Hall v. State Farm Lloyds
| Docket Number | Civil Action H-21-1769 |
| Decision Date | 28 July 2022 |
| Parties | JOHN HALL, Plaintiff, v. STATE FARM LLOYDS, Defendant. |
| Court | U.S. District Court — Southern District of Texas |
This is an insurance coverage dispute. John Hall alleges that his home was damaged by an explosion that occurred 1.8 miles away. The parties dispute the cause and extent of any damage. State Farm has moved for summary judgment, submitting reports from two engineers who separately inspected the property and concluded that the damage they observed was not caused by the explosion, but instead by “normal wear and tear, minor material and installation deficiencies, a lack of maintenance, as well as expansion and contraction of the building materials due to naturally occurring variations in temperature and humidity.” (Docket Entry No. 24-2, at 5). Hall responded with a report from an engineer who did not visit the property, did not review State Farm's experts' reports, and did not state any basis for opining that the home “seemed” to be damaged by the explosion. Hall also submitted a report from a meteorologist whose speculations as to the root cause of the alleged damage are both beyond his expertise and unhelpful.
Based on the pleadings, the motions and responses, the parties' submissions, and the applicable law, the court grants State Farm's motion for summary judgment and grants in part and denies in part State Farm's motion to exclude Hall's expert witnesses. (Docket Entries Nos. 20, 24). The reasons are explained below.
Hall has a homeowner's insurance policy with State Farm. The policy “insure[s] for accidental direct physical loss to the property,” but it does not cover losses caused by natural wear and tear, deterioration, or “settling, cracking, shrinking, bulging, or expansion of . . . foundation, walls, floors, roofs, or ceilings.” (Docket Entry No. 24-2, at 17-18).
On January 24, 2020, a propylene-tank leak caused an explosion at Watson Grinding and Manufacturing at 4525 Gessner Road, in Houston, Texas. (Id., at 13). Hall's home-which was built in 1960 and which Hall purchased in 1983-is 1.8 miles from the explosion site. Hall did not hear or feel anything from the explosion, which occurred when he was asleep. (Docket Entry No. 24-3, at 4). He heard about the explosion later that day on the news.
After learning of the explosion, Hall inspected the home “but . . . did not see any damage at that time.” (Id.). Hall began to suspect that he “did, in fact, sustain damage to [his] home from that explosion” only when the ceiling in his garage fell down six or seven months later, in July or August 2020. (Id.). After Hall removed fallen sheetrock from the garage floor, he inspected the ceiling and noticed that “the joists . . . were bowed.” (Id.). Hall saw no other damage on the inside or outside of his home. (Id., at 6).
Hall retained counsel and submitted a claim in September 2020 under the policy. In April 2021, Hall filed this lawsuit against State Farm, even though it had yet resolved Hall's claim. The delay was largely due to difficulties in getting the property inspection done. Hall asserted claims for breach of contract, breach of the duty of good faith and fair dealing, deceptive trade practices, violations of the Texas Insurance Code, fraud, and conspiracy. (Docket Entry No. 1-3). The complaint included seemingly irrelevant and false allegations, including that State Farm acted in bad faith “in an action for property damage due to plumbing leaks” and that “the insurer was found to have hired an investigating firm biased against finding liability.” (Docket Entry No. 1-3, at 9). Hall's claim was not for “plumbing leaks,” and State Farm had not denied Hall's claim at that point.
State Farm had inspected Hall's property only a few days before Hall filed his lawsuit. One reason for the delay was that the engineer State Farm hired to inspect Hall's property “asked to be removed” from the assignment because of “concerns in regards to communication between [Hall's] attorney rep and the engineer . . . and directives [from Hall's attorney] on how the inspection was going to be completed.” (Docket Entry No. 24-2, at 8). That engineer later “submit[ted] an invoice for the amount of time” he spent unsuccessfully “attempt[ing] to coordinate the visits” to Hall's property. (Id., at 7). In short, Hall's counsel appears to have been a significant reason for State Farm's delay in adjusting the claim.
State Farm did retain a second engineer-Dan Rich from Rich Engineering-who was able to inspect the property in March 2021, but not without difficulty. Hall's counsel refused to allow Rich to speak with Hall “regarding the history of the residence or the damage that was being attributed to the WGM explosion.” (Docket Entry No. 24-2, at 12; see also id., at 6). At the time of the inspection, “Rich Engineering was not informed of what damage Mr. Hall was specifically attributing to the explosion.” (Id., at 14). After the inspection, Rich Engineering emailed Hall's counsel a list of questions about the property. Neither Hall nor his counsel responded. (Id., at 12).
Based on the inspection, Rich Engineering concluded that “[t]he residence was not damaged by the explosion.” (Id., at 15). The report states that: the “foundation was not damaged by the explosion”; cracks in the drywall “were consistent with normal wear and tear, minor material and installation deficiencies, a lack of maintenance, as well as expansion and contraction of the building materials due to naturally occurring variation in temperature and humidity”; the roof was not damaged; cracks in the attic framing “were aged . . . indicat[ing] that the damage predated the explosion”; the “brick veneer cracks had an aged appearance which indicated that they predated the explosion”; and “Rich Engineering did not observe any broken window panes during its site visit.” (Id., at 13-15).
As a result of Rich Engineering's report, State Farm informed Hall's counsel in May 2021 that it was denying Hall's claim. The denial letter stated that State Farm's “investigation revealed the residence was not damaged by the explosion.” (Docket Entry No. 24-2, at 17-21).
State Farm also hired a structural forensic investigator to inspect the property. (Docket Entry No. 24-4). State Farm retained Jarrod Burns of BSC Forensic Services, LLC “to document conditions consistent with the effects of an explosion that occurred on January 24, 2020, at the Watson Grinding Facility, if any.” (Id., at 1). The BSC report noted that Burns “inspected the subject property for conditions consistent with the effects of an explosion,” including “displaced or missing relatively lightweight elements (satellite dishes, fending, etc.), fractured cladding or fenestration components (windows, siding, garage doors, etc.), and if sufficient blast energy had occurred, structural shifting or movement and resulting distress in the building components.” (Id., at 5). The report stated that “BSC's inspection revealed no conditions at the subject property that could be attributed to energy waves associated with the reported explosion,” and noted that “the surrounding properties of similar construction also exhibited no such evidence.” (Id.). The report also stated that “no such conditions would be expected . . . as the subject property was located approximately two . . . miles southeast of the blast origin.” (Id.). The report concluded that the “collapsed ceiling in the garage . . . was attributable to long-term sagged condition of the ceiling joists associated with improper lumber (large knots) and excessive loading from roof beam supports in the attic space above,” and that this condition was not “caused or exacerbated by the reported explosion event.” (Id.).
State Farm's motion for summary judgment is based on the legal standard and the admissible record, as described below.
“Summary judgment is appropriate only when ‘the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.'” Shepherd ex rel. Est. of Shepherd v. City of Shreveport, 920 F.3d 278, 282-83 (5th Cir. 2019) (quoting Fed.R.Civ.P. 56(a)). “A material fact is one that might affect the outcome of the suit under governing law,” and “a fact issue is genuine if the evidence is such that a reasonable jury could return a verdict for the non-moving party.” Renwick v. PNK Lake Charles, LLC, 901 F.3d 605, 611 (5th Cir. 2018) (citations and internal quotation marks omitted). The moving party “always bears the initial responsibility of informing the district court of the basis for its motion,” and identifying the record evidence “which it believes demonstrate[s] the absence of a genuine issue of material fact.” Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986).
“When the moving party has met its Rule 56(c) burden, the nonmoving party cannot survive a summary judgment motion by resting on the mere allegations of its pleadings.” Duffie v United States, 600 F.3d 362, 371 (5th Cir. 2010). The nonmovant must identify specific evidence in the record and articulate how that evidence supports that party's claim. Willis v. Cleco Corp., 749 F.3d 314, 317 (5th Cir. 2014). “A party cannot defeat summary judgment with conclusory allegations, unsubstantiated assertions, or only a scintilla of evidence.” Lamb v. Ashford Place Apartments LLC, 914 F.3d 940, 946 (5th Cir. 2019) (citation and internal quotation marks omitted). In deciding a summary judgment motion, “the evidence of the nonmovant is to be believed, and all justifiable inferences are to be drawn in his or her favor.” Waste Mgmt. of La., LLC v. River Birch,...
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