Creek Condominium v. Philadelphia Indemnity Insurance Co. et al

Filing 37

OPINION on Summary Judgment. (Signed by Judge Lynn N. Hughes) Parties notified. (ghassan, )

Creek Townhouse Condominium
Association, Inc.,
Plaintiff,

7,674
Civil Action HHT

versus
Philadelphia Indemnity Insurance Co.,
et al..
Defendants.

Opinion on Summary Judgment
Introduction.
A condominium owner disputes its insurance carrier's payment for damage from
Hurricane Ike. T h e insurance carrier will prevail.
I.

2.

Hurricane I ke.
CreekTownhouse Condominium Association owns apartment buildings in southwest

Houston. Hurricane Ike damaged four of its buildings on September 13, 2008. W h e n the
hurricane struck, Philadelphia Indemnity Insurance Company insured the buildings.
Philadelphia hired claim adjuster Edward Elftmann of Engle Martin O Associates to
inspect the property. He inspected the buildings on September 19. Elftmann estimated the
repair cost on November

I

and reported to Philadelphia two days later. Creek agreed to that

amount on December 8. Elftman then spontaneously discovered an error in his calculations for
one building. He increased the amount, and Creek's property manager signed the revised
statement of loss on December 17. Philadelphia closed Creek's claim on January 9, and it paid
Creek $51,617 onJanuary I 2,2009. Creek did not contact Philadelphia again about its claim
until suing on February

2 j, 2011.

Creek says Philadelphia violated the Texas Insurance Code and Texas Deceptive Trade
Practices Act, delayed payment, committed fraud, breached its insurance policy, and breached
the common law duty of good faith and fair dealing. Philadelphia has moved for summary
judgment.

3.

Limits.

Suits under Chapter 541 of the Texas Insurance Code must be filed within two years
of the cause of action. Similarly, suits under the Texas Deceptive Trade Practices Act must be
filed within two years of the cause of action or within two years after the consumer should have
discovered a deceptive act.
Philadelphia says Creek's claims are barred by these statutes of limitations. Hurricane
Ike delivered its damage on September 13, 2008, and Philadelphia paid Creek on January
2009. More than two years later
February 25,

2011.

-

and after cashing Philadelphia's check

-

12,

Creek sued on

As a defense, Creek says that when its cause of action arose is an

undetermined fact. This is a slogan in search of a fact. Creek's cause of action arose when
Philadelphia paid in January 2009. Its claims under the statutes are late.
Creek says payment was delayed. It offers its recent estimate from
from 2008 and Philadelphia's payment

121

201 I

for damage

days after Creek was damaged.

After an insured makes a claim, the insurance carrier must act by specific deadlines
under the Texas Insurance Code. A lawsuit claiming violation of these requirements must be
made within two years of the violation. This claim is late and barred.

4.

Fraud.
Creek says Philadelphia defrauded it when Elftmann undervalued the damage and

overvalued the property. It also says that he misrepresented Creek's coverage. When insurance
companies evaluate property damage, their adjusters make estimates that are approximations
of repair costs. As sometimes happens, when these initial estimates are low, insurance
companies change their calculations or later send checks to cover the difference.
Creek did not identify a material fact that Philadelphia falsely represented on which it
relied and Philadelphia knew was wrong. Philadelphia says that it disregarded a penalty it could
have applied against Creek for being undereinsured.

Creek has no reason to dispute

overvaluation of its property, because Philadelphia did not apply a coinsurance penalty for its
being under-insured.
Creek has no evidence of fraud

-

it is only dissatisfied with Philadelphia's damage

assessment. Creek's insurance policy described how to dispute the assessment. Under the
policy, Creek could have sent a letter to Philadelphia or had a second inspector assess the
damage. It did nothing until suing Philadelphia 2 5 months after payment. T h e only fraud here
is Creek's assertion of claims that it knows are imagined.

5.

Breach.
Creek says Philadelphia breached its insurance policy by estimating the damage to be

less extensive than Creek now says it was and delaying payment. Creek's recent assessment of
its damage in March, 2011, is only evidence of Creek's dissatisfaction with Philadelphia's
assessment. Dissatisfaction alone does not support a claim for breach. Creek had a dispute
which it should have resolved sooner, either by hiring an alternate assessor or suing within two
years.

6.

Conclusion.
More than two years after signing a statement of loss and cashing the carrier's check,

the apartment owner has asserted a typical list of legal theories

- fraud,

breach, and statutory

violations. It has no facts to support any of them. T h e actual data show prompt, thoughtful
claims administration by the carrier.
The owner is late - not the carrier. Expanding his mean and dishonest assault, he also
sued the adjuster, raising the cost of insurance for everyone else. He could not have done this,
of course, without the assistance of an unprincipled lawyer. Creek will take nothing from
Philadelphia Indemnity Insurance Company, Engle Martin GAssociates, or Edward Elftmann.

Signed on November

4
1

,2011, at Houston, Texas.

Lynn N. Hughes
United States District Judge