Zero x Damages = No Attorneys’ Fees

Fortuitously, a Justice with a mechanical engineering degree drew the opinion in Rosales v. Allstate Vehicle & Prop. Ins. Co., which involved the application of a (literal) statutory formula in a section of the Insurance Code, to answer the question whether the payment of all possible damages for a prompt-payment claim extinguished a claim for attorneys’ fees under the prompt-payment statute.

Here’s the formula, from section 542A.007(a) of the Insurance Code, edited slightly in the opinion for easier review:

In this case, the insurer paid the amount found by an appraisal on a home-damage claim (minus the deductible), plus an amount to cover any prompt-payment interest for the time period leading up to the payment. Under the statute, then, “the amount to be awarded in a [prompt-payment] judgment for a covered loss is presently zero dollars, and because the amount of attorney’s fees is a multiple of that amount, Chapter 542As formula must result in an award of zero attorney’s fees.”

The opinion also deftly summarizes the surprisingly voluminous federal district-court authority, distinguishing some adverse precedent as not accurately reflecting the Texas Supreme Court’s most recent guidance on similar issues. No. 05-22-00676-CV (May 16, 2023).