(Article from Insurance Law Alert, July/August 2025)
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Holding
A Texas district court granted a property insurer’s motion for judgment as a matter of law following a jury verdict awarding the policyholder $4.8 million in actual damages and $35 million in punitive damages, finding a lack of evidence to support the awards. Green Acres Baptist Church, Inc. v. Bhd. Mut. Ins. Co., 2025 U.S. Dist. LEXIS 126690 (E.D. Tex. July 3, 2025).
Background
Property owned by Green Acres Baptist Church incurred damage during a hailstorm. Brotherhood Mutual paid more than $3.1 million to repair or replace the property according to the policy and the parties’ agreed upon scope of work. However, the parties disputed whether certain other property was covered by the policy. Green Acres filed suit, alleging breach of contract, bad faith, and violations of the Texas Insurance Code.
The case went to trial and a jury returned a verdict awarding Green Acres approximately $4.8 million on the breach of contract claim and $35 million in punitive damages. Although the jury found that Brotherhood engaged in unfair or deceptive acts, it awarded no damages on that claim. It also found that Brotherhood did not violate the Texas Insurance Code.
Post-trial, Brotherhood sought a take-nothing judgment as a matter of law. It argued that it complied with the policy by paying Green Acres the replacement costs of all property that had been repaired or replaced. With respect to property that had not yet been repaired or replaced, Brotherhood argued that it owed only actual cash value, which Green Acres failed to prove at trial. The court agreed and granted Brotherhood’s motion for judgment as a matter of law.
Decision
The policy provides that Brotherhood must pay the lesser of the amount determined under the “Valuation of Property” clause or the cost to repair, replace, or rebuild the property with material of like kind and quality. The Valuation of Property clause states that Brotherhood must pay the replacement cost up to the amount Green Acres spends to repair or replace with similar materials. Thus, if Green Acres does not repair or replace damaged property, Brotherhood does not owe replacement costs. Rather, in that case, Green Acres may make a claim for the actual cash value.
The court held that Green Acres was not entitled to any additional replacement costs because it had not repaired or replaced any property for which Brotherhood had not already paid. The court further held that Green Acres was not entitled to actual cash value because it failed to submit evidence supporting such claims. In this context, the court held that estimates of replacement costs were insufficient to establish actual cash value. Along similar lines, the court held although Green Acres was not satisfied with some of the repairs, it failed to present evidence that the materials used were not “of like kind and quality.”
Having reached these conclusions, the court held that Brotherhood did not breach the policy and that Green Acres did not suffer any damages, let alone the $4.8 million awarded by the jury.
As to the common law and statutory bad faith claims, the court held that Green Acres failed to prove the actual damages required to substantiate the common law claims. Rather, the only source of actual damages raised at trial were the allegedly unpaid policy benefits. The statutory claims likewise failed to substantiate actual damages given that the jury had found that Brotherhood did not violate any statutory provisions. As such, the court ruled that Brotherhood was entitled to judgment as a matter of law on the bad faith claims as well.
Comments
The decision is important not only in its substantive findings, but also in its clear pronouncement as to the burden of proof for actual cash value claims. Green Acres argued that the actual cash value clause in the “Valuation of Property” provision constituted a limitation on liability for which Brotherhood bears the burden of proof. The court rejected this assertion, explaining that the clause provides a way to measure damages, not a limitation on liability.