U.S. DISTRICT COURT GRANTS SUMMARY JUDGMENT BASED ON POLICY’S COSMETIC-DAMAGE EXCLUSION

On March 13, 2023, the United States District Court for the Northern District of Texas granted summary judgment in favor of Allstate based on the policy’s cosmetic-damage exclusion. In Amphay v. Allstate Vehicle and Property Ins. Co., No 2:21-CV-219-Z-BR, 2023 WL 2491285 (N.D. Texas—Amarillo, March 13, 2023, mem. op.), Amphay made a claim for damage to his metal roof sustained in a hailstorm.  Allstate denied Amphay’s claim on the ground that the damage to the metal roof was cosmetic damage and not covered by Amphay’s homeowner’s policy, which excluded coverage for “cosmetic damage caused by hail to the surface of a metal roof, including but not limited to, indentations, dents, distortions, scratches, or makes, that change the appearance of the surface of a metal roof.” The exclusion did not apply to “sudden and accidental direct physical damage to the surface of a metal roof caused by hail that results in water leaking through the surface of a metal roof.”  Amphay filed suit and Allstate sought summary judgment, which the court granted.

The U.S. District Court began its analysis by noting that the plain grammatical meaning of the cosmetic exclusion was that cosmetic damage to Amphay’s roof caused by hail was not covered unless it resulted in water leaking through the surface.  Both of Allstate’s experts confirmed that the damage to the metal roof was cosmetic and did not allow water to enter through the roof. The court, relying on Tri Invs., Inc. v. United Fire & Cas. Co., No. 5:18-CV-116, 2019 WL 13114345, at *7 (S.D. Tex. Nov. 15, 2019) (excluding expert testimony as unreliable and unhelpful to a trier of fact because the expert provided no timeline or rate for the corrosion and whether it would ultimately result in failure of the roof at any particular indentation), concluded that Amphay’s expert’s contention that the roof could leak sometime in the future was speculation and insufficient to create a fact issue.

The U.S. District Court also dismissed Amphay’s bad-faith claim, which was based on the contention that the adjuster never went into the primary bedroom to view the damage. However, the inspection occurred in October 2020, the first year of COVID, and Amphay was sick and secluded in the master bedroom. The adjuster advised Amphay’s spouse that he could not inspect the master bedroom because of Amphay’s condition. The court concluded that it could not attribute the adjuster's caution as bad faith on the part of Allstate. Further, the initial assessments were confirmed by the experts. Thus, there was no evidence of any “unfair or deceptive acts” committed by Allstate.