The Corpus Christi Court of Appeals recently affirmed a take nothing judgment against an insurer after applying an offset for the insurer’s litigation costs which exceeded the damages awarded by the jury. In Salinas v. State Farm Lloyds, 2019 WL 1561998 (Tex.App. – Corpus Christi April 11, 2019), Salinas sued State Farm alleging breach of contract and asserting extra-contractual claims arising from State Farm’s handling of a claim for hail damage to their residence. State Farm made a $25,900 settlement offer under Texas Rule of Civil Procedure 167 back in June 2014. Then in June 2017, the jury awarded $38,163.87, which included $10,500 for breach of contract and an identical amount, $10,500 was also awarded under the Texas Deceptive Trade Practices Act (DTPA). And the balance consisted of interest, attorney fees and costs. State Farm filed a motion to modify arguing that DTPA damages were duplicative of the contract damages and that the settlement offer, made three years before under Rule 167, required the court to enter a take-nothing judgment.  Following a hearing for which plaintiff’s counsel was not present, the trial court agreed.

The Corpus Christi Court of Appeals conducted a two part analysis and in the first part, found that the hearing conducted without plaintiff’s counsel was error.  But in the second part of its analysis, the court determined that the error did not result in harm to Salinas because the trial court correctly applied the one-satisfaction rule to the damage award, disallowing the duplicate award of $10,500 under the DTPA. And, Salinas’s attorney fees were $3,150 at the time the settlement offer expired in 2014. So with interest, the adjusted award was $15,345.45. And because the amount is significantly less than 80% State Farm’s June 2014 Offer of Settlement made under Rule 167, State Farm was entitled to offset its own attorney fees and litigation costs totaling $31,254.35 against the jury award resulting in a take-nothing judgment. Accordingly, the court of appeals found no harm and affirmed the take-nothing judgment in favor of State Farm.  

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