Dallas Fort Worth Insurance Lawyer Blog
Insurance claims that are not timely paid and in violation of the Texas Prompt Payment of Claims Act, do those claims survive the death of the insured? This topic is discussed in a 2024 opinion from the Eastern District of Texas, Beaumont Division. The opinion is styled, Brenda barron, Temporary Administratrix Of The Estate Of Larry Barron, Deceased v. Century Surety Company, d/b/a Century Insurance Group.
The issue here is whether an insured’s claim for statutory interest and attorney fees under chapter 542 of the Texas Insurance Code survives their death. In February 2021, Larry Barron’s commercial building was damaged by a winter storm. The building was insured by Century. After Century refused to pay all of Barron’s claim, he sued Century for breach of contract, statutory bad faith, and statutory interest and attorney fees under chapter 542. Following the parties’ motions for summary judgment, the court dismissed his claim for bad faith.
Sadly, Larry Barron passed away on December 17, 2023. Brenda Barron replaced him in this lawsuit as the administratrix of his estate. In Century’s present motion for summary judgment, it argues that none of the insured’s extra-contractual claims survive his death. In response, Barron says that at least the claim for statutory bad faith should survive. But because that claim has already been dismissed, the undersigned only needs to address the remaining extra-contractual claims for statutory damages and attorney fees under chapter 542.
For the reasons below, Barron’s remaining extra-contractual claims do not survive the insured’s death. Thus, her claims for statutory damages and attorney fees under chapter 542 should be dismissed.
By statute, Texas insureds are protected by Texas law. Yet, no Texas statute addresses whether claims for attorney fees and statutory interest under chapter 542 survive the death of the insured. Without a relevant statute, the common law should guide this decision. But the Supreme Court of Texas has not addressed the survivability of these claims either.
In Texas, no cause of action survives the death of a party unless the damages grow out of acts affecting property rights of the injured party. Thus, a cause of action that is penal or personal in nature typically does not survive, while claims that are contractual in nature or affect property rights survive the death of either party.
Century argues that Barron’s extra-contractual claims do not survive because they are penal and personal in nature. Century explains how Texas courts have applied the state’s survival standard to deny claims that are similar to chapter 542, including the Deceptive Trade Practices Act and chapter 541 of the Texas Insurance Code. Century also highlights one federal court’s decision that denies the survivability of claims under chapter 542. In her response and sur-reply, Barron fails to offer a substantive rebuttal to these arguments.
In general, statutory interest and attorney fees under chapter 542 are penal in nature and, as a result, do not survive. A statute is penal if it permits a recovery . . . for the purpose of enforcing obedience to the mandate of the law. In contrast, a statute is remedial if the recovery is permitted as a remedy for the injury or loss suffered. Neither statutory interest nor attorney fees are designed to remediate harm from a plaintiff’s injury.
The Texas Supreme Court has often treated statutory interest as penal in nature. Likewise, the Texas Supreme Court has also described attorney fees in the same way. Accordingly, neither claim survives the insured’s death.
This conclusion is supported by Texas courts’ characterization of claims for statutory interest as personal to the insured.
Here, there is no evidence that Brenda Barron is an insured or beneficiary of Larry Barron’s policy. Therefore, she is not entitled to statutory interest or attorney fees under Chapter 542.