USAA Texas Lloyds Company v. Menchaca

Case Updates

The Texas Supreme Court reversed and remanded for a new trial; however, its opinion failed to clarify the law.

In its brief, the U.S. Chamber urged the Texas Supreme Court to grant the petition for review to clarify that an insured may not bring a statutory bad faith claim if the insurer never breached the terms of the insurance contract. This bad faith lawsuit centers on an insured’s attempts to convert her insurer’s denial of an insurance claim for $455 in storm damage to her home into a recovery of $1.2 million in damages, nearly six times the home’s insured value. The core issue is whether, under Texas law, a plaintiff may recover policy benefits for an insurance company’s alleged bad faith in rejecting a claim when the insurer did not, in fact, breach the insurance contract. The Chamber asked the Court to reaffirm its precedent and make clear that contractual benefits are not available for extra-contractual claims, when there has been no breach of the contract or policy.

Justice Dale Wainwright and Lindsay E. Hagans of Bracewell LLP served as co-counsel for the U.S. Chamber of Commerce on behalf of the U.S. Chamber Litigation Center.