INSURER PREVAILS ON SUMMARY JUDGMENT BASED ON INSURED’S FAILURE TO SEGREGATE COVERED FROM NON-COVERED PROPERTY DAMAGES

Last week, the United States District Court, Southern District of Texas, granted summary judgment on all causes of action against Acadia related to a storm damage claim. Advanced Indicator and Manufacturing, Inc. Acadia Insurance Company, No. 4:18-CV-03059, 2021 WL 199617 (S.D. Tex., Jan. 19, 2021.

In the lawsuit, Indicator submitted a claim for its roof that was damaged by Hurricane Harvey. After an investigation, Acadia found that the damage to the building was not exclusive to Harvey and denied the claim. Indicator sued Acadia for breach of contract, breach of the duty of faith and fair dealing, violating the Texas Insurance Code, and violating the Deceptive Trade Practices Act. Acadia moved for summary judgment.

In response to the summary judgement, the insured filed a response that included unsworn declarations by their expert Peter De La Mora and an unsworn report from expert Art Boutin.  The court struck De La Mora’s declaration because it was unsworn and struck Boutin’s report because it was unsworn and not produced until after his deposition, in violation of the federal rules.

The court found Acadia’s investigation of the claim was thorough. The court then turned its analysis to the concurrent causation doctrine and noted that a “failure to segregate covered and non-covered causes of loss is fatal to the whole claim.”  The court noted that even if Plaintiff’s expert De La Mora’s unsworn declaration were admissible, it still did not differentiate between damage caused by Harvey versus prior damage. Further, in regard to his testimony, the court found: “At best, de la Mora contradicts himself - at worst he ultimately admits there is more than one cause of damage to the property.”

Because there was no competent evidence to apportion covered and non-covered damages to the property, the breach of contract claim failed. And because there was no breach of the policy contract, the extra-contractual claims also failed as a matter of law.