Statutory Damages: Barbara Technologies Corp.and Ortiz

The Texas Supreme Court has recently announced that it will hear oral arguments on a case concerning whether policyholders are entitled to statutory damages in addition to their initial benefits award. In both Barbara Technologies Corp. v. State Farm Lloyds and Oscar Ortiz v. State Farm Lloyds, the court will consider whether an insurer’s payment of an appraisal award operates as a contractual bar to damages available to the policyholder pursuant to the Texas Insurance Code.

In April 2017, the Texas Supreme Court set forth five rules to “provide clarity regarding the relationship between claims for an insurance-policy breach and Insurance Code violations.” In doing so, the Texas Supreme Court announced that “five distinct but interrelated rules govern the relationship between contractual and extra-contractual claims in the insurance context,” thus promoting statutory protections for policyholders which penalize insurers for deceptive practices. Now, upon hearing Barbara Technologies Corp. and Ortiz, the Court will analyze the law pertaining to statutory damages in addition to initial benefits awards, and how it applies in both a commercial and private context.