Soon after, the Lamberts asked State Farm to reinspect their home, which Mr. Senne did in October 2015, this time finding closer to $10,000 in damage and netting the Lamberts about $1,700 after subtracting depreciation and the deductible.

Dissatisfied, the Lamberts sued State Farm in January 2016, asserting claims for, among other things, violations of the Texas Prompt Payment of Claims Act ("TPPCA").

State Farm moved to compel appraisal under the appraisal provision in the Lamberts' policy. The Lamberts and State Farm followed that procedure, designating appraisers who then jointly appointed an umpire.

The appraisal panel ultimately set the amount of loss to the Lamberts' home at $99,112.72 on a replacement-cost basis and $70,965.54 on an actual-cash-value basis. Two days after learning of the award, and after deducting depreciation and the past payment of roughly $1,700, in mid-August 2016 State Farm paid the Lamberts $63,404.63.

Thereafter, State Farm moved for summary judgment, arguing that because it had paid the amount of loss as determined by appraisal and because the Lamberts had not alleged an independent injury separate from their rights under the policy, State Farm was entitled to a take-nothing judgment in its favor.

The Lamberts moved for partial summary judgment on their TPPCA claim, specifically claiming that they were entitled to statutory interest and attorneys' fees under Section 542 of the Texas Insurance Code.

The trial court ruled in favor of State Farm, and the Lamberts appealed. Among other things, they asserted that State Farm had failed to follow the TPPCA's prompt-payment deadlines and as a result they were entitled to statutory interest and attorneys' fees.

The Appellate Court's Decision

The appellate court reversed the trial court's decision on the Lamberts' TPPCA claim.

In its decision, the appellate court explained that although the TPPCA did not explicitly address how initiating the appraisal process affected its timing guidelines, the Texas Supreme Court had recently offered guidance in a case with similar facts.

In Barbara Techs. Corp. v. State Farm Lloyds, ___ S.W.3d ___, No. 17-0640 (Tex. June 28, 2019), State Farm twice denied its insured's claim for storm-related damages because, State Farm asserted, the damages did not exceed Barbara Tech's deductible. Barbara Tech sued, prompting State Farm to invoke the policy's appraisal provision. Barbara Tech accepted the resulting appraisal award payment but still claimed that statutory damages were appropriate because State Farm had failed to comply with the TPPCA's 60-day time limit for payment.

Although both the trial and appellate courts found that a payment of an appraisal award barred a TPPCA claim as a matter of law, the Texas Supreme Court disagreed.

The court interpreted the TPPCA's lack of any appraisal-related language to mean that the legislature intended neither to impose specific deadlines for the contractual appraisal process within the prompt-pay scheme nor to exempt the contractual appraisal process from the deadlines. The court concluded that an insured could be entitled to a recovery by showing that (1) the insurer was initially liable for the claim under the policy, and (2) the insurer violated a TPPCA provision.

Because in Barbara Tech State Farm had not accepted liability under the policy and had not yet had its liability adjudicated one way or another, Barbara Tech was not entitled to TPPCA damages as a matter of law. By the same token, State Farm's invoking appraisal and promptly paying the resulting award did not automatically exempt it from TPPCA damages, either.

For these reasons, the court remanded the case for the trial court to first determine liability and then sort through the TPPCA timing requirements.

In the Lamberts' case, the appellate court noted that State Farm indicated in a post-submission letter brief discussing Barbara Tech that the Lamberts' TPPCA claim was "in the same procedural posture" and should be remanded for the same reasons.

The appellate court agreed. Although it did not find that the Lamberts were entitled to summary judgment on their TPPCA claim, it decided that the trial court had erred by granting summary judgment in State Farm's favor. Accordingly, it reversed the part of the trial court's order granting summary judgment for State Farm on the Lamberts' TPPCA claim, and remanded the case on that claim.

The case is Lambert v. State Farm Lloyds, No. 02-17-00374-CV (Tex. Ct. App. Nov. 7, 2019). Attorneys involved include: ATTORNEYS FOR APPELLANTS: ANDREW B. BENDER, HOUSTON, TEXAS; CHAD T. WILSON, WEBSTER, TEXAS. ATTORNEYS FOR APPELLEES: MELISSA A. LORBER, ENOCH KEVER PLLC, AUSTIN, TEXAS; DAVID JEFFERSON FISCHER, ORGAIN BELL & TUCKER, LLP, SILSBEE, TEXAS.