Opinion
CIVIL ACTION NO. 2:21-CV-9
2021-06-30
The HLAVINKA EQUIPMENT COMPANY, Plaintiff, v. NATIONWIDE AGRIBUSINESS INSURANCE COMPANY; cp Nationwide Mutual Insurance Company, Defendants.
Craig Michael Saucier, Clayton Jude Smaistrla, Valerie Michelle Mazzola, Saucier Smaistrla PLLC, San Antonio, TX, for Plaintiff. C. Daniel DiLizia, Robert G. Wall, Patrick M. Kemp, Segal McCambridge Singer & Mahoney, Ltd., Austin, TX, for Defendants.
Craig Michael Saucier, Clayton Jude Smaistrla, Valerie Michelle Mazzola, Saucier Smaistrla PLLC, San Antonio, TX, for Plaintiff.
C. Daniel DiLizia, Robert G. Wall, Patrick M. Kemp, Segal McCambridge Singer & Mahoney, Ltd., Austin, TX, for Defendants.
ORDER
DAVID S. MORALES, UNITED STATES DISTRICT JUDGE Pending before the Court is Defendant Nationwide Agribusiness Insurance Company's ("Defendant") motion to Deny Plaintiff's Claim for Attorneys’ Fees. (D.E. 5). Defendant asserts that Plaintiff The Hlavinka Equipment Company ("Plaintiff") should be denied attorney's fees because it failed to comply with the pre-suit notice requirement in the Texas Insurance Code. Id. at 2; TEX. INS. CODE § 542A.003. Defendant demonstrated that it was entitled to pre-suit notice in a timely manner. In addition to failing to provide pre-suit notice at least 61 days before filing the action, Plaintiff did not offer a justification that would satisfy the impracticability exception for pre-suit notice. Accordingly, Defendant's motion is GRANTED.
I. Background
On August 25, 2017, Hurricane Harvey struck Texas and ten of Plaintiff's farm equipment dealerships ("the properties") were damaged. (D.E. 1-1, p. 6). Sometime thereafter, Plaintiff submitted claims with Defendant against its policy ("the policy") for personal property damage and lost business income. Id. Plaintiff's claim was assigned to adjuster Mark Whelan ("Whelan") and he first inspected the property on or about September 4, 2017. Id. Plaintiff alleges that Whelan severely underestimated the claim regarding both the property damage and the loss of business income. Id. at 6–7.
After filing the claim with Defendant, Plaintiff applied for FEMA disaster relief, and a FEMA adjuster estimated that the additional damages totaled $967,107.00. Id. at 7. However, Plaintiff's FEMA relief application was denied because it employed too many people. Id. The estimate provided by the FEMA adjuster was sent to Defendant by Plaintiff to show that Whelan had grossly underestimated the property damage. Id.
After Whelan inspected the properties a second time and reviewed the adjustment for Defendant, Defendant notified "Plaintiff on December 18, 2018 that Plaintiff was owed an additional $974,873.56 in policy benefits." Id. Upon receipt of the revised estimate and claim determination, Plaintiff recognized that Defendant and Whelan "still omitted extensive, visibly apparent storm damages to Plaintiff's properties." Id. This is the date that Plaintiff alleges that the statute of limitation began to run. (D.E. 7, p. 5).
Approximately eleven months later, on or about November 24, 2019, Plaintiff retained counsel to attempt to resolve the dispute and initiate the appraisal process. (D.E. 5, p. 3). In February 2020, Plaintiff sent Defendant and Whelan a written demand for appraisal and named Rick Guerra-Prats ("Guerra-Prats") as its appraiser. (D.E. 7, p. 2). At the time, Guerra-Prats estimated the appraisal process would take four to six months to complete. Id. at 3.
Later that month, Whelan declared that the appraisal demand was premature because the policy requires Plaintiff to provide an estimate of damages quantifying the dispute. (D.E. 7-3, p. 2). Then, Plaintiff's counsel emailed Whelan stating that appraisal was not premature but offered to provide an estimate if Defendant agreed not to object to Guerra-Prats serving as Plaintiff's appraiser. (D.E. 7-4). On the same day, Defendant hired counsel and appointed Brett Lochridge ("Lochridge") as its appraiser. (D.E. 7-5). Beginning in March of 2020, the COVID-19 pandemic and related restrictions on public contact caused delays in the appraisal process. (D.E. 7, p. 4). Appraisers were not able to appoint an umpire until July 23, 2020 which was 119 days longer than was anticipated by the policy. Id.
On December 17, 2020, Plaintiff filed this lawsuit without giving Defendant pre-suit notice because it believed the limitations period would expire the following day. Id. Thereafter, on January 13, 2021, Guerra-Prats gave his appraisal estimate to Lochridge followed by Lochridge providing his estimate to Guerra-Prats on January 29, 2021. Id.
II. Analysis
A. Plaintiff did not Provide Pre-suit Notice as Required.
Texas Insurance Code § 542A.003 requires that a claimant provide notice to the insurer at least 61 days before filing suit. Notice must include "(1) a statement of acts or omissions giving rise to the claim; (2) the specific amount alleged to be owed by the insurer on the claim for damage to or loss of covered property; and (3) the amount of reasonable and necessary attorney's fees incurred by the claimant." § 542A.003(b). The purpose of the pre-suit notice requirement is to "discourage litigation and encourage settlements of consumer complaints by allowing the defendant-insurer a right and opportunity to make a settlement offer." Perrett v. Allstate Ins. Co. , 354 F. Supp. 3d 755, 757 (S.D. Tex. 2018) (quoting Hines v. Hash , 843 S.W.2d 464, 468 (Tex. 1992) ). Here, both parties agree that Plaintiff failed to provide pre-suit notice to the Defendant before filing suit on December 17, 2020. (D.E. 7, p. 4–5); (D.E. 9, p. 6).
B. Defendant was Entitled to Pre-suit Notice.
When a defendant "pleads and proves that [it] was entitled to but was not given a pre-suit notice," the court may not award any attorney's fees to the claimant after the date the defendant asserts it was owed pre-suit notice. TEX. INS. CODE § 542A.007(d). The defendant must plead this defense on or before 30 days after it files its answer. Id. Defendant successfully pled and proved that it was entitled to pre-suit notice in its Original Answer on January 14, 2021. (D.E. 1-2, p. 1–2).
Defendant asserted this defense in their original answer claiming that it was entitled to pre-suit notice but did not receive it.
C. Plaintiff Failed to Demonstrate that Providing Notice was Impracticable.
Pre-suit notice is not required if "the claimant has a reasonable basis for believing that there is insufficient time to give the presuit notice before the limitations period will expire." TEX. INS. CODE § 542A.003(d)(1). Prior decisions illustrate that the reasonable basis standard for impracticability is not an easy threshold to satisfy and "ought to be reserved for those instances in which presuit notice genuinely cannot be provided." Tadeo as Tr. of John E. Milbauer Tr. v. Great N. Ins. Co. , No. 3:20-CV-00147-G, 2020 WL 4284710, at *8 (N.D. Tex. July 27, 2020) ; see, e.g., Elevia, Inc. v. Amguard Ins. Co. , No. CV H-19-4028, 2019 WL 10894131 (S.D. Tex. Dec. 20, 2019) (granting motion to deny abate because impracticability standard was not met as pre-suit notice could have been provided); PMG Int'l, Ltd. v. Travelers Indem. Co. of Am., No. SA-20-CV-00145-XR, 2020 WL 6123134, at *2 (W.D. Tex. May 11, 2020) (granting motion to preclude attorney's fees for the same reason). In order to utilize the exception to pre-suit notice, plaintiffs must offer some "reason independent from simply stating that the impending expiration of the limitations period made notice impracticable." Hosp. Operations, LLC v. Amguard Ins. Co. , No. 1:19-CV-00482, 2019 WL 11690209, at *2 (E.D. Tex. Dec. 2, 2019) ; see also Nexxt Holding, Inc. v. Travelers Cas. Ins. Co. of Am. , No. CV H-20-817, 2020 WL 5702095, at *1 (S.D. Tex. Sept. 24, 2020) (assertation of a calculation error of the statute of limitations period does not justify impracticability of notice). On its own, the fact that a claimant waited to hire counsel is not a valid justification that there is insufficient time to give pre-suit notice. J.P. Columbus Warehousing, Inc. v. United Fire & Cas. Co. , 5:18-CV-00100, 2019 WL 453378, at *6 (S.D. Tex. Jan. 14, 2019), adopted by 5:18-CV-100, 2019 WL 450681 (S.D. Tex. Feb. 4, 2019) ; Gateway Plaza Condo v. Travelers Indem. Co. of Am. , 3:19-CV-01645-S, 2019 WL 7187249, at *2 (N.D. Tex. Dec. 23, 2019). Instead, a claimant must provide an explanation for why it hired an attorney at the particular time that it did. Id.
Here, Plaintiff asserts that providing notice 61 days before the expiration date of the statute of limitations on December 18, 2020 was impracticable because it could not specify the amount the insurer owed (as required as part of the notice procedure), as it did not receive an estimate of repairs until January 13, 2021. (D.E. 7, p. 4). Plaintiff claims that the COVID-19 pandemic slowed down the appraisal process, thus making it impractical to specify the amount owed by the insurer. Id. While there was a delay in receiving an estimate of repairs caused by the pandemic, Plaintiff waited until November 2019 to hire counsel and begin the appraisal process creating an unaccounted for eleven-month gap of time. (D.E. 7, p. 2–3). Plaintiff provides no explanation as to why it waited until November 2019 to hire counsel, even though it was notified of Defendant's damage estimate in December 2018 (eleven months prior) and subjectively believed at that point that the estimate was too low. As such, Plaintiff reasonably could have begun the appraisal process in early 2019 (and does not provide a reason why it did not do so), leaving ample time to provide pre-suit notice and file a lawsuit if a settlement was not reached even if the appraisal process occurred as slowly as it did. Barring a sufficient explanation of why Plaintiff waited eleven months (December 2018 to November 2019) to begin the appraisal process and obtain an estimate, it is apparent that pre-suit notice could have been provided to Defendant if Plaintiff had taken the appropriate steps during a reasonable time period.
"The notice required under this section must provide ... the specific amount alleged to be owed by the insurer on the claim for damage to or loss of covered property." TEX. INS. CODE § 542A.003(b)(2).
By applying for FEMA relief, Plaintiff had a head start in the process of obtaining an estimate, even before the statute of limitation began to run in December of 2018. This head start further emphasizes the fact that Plaintiff could have reasonably started the estimate process long before it actually did.
III. Conclusion
For the above reasons, Defendant's motion to Deny Plaintiff's Claim for Attorney's Fees (D.E. 5) is GRANTED because Plaintiff failed to demonstrate that providing notice was impracticable. Pursuant to Texas Insurance Code section 542A.007(d), this Court cannot award Plaintiff attorney's fees incurred after January 14, 2021, the date on which Defendant filed its pleading asserting that it was entitled to but was not given pre-suit notice.
SO ORDERED.