A federal court in Texas granted summary judgment to an insurer that the insured failed to provide evidence that would allow a jury reasonably to apportion damages between covered and non-covered causes of loss. Tchakarov v. Allstate Indem. Co., No. 3:20-cv-2769-D, 2021 WL 4942193, 2021 U.S. Dist. LEXIS 203896 (N.D. Tex. Oct. 22, 2021).
A homeowner submitted a claim for roof damage. It engaged an engineer who testified in litigation against the homeowner that the roof exhibited evidence of damage during the policy period, but also that the roof exhibited damage from a storm before the policy period, as well as damage caused by wear and tear. While the court found that the policyholder had provided sufficient evidence to create a genuine issue of material fact regarding whether covered hail damage had occurred at the property during the policy period, the court also found that the policyholder had failed to meet its burden to segregate damages resulting from concurrent causes. Under Texas law, a policyholder's failure to segregate covered and noncovered perils is fatal to recovery. Accordingly, the court granted summary judgment to the insurer on the contractual and extra-contractual causes of action based on the doctrine of concurrent causation because the policyholder failed to segregate hail damage occurring before versus during the policy period.
The court's ruling was not based on a failure to segregate hail damage versus wear and tear damage, even though it was undisputed that the policy contained an exclusion for damage due to wear and tear, and that the engineer engaged by the policyholder attributed some damage to wear and tear. The court noted that the Fifth Circuit had recently certified questions to the Supreme Court of Texas regarding application of the concurrent causation doctrine in the context of wear and tear exclusions. Frymire Home Servs., Inc. v. Ohio Sec. Ins. Co., 12 F.4th 467, 472 (5th Cir. 2021), certified questions accepted (Sept. 10, 2021), case dismissed (Dec. 3, 2021). Phelps previously reported the Frymire case in the prior volume of the Insurance Law Report. Although the outcome of the Frymire case could have impacted the application of the concurrent causation doctrine to the wear and tear exclusion, the court avoided that uncertainty by granting summary judgment solely based on a failure to segregate damages between multiple storms.
While it remains an open question as to whether Texas' approach to concurrent causation issues can apply to wear and tear exclusions, the court's decision makes clear that a policyholder litigating a claim for damage resulting from a storm must make some effort to segregate non-covered damages where it is undisputed that a pre-policy storm could have contributed to the damage at issue.
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