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by Katherine Jakeway

This month, the Fifth Circuit made clear that Texas law does not permit tort recovery when an insured has already been made whole under their policy. In Wilhite v. Ark Royal Ins. Co., No. 24-20401, 2025 WL 2588992 (5th Cir. Sept. 8, 2025), the Court held that a plaintiff’s tort claims following a loss caused by a burst pipe in a home are foreclosed under binding circuit and Texas Supreme Court precedent if their damages have already been paid under their policy.

In this case, plaintiff George Wilhite submitted a claim to his insurer Ark Royal for damage caused by a burst water pipe in his home. Following the invocation of Wilhite’s appraisal provision, Ark Royal paid Wilhite the balance and statutory interest due to him under the homeowner’s policy.

Despite this payout, Wilhite proceeded to file suit against Ark Royal in state court, which Ark Royal removed to the United States District Court for the Southern District of Texas. Wilhite asserted four causes of action in his amended complaint: (1) breach of contract; (2) violations of the Texas Prompt Payment Claims Act (TPPCA); (3) breach of the common law duty of good faith and fair dealing, and (4) violations of Chapter 541 of the Texas Insurance Code (Unfair Methods of Competition and Unfair or Deceptive Acts or Practices). Ark Royal argued that Wilhite could prove no independent injury, as he was already made whole by the appraisal award and interest paid to him under his policy. Wilhite conceded that his contract and TPPCA claims were not viable but maintained that he was entitled to recover under his common law tort and Chapter 541 claims despite the appraisal payment. The district court disagreed and granted Ark Royal summary judgment on all claims.

On appeal, Wilhite argued again that Chapter 541 of the Texas Insurance Code entitled him to tort relief even if Ark Royal’s payment to him precluded recovery on a breach of contract claim. However, the Fifth Circuit emphasized that this argument was barred by its recent decision in February of this year, Mirelez v. State Farm Lloyds, 127 F.4th 949 (5th Cir. 2025). In Mirelez, the insured submitted a homeowner’s claim and invoked appraisal, which the insurer paid in full, plus interest. The insured sued and asserted the exact same claims as Wilhite. Mirelez alleged that he was entitled to actual and treble damages in tort despite being paid an appraisal award and applicable interest. Moreover, he specifically argued that Texas case law did not require him to prove an independent injury. The court disagreed, and reiterated precedent from the Texas Supreme Court which “held, quite explicitly, that if the only ‘actual damages’ that a plaintiff seeks are policy benefits that have already been paid pursuant to an appraisal provision in that policy, an insured cannot recover for bad faith either under Chapter 541 of the Texas Insurance Code or in common law tort.” Id. at 951 (citing Ortiz v. State Farm Lloyds, 589 S.W.3d 127, 135 (Tex. 2019)). Moreover, the court highlighted that when a plaintiff has recovered his benefits in full through the payment of an appraisal award and interest, “[he] cannot maintain his extracontractual bad faith claims in the absence of evidence supporting an independent injury caused by alleged violations of Chapter 541 of the Insurance Code or an alleged breach of duty owed.” Id. at 953.

Further, the Fifth Circuit reaffirmed Mirelez less than a week later in Senechal v. Allstate Vehicle and Prop. Ins. Co., 127 F.4th 976 (5th Cir. 2025), where the court affirmed an order of summary judgment against the insured’s tort claims because his insurer paid the appraisal award and because the insured presented no evidence of independent injury.

Surprisingly, despite this precedent, the court highlighted in a footnote that Wilhite’s brief never even acknowledged Mirelez despite its publication three weeks prior and Wilhite’s counsel being the counsel of record in Mirelez. Because Wilhite’s claim was directly barred by the holdings in both the Fifth Circuit in Mirelez and Texas Supreme Court precedent in Ortiz, the court affirmed the order of summary judgment in favor of Ark Royal.

In sum, Wilhite v. Ark Royal Ins. Co. adds to a line of strong precedent, reaffirming that without an independent injury, Texas law does not permit tort recovery for an insured if they have been made whole by payment of an appraisal award under their policy. 

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The opinions expressed are those of the authors and do not necessarily reflect the views of the firm or its clients. This article is for general information purposes and is not intended to be and should not be taken as legal advice.