One Way Investments Inc v. Century Surety Company et al
Filing
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MEMORANDUM OPINION AND ORDER granting 31 Motion for Summary Judgment filed by Century Surety Company; granting 37 Motion To Extend Time filed by One Way Investments Inc; granting 42 Motion To Extend Time filed by One Way Investments Inc; granting 43 Motion for Leave to File filed by One Way Investments Inc; and granting 45 Motion for Leave to File filed by One Way Investments Inc. (Ordered by Judge Sidney A Fitzwater on 9/21/2016) (Judge Sidney A Fitzwater)
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION
ONE WAY INVESTMENTS, INC.,
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Plaintiff,
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§ Civil Action No. 3:14-CV-2839-D
VS.
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CENTURY SURETY COMPANY, et al., §
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Defendants. §
MEMORANDUM OPINION
AND ORDER
Defendant Century Surety Company (“Century”) moves for summary judgment
dismissing plaintiff One Way Investments, Inc.’s (“One Way’s”) claims for breach of
contract, violations of the Texas Insurance Code, and breach of the duty of good faith and
fair dealing. For the reasons that follow, the court grants the motion and dismisses this action
by judgment filed today.
I
This case involves an insurance coverage dispute. Century insured One Way’s Han
Gil Hotel Town (the “Property”) in Dallas under a Texas Commercial Property Insurance
Policy (the “Policy”). One Way alleges that, on or about June 13, 2012, a severe hail storm
caused significant damage to the Property’s roof and appurtenances and to its interior. One
Way submitted a claim under the Policy for wind and hail damage caused to the Property by
the storm, seeking the cost for repair and/or replacement of the roof, air conditioning units,
and damage to the interior walls.
Century’s adjuster, Richard Mattoni (“Mattoni”), estimated the cost of the Property
damage to be $2,372.43, which was less than the amount of One Way’s deductible.
Accordingly, Century did not pay any amount on One Way’s claim.
One Way sued Century for breach of the Policy, breach of the duty of good faith and
fair dealing, and unfair settlement practices and failure to promptly pay its claim, in violation
of the Texas Insurance Code.1 Century now moves for summary judgment. One Way
opposes the motion.2
II
When, as here, a party moves for summary judgment on claims on which the opposing
party will bear the burden of proof at trial, the moving party can meet its summary judgment
obligation by pointing the court to the absence of admissible evidence to support the
opposing party’s claims. See Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986). Once the
moving party does so, the opposing party must go beyond its pleadings and designate specific
facts showing there is a genuine issue for trial. See id. at 324; Little v. Liquid Air Corp., 37
1
One Way also sued VeriClaim, Inc. (“VeriClaim”) and Mattoni. On May 14, 2015
the court dismissed One Way’s action against VeriClaim with prejudice and entered a Fed.
R. Civ. P. 54(b) final judgment. On August 25, 2015 the court granted One Way’s
unopposed motion to dismiss its action against Mattoni with prejudice.
2
One Way has filed a motion to extend time to designate expert witnesses, an amended
motion to extend time to designate expert witnesses, a motion to file an amended response
to Century’s motion for summary judgment, and a motion to file an amended expert
disclosure. The court grants the motions. Because One Way has attached its proposed
amended expert designations and response to Century’s motion for summary judgment to its
motions, the court has been able to consider them and determine that they do not change the
result or reasoning of this memorandum opinion and order.
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F.3d 1069, 1075 (5th Cir. 1994) (en banc) ( per curiam). An issue is genuine if the evidence
is such that a reasonable jury could return a verdict in the opposing party’s favor. Anderson
v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). The opposing party’s failure to produce
proof as to any essential element of a claim renders all other facts immaterial. See TruGreen
Landcare, L.L.C. v. Scott, 512 F.Supp.2d 613, 623 (N.D. Tex. 2007) (Fitzwater, J.).
Summary judgment is mandatory if the opposing party fails to meet this burden. Little, 37
F.3d at 1076.
III
Century first moves for summary judgment dismissing One Way’s breach of contract
claim, in which One Way asserts that Century breached the Policy by not paying for the full
cost of repairs to the Property.
A
Century maintains that the Policy does not cover damage or loss to the Property due
to wear and tear; there is no evidence from which a jury could allocate covered loss (due to
wind and hail) from non-covered loss (due to wear and tear); there is no expert testimony that
the Property damage was caused by wind and hail; there is expert testimony that the Property
damage was caused by wear and tear and improper construction; and there is no evidence
establishing that the alleged cost of repairs is reasonable and necessary. Century offers the
affidavit of its expert, Robert N. Fleishmann (“Fleishmann Affidavit”), as evidence that the
damage to the Property was not caused by wind and hail.
One Way responds that expert testimony is not required to allocate loss between
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covered and non-covered losses; there is evidence that the roof leaked after, but not before,
the storm; and there is evidence of the estimated cost of repairs. One Way offers as evidence
the affidavit of Amos Mun, the proprietor of the Property, a report by A & L Engineering and
Consulting, Inc. (“A & L”), and an estimate of the cost of repairs by Accord Services, Inc.
(“Accord”).
B
It is undisputed that Texas law applies in this diversity case. An insured cannot
recover under an insurance policy unless the insured pleads and proves facts that show that
its damages are covered by the policy. See Emp’rs Cas. Co. v. Block, 744 S.W.2d 940, 944
(Tex. 1988), overruled in part on other grounds by State Farm Fire & Cas. v. Gandy, 925
S.W.2d 696 (Tex. 1996). Although an insured who suffers damage from both covered and
excluded perils is not precluded from recovering, “[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.” Lyons v. Miller Cas. Ins. Co. of Tex., 866
S.W.2d 597, 601 (Tex. 1993). Because an insured can only recover for covered events, the
burden of segregating the damage attributable solely to the covered event is a coverage issue
for which the insured carries the burden of proof. See Wallis v. United Servs. Auto. Ass’n,
2 S.W.3d 300, 303 (Tex. App. 1999, pet. denied). “It is essential that the insured produce
evidence which will afford a reasonable basis for estimating the amount of damage or the
proportionate part of damage caused by a risk covered by the insurance policy.” Travelers
Indem. Co. v. McKillip, 469 S.W.2d 160, 163 (Tex. 1971). “[F]ailure to segregate covered
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and noncovered perils is fatal to recovery.” Comsys Info. Tech. Servs., Inc. v. Twin City Fire
Ins. Co., 130 S.W.3d 181, 198 (Tex. App. 2003, pet. denied); Dall. Nat’l Ins. Co. v. Calitex
Corp., 458 S.W.3d 210, 227 (Tex. App. 2015, no pet.) (holding there was no reasonable basis
for estimating amount of damage caused by risk covered by the insurance policy).
One Way has not introduced any evidence that would enable a reasonable jury to
estimate the amount of damage or the proportionate part of damage caused by a covered
cause—i.e., hail and wind. Even if the court were to consider the reports of A & L and
Accord as timely proffered expert testimony, the reports only provide estimates of the cost
to repair the Property and some evidence that the Property was damaged by hail. Neither
report provides evidence from which a reasonable jury could allocate damage from wear and
tear, poor construction, or any other causes, on the one hand, and allocate damage from wind
and hail, on the other hand. Accordingly, because One Way has not created a genuine fact
issue concerning whether its alleged damages are covered by the Policy, Century is entitled
to summary judgment dismissing One Way’s breach of contract claim.
C
Century is entitled to summary judgment on One Way’s breach of contract claim for
an additional reason. A party seeking to recover for the cost of repairs must prove the
reasonable value of the repairs and that the repairs are necessary. Ebby Halliday Real Estate,
Inc. v. Murnan, 916 S.W.2d 585, 589 (Tex. App. 1996, writ denied). “Mere proof of
amounts charged or paid does not raise an issue of reasonableness and such amounts
ordinarily cannot be recovered without evidence showing the charges were reasonable.” Id.
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One Way has not presented any evidence that would enable a reasonable jury to find
that the damages One Way seeks for repairs to the Property are reasonable and necessary.
It has only provided an estimate of the cost to repair the Property.
IV
Century also moves for summary judgment as to One Way’s extra-contractual claims
for breach of the duty of good faith and fair dealing and for violations of the Texas Insurance
Code. Century maintains that there can be no liability for extra-contractual claims where
there has been no breach of the Policy. One Way has not responded to Century’s motion for
summary judgment to the extent the motion is addressed to One Way’s extra-contractual
claims.
A “bona fide dispute” regarding insurance coverage precludes liability for breach of
the duty of good faith and fair dealing and violations of the Texas Insurance Code. See
Higginbotham v. State Farm Mut. Auto. Ins. Co., 103 F.3d 456, 460 (5th Cir. 1997) (citing
Emmert v. Progressive Cnty. Mut. Ins. Co., 882 S.W.2d 32, 36 (Tex. App. 1994, writ
denied)); Douglas v. State Farm Lloyds, 37 F.Supp.2d 532, 544 (S.D. Tex. 1999). In other
words, if there is any reasonable basis for denying insurance coverage, the insurer will not
be liable in tort. See Emmert, 882 S.W.2d at 36.
Century points to the testimony of its expert, Fleishmann, who conducted an
examination of the Property. Fleishmann concluded that “hail damage to the roof did not
cause or contribute to roof leakage and that there was no wind damage to the roof,” and that
“the poor condition of the roof was not caused by hail or any storm event but by the age of
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the roofing materials and normal wear and tear.” D. App. 89. One Way has not provided
any evidence that refutes Fleishmann’s conclusions or that would enable a reasonable jury
to find that Century did not have a reasonable basis for denying One Way’s claim. One Way
has also failed to introduce any evidence that Century violated its duty of good faith and fair
dealing or that Century otherwise violated the Texas Insurance Code by failing to promptly
respond to One Way’s claim or by engaging in other unfair settlement practices.
Accordingly, Century is entitled to summary judgment dismissing One Way’s extracontractual claims.
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For the reasons explained, the court grants Century’s motion for summary judgment
and dismisses this action with prejudice by judgment filed today.
SO ORDERED.
September 21, 2016.
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SIDNEY A. FITZWATER
UNITED STATES DISTRICT JUDGE
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