Cir. 2025) (quoting

Mirelez and affirming dismissal due to lack of evidence of independent injury); First

Baptist Church Daisetta Texas v. Church Mut. Ins. Co., No. 24-40594, 2025 WL

893797, at *2 (5th Cir. Mar. 24, 2025) (affirming dismissal of extra-contractual

claims because plaintiff did not have “evidence supporting an independent injury

caused by alleged violations of Chapter 541 of the Insurance Code or an alleged

breach of duty owed”); Guiles v. GeoVera Advantage Ins. Servs., Inc., No. 24-40411,

2025 WL 893755, at *1 (5th Cir. Mar. 24, 2025) (affirming dismissal of claims

because that did not assert an independent injury); Wilhite v. Ark Royal Ins. Co., No.

24-20401, 2025 WL 2588992, at *5 (5th Cir. Sept. 8, 2025) (holding “[a]n insured

cannot maintain tort claims against his insurer if he has received his full appraisal

award absent evidence of an independent injury”); Frederich v. Trisura Specialty

Ins. Co., No. 24-40748, 2025 WL 2840272, at *2 (5th Cir. Oct. 7, 2025) (same as

Wilhite); Dillen v. QBE Ins. Corp., No. 25-20070, 2025 WL 2978442, at *1 (5th Cir.

Oct. 22, 2025) (same as Wilhite).

The cases discussed above establish that breach of contract and TPPCA claims

cannot survive summary judgment if the insurer has paid an appraisal award in full

including all statutory interest. Binding precedents also establish that, after payment

of an appraisal award, a plaintiff must present evidence of an independent injury to

survive summary judgment on extra-contractual bad faith claims. Neither Texas

courts nor federal courts applying Texas law have clearly delineated what constitutes

an “independent” injury. Most courts hold that neither mental anguish nor increased

market costs of repairs since the date of an appraisal award constitute an independent

injury which could support an extra-contractual bad faith claim. See Vernon, 2025

WL 3635577, at *9 (citing cases). Indeed, of all the cases cited above and reviewed

by the Court, only Vernon held that bad faith claims survived the defendant’s motion

for summary judgment. The Plaintiff in Vernon presented evidence of additional

damage to her home that resulted from the insurer’s delay in paying benefits. Id. at

*8. In denying the insurer’s motion for summary judgment on Plaintiff’s bad faith

claims, the Vernon court cited the Texas Supreme Court’s observation in Ortiz that

additional property damages resulting from the insurer’s delay could qualify as

actual damages independent of the loss of policy benefits, damages which were

absent in Mirelez and other cases. Id.

Having set out the relevant law, the Court now turns to Defendant’s Motion for

Summary Judgment, which has been fully briefed and is ripe for determination. ECF

83; ECF 89; ECF 91.

III. Analysis

Defendant’s move for summary judgment on all of Plaintiff’s claims.

Plaintiffs do not seek to overturn the appraisal award but argue that Defendant should

be forced to pay the outstanding $4,521.39 portion of the Appraisal Award, and also

that Plaintiffs may pursue all of their claims despite Defendant’s payment of 96% of

the Appraisal Award. The Court addresses each claim in turn.

A. Defendant is entitled to summary judgment on Plaintiff’s breach of

contract claim.

The Policy incorporates TPPCA deadlines and Plaintiffs argue that Defendant

breached the Policy by not timely paying the claim, entitling them to consequential

damages. ECF 68 at 12-18. Plaintiffs further contend that because Barbara Techs.

holds that appraisal does not toll the deadlines under TPPCA, Defendant’s liability

for breach the contract is not extinguished by payment of the appraisal award. Id.

In addition, Plaintiffs contend that their breach of contract claim is not foreclosed

because Defendant has not paid $4,521.38, an amount they categorize as living

expenses and $8,379.36 for borrowing costs on a Frost Bank loan obtained to make

repairs pending payment of insurance benefits. Id. at 18-22. Plaintiffs’ breach of

contract theory clearly attempts to bypass the holding of Ortiz and its progeny.

The holding in Ortiz mandates that Defendant’s payment of the appraisal

amount extinguished Plaintiffs’ breach of contract claim. Plaintiffs argue that

Defendant breached the contract by initially paying less than the amount determined

in the appraisal process. As the Texas Supreme Court held in Ortiz, when parties

contractually agree to an appraisal procedure for determining the amount of the

insured’s loss, and the insurer pays the binding appraisal award, the insurer has

complied with its obligations “under the policy.” 589 S.W.3d at 133. “It simply

does not follow that an appraisal award demonstrates that an insurer breached [the

policy] by failing to pay the covered loss.” Id. at 132-133. Plaintiffs’ claim for

breach of contract is a claim “under the policy,” and is therefore barred by

Defendant’s payment of the appraisal award.

Defendant declined to pay $4,521.38 of the appraisal award, an amount

reflecting the percentage of Plaintiffs’ mortgage payments that corresponds to the

percentage of their home that was rendered unusable by the broken pipe. ECF 89 at

19-20. While mortgage payments are not a covered expense under the Policy,

Plaintiff contends this sum constitutes living expenses which are covered by the

Policy. Id. Plaintiff bears the burden to prove a particular loss is covered by the

policy. See Century Sur. Co. v. Hardscape Const. Specialties Inc., 578 F.3d 262, 265

(5th Cir. 2009) (holding that Texas law “places the burden of establishing coverage

upon the insured”). The appraisal award includes this sum, expressly identified as

mortgage payments, in the $29,614.82 amount awarded for loss of use. ECF 62-49

at 28. However, an appraisal determines only the amount of loss, not whether that

loss is covered. See Castandea v. Maxum Indem. Co., No. 7:24-CV-00071, 2025

WL 3050185, at *3 (S.D. Tex. July 30, 2025) (explaining that no matter what the

appraisers say, the terms of the policy govern coverage).

Plaintiffs fail to cite any provision of the Policy that affords coverage for the

claimed loss of $4,521.38, which reflects a percentage of their mortgage payments.

ECF 62-49 at 28. Plaintiffs’ Policy expressly covers only “additional living

expenses,” not all living expenses. ECF 11-3 at 50. Plaintiffs have presented no

evidence showing the $4,521.38 reflects increased living expenses. A Northern

District of Texas court rejected a similar argument in McDonald v. State Farm

Lloyds, No. 3:00-CV-1829-R, 2001 WL 406379, at *2 (N.D. Tex. Apr. 17, 2001)

holding:

The Loss of Use provision is perfectly clear regarding what constitutes

an additional expense: it states that an additional expense is an ‘increase

in living expense.’ The Plaintiffs have failed to proffer any evidence or

legal argument to demonstrate how their inability to use their entire

home caused an increase in living expenses in the amount of the fair

rental value of their home.

(internal citation omitted). Plaintiffs have failed to meet their burden to demonstrate

a genuine issue of material fact as to whether the claimed $4,521.38 is a covered loss

under the Policy. Therefore, Defendant is entitled to summary judgment on

Plaintiff’s breach of contract claim.

B. Defendant is entitled to summary judgment on Plaintiff’s TPPCA

claim.

Payment of an appraisal award does not, as a matter of law, bar a claim under

the TPPCA. Barbara Techs., 589 S.W.3d at 819 (“Nothing in the TPPCA would

excuse an insurer from liability for TPPCA damages if it was liable under the terms

of the policy but delayed payment beyond the applicable statutory deadline,

regardless of use of the appraisal process.”). However, a TPPCA claim does not

always survive after an appraisal award has been paid.

In Barbara Techs., the insurer paid the amount of the appraisal award, less

depreciation and the deductible, six days after receiving the appraisal award. Id. at

815. Notably, nothing in the Barbara Techs. opinion indicates the insurer paid

interest on the appraisal award in fulfillment of its TPPCA obligations. Here,

Defendant paid, as TPPCA damages, the statutory interest on the appraisal award

which amounted to $26,836.90. ECF 71 at 8; ECF 35-2. Defendant’s payment of

statutory interest forecloses a claim under the TPPCA. See, e.g., Martinez, 2024 WL

1348439, at *5; Vernon, 2025 WL 3635577, at *6. Therefore, Defendant is entitled

to summary judgment on Plaintiff’s TPPCA claim.

C. Defendant is entitled to summary judgment on Plaintiffs’

extracontractual claims because Plaintiffs have no independent injury.

Defendant seeks summary judgment on all extra-contractual claims, arguing

Plaintiffs cannot demonstrate an independent injury. ECF 83 at 19-23. Having

recommended dismissal of Plaintiffs’ breach of contract action, the Court also

recommends dismissal of Plaintiffs’ extracontractual claims in accordance with the

holdings in Menchaca, Ortiz, and their progeny. See Roeder v. Allstate Vehicle &

Prop. Ins. Co., No. CV H:22-4275, 2023 WL 5985240, at *4 (S.D. Tex. Sept. 14,

2023) (dismissing plaintiff’s bad faith claims because they presented no evidence of

an independent injury).

Other plaintiffs have argued “they are not required to show an injury

independent from their denied benefits in order to recover statutory damages for [the

insurer’s] alleged bad faith actions.” Navarra v. State Farm Lloyds, No. 23-20582,

2024 WL 3174505, at *2 (5th Cir. June 25, 2024). The Fifth Circuit rejected the

plaintiff’s argument in Navarra, citing Ortiz. Id. The Fifth Circuit distinguished

that case from Lyda Swinerton Builders, Inc. v. Oklahoma Surety Co., 903 F.3d 435

(5th Cir. 2018) because in Lyda “the insured was seeking damages for unpaid defense

costs owed under the policy,” whereas plaintiffs in Navarra sought “damages for

paid policy benefits that State Farm previously provided pursuant to the appraisal

award.”

Because Plaintiffs have not submitted evidence of an independent injury

separate from policy benefits and TPPCA damages, which Defendant has paid under

the Appraisal Award, Defendant is entitled to summary judgment on Plaintiffs’

extracontractual claims.

D. Defendant is entitled to summary judgment on Plaintiffs’ claim for

prejudgment interest.

Plaintiffs argue the payment of the appraisal award plus interest does not fully

satisfy Defendant’s TPPCA or breach of contract liability because Defendant failed

to calculate prejudgment interest using the “declining principal” formula, resulting

in approximately $3,500.00 in unpaid interest. ECF 68 at 21-26. Plaintiffs’

argument relies primarily on State Farm Mut. Auto. Ins. Co. v. Norris, 216 S.W.3d

819, 821–22 (Tex. 2006) and GuideOne Lloyds Ins. Co. v. First Baptist Church of

Bedford, 268 S.W.3d 822, 829 (Tex. App. 2008). Neither case supports their cause.

In Norris, the Texas Supreme Court held the “declining principal” formula

applies to calculation of prejudgment interest in an uninsured motorist case. When

calculating interest using this formula, the court “considers the date on which the

insured received each payment.” 216 S.W.3d 819, 821–22. The problem with

Plaintiffs’ argument is that in this case no judgment exists and therefore Plaintiffs

are not entitled to prejudgment interest. See Norris, 216 S.W.3d at 821–22 (stating

“[t]he purpose of prejudgment interest is to compensate a claimant for the lost use

of money due as damages during the lapse of time between the accrual of the claim

and the date of the judgment” (emphasis added)); see also Cortinas v. Liberty Mut.

Pers. Ins. Co., No. SA-22-CV-544-OLG (HJB), 2025 WL 233589, at *6 (W.D. Tex.

Jan. 13, 2025), report and recommendation adopted, No. SA-22-CV-00544-OLG-

HJB, 2025 WL 1062093 (W.D. Tex. Apr. 8, 2025) (explaining that under the

“declining principal rule,” “[a] settlement payment should be credited first to

accrued prejudgment interest as of the date the settlement payment was made, then

to ‘principal,’” and holding that “[t]he problem with Plaintiffs' argument is that it is

only a ‘judgment’ that ‘earns prejudgment interest’”)

Similarly, GuideOne Lloyds Ins. Co. v. First Baptist Church of Bedford, 268

S.W.3d 822, 829 (Tex. App. 2008), involved the calculation of interest on damages

awarded in a judgment and did not involve an appraisal award. In GuideOne, the

trial court issued a judgment after a jury verdict awarding the insured actual

damages, penalty interest under Article 21.55 of the Insurance Code (recodified as

the TTPCA), prejudgment interest, attorney’s fees, and post-judgment interest. Id.

Under § 21.55, the “claim” on which the penalty interest was to be calculated was

the amount ultimately determined to be owed, less any partial payments. Id. at 831.

The trial court calculated the interest penalty on the entire damages award running

from the accrual date of the claim through the date of judgment. Id. at 831.

Reversing, the appellate court held that the proper calculation of the interest penalty

required the court to: (1) determine the amount of regular prejudgment interest that

accrued on the insured’s breach of contract damages as of the date the insurer made

an unconditional tender of $155,000; (2) apply the $155,000 tender first to the

amount of prejudgment interest that had accrued as of the tender date as calculated

in step (1); (3) apply the remaining amount of the tendered funds to reduce the total

damages award; and (4) apply the 18% penalty to the resulting reduced damages

amount. Id. at 833. Thus, the trial court’s interest award was reduced to include

only penalty interest on the difference between the amount ultimately owed and the

amount unconditionally tendered by the insurer. Id. at 831.

In this case, Defendant paid the appraisal award, including statutory interest

on the total appraisal award, less partial payments, for the entire period from April

6, 2021 through the date of payment of the appraisal award. Plaintiffs have not

obtained a judgment for breach of contract or TPPCA damages and are not entitled

to prejudgment interest, regardless of how it is calculated. Kahlig Enters., Inc. v.

Affiliated FM Ins. Co., No. 23-50144, 2024 WL 1554067, at *1 (5th Cir. Apr. 10,

2024) (affirming the district court’s holding that absent a judgment against the

insurer “neither prejudgment interest nor attorney's fees were available”). Defendant

is entitled to summary judgment on Plaintiffs’ claim for prejudgment interest.

E. Defendant is entitled to summary judgment on Plaintiff’s claim for

attorney’s fees.

Plaintiffs also seek an award of attorney’s fees pursuant to Texas Insurance

Code §542.007. Plaintiffs attempt to distinguish their case from Rodriguez v. Safeco

Ins. Co. of Indiana, 684 S.W.3d 789, 790 (Tex. 2024) because the insured in

Rodriguez conceded that payment of the appraisal award extinguished his breach of

contract and Insurance Code violation claims. ECF 68 at 28 (citing Rodriguez v.

Safeco Ins. Co. of Indiana, No. 5:20-cv-168, 2022 WL 6657888, *1 & n.2 (N.D. Tex.

Oct. 3, 2022)). That distinction lacks meaning because this Court has disposed of

Plaintiffs’ breach of contract and Insurance Code claims. The result is the same—

Plaintiffs have not obtained a judgment on any claim and therefore are not entitled

to attorney’s fees. Kahlig Enters., Inc. v. Affiliated FM Ins. Co., No. 23-50144, 2024

WL 1554067, at *4 (5th Cir. Apr. 10, 2024) (quoting Rodriguez, 684 S.W.3d at 793

as holding that where there is no judgment, the statutory formula results in attorney's

fees of zero”); Stem v. Lloyds, No. CV H-23-0232, 2024 WL 115225, at *3 (S.D.

Tex. Jan. 10, 2024) (stating “[b]ecause Defendant voluntarily paid the appraisal

amount, the judgment will include $0 for Plaintiff's claim under the Policy.

Therefore, the amount of attorney's fees allowed by § 542.007(a)(3) is $0”).

Defendant is entitled to summary judgment on Plaintiffs claim for attorney’s fees.

IV. Conclusion and Recommendation

For the reasons discussed above, the Court recommends that Defendant’s

Motion for Summary Judgment (ECF 83) be GRANTED in its entirety and this case

be DISMISSED WITH PREJUDICE.

The Clerk of the Court shall send copies of the memorandum and

recommendation to the respective parties, who will then have fourteen days to file

written objections, pursuant to 28 U.S.C. § 636(b)(1)(C). Failure to file written

objections within the time period provided will bar an aggrieved party from attacking

the factual findings and legal conclusions on appeal. Douglass v. United Servs. Auto.

Ass’n, 79 F.3d 1415, 1428-29 (Sth Cir. 1996) (en banc), superseded by statute on

other grounds.

Signed on August 04, 2026, at Houston, Texas.

United States Magistrate Judge

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