The magistrate judge recommended that the insurer's motion for summary judgment regarding the insured's bad faith claims be granted. Thornton v. HJB State Farm Lloyds, 2025 U.S. Dist. LEXIS 151342 (W.D. Texas Aug. 5, 2025).
The insureds claimed their home was damaged in a wind and hail storm. A claim was submitted and State Farm inspected a couple of days later. The inspection report indicated neither wind nor hail damage to the roof's shingles, but instead noted wear and tear and general deterioration. The report did note "small dents'" on a single vent which was consistent with hail damage. State Farm did not inspect the interior the insureds' home. The insureds verbally described water damage in the kitchen and master bedroom.
State Farm denied the claim. The only covered losses were the dents to the single roof vent and the water damage to the kitchen and bedroom State Farm estimated the replacement cost value (RCV) for these losses was $2,541.81, less that the insureds' deductible. State Farm further stated that the remaining damage resulted from rot and deterioration, neither of which were covered losses under the policy.
The insureds hired a public adjuster who inspected the property. He estimated the RCV at $87,564.15, $35,880.02 of which he attributed to the roof.State Farm and the public adjuster then jointly inspected the property. State Farm asked the public adjuster to identify the areas that he believed demonstrated hail damage to the roof. State Farm concluded that the identified areas reflected natural wear and tear and aging rather than hail damage.
The insureds sued and State Farm sought summary judgment on claims for (1) breach of the common law duty of good faith and fair dealing and (2) unfair settlement practices under the Texas Insurance Code.
If State Farm's investigations were reasonable, then any delay or denial of the insureds' claim would be the result of a bona fide coverage dispute and could not form the basis for bad faith. The insureds' relied on the deposition of their expert as evidence to support their contention that State Farm conducted an unreasonable investigation. The expert testified that the hail damage was so significant that State Farm's doing anything but covering the cost of a full roof replacement was necessarily in bad faith. The expert conceded that he never reviewed any of State Farm's reports, but testified that, as a rule, to disagree with him was to act in bad faith. The magistrate judge found the expert's testimony to be entirely conclusory – it did not identify any specific damage assessment that State Farm made that was unreasonable. The expert's general testimony that State Farm acted in bad faith by disagreeing with his own conclusions did not create a genuine dispute on the matter.
State Farim was entitled to summary judgment on the insureds' claims for violation of its common law duty of good faith and fair dealing and for violations of the Texas Insurance Code.