Tippett v. Safeco and the Binding Effect of an Appraisal Award
Once an appraisal award is issued and timely paid, what claims survive? Tippett — and the Texas cases that follow it — draw the line.
An appraisal award is meant to be binding on the amount of loss. But policyholders and carriers keep fighting about what that means for the surrounding claims — breach of contract, statutory bad faith, prompt-pay penalties.
The Texas line of cases running through Tippett v. Safeco and culminating in Ortiz v. State Farm Lloyds, 589 S.W.3d 127 (Tex. 2019), has settled much of it: when a carrier timely pays a binding appraisal award, that payment generally forecloses a breach-of-contract claim based on the same underpayment, and defeats bad-faith theories that rest only on the amount underpaid.
What survives? Under Barbara Technologies Corp. v. State Farm Lloyds, 589 S.W.3d 806 (Tex. 2019), a Prompt Payment of Claims Act (Chapter 542) claim can survive appraisal — because the statute punishes late payment, not underpayment, and appraisal does not undo missed deadlines. Independent-injury bad-faith theories (misrepresentation, statutory violations causing a separate injury) may also survive under Menchaca's fifth rule.
The practical takeaway for a policyholder: invoke appraisal when the fight is over amount, but do not assume appraisal will end the case. Keep a clean timeline of every carrier deadline, because the 542 clock keeps running.
Citation: Tippett v. Safeco Ins. Co. of Am., 2016 WL 3946785 (Tex. App.—El Paso); Ortiz, 589 S.W.3d 127 (Tex. 2019); Barbara Techs., 589 S.W.3d 806 (Tex. 2019).