Greene ex rel. Greene v. Farmers Ins. Exch.

• Decision Date: 29 August 2014
• Docket Number: No. 12–0867.,12–0867.
• Citation: 446 S.W.3d 761
• Parties: Bob GREENE, as Next Friend of LeWayne Greene, Petitioner, v. FARMERS INSURANCE EXCHANGE, Respondent.
• Court: Texas Supreme Court

446 S.W.3d 761

Bob GREENE, as Next Friend of LeWayne Greene, Petitioner
v.
FARMERS INSURANCE EXCHANGE, Respondent.

No. 12–0867.

Supreme Court of Texas.

Argued Jan. 7, 2014.
Decided Aug. 29, 2014.
Rehearing Denied Nov. 21, 2014.

446 S.W.3d 762

David M. Pruessner, Higier, Allen & Lautin, PC, Addison, TX, for Amicus Curiae Mockingbird Ventures.

Keith Gregory Hopkinson, Mary F. Keller, Winstead PC, Austin, TX, for Amicus Curiae Property Casualty Insurers Association of America.

D. Bradley Kizzia, Brown Fox Kizzia & Johnson PLLC, Dallas, TX, William Michael Ucherek II, Juneau Boll Stacy & Ucherek, Addison, TX, for Petitioner Bob Greene, as Next Friend of Lewayne Greene.

Rebecca E. Bell, Steven A. Springer, Fee Smith Sharp & Vitullo, LLP, Stephen G. Good, Macdonald Devin P.C., Dallas, TX, for Respondent Farmers Insurance Exchange.

Opinion

Justice JOHNSON delivered the opinion of the Court, in which Chief Justice HECHT, Justice GREEN, Justice GUZMAN, Justice LEHRMANN, Justice DEVINE, and Justice BROWN joined.

In this case a house that had been vacant for several months was damaged

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when fire spread to it from a neighboring property. The house was insured under a Texas homeowner's policy containing a clause suspending dwelling coverage if the house was vacant for over sixty days. The homeowner had not purchased an available endorsement providing coverage for extended vacancies, and the insurer denied the homeowner's claim, even though the vacancy was not related to the loss. On cross-motions for summary judgment, the trial court granted judgment for the homeowner. The court of appeals held that the vacancy provision must be applied according to its terms and reversed.

We affirm.

I. Background

LaWayne Greene owned and lived in a house in Irving that she insured with Farmers Insurance Exchange. The policy Farmers issued to Greene was a Texas Homeowners–A Policy (HOA)form prescribed by the Texas Department of Insurance (TDI).¹ The policy was effective from February 10, 2007 to February 10, 2008. On June 30, 2007, Greene moved into a retirement community. On July 5, 2007, she notified Farmers that she was going to sell her house and provided Farmers with change of address information. On November 14, 2007, fire from a neighboring house spread to Greene's house and damaged it. Farmers denied Greene's fire damage claim on the basis that the house had been vacant for more than sixty days. The denial prompted a lawsuit on Greene's behalf by Bob Greene as her next friend (collectively, Greene). Greene sued Farmers for breaching its contractual obligation to pay under the policy, as well as for extra-contractual damages.²

Section I.A. of Farmers' policy contains the relevant property coverage³ language:

SECTION I PROPERTY COVERAGE

COVERAGE A (DWELLING)

We cover:

1. The dwelling on the residence premises shown on the declarations page including structures attached to the dwelling.

The policy defines “residence premises”:

9. “Residence Premises” means the residence premises shown on the declarations page. This includes the one or two family dwelling, including other structures, and grounds where an insured resides or intends to reside within 60 days after the effective date of this policy.

“Section I—Conditions” contains the policy language at issue:

13. Vacancy. If the insured moves from the dwelling and a substantial part of the personal property is removed from that dwelling, the dwelling will be considered vacant. Coverage that applies under Coverage A (Dwelling) will be suspended effective 60 days after the dwelling becomes vacant. This coverage will remain suspended during such vacancy.

Dwelling coverage for periods of vacancy lasting more than sixty days was available

446 S.W.3d 764

through a TDI-approved endorsement to the policy. Greene's policy had several endorsements, but it did not have Endorsement TDP–011 that provided dwelling coverage during an extended vacancy.⁴ SeeTex. State Bd. of Ins., Endorsement No. TDP–011 (July 8, 1992). The parties stipulated that the vacancy of Greene's house for more than sixty days was not causally related to the fire damage the house suffered.

Both parties moved for summary judgment as to the breach of contract claim. In her motion, Greene asserted, in part, that Texas Insurance Code § 862.054 (commonly referred to as the anti-technicality statute) precluded Farmers from raising the vacancy clause as a defense. She further asserted that if the anti-technicality statute did not apply, both this Court's precedent and Texas public policy precluded Farmers from denying the claim because the vacancy did not prejudice Farmers nor was it causally related to Greene's loss.

The trial court denied Farmers' motion, granted Greene's, severed “all claims, causes, actions or defenses which are not disposed of by judgment on Plaintiff's breach-of-contract cause of action,”⁵ and rendered final judgment for Greene on the contract claim. Farmers appealed the ruling on the breach of contract claim; Greene did not appeal the dismissal of her other claims.

The court of appeals reversed and rendered judgment for Farmers. It held that because the vacancy clause unambiguously suspended dwelling coverage after sixty days of vacancy, “describing the vacancy exclusion in terms of a breach or violation is a nonsequitur.” Farmers Ins. Exch. v. Greene, 376 S.W.3d 278, 283 (Tex.App.-Dallas 2012, pet. granted). The appeals court concluded that Farmers was not required to establish that the vacancy contributed to cause the loss in order to assert the vacancy clause as a defense because (1) the anti-technicality statute did not apply, (2) this Court's decisions did not require such a showing, and (3) public policy did not require it. Id. at 285.

Greene argues that the court of appeals erred in reaching each of the foregoing conclusions. She also urges that in the event we do not reverse the court of appeals' judgment, we should remand the case to the court of appeals and direct it to clarify its judgment. We examine her arguments in turn.

II. Discussion

A. Texas Insurance Code § 862.054

Section 862.054 provides:

Fire Insurance: Breach by Insured; Personal Property Coverage.

Unless the breach or violation contributed to cause the destruction of the property, a breach or violation by the insured

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of a warranty, condition, or provision of a fire insurance policy or contract of insurance on personal property, or of an application for the policy or contract:

(1) does not render the policy or contract void; and

(2) is not a defense to a suit for loss.

Tex. Ins.Code § 862.054.

Greene does not argue that the statute applies because she breached or violated her insurance policy in the usual sense of having violated a duty or obligation she assumed in the policy. Rather, she reasons that the statute applies because the Legislature's use of “breach” in the statute encompasses the situation where a policy condition is “triggered”; when she vacated the house she triggered operation of the vacancy clause; so she breached the vacancy clause within the meaning of the statute. See id. She further argues that defining “breach” to exclude “trigger” will lead to absurd results. We disagree with both arguments.

In examining the statutory language to see if Greene is correct, we follow familiar principles. We review issues of statutory construction de novo, City of San Antonio v. City of Boerne, 111 S.W.3d 22, 25 (Tex.2003), with our primary objective being to give effect to the Legislature's intent. Tex. Lottery Comm'n v. First State Bank of DeQueen, 325 S.W.3d 628, 635 (Tex.2010). We rely on the plain meaning of the text as expressing legislative intent unless a different meaning is supplied by legislative definition or is apparent from the context, or the plain meaning leads to absurd results. Id. We presume the Legislature selected language in a statute with care and that every word or phrase was used with a purpose in mind. Id.

“Breach” of a contract occurs when a party fails to perform an act that it has contractually promised to perform. SeeBlack's Law Dictionary 225 (10th ed.2014) (defining “breach of contract” as a “[v]iolation of a contractual obligation by failing to perform one's own promise”); see also U.S. v. Winstar Corp., 518 U.S. 839, 909–10, 116 S.Ct. 2432, 135 L.Ed.2d 964 (1996) (finding a party unable to perform its promise liable for breach); Orix Cap. Mkts., L.L.C. v. Wash. Mut. Bank, 260 S.W.3d 620, 623 (Tex.App.-Dallas 2008, no pet.) ; Restatement (Second) of Contracts § 235(2) (1981). Similarly, a “violation” is “the contravention of a right or duty.” Black's Law Dictionary 1800 (10th...