• Supreme Court of Texas
  • 14-0721
  • JEFFREY S. BOYD, JUSTICE
Menchaca sued USAA after it failed to pay for alleged property damage. The jury found that USAA complied with the terms of its insurance policy, but also found that USAA engaged in deceptive practices made unlawful under the Texas Insurance Code, and awarded Menchaca damages. USAA argued that the first finding meant it could not be held liable for damages; Menchaca argued that the second finding rendered USAA liable. The trial court agreed with Menchaca and awarded damages. An intermediate appellate court affirmed. After acknowledging confusion in its prior precedents, the court announced five interrelated rules: (1) an insured cannot recover policy benefits as damages for an insurer's statutory violation if the policy does not provide the insured a right to receive those benefits; (2) an insured who establishes a right to receive benefits under the insurance policy can recover those benefits as actual damages under the Insurance Code if the insurer's statutory violation causes the loss of the benefits; (3) even if the insured cannot establish a present contractual right to policy benefits, the insured can recover benefits as actual damages under the Insurance Code if the insurer's statutory violation caused the insured to lose that contractual right; (4) if an insurer's statutory violation causes an injury independent of the loss of policy benefits, the insured may recover damages for that injury even if the policy does not grant the insured a right to benefits; and (5) an insured cannot recover any damages based on an insurer's statutory violation if the insured had no right to receive benefits under the policy and sustained no injury independent of a right to benefits. The court held that the trial court made errors based upon the prior confusion in the law, and remanded the case for a new trial. USAA Texas Lloyds Company v. Menchaca, In the Supreme Court of Texas, No. 14-0721, 4/7/17

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