Filed: Sep. 17, 2013
Latest Update: Feb. 12, 2020
Summary: Case: 12-40635 Document: 00512375960 Page: 1 Date Filed: 09/17/2013 IN THE UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT United States Court of Appeals Fifth Circuit FILED September 17, 2013 No. 12-40635 Lyle W. Cayce Clerk TMM INVESTMENTS, LIMITED., Plaintiff–Appellee–Cross Appellant v. OHIO CASUALTY INSURANCE COMPANY, Defendant–Appellant–Cross Appellee Appeals from the United States District Court for the Eastern District of Texas Before JOLLY, DAVIS, and PRADO, Circuit Judges. EDWARD C
Summary: Case: 12-40635 Document: 00512375960 Page: 1 Date Filed: 09/17/2013 IN THE UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT United States Court of Appeals Fifth Circuit FILED September 17, 2013 No. 12-40635 Lyle W. Cayce Clerk TMM INVESTMENTS, LIMITED., Plaintiff–Appellee–Cross Appellant v. OHIO CASUALTY INSURANCE COMPANY, Defendant–Appellant–Cross Appellee Appeals from the United States District Court for the Eastern District of Texas Before JOLLY, DAVIS, and PRADO, Circuit Judges. EDWARD C...
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Case: 12-40635 Document: 00512375960 Page: 1 Date Filed: 09/17/2013
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
FILED
September 17, 2013
No. 12-40635
Lyle W. Cayce
Clerk
TMM INVESTMENTS, LIMITED.,
Plaintiff–Appellee–Cross Appellant
v.
OHIO CASUALTY INSURANCE COMPANY,
Defendant–Appellant–Cross Appellee
Appeals from the United States District Court
for the Eastern District of Texas
Before JOLLY, DAVIS, and PRADO, Circuit Judges.
EDWARD C. PRADO, Circuit Judge:
This appeal arises out of an insurance dispute between TMM Investments,
Ltd. (“TMM”), which owned a shopping center, and Ohio Casualty Insurance Co.
(“OCIC”), which insured the property. The property was damaged in a
hailstorm, but the parties disagreed about the extent of the damage. An
appraisal was conducted according to the terms of the insurance contract, but
TMM was not pleased with the appraisal award and sued to have the award
declared invalid. The district court set aside the appraisal award and had the
case proceed to trial for liability and coverage determinations. An advisory jury
assessed a damage award, and after a bench trial on the remaining issues, the
district court delivered a number of findings of fact and conclusions of law,
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including that OCIC had breached the insurance contract and that TMM was
entitled to damages, attorney’s fees, and prejudgment interest. OCIC appeals
the district court’s order setting aside the appraisal award and the district
court’s findings of fact and conclusions of law. TMM appeals the district court’s
determination that TMM was entitled to only the actual cash value of the
damage, rather than the replacement cost, and the district court’s failure to
award appellate attorney’s fees. Because we find that the original appraisal
award should not have been set aside, we reverse.
I. FACTUAL AND PROCEDURAL BACKGROUND
TMM owns a shopping center (“Liberty Square”) in Texarkana, Texas,
which was insured by OCIC under a policy that was in force from June 1, 2005
to June 1, 2006. According to TMM, the roof of the Liberty Square property was
severely damaged when a hailstorm passed through the area on or around June
6, 2005. TMM notified OCIC of the damage around March 30, 2007. TMM
conducted an assessment of the damage and estimated it to be between $654,796
and $955,910. OCIC’s engineers, on the other hand, estimated the damage to be
only around $17,949. OCIC made TMM a payment offer on the basis of that
estimate. TMM filed a sworn proof of loss for $679,725.68 on April 9, 2008.
Because the disparity between the parties’ estimates was so great, TMM
refused the payment offer and invoked the Appraisal Property Loss Conditions
section of the insurance policy, which reads, in pertinent part:
If we and you disagree on the amount of loss, either
may make written demand for an appraisal of the loss.
In this event, each party will select a competent and
impartial appraiser and notify the other of the
appraiser selected within 20 days of such demand. The
two appraisers will select an umpire. If they cannot
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agree within 15 days upon such umpire, either may
request that selection be made by a judge of a court
having jurisdiction. Each appraiser will state
separately the amount of loss. If they fail to agree, they
will submit their differences to the umpire. A decision
agreed to by any two will be binding as to the amount
of loss.
The appraisal process initially encountered a number of delays, but
ultimately TMM and OCIC appointed Clifford Crites and Mitchell Butler as
their respective appraisers. Crites and Butler designated Gary Boyd to serve as
umpire. In March 2009, Crites, Butler, and Boyd began their appraisals. On
April 13, Butler sent Boyd and Crites an e-mail that read:
Gentlemen,
While I appreciate and do not question the [] directions,
warnings and procedures quoted below from the various
expert agencies, the insurance issue remains what was
damage[d] by the storm/hail and what is the reason the
moisture levels are what they are. It is my position
that from the roofing stand point the old aluminum
coating was scuffed and displaced by the storm. The
membrane was not damaged. The water infiltration
was not as a result of the storm and the subsequent
interior water damage resulting from that infiltration
is not covered under the policy. It is my understanding
that the policy would only cover interior damage if
there was not a covere[d] peril related opening(s) in the
roof. I feel confident in my position on this matter but
ask my client for confirmation and advi[c]e. Once I
have the confirmation I will issue an estimate that
cover[s] all item[s] I attribute to the storm and my
recommended quantification of expense.
On July 15, citing concerns over the way the appraisal was being conducted,
Crites resigned.
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On July 29, 2009, Boyd issued an appraisal award, which Butler also
signed, listing the “Replacement Cost” of the damage to Liberty Square as
$73,014.83, and the “Actual Cash Value” of the loss as $49,632.63. The award
contained line items for “Clean and coat modified [illegible] roof 188 sqs,”
“Repair & coat EFIS,” and “Replace and paint aluminum shingles,” but
apparently the final figure was not inclusive of any estimate for damage to the
roof membrane or to the skylights. Boyd, in drawing up the award, also chose
to exclude damage to Liberty Square’s heating, ventilation, and air-conditioning
(HVAC) system because he did not believe the damage affected the unit’s
operation, even though Crites and Butler had both stated in their own appraisal
awards that the HVAC system had sustained $2,794.80 worth of damage. At
some point, OCIC tendered payment for the “Actual Cash Value” listed in the
award Boyd issued, less the policy deductible. After TMM notified OCIC that
the award had excluded the HVAC damage, OCIC sent TMM a check for
$51,427.43, the amount of the appraisal award plus the agreed-upon $2,794.80
damage to the HVAC system. Because it took issue with the appraisal process
and award, TMM refused the money.
TMM then sued OCIC in state court on August 21, 2009, seeking a
declaratory judgment pursuant to the Texas Declaratory Judgments Act that the
appraisal process was flawed and that the appraisal award should be set aside.
TMM additionally alleged that OCIC had breached the terms of the insurance
contract by failing “to pay any claim loss in a timely manner when liability and
loss had become reasonably clear.”1 OCIC timely removed the case to federal
1
The complaint also contained claims for breach of fiduciary duty and violations of the
Texas insurance code but TMM later agreed to reserve those issues for a separate trial, to be
held once causation, damages, and coverage issues had been resolved.
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court on diversity grounds.2 See 28 U.S.C. § 1332(a) (2013). The parties took
discovery, and Boyd, Butler, and Crites each gave sworn depositions. In his
deposition, Butler testified that he believed some of the damage to Liberty
Square’s skylights had been caused by projectiles from inside the building such
as bullets or rocks, rather than hail.
On January 31, 2011, OCIC moved for summary judgment. TMM in turn
filed a cross-motion for partial summary judgment on February 1, 2011, arguing
that the appraisal award should be set aside because the appraisers had erred
in a number of ways. First, TMM argued that Boyd, the umpire, had exceeded
his authority when he improperly excluded damage to Liberty Square’s HVAC
system. See Fisch v. Transcon. Ins. Co.,
356 S.W.2d 186, 189 (Tex. Civ.
App.—Houston 1962, writ ref’d n.r.e.) (“[T]he umpire’s power to act is
conditioned upon a disagreement between the appraisers and the submission of
their differences only to him . . . .”). Second, TMM argued that Butler and Boyd,
in considering whether it had been hail, or instead wind, improper installation,
and deterioration that had caused the damage to Liberty Square’s roof, had
“improperly considered causation and coverage issues” in arriving at the
appraisal award.3 Third, TMM claimed that Boyd and Butler had ignored
pertinent evidence in arriving at their appraisal award.
On March 25, 2011, the district court granted partial summary judgment
for TMM, finding that the appraisal award was invalid and should be set aside.
The district court agreed with TMM that the appraisal panel had exceeded the
2
The original complaint also included Boyd and Butler, who are Texas domiciliaries,
as defendants, but TMM voluntarily dismissed all claims against them pursuant to a
settlement agreement, creating complete diversity between the parties.
3
As with similar insurance policies, TMM’s policy did not cover wear and tear.
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scope of its authority, first, because Boyd was not authorized to exclude the
HVAC damage from the appraisal award, and second, because Butler and Boyd
improperly considered causation and coverage issues when evaluating the
damage to certain parts of the property, namely the roof membrane and
skylights, citing Wells v. Am. States Preferred Ins. Co.,
919 S.W.2d 679, 685 (Tex.
App.—Dallas 1996, writ denied). The court determined that “[t]he case [would]
proceed to trial on matters of causation, liability, and damages[,]” because “[i]t
would be inappropriate to remand this matter for a new appraisal
determination.”
The district court empaneled an advisory jury, which eventually found
that it would cost $654,795.84 “to repair and replace Liberty Square Shopping
Center property damaged by the hailstorms of June 6, 2005, November 27, 2005,
and/or May 16, 2006.” The district court then conducted a bench trial, and
issued its findings of fact and conclusions of law on November 15, 2011. The
court concluded that OCIC had breached the terms of the insurance policy and
that TMM was entitled to “the actual cash value of the damage: $445,261.17,”
or sixty-eight percent of the replacement cost. The court also awarded TMM
attorney’s fees, court costs, expert fees, and prejudgment interest running from
October 6, 2008. OCIC moved for a new trial, but the district court denied the
motion. OCIC and TMM both timely appealed.
II. DISCUSSION
Both parties have raised a number of issues on appeal, many of which are
contingent on the outcome of the dispute over the validity of the appraisal
award. We hold that the appraisal award was incorrect in that it excluded
damage to the HVAC unit from the award, but that the rest of the award should
remain unaffected by this determination. The appraisers did not exceed their
authority when they considered causation issues, and therefore the appraisal
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award should not have been set aside. OCIC thus was only obligated to pay the
amount articulated in the award, plus the cost of repair for the HVAC system.
OCIC therefore fulfilled the terms of the insurance contract when it tendered the
amount articulated in the award and the cost of the repair to the HVAC system
to TMM, and the district court erred when it determined OCIC had breached the
insurance contract. Accordingly, the district court’s award of attorney’s fees and
prejudgment interest to TMM is also reversed. Because we hold that there was
no breach of contract, the issues raised in TMM’s cross-appeal are moot.
A. Standard of Review and Applicable Law
“We review a grant of summary judgment de novo, viewing all evidence in
the light most favorable to the nonmoving party and drawing all reasonable
inferences in that party’s favor.” Pierce v. Dep’t of the U.S. Air Force,
512 F.3d
184, 186 (5th Cir. 2007). “[S]ummary judgment is proper if the pleadings,
depositions, answers to interrogatories, and admissions on file, together with the
affidavits, if any, show that there is no genuine issue as to any material fact and
that the moving party is entitled to a judgment as a matter of law.” Celotex
Corp. v. Catrett,
477 U.S. 317, 322 (1986) (internal quotation marks omitted).
Because this case was removed to federal court on diversity grounds,
Texas substantive law applies. See Erie R.R. Co. v. Tompkins,
304 U.S. 64,
78–80 (1938). “To determine issues of state law, we look to final decisions of the
state’s highest court, and when there is no ruling by that court, then we have the
duty to determine as best we can what the state’s highest court would decide.”
Westlake Petrochems., L.L.C. v. United Polychem, Inc.,
688 F.3d 232, 238 n.5 (5th
Cir. 2012) (citation omitted). “In making an [Erie] guess in the absence of a
ruling from the state’s highest court, this Court may look to the decisions of
intermediate appellate state courts for guidance.” Howe ex rel. Howe v.
Scottsdale Ins. Co.,
204 F.3d 624, 627 (5th Cir. 2000) (citation omitted).
B. Analysis
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“Because courts ‘seek to implement the intention of the parties as
expressed in the language of a contract,’ it has long been the rule in Texas that
‘appraisal awards made pursuant to the provisions of an insurance contract are
binding and enforceable.’” Richardson v. Allstate Tex. Lloyd’s, No. 05-06-00100-
CV,
2007 WL 1990387, at *3 (Tex. App.—Dallas July 11, 2007, no pet.) (mem.
op.) (alteration omitted) (quoting Providence Lloyds Ins. Co. v. Crystal City
Indep. Sch. Dist.,
877 S.W.2d 872, 875 (Tex. App.—San Antonio 1994, no writ));
see also Lundstrom v. United Servs. Auto. Ass’n,
192 S.W.3d 78, 87 (Tex.
App.—Houston [14th Dist.] 2006, pet. denied). Every reasonable presumption
will be indulged to sustain an appraisal award, and the burden of proof lies on
the party seeking to avoid the award. Franco v. Slavonic Mut. Fire Ins. Ass’n,
154 S.W.3d 777, 786 (Tex. App.—Houston [14th Dist.] 2004, no pet.); Continental
Ins. Co. v. Guerson,
93 S.W.2d 591, 594 (Tex. Civ. App.—San Antonio 1936, writ
dism’d). An appraisal award will be upheld unless at least one of three
circumstances exists: (1) the award was made without authority; (2) the award
was the result of fraud, accident, or mistake; or (3) the award was not made in
substantial compliance with the terms of the contract. Crystal
City, 877 S.W.2d
at 875–76. “The effect of an appraisal provision is to estop one party from
contesting the issue of damages in a suit on the insurance contract, leaving only
the question of liability for the court.”
Lundstrom, 192 S.W.3d at 87.
1. Exclusion of the HVAC system damages
The district court was correct in determining that the umpire had no
authority to exclude the HVAC damages estimate from the appraisal award.
Texas courts have clearly held that unless there is a discrepancy between the
findings of the two appraisers appointed by the parties, there is no duty for the
umpire to perform. See
Fisch, 356 S.W.2d at 189–90 (“Since the umpire’s power
to act is conditioned upon a disagreement between the appraisers and the
submission of their differences only to him, we are of the opinion that the award,
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which was signed by only one appraiser and the umpire who had no authority
to act, is invalid.”); Crystal
City, 877 S.W.2d at 876 (“[A]n umpire, appointed to
decide on matters of difference only, has no authority to pass on matters
concerning which there was no difference between the appraisers.” (quoting
Fisch, 356 S.W.2d at 190)). Here, no party disputes that Butler and Crites
agreed as to how much damage the HVAC system sustained. Boyd was thus
without authority to strike it from the appraisal award.
However, Boyd’s error does not justify, on its own, throwing out the entire
appraisal award. The district court had no occasion to decide the issue of what
should be done in the event the HVAC damages omission constituted the only
error on the part of the appraisal panel, because it also found that the appraisal
panel’s consideration of causation rendered the appraisal invalid in its entirety.
Because we find that the award is otherwise unobjectionable, see infra Part
II.B.2., we must determine if, given Boyd’s error, the “valid” portion of the award
should stand. While Texas courts have never addressed the issue, the related
case law suggests that minor mistakes that do not taint the entire award should
not frustrate the parties’ intent to be bound by the appraisal provision of their
contract.
In Crystal City, the trial court set aside an appraisal award because a
section in the award listing damages agreed upon by the appraisers had been
mislabeled. 877 S.W.2d at 876–77. The court of appeals, while acknowledging
the error, nonetheless reinstated the award and noted that “[i]f the [umpire and
the two other appraisers] are of one mind, or if any two of them are in accord as
to value and loss, the appraisal award is a finality.”
Id. at 877–78 (citation
omitted). A federal district court case interpreting Texas law also suggests that
the acceptable portions of the award should continue to bind the parties. In
MLCSV10 v. Stateside Enterprises, Inc., the court explained, “To the extent the
appraisal award implicitly determined that the ductwork damage was not
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covered . . . , the plaintiffs have provided a sufficient basis for setting aside that
part of the appraisal award. There is, however, no basis for setting aside the
entire award or any other part of it.”
866 F. Supp. 2d 691, 707–08 (S.D. Tex.
2012). The court went on to say in a footnote, “[A] finding that appraisers were
biased would require setting aside the entire award. But as all parties admitted
. . . , there is no precedent that compels setting aside an entire appraisal award
based on a finding that one part of the award was incomplete or implicitly
determined a coverage issue.”
Id. at 708 n.6. Here, there is no contention that
Boyd lacked authority to speak on the numerous damage items that Butler and
Crites disagreed about. We do not believe the omission of the HVAC damage
from the award justifies ignoring the intent of the parties to have damages
issues submitted to and decided by an appraisal panel. Cf. State Farm Lloyds
v. Johnson,
290 S.W.3d 886, 895 (Tex. 2009) (“Like any other contractual
provision, appraisal clauses should be enforced.”). We therefore uphold the
remainder of the award.4
2. Whether the appraisal panel exceeded its authority in considering
causation
The district court, in its order setting aside the appraisal award, concluded
that the appraisal panel had exceeded its authority in “attribut[ing] the roof
membrane damage to improper installation and the skylight damage to rocks
thrown from below.” The district court relied primarily on a Texas Court of
Appeals case, Wells v. American States Preferred Insurance Co.,
919 S.W.2d 679
(Tex. App.—Dallas 1996, writ denied), in coming to that conclusion. According
to the district court, Wells “held that the appraisal panel’s responsibility is
simply to determine the value of property damage and that ‘questions of what
caused or did not cause the loss are questions to be decided by the court.’”
4
The appraisal award amount and the HVAC damage amount were tendered to TMM,
but it appears TMM never cashed the check. If this is the case, OCIC is obviously required
to furnish that amount to TMM again.
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(quoting
Wells, 919 S.W.2d at 685). In Wells, the appraisal panel unanimously
concluded that the claimant’s house had suffered damage “due to foundation
movement in the amount of $22,875.94[,]” but that the amount of damage
attributable to a plumbing leak that had allegedly created the foundation
movement—which the policy would have covered—was
zero. 919 S.W.2d at 682.
The trial court approved the appraisal award, but the appeals court reversed,
concluding that “the appraisal section of [the policy] establishes an appraisal
procedure to determine the dollar amount of the insured’s loss only, and that it
does not authorize or empower the appraisal panel created thereunder to
determine what caused or did not cause that loss.”
Id. at 685. The appraisal
award was therefore made without authority, and the court remanded the case
to the trial court for a new trial.
Id. at 686–87.
OCIC argues, however, that the district court did not take full account of
a more recent Texas Supreme Court case that modifies the scheme established
by Wells. That case, State Farm Lloyds v. Johnson, does indeed provide the
controlling law on the issue of the scope of the appraisal panel’s authority.
290
S.W.3d 886 (Tex. 2009). In Johnson, the claimant alleged that her roof had been
damaged in a hailstorm and filed a claim with her insurance company.
Id. at
887. When the insurance company provided a much lower damage estimate
than her claim requested, the claimant invoked the policy’s appraisal provision.
Id. at 887–88. The insurance company, however, argued that appraisal should
not be required because the panel would necessarily have to decide issues of
causation, not “amount of loss.”
Id. at 888. The claimant then filed suit seeking
a declaratory judgment compelling appraisal.
Id.
The Texas Supreme Court began by repeating the rule, established in
earlier case law, that “damage questions [are] for appraisers and liability
questions [are] for the courts[.]”
Id. at 889. It quickly acknowledged, though,
that “[t]he line between liability and damage questions may not always be
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clear[,]”
id. at 890, and that “[c]ausation relates to both liability and damages
because it is the connection between them[,]”
id. at 891–92.
The court discussed both Wells and Lundstrom v. United Services
Automobile Ass’n, a case somewhat at odds with Wells, in which the appeals
court upheld an appraisal award that considered damages from an “initial
wetting” but not damages from mold.
Id. at 892; see Lundstrom, 192 S.W.3d at
89 (“The cases cited in Wells stand for the narrower proposition that appraisers
exceed their authority when they engage in making the legal determination of
what is or is not a covered loss based on their determination of what caused the
loss or a portion of it.”). The Johnson court reconciled these cases as follows:
Appraisers can decide the cost of repairs in [the context
of cases like Wells], but if they can also decide causation
there would be no liability questions left for the courts.
By contrast, when different types of damage occur to
different items of property, appraisers may have to
decide the damage caused by each before the courts can
decide liability. . . . In [the context of cases like
Lundstrom], courts can decide whether water or mold
damage is covered, but if they can also decide the
amount of damage caused by each, there would be no
damage questions left for the appraisers. The same is
true when the causation question involves separating
loss due to a covered event from a property’s pre-
existing condition. . . . If State Farm is correct that
appraisers can never allocate damages between covered
and excluded perils [such as wear and tear], then
appraisals can never assess hail damage unless a roof
is brand new.
Johnson, 290 S.W.3d at 892–93. The court concluded that appraisal should be
compelled, noting that “[a]ny appraisal necessarily includes some causation
element, because settling the ‘amount of loss’ requires appraisers to decide
between damages for which coverage is claimed from damages caused by
everything else.”
Id. at 893.
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At the very least, Johnson arguably establishes that appraisal panels are
within their rights when they consider whether damage was caused by a
particular event or was instead the result of non-covered pre-existing perils like
wear and tear. Indeed, this is the way many subsequent cases have interpreted
Johnson’s guidance. See, e.g.,
MLCSV10, 866 F. Supp. 2d at 705 (“Lochridge’s
causation evaluation involved no more than ‘separating loss due to a covered
event from a property’s pre-existing condition.’” (quoting
Johnson, 290 S.W.3d
at 892)); Essex Ins. Co. v. Helton, 4:10-cv-2229, at *2 (S.D. Tex. Jan. 24, 2012)
(slip op.) (“However, where there are different types of damage to different items
of property, or where the property is not new and has suffered wear and tear,
appraisers may have to decide causation in order to decide damages.”). To the
extent the appraisers merely distinguished damage caused by pre-existing
conditions from damage caused by the storm, they were acting within their
authority.
The district court appears to have concluded that Johnson required setting
aside the appraisal award because “TMM contends the storm damaged the
skylights, but [OCIC] contends rocks caused the damage. . . . TMM contends the
storm damaged the roof membrane, but [OCIC] contends the roof membrane was
damaged due to improper installation. The parties have alleged different causes
for the same injuries.” There are two principal problems with this conclusion.
First, it is not entirely clear from the record what reasons Butler or Boyd had for
excluding certain items from the award. TMM itself acknowledges that multiple
causes of damage, including wear and tear, have been alleged. Its summary
judgment motion stated,“Here, the moisture levels were allegedly caused by hail
storm, wind storm and/or windstorm, improper installation and deterioration.”
If that is the case, Johnson appears to foreclose setting aside the appraisal
award—it was entirely appropriate for the appraisers to consider whether
damage was caused by these pre-existing conditions.
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Second, it appears the district court misapplied the law even if its
statements about the reasons for Butler’s and Boyd’s exclusions are accurate.
Johnson stated, “[W]hen different causes are alleged for a single injury to
property, causation is a liability question for the courts. . . . By contrast, when
different types of damage occur to different items of property, appraisers may
have to decide the damage caused by each before the courts can decide liability.”
Johnson, 290 S.W.3d at 892. Putting aside the question of why this distinction
should matter, even according to the facts as the district court found them, this
is a case of the second variety because damage is alleged to have occurred to the
roof membrane and the skylights. Additionally, the closeness of the facts in
Johnson to those at bar—both involved roofs damaged in part by
hailstorms—militates in favor of arriving at a holding similar to the one arrived
at by the Johnson court. Coupled with the requirement that we indulge “every
reasonable presumption to sustain an appraisal award,” Johnson appears to
compel reversal of the district court’s order setting aside the award in this case.
3. Claims related to breach of contract
Because the appraisal award was not invalid, when OCIC tendered the
amount articulated in the appraisal award plus an amount for the damage to the
HVAC system, it fulfilled the terms of the insurance contract. See Probus Props.
v. Kirby,
200 S.W.3d 258, 262 (Tex. App.—Dallas 2006, pet. ref’d) (explaining
that tendering a check “suspends the obligation until dishonor of the check or
until it is paid or certified” (emphasis added) (internal quotation marks
omitted)). Because TMM thus did not bring a “valid claim” for breach of
contract, it should not have been awarded attorney’s fees, and we reverse the
district court’s determination to that effect. See Tex. Civ. Prac. & Rem. Code
Ann. § 38.001(8) (2013). Similarly, because TMM was not a “prevailing party”
in its breach of contract claim, we reverse the district court’s award of costs to
TMM. See Fed. R. Civ. P. 54(d); Carter v. Gen. Motors Corp.,
983 F.2d 40, 43
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(5th Cir. 1993) (explaining that “federal procedural law ordinarily governs the
award of costs in diversity cases”). Because the claims in TMM’s cross-appeal
are uniformly related to the breach of contract found by the district court, we
dismiss these claims as moot.
III. CONCLUSION
For the foregoing reasons, we REVERSE the district court’s decision and
REMAND the case so that the district court may reinstate the appraisal award,
including the HVAC damage amount of $2794.80.
15