HOUSTON - A $643,000 judgment, $250,000 of which was in attorney’s fees awarded to The Buzbee Law Firm, has been wiped on appeal.
The ruling stems from a property insurance dispute. Following Hurricane Harvey, Emilio Menchaca filed a claim with Homeowners of America Insurance Company.
HAIC estimated that the cost of covered repair to Menchaca’s house was less than his deductible, leading him to retain counsel and send a demand letter stating that he sustained $48,757.98 in economic damages, court records state.
HAIC invoked the appraisal process and eventually filed a suit for declaratory judgment against Menchaca, who responded by bringing a counterclaim asserting, among other allegations, violations of the Texas Insurance Code, fraud and breach of contract.
During the litigation, HAIC, without admitting liability, issued a check to Menchaca in the amount of $7,085.86 – the actual cash value of $13,145.86 assigned by appraisers, minus the $6,060 deductible under Menchaca’s policy.
Court records show the case went to trial and the jury returned a verdict in favor of Menchaca, finding that the actual cash value of covered damages to his property was $13,145.86.
The jury further found that he sustained $300,000 in past mental anguish damages and that the reasonable and necessary fees for his attorneys was $250,000.
A trial court rendered final judgment on the jury’s verdict, ordering that Menchaca recover from HAIC $300,000 in mental anguish damages, $250,000 for his attorney’s fees, and $93,000 in prejudgment interest.
HAIC appealed, arguing that the trial court erred in rendering judgment in favor of Menchaca because it complied with its obligations under the policy, as a matter of law, when it paid an appraisal award to him.
The insurer also contended that the trial court erred in awarding Menchaca $300,000 in mental anguish damages because mental anguish that results from the denial of an insurance claim is not a recoverable “independent injury.”
On July 31, the First Court of Appeals reversed the trial court’s judgment, finding that Menchaca take nothing on his counterclaims against HAIC.
Justices held that because HAIC paid the appraisal award, Menchaca cannot recover attorney’s fees and the trial court erred in awarding him fees.
The First Court also found that the only actual damages Menchaca sought were lost policy benefits, which HAIC paid when it paid the appraisal award, holding that the trial court erred in awarding him $300,000 in mental anguish damages.
HAIC is represented by The Monson Law Firm and Enoch Kever.
Appeals case No. 01-23-00633-CV
