The Zelle Lonestar Lowdown - Issue 19
U.S. Magistrate Judge Andrew Edison of the United States District Court for the Southern District of Texas recently issued a decision granting summary judgment for an insurance carrier in a first-party case involving alleged hail damage to a residential property. In granting summary judgment, the Court rejected an improper disclosure of experts and applied the concurrent causation doctrine where the insured could not produce evidence to allocate damage between hail events.
Thompson v. State Farm Lloyds involved alleged damage to a residential property in the Houston area resulting from a September 28, 2021 storm. 2024 WL 4544783, *1 (S.D. Tex. Oct. 22, 2024). Thompson reported that a roofer, Shingle Hut, LLC, had inspected her property and concluded that her roof damage was caused by a September 28, 2021 hailstorm, which led to her filing a claim with State Farm. Id. State Farm investigated the loss, completing multiple inspections, and identified only minor covered hail damage to the gutters and a window screen, repairs for which fell below the applicable deductible. Id.
Disagreeing with State Farm’s coverage determination, Thompson initiated the lawsuit, asserting claims for breach of contract, violations of Chapters 541 and 542 of the Texas Insurance Code, and common law bad faith. Id. During litigation, State Farm designated engineer Jordan Beckner as an expert regarding causation. Id. Beckner inspected the property and concluded that no hailstorm occurred at the property on September 28, 2021, and further, that any damage to the roofing was caused by wear, tear, and deterioration (all excluded causes of loss under the applicable policy). Id.
State Farm moved for summary judgment for two independent reasons:
(1) Thompson failed to produce evidence that hail or wind damaged the Property on September 28, 2021, and the amount of loss exceeded the Policy's deductible; and
(2) even if Thompson could present some evidence of wind or hail damage on September 28, 2021, which exceeded the Policy’s deductible, she failed to segregate the covered losses under the concurrent causation doctrine.
Id. at *3.
The Court first addressed State Farm’s objections to Thompson’s summary judgment evidence, namely an estimate prepared by Martin Langley of Shingle Hut, LLC and accompanying letter signed by Shingle Hut’s owner, Kevin Catchings, opining that damage was caused by the September 28, 2021 hailstorm requiring a “complete reroof and any associated repairs…which will cost $44,419.05.” Id. at *1-2. Though the Court also questioned the admissibility of this ‘opinion’ evidence, a full analysis was ultimately unnecessary—the Court sustained State Farm’s objection to the letter and estimate based on the simple fact that neither Langley nor Catchings had been properly disclosed as testifying experts in compliance with the Federal Rule of Civil Procedure, and there was no indication that the failure to designed Langley and/or Catchings was substantially justified or harmless. Id. at *2.
Without this evidence, the Court held that Thompson could not meet her burden to plead and prove facts that show hail or wind damaged the property on September 28, 2021. Id. at *3. The Court reasoned: “[T]here is not a shred of evidence in the summary judgment record that the cost to repair the roof is above the $14,186 Policy deductible. This is a death knell to her breach of contract claim.” Id.
Turning to the secondary basis for summary judgment, the Court held that, even assuming Thompson could create a genuine dispute as to whether hail damaged the property on September 28, 2021, the concurrent causation doctrine barred her breach of contract claim. Id. at *4.
Under the concurrent causation doctrine, “[w]hen covered and excluded perils combine to cause an injury, the insured must present some evidence affording the jury a reasonable basis on which to allocate the damage.” Id. at *3 (quoting Lyons v. Millers Cas. Co. of Tex., 866 S.W.2d 597, 601 (Tex. 1993). In its analysis, the Court recognized that considerable confusion exists over how district courts should apply the doctrine, though the Fifth Circuit recently confirmed that it does not preclude recovery where the insured presents evidence demonstrating that all of the claimed damage resulted from a covered cause. Id. at *3 (citing Advanced Indicator & Mfg., Inc. v. Acadia Ins. Co., 50 F4th 469, 477 (5th Cir. 2022).
Here, Thompson’s properly designated expert opined: “it’s possible the impacts [to Thompson’s roof] originate from a single storm that had a variation of sizes or could be the result of more than one event.” Id. Such concession by her own expert that more than one event could have caused the damage to her roof was enough to trigger the concurrent causation doctrine, thereby obligating Thompson to “present some evidence affording the jury a reasonable basis on which to allocate the damage.” Id. Again, upon exclusion of the estimate and letter from Shingle Hut, Thompson had no other evidence to allow a jury to reasonably allocate the damage.
As such, the Court found both of State Farm’s arguments persuasive and granted summary judgment on Thompson’s breach of contract claim. Id. at *3-4.
The Court further granted summary judgment on Thompson’s extracontractual claims, finding that State Farm conducted a reasonable investigation by relying on two separate property inspections that both determined that the September 28, 2021 hailstorm did not result in a covered loss. Id. at *4. Ultimately, the differing positions evidenced nothing more than a bona fide coverage dispute, which does not rise to the level of bad faith or support the alleged violations of Chapter 541 of the Texas Insurance Code. Id.
The Court’s decision on State Farm’s Motion for Summary Judgment was thorough and well-reasoned, appropriately holding Thompson to her burdens under the Federal Rules of Civil Procedure and Texas’s concurrent causation doctrine.
