Court Affirms Summary Judgment for Insurer in Storm Damage Dispute
KAHLIG ENTERPRISES, INCORPORATED, Plaintiff-Appellant, v. AFFILIATED FM INSURANCE COMPANY, Defendant-Appellee.
No. 23-50144.
United States Court of Appeals, Fifth Circuit.
Filed April 10, 2024.
Appeal from the United States District Court for the Western District of Texas, USDC No. 5:20-CV-1091.
Before WIENER, HAYNES, and HIGGINSON, Circuit Judges.
STEPHEN A. HIGGINSON, Circuit Judge:
Introduction
Kahlig Enterprises appeals the grant of summary judgment to its insurer, Affiliated FM Insurance Company (AFM), on claims for breach of contract and violations of the Texas Insurance Code following a storm that damaged several of Kahlig's car dealerships and a car wash. Applying Texas law, we review the case de novo and affirm the district court’s decision.
Background
AFM issued an all-risk insurance policy to Kahlig covering September 1, 2018, to September 1, 2019, for direct physical loss or property damage. The policy specified that losses would be valued at replacement cost if repairs were completed within two years of the loss date, otherwise, the losses would be valued at actual cash value. On April 13, 2019, a storm damaged several properties, and Kahlig notified AFM. AFM acknowledged the claim and coverage but required repair invoices for validation. On October 3, 2019, Kahlig provided a signed, sworn proof of loss without the requested repair documentation. AFM paid Kahlig $756,547.54 for the actual cash value minus the deductible.
Kahlig demanded appraisal, which AFM initially refused due to incomplete compliance with policy provisions. Kahlig sued AFM, alleging breach of contract, bad faith, and violations of the Texas Insurance Code, seeking replacement cost value, penalties, attorney's fees, and prejudgment interest. The appraisal awarded replacement and actual cash values, but AFM only paid for the actual cash value and penalties calculated from October 3, 2019.
Discussion
I. Burden of Proof and Timing of Repairs
The policy limited recovery to actual cash value if repairs were not made within two years. Kahlig argued that AFM caused repair delays, but the court found no evidence supporting this. The burden of proof was on Kahlig to show timely repairs within two years, which it failed to do.
A. Skylight Repairs
The district court found that AFM had already compensated Kahlig for skylight repairs within the December 23, 2019 payment. There was no fact question about additional compensation for these repairs.
B. Leak Repairs
Kahlig's evidence regarding leak repairs was insufficient. General assertions and unsubstantiated claims do not satisfy the non-movant’s burden to provide specific evidence.
II. Texas Prompt Payment of Claims Act (TPPCA) Penalties
Under TPPCA, penalties accrue if the insurer fails to pay within 60 days of receiving all required information. The district court set October 3, 2019, as the accrual date based on the sworn proof of loss. Kahlig's alternative dates lacked supporting evidence. The district court’s determination was upheld, and AFM’s payment of $62,706.77 in penalties was deemed sufficient.
III. Prejudgment Interest and Attorney's Fees
Prejudgment interest was not available as there was no judgment against AFM. Additionally, attorney's fees under Chapter 542A of the Texas Insurance Code were limited by the policy's full payment plus penalties. The statutory formula resulted in zero allowable attorney's fees.
Conclusion
The district court's judgment is affirmed. Kahlig failed to meet its burden to show entitlement to replacement cost value, and the penalties and attorney’s fees were correctly calculated and awarded.
Keywords:
Insurance dispute, storm damage, summary judgment, Texas Insurance Code, replacement cost value, actual cash value, TPPCA penalties, attorney's fees.
Meta Title:
Court Affirms Summary Judgment for Insurer in Storm Damage Dispute
Meta Description:
The Fifth Circuit affirms summary judgment for Affiliated FM Insurance Company, rejecting claims by Kahlig Enterprises for breach of contract and additional penalties after a storm damage dispute.