Opinion issued August 25, 2026
In The
Court of Appeals
For The
First District of Texas
Background
In August 2015, the Smiths submitted to Allstate a claim under their homeowners insurance policy, seeking coverage for damages to their residence, including the dwelling and the contents, caused by a fire. The policy excludes coverage for “any loss consisting of or caused by . . . [i]ntentional or criminal acts of or at the direction of any insured person, if the loss that occurs: a) may be reasonably expected to result from such acts; or b) is the intended result of such acts.” This exclusion does not apply to “an innocent spouse or insured person who did not contribute to such loss or to the interest of an innocent spouse or insured person in the damaged property.”
In a letter to the Smiths dated September 22, 2015, Allstate informed the Smiths that its preliminary investigation of their claim indicated that “the loss in question resulted from an intentionally set fire” and cautioned that if its “investigation determines that the damage to the Residence was caused by you or at your direction, policy proceeds would not be payable to you.”
Allstate investigated the Smiths’ claim and ultimately determined that the fire was “not accidental[] but was intentionally caused at [the Smiths’] direction and with [their] knowledge and consent.” Accordingly, in a letter dated September 19, 2016, Allstate provided the Smiths “formal notification” that Allstate had “decided to reject [their] claim for a fire loss which [they] reported occurred on August 13, 2015
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(the Fire) at 2707 Blue Jay Cr., Humble, Texas 77396 (the Claim)” based on the intentional or criminal acts exclusion in the policy. Allstate informed the Smiths that because “the Fire was not accidental as to you, your losses arising out of the Fire are not within the coverage provided by the Policy.”
Sometime later, Allstate learned that there was a mortgage on the property, and Allstate issued a payment in the amount of approximately $58,000 to the mortgagee for damages to its collateral.
In July 2019, the Smiths invoked the appraisal provision of the Policy. It provides that if the insurer and insured “fail to agree on the amount of loss, either party may make written demand for an appraisal.” When Allstate “refuse[d] to participate” in the appraisal process, on August 22, 2019—almost three years after Allstate denied their claim under the policy—the Smiths sued Allstate alleging that it breached the policy by refusing to participate in an appraisal. The Smiths moved to compel an appraisal, and the trial court granted the motion. Later, after Allstate declined to pay the appraisal award “because the claim had been denied on September 19, 2016,” the Smiths amended their petition to allege that Allstate “failed to perform its contractual duty to adequately compensate [the Smiths] under the terms of the policy.”
Allstate moved for summary judgment. It argued that the Smiths’ lawsuit was barred by the contractual limitations period in the policy—which provides that “[n]o
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one may bring an action against [Allstate] in any way related to the existence or amount of coverage . . . unless the action is commenced within two years and one day from the date the cause of action first accrues.”1 Allstate contended that the Smiths’ cause of action accrued on September 19, 2016, when Allstate denied their claim. And, because the Smiths did not file the underlying lawsuit until August 22, 2019—more than two years and one day later—the Smiths’ claims were time-barred.
In response, the Smiths argued that Allstate’s position on limitations would be correct if it “had not re-opened investigation into [their] claim, changed its coverage decision, and tendered additional payment on the claim.” According to the Smiths, Allstate’s “final claim decision was made on August 31, 2017, when it issued payment [to the mortgagee] on [their] dwelling claim.” And they argued that this payment “toll[ed] the limitations period” and, therefore, their causes of action “fully accrued on August 31, 2017.” Accordingly, because they filed suit on August 22, 2019, the Smiths maintained that their suit was filed within the policy’s limitations period. The trial court denied Allstate’s motion for summary judgment.
At trial, Allstate investigator Byron Rachal testified that Allstate sent the September 19, 2016 letter, which he described as a “denial letter,” to “communicate . . . the decision that was made on the claim,” i.e., that the claim was “being rejected
1 Allstate raised limitations as an affirmative defense in its answer.
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or denied.” He testified that the Smiths’ claim was denied because the fire was non- accidental and it was set with the Smiths’ knowledge and consent.
Rachal further testified that a payment of approximately $29,000 was made to the Smiths for additional living expenses, or temporary housing, in 2015 immediately after the fire.2 And that a payment of approximately $58,000 was made to the mortgagee—but there was no testimony introduced at trial as to when this payment was made. Further, Rachal testified that it is still his position that the Smiths’ claim was correctly denied.
At the close of the evidence, Allstate moved for a directed verdict on its limitations defense. Allstate argued that the evidence introduced at trial established that the Smiths’ claim was denied in September 2016 and that it later declined to pay the appraisal award because the claim had been denied in 2016. Because the petition was not filed until August 2019, it was outside the limitations period. In response, the Smiths argued that limitations on their claims accrued when Allstate issued a payment to the mortgagee.
Allstate pointed out that the Smiths offered no testimony or evidence at trial establishing the date of the payment to the mortgagee. Yet, the trial court—noting that it was “taking judicial notice of the motion for summary judgment evidence that
2 Coverage for additional living expenses is separate from the dwelling coverage under the policy.
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was provided before”—found that “the statute of limitations ha[d] been met in this case” and denied Allstate’s motion for a directed verdict.
The trial court submitted a question to the jury regarding the date on which the Smiths’ causes of action against Allstate accrued. Specifically, Question No. 5 asked the jury: “By what date did HARRY AND ANN SMITH know or should have known that ALLSTATE denied their claim for policy benefits?”
The jury found that Allstate failed to comply with the policy and awarded the Smiths $202,428.36 in damages and $38,500 in attorneys’ fees. In answer to Question No. 5, the jury found that the Smiths knew or should have known that Allstate denied their claim by September 19, 2016—the date asserted by Allstate.
Following trial, Allstate then moved for a take-nothing judgment in light of the jury’s answer to Question No. 5, which established that the Smiths’ claims were barred by limitations. The Smiths, on the other hand, moved for entry of judgment of $202,428.36 in actual damages and $38,500 in attorneys’ fees.
After a hearing and additional briefing on the limitations issue, the trial court signed an amended final judgment awarding the Smiths $75,000 in actual damages, in accordance with a binding stipulation as to damages filed by the Smiths, plus pre- and post-judgment interest. Allstate timely appealed.
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Statute of Limitations
In its second issue, Allstate argues that the trial court erred by denying its motion for a directed verdict because the evidence introduced at trial conclusively establishes that the Smiths’ claims are barred by the statute of limitations. We agree. A. Standard of Review A directed verdict is proper (1) when the evidence conclusively establishes the movant’s right to judgment or negates the opponent’s right or (2) when the evidence is insufficient to raise a material fact issue. See Prudential Ins. Co. of Am. v. Fin. Rev. Servs., Inc., 29 S.W.3d 74, 77 (Tex. 2000). We use a legal sufficiency standard to review a trial court’s denial of a motion for directed verdict. See City of Keller v. Wilson, 168 S.W.3d 802, 823 (Tex. 2000); Austin Bridge & Rd., LP v. Suarez, 556 S.W.3d 363, 376 (Tex. App.—Houston [1st Dist.] 2018, pet. denied). B. Analysis The parties do not dispute that the policy sets the applicable statute of limitations in this case at two years and one day from the date the cause of action accrues.3 Nor do they dispute that the Smiths filed suit on August 22, 2019. Rather,
3 Although breach-of-contract actions are generally subject to a four-year statute of limitations, an insurer may contractually limit the time for filing suit, provided that the limitations period is not less than two years. See TEX. CIV. PRAC. & REM. CODE §§ 16.004, 16.070; Bazile v. Aetna Cas. & Sur. Co., 784 S.W.2d 73, 74 (Tex. App.—
Houston [14th Dist.] 1989, writ dism’d).
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they dispute the date on which the Smiths’ claims accrued—i.e., when limitations began to run.
Generally, when a cause of action accrues is a question of law. Provident Life & Accident Ins. Co. v. Knott, 128 S.W.3d 211, 221 (Tex. 2003). And, as a general rule, “a cause of action accrues and the statute of limitations begins to run when facts come into existence that authorize a party to seek a judicial remedy.” Id. An insured’s cause of action for breach of an insurance contract accrues when the insurer wrongfully denies coverage. See Stewart Title Guar. Co. v. Hadnot, 101 S.W.3d 642, 645 (Tex. App.—Houston [1st Dist.] 2003, pet. denied); cf. Murray v. San Jacinto Agency, Inc., 800 S.W.2d 826, 827–28 (Tex. 1990). In determining whether and when coverage has been denied, courts consider whether the insurer communicated an unequivocal denial, and whether there is evidence that the decision had been subsequently withdrawn or changed either by making payment or by taking other action inconsistent with the decision to deny coverage. See, e.g., Pace v. Travelers Lloyds of Tex. Ins. Co., 162 S.W.3d 632, 634–35 (Tex. App.—Houston [14th Dist.] 2005, no pet.).4 Here, the September 19, 2016 letter plainly stated that Allstate had “decided to reject [the Smiths’] claim for a fire loss which [they] reported occurred on August
4 See also Davis v. Homeowners of Am. Ins. Co., No. 05-24-00035-CV, 2025 WL 1031926, at *5 (Tex. App.—Dallas Apr. 7, 2025, no pet.) (mem. op.).
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13, 2015.” The letter provided a reason—that the fire was intentionally set and was caused at the Smiths’ direction and with their knowledge and consent. The letter also referred the Smiths to the intentional and criminal acts exclusion of the policy and clearly stated that Allstate had determined that the exclusion applied. Finally, the letter informed the Smiths: “Since the Fire was not accidental as to you, your losses arising out of the Fire are not within the coverage provided by the Policy.”
This letter unequivocally communicated Allstate’s decision to deny coverage for the Smiths’ claim. See Knott, 128 S.W.3d at 222 (“We do not require an insurer to include ‘magic words’ in its denial of a claim if an insurer’s determination regarding a claim and its reasons for the decision are contained in a clear writing to the insured.”). Accordingly, the Smiths knew that facts came into existence authorizing them to seek a judicial remedy on September 19, 2016, when Allstate unequivocally denied their claims. Thus, their claim accrued on that date—unless there is evidence in the record that this decision was withdrawn or changed.
In response to the motion for a directed verdict, and now on appeal, the Smiths maintained that their cause of action did not accrue until August 31, 2017—when Allstate made a payment to the mortgagee. We disagree.
First, although Rachal testified that Allstate paid the mortgagee approximately $58,000, there was no evidence introduced at trial as to when the payment was made. The Smiths argue that Allstate judicially admitted the date of that payment, but they
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cite to arguments by Allstate’s attorney at a post-trial hearing and in post-trial briefing—both of which occurred after the trial court ruled on the motion for a directed verdict.
Moreover, in response to Allstate’s motion for directed verdict, the Smiths did not raise the question of whether Allstate had made a judicial admission with respect to the date of payment to the mortgagee. Nor did they object to the submission of Question No. 5, which asked the jury when the Smiths should have known that Allstate denied their claim, on that basis.
“While a judicial admission relieves the opposing party’s burden of proving the admitted fact and bars the admitting party from disputing it, a judicial admission does not excuse the opposing party from having to preserve error.” Sherman v. Merit Office Portfolio, Ltd., 106 S.W.3d 135, 140 (Tex. App.—Dallas 2003, pet. denied). A party relying on an opponent’s judicial admissions of fact “must protect his record by objecting to the introduction of evidence contrary to that admission of fact and by objecting to the submission of any issue bearing on the fact admitted.” Hous. First Am. Sav. v. Musick, 650 S.W.2d 764, 769 (Tex. 1983).
Thus, even if Allstate had made a judicial admission as to the date of payment to the mortgagee, the Smiths waived their right to rely on this judicial admission argument on appeal by not raising it in response to the motion for directed verdict or in response to the submission of Question No. 5 to the jury. See id. at 768–69
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(holding that plaintiff waived right to rely on judicial admission because it failed to object to submission of special issue to jury on ground that it was relying on defendant’s pleading as judicial admission); Sherman, 106 S.W.3d at 140–41 (holding that plaintiff waived right to rely on judicial admission argument when he failed to raise it in response to motion for directed verdict). Accordingly, without evidence of when Allstate made a payment to the mortgagee,5 the fact that Allstate made this payment, standing alone, is not evidence that Allstate changed or withdrew its September 19, 2016 decision to deny the Smiths’ claim. See Davis, 2025 WL 1031926, at *5; Pace, 162 S.W.3d at 634–35.
Second, even if there was evidence before the jury that Allstate made a payment to the mortgagee after denying the Smiths’ claim on September 19, 2016, that is not evidence that Allstate changed or withdrew its position under the terms of the policy. As noted above, relying on the intentional and criminal acts exclusion of the policy, Allstate notified the Smiths on September 19, 2016 that it was denying
5 We note that in denying Allstate’s motion for directed verdict, the trial court stated that was “taking judicial notice of the motion for summary judgment evidence that was provided before.” To the extent that summary judgment evidence was not admitted at trial, this was error and this evidence cannot be used to support the denial of directed verdict. See, e.g., In re C.J.S., 702 S.W.3d 573, 598 (Tex. App.—
Houston [1st Dist.] 2024, no pet.) (“[W]hile . . . the trial court can take judicial notice of the existence of certain documents in its records, it may not take judicial notice of the truth of factual statements and allegations contained in the pleadings, affidavits, or other documents in the file.” (internal citations and quotations omitted)); Farlow v. Harris Methodist Fort Worth Hosp., 284 S.W.3d 903, 925 (Tex. App.—Fort Worth 2009, pet. denied) (courts do not consider evidence not admitted at trial in determining whether directed verdict was proper).
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their claim because the fire was intentionally set with their knowledge and consent. This exclusion plainly excludes coverage for “any loss . . . caused by . . . [i]ntentional or criminal acts of or at the direction of any insured person” and does not apply to those persons who do not “contribute to such loss.”
And this letter further communicated Allstate’s decision, based on this exclusion, to deny coverage for “your”—i.e., the Smiths’—losses. It in no way indicates that the mortgagee was in any way responsible for the fire or that payments to a mortgagee would be separately denied based on this exclusion.
The evidence introduced at trial establishes that Allstate maintained its position that the Smiths’ claims were properly denied in 2016 and that coverage of the Smiths’ losses was not authorized by the policy.6 Accordingly, we conclude that the evidence that a payment was made to the mortgagee, even after Allstate’s decision to deny the Smiths’ claim, is not evidence that Allstate changed or withdrew its denial decision as to the Smiths.7
6 For instance, Rachal testified that the only payment made to the Smiths was the approximately $29,000 for additional living expenses, or temporary housing, and that this payment was made in 2015—after the fire and before their claim was denied.6 He also testified that their claim was denied in 2016 and that he stands by that decision. Finally, the evidence reflects that, when Allstate refused to pay the appraisal award on September 1, 2021, Allstate reiterated that the claim had been denied on September 19, 2016.
7 We also reject the Smiths’ argument that, alternatively, the evidence introduced at trial established that the Smiths’ causes of action accrued on September 1, 2021, when Allstate refused to participate in the appraisal process. As noted above,
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In sum, we hold that the evidence introduced at trial conclusively establishes that Allstate denied the Smiths’ claim on September 19, 2016, and thus, the Smiths’ causes of action accrued on that date. Because the Smiths did not file their lawsuit until August 22, 2019—more than two years and one day after accrual—their claims are time-barred. Accordingly, the trial court erred in denying Allstate’s motion for a directed verdict.
We sustain Allstate’s second issue.8 Conclusion
We reverse the trial court’s judgment and render judgment that the Smiths take nothing from Allstate.
Terry Adams
Chief Justice
Panel consists of Chief Justice Adams and Justices Rivas-Molloy and Guiney.
Allstate declined to pay the appraisal award because the claim had already been denied on September 19, 2016.
8 Because of our disposition of this issue, we do not reach Allstate’s first issue, in which it argues that the trial court erred in disregarding the jury’s answer to Question No. 5. See TEX. R. APP. P. 47.1.