Lawyers practicing in Texas know that the Texas Insurance Code and the DTPA statute have notice provisions, which require the policyholder to provide a sixty-day written notice to the carrier setting out the complaint and the amount of damages. I have previously blogged on these statutes.1

Before a policyholder files a lawsuit against a carrier, the 60-day notice letter must be sent to give the carrier an opportunity to resolve the claim with the policyholder before suit is filed. If suit is filed before the sixty day period has run, the court will abate the case for sixty days after the policyholder provides the carrier with a 60-day letter. Therefore, the statutes require the policyholder to give the carrier the opportunity to do the right (or wrong) thing before suit is filed. However, Fregoso v. State Farm Lloyds,2 out of the Southern District of Texas, points out that the policyholder must give the carrier an opportunity to do the right (or wrong) thing even before the 60-day letter.

Fregoso made a claim in May 2012, claiming dates of loss in March and April 2012. State Farm agreed to $6,910.44 in damages, subtracted the deductible and depreciation, and paid ACV to Fregoso. Mr. Fregoso did the work and submitted his receipts to State Farm (presumably in 2012). Mr. Fregoso told State Farm that all repairs were complete. State Farm released the replacement hold back to Fregoso and closed the file. State Farm heard nothing else until Fregoso requested paperwork in February 2013 and then Fregoso sued State Farm in May 2014. Before filing suit Fregoso never informed State Farm he disagreed with the $6,910.44, never informed State Farm he had damages over what was agreed to, and never sent a 60-day notice letter. The court abated the case to give Fregoso time to send in a 60-day notice letter, but Fregoso never did. Instead Fregoso demanded appraisal.

State Farm moved for summary judgment alleging that, as a matter of law, State Farm did not breach the policy contract. State Farm cited the policy provision that when repairs are completed State Farm will only pay the money actually spent. State Farm’s argument was simple…damages were agreed to, Fregoso completed the work, and State Farm paid all the damages after being provided invoices for all money spent. Fregoso never disagreed with the damages and never proved any extra damages. Therefore, there was no breach of contract. In granting the motion for summary judgment, the trial court said:

The fact that Plaintiffs are dissatisfied with the damages paid is not the result of State Farm’s failure to fulfill a Policy obligation; instead, it results from Plaintiffs’ knowing failure to even submit damages to State Farm prior to filing this lawsuit. By way of Mr. Fregoso’s affidavit, the Court observes that Plaintiffs now claim they were not satisfied with the inspection or the amount paid to complete repairs on their property. However, Plaintiffs have provided no summary judgment evidence that they filed a supplemental claim or took any steps to request additional payment. Plaintiffs could have supplemented their claim when Ms. Fregoso called to request claim-related paperwork in February 2013, yet they failed to do so. In the absence of any evidence that Plaintiffs performed as required under the Policy, Plaintiffs cannot prevail on the breach of contract claim.

Before the 60-day notice letter and before filing suit, the policyholder, or his public insurance adjuster, must inform the carrier (best done in writing) of any disagreements the policyholder has with the amount of damages assessed by the carrier and must inform the carrier of any extra damages. You must give the carrier the opportunity to do the right (or wrong) thing.

1 Rethinking the Sixty-Day Notice Letter in Texas and Texas Sixty-Day Notice Letter Redux.
2 Fregoso v. State Farm Lloyds, 7:14-CV-530, 2016 WL 1170104 (Tex. S.D. Mar. 24, 2016).