The jury charge included the following:

You are instructed that the Court has found that State Farm Lloyds failed to comply with the Homeowners Policy. [Italics in original]

QUESTION NUMBER 1

What sum of money, if any, if paid now in cash, would fairly and reasonably compensate the MacKeens for State Farm Lloyds [sic] failure to comply with the Homeowners Policy?

Consider the following elements of damages, if any, and none other.

In answering these subparts, you are to consider only the Replacement Cost Value (RCV) of the Dwelling and Dwelling Extensions (under Coverage A of the Homeowner's Insurance Policy), except as it relate to wood fences. “Replacement Cost Value” is defined as the reasonable and necessary costs to replace or repair the damaged property with similar construction and for the same use.

* * *

Answer separately in dollars and cents for damages, if any.

Damages to the Dwelling:

Answer: $   

Damages to the Dwelling Extensions:

Answer: $   

QUESTION NUMBER 2

Did State Farm Lloyds engage in any unfair or deceptive act or practice that was the producing cause of damages to the MacKeens?

“Producing cause” means a cause that was a substantial factor in bringing about the damages, if any, and without which the damages would not have occurred. There may be more than one producing cause.

“Unfair or deceptive act or practice” means any one or more of the following:

1) Misrepresenting to a claimant a material fact or policy provision relating to coverage at issue; or

2) Failing to attempt in good faith to effectuate a prompt, fair, and equitable settlement of a claim when the insurer's liability has become reasonably clear; or

3) Failing to provide promptly to the MacKeens a reasonable explanation of the factual and legal basis in the policy for State Farm Lloyds' denial of the claim; or

4) Refusing to pay a claim without conducting a reasonable investigation with respect to the claim.

Answer “Yes” or “No.”

Answer:    

If you have answered “Yes” to Question No. 2 then answer this question. Otherwise, do not answer this question. [Italics in original]

QUESTION NUMBER 3

What sum of money, if any, if paid now in cash, would fairly and reasonably compensate the MacKeens for their damages, if any, that were caused by such unfair or deceptive act or practice?

Consider the following elements of damages, if any, and none other.

In answering these subparts, you are to consider only the Replacement Cost Value (RCV) of the Dwelling and Dwelling Extensions (under Coverage A of the Homeowner's Insurance Policy), except as it relate to wood fences.

“Replacement Cost Value” is defined as the reasonable and necessary costs to replace or repair the damaged property with similar construction and for the same use.

* * *

Answer separately in dollars and cents for damages, if any.

Damages to the Dwelling:

Answer: $   

Damages to the Dwelling Extensions:

Answer: $   

Ten members of the jury answered question one with damage findings of $25,000 for the dwelling and $30,000 for its extensions. The jury found that State Farm had knowingly engaged in an unfair or deceptive act or practice resulting in actual damages to the MacKeens of $25,000 for their dwelling and $30,000 for its extensions and because State Farm had acted knowingly, the MacKeens were due $50,000 in additional damages. Finally, the jury awarded the MacKeens attorneys' fees of $220,000 through trial with conditional awards for direct appeal of $75,000 and $50,000 if petition for review by the Texas Supreme Court was sought and an additional $50,000 if petition for review was granted.

The trial court rendered judgment for the MacKeens on their extra-contractual claim, with additional damages, and attorneys' fees.

The trial court denied State Farm's motion for a new trial, and it appealed. Among other things, State Farm argued that the trial court had abused its discretion by including the instruction “that the Court has found that State Farm Lloyds failed to comply with the Homeowners Policy” over its objections because it was an improper comment on the weight of the evidence.

The Appellate Court's Decision

The appellate court reversed.

In its decision, the appellate court explained that the trial court did not find as a matter of law that State Farm had breached Coverage A of its policy with respect to damage to the dwelling and extensions, and that it could not make such a finding on the conflicting evidence presented.

The appellate court also noted that the trial court did not submit a breach-of-contract liability question to the jury.

Rather, the appellate court said, through its “State Farm failed to comply” instruction, the trial court informed the jury that “it had resolved all liability issues for breach of the policy against State Farm.” The appellate court then declared that it was “unable to see how the instruction aided the jury to answer the questions submitted.” Moreover, the appellate court said, it agreed with State Farm that the instruction “improperly commented on the weight of the evidence.” The appellate court stated:

The court's instruction that State Farm failed to comply with the policy manifestly suggested to the jury that State Farm's failure encompassed its obligation to pay policy benefits under Coverage A, thereby suggesting the opinion of the trial court favoring the MacKeens' evidence on the cost of repair or replacement over that presented by State Farm.

Accordingly, the appellate court held, the trial court had abused its discretion by instructing the jury that State Farm had failed to comply with the policy. The error, according to the appellate court, directly related to State Farm's liability under the policy for Coverage A benefits, “a contested critical issue in the litigation.”

The appellate court added that the same could be said for the impact of the “State Farm failed to comply” instruction on the jury's consideration of question three, which addressed the same damage elements as question one.

Finally, the appellate court declared that “broadly instructing the jury of State Farm's failure to comply with the policy, the [trial] court suggested as well an affirmative answer to the issue presented in question two.”

The appellate court concluded that the charge error was not harmless, and it reversed the trial court's judgment and remanded for a new trial.

The case is State Farm Lloyds v. Mackeen, No. 07-17-00175-CV (Tex. Ct. App. May 17, 2019).