TWO RECENT FEDERAL CASES REFLECT DIFFERENT SUMMARY JUDGMENT APPROACHES TO PROPERTY DAMAGE CLAIMS
A federal court in Dallas granted summary judgment in favor of American Insurance Company (“AIC”) in a hail storm case. In Hamilton Properties v. Am. Ins. Co., No. 3:12-CV-5046-B, 2014 WL 3055801 (N.D. Tex. July 7, 2014) (Boyle, J.), a commercial property owner sued AIC for denial of a claim related to damages from a July 8, 2009 hailstorm in Dallas.
The court found AIC had satisfied its summary judgment burden on the breach of contract claim. AIC had introduced evidence that other hailstorms that occurred outside the policy period had affected the property and the damage was possibly attributable to normal wear and tear, also excluded by the policy. The plaintiff countered with affidavits showing that the July 8 hailstorm caused damage to roofs of neighboring buildings and was stronger than prior hailstorms. The court found the affidavits insufficient to defeat summary judgment because they were silent as to the condition of the plaintiff’s property before or after the July storm and did little more than show that the July storm could have damaged the property. Although the court acknowledged that the plaintiff’s affidavits were some evidence that the July storm contributed to the damages, it concluded the plaintiff’s evidence would not allow a jury to allocate damages between the July hailstorm and non-covered factors. Because of this deficient evidence and the plaintiff’s lack of evidence on its other claims, the court also granted summary judgment in favor of AIC on the plaintiff’s claims for bad faith, violations of the Texas Insurance Code and the DTPA, breach of fiduciary duty, and misrepresentation.
In contrast, the federal court in First Christian Academy, Inc. v. New Hampshire Ins. Co., No. H-13-1452, 2014 WL 294949 (S.D. Tex. July 1, 2014) (Miller, J.) granted summary judgment against an insurer in a claim brought by a commercial property owner for vandalism damages.
New Hampshire Insurance (“NHIC”) cancelled the insured’s commercial property and general liability insurance policies on December 10, 2011 after the insured failed to pay premiums. The insured filed suit against NHIC on April 19, 2013 for wrongful denial of a property damage claim from vandalism that occurred in late December 28, 2011, after the policy had been cancelled. Later, in response to a motion for summary judgment by NHIC, the plaintiff argued it first reported the loss in February 2012 and the vandalism occurred as far back as September 2011, within the policy period.
NHIC objected to the property owner’s affidavit stating that the loss occurred during the coverage period. NHIC argued this evidence was conclusory, unsubstantiated, and self-serving. Judge Gray Miller rejected this argument and found the affidavit sufficient because all the plaintiff had to show was more than a scintilla of evidence to defeat summary judgment. The court denied NHIC’s summary judgment argument that there was no breach of contract as a matter of law.
In addressing the plaintiff’s claims for bad faith and violations of the Texas Insurance Code and Deceptive Trade Practices Act, the court found that in light of plaintiff’s evidence that the damage was sustained before the policy’s cancellation, there existed a genuine issue of material fact that the insurer should have at least conducted an investigation into this aspect of the claim. It therefore denied NHIC’s motion for summary judgment on these extra-contractual claims.