Louis Hinojos v. State Farm Lloyds and Raul Pulido

IN THE SUPREME COURT OF TEXAS
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No. 19-0280
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LOUIS HINOJOS, PETITIONER

V.

STATE FARM LLOYDS AND RAUL PULIDO, RESPONDENTS

══════════════════════════════════════════
ON PETITION FOR REVIEW FROM THE
COURT OF APPEALS FOR THE EIGHTH DISTRICT OF TEXAS
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JUSTICE GUZMAN, dissenting.

I fully join JUSTICE BLACKLOCK’s dissent but write separately to further explain why I

joined the Court’s opinion in Barbara Technologies Corp. v. State Farm Lloyds 1 but cannot do so

here. Barbara Tech applies to this case to the extent it holds that engaging a contractual appraisal

process does not extend the deadlines in the Texas Prompt Payment of Claims Act (TPPCA). But

Barbara Tech neither involved nor answered the dispositive question in this case: whether the

insurer’s partial payment of a claim before the deadline precludes liability under the Act. On that

issue, the Act’s plain language favors judgment for the insurer.

1
589 S.W.3d 806 (Tex. 2019).
The Legislature designed the Act “to promote the prompt payment of insurance claims.” 2

To that end, it provides a series of payment windows and imposes liability on insurers for

non-compliance. One of those payment windows, provided in section 542.057(a), requires an

insurer that has accepted “a claim or part of a claim” to “pay the claim” within five days after so

notifying the insured. 3 Paying “part of a claim” is thus paying “the claim” under the TPPCA. 4

Section 542.058(a), which immediately follows, provides a catch-all sixty-day payment window

and entitles insureds to damages when an insurer “delays payment of the claim.” 5 Because paying

“part of [the] claim” amounts to “pay[ing] the claim,” State Farm cannot be subject to liability for

“delay[ing] payment of the claim.”

Although the Court holds that paying “part of a claim” is not “payment of the claim,” it

does not rely on the analysis in Barbara Tech to reach that conclusion. In Barbara Tech, the

insurer had rejected the full amount of the claim and paid nothing before the sixty-day payment

window closed. 6 After an appraisal established the amount of the loss, State Farm paid the claim

and argued the payment was timely because initiation of the contractual appraisal process extended

the TPPCA’s payment deadline. 7 The Court rejected that argument as unsupported by the statutory

text: “We hold 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,

2
TEX. INS. CODE § 542.054.
3
Id. § 542.057(a) (emphases added).
4
Id.
5
Id. § 542.058(a).
6
Barbara Tech, 589 S.W.3d at 809-10.
7
Id. at 810-11.

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exempt[ed] State Farm from TPPCA damages as a matter of law.” 8 To the extent the Court reaches

the same conclusion here—that State Farm’s payment of the appraisal award did not absolve it of

TPPCA liability—it is consistent with Barbara Tech.

But this case involves a claim-payment scenario that was not at issue in Barbara Tech:

timely payment of “part of a claim.” As to that matter, the TPPCA’s plain language compels the

conclusion that State Farm complied with the TPPCA as a matter of law by paying, within the

statutory deadlines, the part of the claim it believed it owed. As JUSTICE BLACKLOCK’s dissent

elucidates more comprehensively, paying “part of a claim” is “pay[ing] the claim,” so State Farm

did not “delay payment of the claim.” 9 In holding to the contrary, the Court strays from our

obligation to construe statutes as written.

Just as Barbara Tech does not support the Court’s disposition, neither do the other cases

the Court relies on. The facts in this case are similar to Republic Underwriters Insurance Co. v.

Mex-Tex, Inc. 10 and Alvarez v. State Farm Lloyds 11, but neither opinion addresses, resolves, or

even mentions the legal issue here: whether paying “part of a claim” amounts to “payment of the

claim.” 12 The statute instructs, in express language, that it does.

The Court is understandably concerned that an insurer could too easily avoid TPPCA

liability by paying a nominal amount. 13 But (1) courts have no authority to expand or contract

8
Id. at 829.
9
TEX. INS. CODE §§ 542.057, .058.
10
150 S.W.3d 423 (Tex. 2004).
11
601 S.W.3d 781 (Tex. 2020).
12
See id. at 783 (holding “State Farm’s payment of the appraisal award” did not entitle it to summary judgment
on the insured’s TPPCA claim); Mex-Tex, 150 S.W.3d at 427-28 (holding the insurer did not owe prompt-pay damages
on the amount paid before the statutory deadline).
13
See ante at 8.

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statutory text to achieve policy objectives 14 and (2) the Legislature has enacted other remedies to

address bad-faith conduct. Our duty is to construe statutes as written, 15 and this statute, as written,

permits a prompt, partial payment to eliminate liability under the TPPCA. If the amount of an

otherwise prompt payment indicates bad faith, the insured can seek recompense under other

statutes. 16 But the Legislature has not authorized prompt-pay damages when an insurer has

promptly paid.

I joined Barbara Tech because it comported with the TPPCA’s plain language. Because

the Court’s holding today does not, I respectfully dissent.

____________________________________
Eva M. Guzman
Justice

OPINION DELIVERED: March 19, 2021

14
See Christus Health Gulf Coast v. Aetna, Inc., 397 S.W.3d 651, 654 (Tex. 2013) (construing the Insurance Code
and noting that “[w]e must take the Legislature at its word, respect its policy choices, and resist revising a statute
under the guise of interpreting it”).
15
Morrison v. Chan, 699 S.W.2d 205, 208 (Tex. 1985).
16
TEX. INS. CODE §§ 541.060(a)(2), 542.003(b)(4).

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