Last Wednesday, in Lynd Co. v. RSUI Indem. Co., --- S.W.3d ----, 2012 WL 1030342 (Tex.App. - San Antonio March 28, 2012), the San Antonio court of appeals reversed a trial court and rendered a $7.5 million judgment against an insurer based on stipulated facts.  The insured, Lynd, manages apartment complexes across the country.  RSUI provided excess property coverage for damage over a primary $20 million limit, up to $480 million per year per occurrence. On September 23, 2005, Hurricane Rita damaged fifteen Lynd apartment complexes, causing damage in excess of $24 million. Under RSUI’s interpretation  of  the  policy,  RSUI  owed  only  $701,487.83.   Lynd  demanded  the  difference  of $3,842,823.08 from RSUI.  Litigation followed.  The trial court granted RSUI's motion for summary judgment and denied Lynd's.

Under the policy, RSUI was entitled to limit its liability to the least of the following in any one “occurrence”:  (a) the actual adjusted amount of the loss, less applicable deductibles and primary and underlying excess limits; or (b) 115% of the individually stated value for each scheduled item of property insured at the location which had the loss as shown on the latest Statement of Values on file with this Company, less applicable deductibles and primary and underlying excess limits.  The court of appeals found it was the parties’ intent to provide RSUI with a choice of one of the available limitation options when determining its liability for losses arising from one “occurrence.”  But the court concluded the policy requires RSUI to apply the same limitation option uniformly to all losses arising from the same “occurrence”  such  that  RSUI  may limit  its  liability  for  damages  to all  properties  arising  from one hurricane by applying either option (a) or option (b), but it may not apply both when the damage arises from the  same  “occurrence.”   Accordingly,  the  court of  appeals  rendered  judgment  in  favor  of  the insured.

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