The Fifth Circuit recently affirmed summary judgment in favor of a property insurer on a hail claim that was reported nearly a year and a half after the hail storm, proving that in extreme circumstances, the duty to promptly report the claim can be effectively enforced, at least in certain courts.  In Alaniz v. Sirius Internat’l Ins. Corp., No. 15-40497, --- Fed. Appx. ---, 2015 WL 5316565 (5th Cir. Sep. 14, 2015), the hail storm in question occurred on March 29, 2012.  The insured, owner of several rental properties in Edinburg, Texas, was aware of the storm and its severity as well as reports that it caused damage to vehicles in the area, but did not initially notice any damage to his properties or inspect them for damage. 

In the summer of 2013, several of his tenants reported water leakage and wet drywall in their units. Alaniz inspected the roof of one property but did not observe any damage. He applied spackling to the wet drywall several times in an attempt to cover the problem.  Later that summer, a neighbor suggested to Alaniz that the leaks might be the result of the March 2012 hailstorm.  In September 2013, Alaniz consulted a lawyer and signed a representation agreement.  On February 14, 2014, a little over five months after obtaining counsel, and over 17 months after the 2012 hail storm, Alaniz submitted a claim to Sirius.  (It was disputed whether Sirius actually received the faxed notice of claim, but considering the record on a summary judgment standard of review, the court construed the facts in the light most favorable to the non-movant, and assumed Sirius did receive the notice of claim.)

Sirius did not respond to the claim, and Alaniz sued.  Sirius moved for summary judgment based solely on Alaniz’s failure to provide “prompt notice of loss or damage” in compliance with the policy condition, and won in the trial court.  On appeal, the Fifth Circuit acknowledged that when “prompt” and “as soon as possible” are not more specifically defined, the legal standard is one of reasonableness.  The court then considered what was reasonable in light of the facts of this claim. 

Alaniz argued that the period to be considered should not be the 17 months between the storm itself and the date he submitted his claim, but should only be the period after which he had subjective awareness of facts suggesting hail damage.  Without directly answering this question, the court concluded that even if it only considered the five months after the time Alaniz consulted an attorney, that delay was not reasonable as a matter of law.  The court’s opinion contains a footnote detailing examples of time periods which have been previously held to be unreasonable as a matter of law, the shortest of which is 32 days, in Klein v. Century Lloyds, 275 S.W.2d 95 (Tex. 1955).  The court also noted that a delay without explanation is more susceptible to being held unreasonable as a matter of law.

As required under Texas law, the court also considered whether the unreasonable delay prejudiced Sirius.  Sirius made cogent arguments that the delay impaired its ability to investigate the loss while the damage was fresh, and also allowed the damage to considerably worsen, but perhaps more significant was that Alaniz failed to dispute any of these arguments.  Therefore, the court deemed him not to have raised a genuine issue of material fact as to prejudice.

Finally, the court confirmed the general Texas rule that extra-contractual claims cannot persist when the breach of contract claim on which they are based fails, and affirmed the summary judgment in its entirety.

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