Hail Claim And Communicating With Insurance Company

Lawyers who handle hail claims know that the quicker a claim is made, the better. Communication with the insurance company is also important. Both these points are made in Southern District of Texas, McAllen Division opinion styled, Juan Sanchez Fregoso, et al v. State Farm Lloyds, et al.
In this case, the court granted State Farm’s motion for summary judgment.
Plaintiffs’ claims arise from damage sustained to their property as a result of a hailstorm event occurring in March / April 2012. The property is insured under a State Farm policy providing replacement cost benefits. Shortly after the storm, Plaintiffs reported an insurance claim to State Farm for the damages sustained to their property. Thereafter, State Farm inspected the property on May 6, 2012, estimating the loss to the property to be $6,910.44. On that same day, State Farm issued to Plaintiffs an actual cash value payment of $3,160.27, the amount remaining after deducting the recoverable depreciation ($1,796.17), and the deductible ($1,954), from the replacement cost value ($6,910.44).
Mr. Juan Fregoso undertook repairs to his property and submitted copies of receipts for the materials used in the repairs to State Farm. A State Farm representative spoke to Mr. Fregoso on May 29, 2012 about the repairs and Mr. Fregoso confirmed that the repairs were complete. Mr. Fregoso also specified that “the costs of repairs were a little bit higher than State Farm’s estimate because he decided to upgrade his roof.” Mr. Fregoso further explained that “he understood he was responsible for the cost of the upgrade . . . .” Subsequent to this exchange, State Farm issued a supplemental payment of $1,796.17, the recoverable depreciation, for Plaintiffs’ storm claim. After payment was issued, State Farm had “no further contact or communications” with Plaintiffs until Mrs. Fregoso requested claim-related paperwork on February 22, 2013. Since that time, there were no further communications between the parties until Plaintiffs filed the instant lawsuit in state court alleging various insurance related causes of action against Defendants on May 22, 2014. The case was removed to Federal Court.
Defendants proffered a copy of the Policy at issue, and both parties submit portions of the claim file State Farm maintained on Plaintiffs. Defendants also attach a declaration from State Farm claims representative, Jacob Loy (“Loy”), along with its supporting attachments. In support of their position, Plaintiffs submit an affidavit from Mr. Fregoso, as well as an affidavit, report, and curriculum vitae from an expert.
At issue in the motion for summary judgment is whether the evidence raises any issue of material fact that State Farm breached the Policy with Plaintiffs. Plaintiffs claim State Farm breached the contract by failing to pay adequate compensation as obligated by the Policy. State Farm on the other hand maintains Plaintiffs’ claim was paid on a replacement cost basis pursuant to the Policy’s loss settlement endorsement provision, which states:
SECTION I -LOSS SETTLEMENT COVERAGE A – DWELLING (Applicable to Homeowners Policy)
A1 – Replacement Cost Loss Settlement – Similar Construction is replaced with the following:
a. [State Farm] will pay the cost to repair or replace with similar construction and for the same use on the premises shown in the Declarations, the damaged part of the property covered under Section I – Coverages, Coverage A – Dwelling . . . subject to the following:
(1) until repair or replacement is completed, we will pay only the actual cash value at the time of the loss of the damaged part of the property . . .
(2) when the repair or replacement is actually completed, we will pay the covered additional amount you actually and necessarily spend to repair or replace the damaged part of the property, …
(3) to receive any additional payments on a replacement cost basis, you must complete the actual repair or replacement of the damaged part of the property within two years after the date of loss, and notify us within 30 days after the work has been completed; . .
State Farm argues that it paid Plaintiffs the amount they “actually and necessarily spent to repair or replace the damaged property” and thus, it “fully complied with the Policy.” Further, Defendants note that Plaintiffs never indicated to State Farm that they “disagreed with the amount of loss determined by State Farm” and never reported that there “remained un-repaired damage.”
The elements of a breach of contract claim in Texas are: (1) the existence of a valid contract; (2) performance or tendered performance by the plaintiff; (3) breach of the contract by the defendant; and (4) damages sustained by the plaintiff as a result of the breach. In Texas, the party claiming breach of contract has the burden of proof.
The first element of a breach of contract claim is satisfied as the parties do not dispute that they entered into a valid contract. The central issue is whether Plaintiffs performed or tendered performance. The Policy states “State Farm will pay the cost to repair or replace . . . the damaged part of the property covered . . .” subject to conditions explained earlier. The undisputed evidence is that State Farm paid the cost to repair or replace very soon after the Plaintiffs’ claim was made. While Plaintiffs insist that the payment was insufficient, the Policy here does provide that to receive any additional payments, Plaintiffs must complete the repair or replacement and notify State Farm of the alleged deficiency within thirty days after the work had been completed. The Policy also states that payment will be for the amount necessarily spent to repair the damaged parts of the property.
The claim file attached to State Farm’s motion for summary judgment indicates that on May 29, 2012, Mr. Fregoso confirmed that all repairs were completed. Thus, State Farm closed the claim on May 29, 2012. Loy’s declaration establishes that State Farm received no further notice from Plaintiffs until February 22, 2013, when Mrs. Fregoso requested paperwork about their claim. The file remained closed, and State Farm received no further notice until this suit was filed in May 2014. Neither Mr. Fregoso’s affidavit, nor the Riley affidavit and estimate establish that notice was provided to State Farm before May 2014. In fact, the record as a whole supports State Farm’s contention that after payment was made in May 2012, Plaintiffs made no further report of repairs, or claims of remaining damages, to State Farm until Plaintiffs filed the instant lawsuit. Thus, it is clear that Plaintiffs’ failure to perform as required by the Policy defeats their breach of contract claim.
The fact that Plaintiffs are dissatisfied with the damages paid is not the result of State Farm’s failure to fulfill a Policy obligation; instead, it results from Plaintiffs’ knowing failure to even submit damages to State Farm prior to filing this lawsuit. By way of Mr. Fregoso’s affidavit, the Court observes that Plaintiffs now claim they were not satisfied with the inspection or the amount paid to complete repairs on their property. However, Plaintiffs have provided no summary judgment evidence that they filed a supplemental claim or took any steps to request additional payment. Plaintiffs could have supplemented their claim when Ms. Fregoso called to request claim-related paperwork in February 2013, yet they failed to do so. In the absence of any evidence that Plaintiffs performed as required under the Policy, Plaintiffs cannot prevail on the breach of contract claim. In turn, because Plaintiffs have failed to raise a genuine issue of fact, Defendants’ motion for summary judgment as to Plaintiffs’ breach of contract claim against State Farm is Granted.