Hamilton Props., Hamilton 1011 LP v. Am. Ins. Co.
| Decision Date | 07 July 2014 |
| Docket Number | CIVIL ACTION NO. 3:12-CV-5046-B |
| Parties | HAMILTON PROPERTIES, HAMILTON 1011 LP, HAMILTON PROPERTIES CORPORATION, GO-KAL LLC, and ULYSSES LLLP, Plaintiffs, v. THE AMERICAN INSURANCE COMPANY, FIREMAN'S FUND INSURANCE COMPANY, ARTHUR J. GALLAGHER, and ALLIANZ GLOBAL RISKS, Defendants. |
| Court | U.S. District Court — Northern District of Texas |
Before the Court is Defendant The American Insurance Company's Motion for Summary Judgment (doc. 27). For the reasons that follow Defendant's Motion is GRANTED.
This case arises out of a dispute regarding an insurance company's decision to disclaim coverage and deny its client's claim for property damage following a hailstorm. Plaintiffs are suing for:(1) breach of contract; (2) violations of the Texas Deceptive Trade Practices Act; (3) violations of the Texas Insurance Code; (4) breach of the duty of good faith and fair dealing; (5) breach of fiduciary duty; (6) misrepresentation; and (7) common law fraud by misrepresentation. Defendant The American Insurance Company ("AIC") has moved for summary judgment with respect to all of these claims.
Plaintiffs Hamilton Properties, Hamilton 1011 LP, Hamilton Properties Corporation, Go-Kal LLC, and Ulysses LLLP (collectively "Plaintiffs") are business entities and organizations whose principal place of business is in Dallas, Texas. Orig. Pet. 1-2. In March 2006 Hamilton Properties purchased the Dallas Plaza Hotel (the "Property"). Pls.' Ex. A at 5. The Property is located at 1011 South Akard Street, Dallas, Texas 75215. Id.; Orig. Pet. 3. It operated as a fully functioning hotel until February 16, 2009. Pl.'s Ex. A at 5.
The Property was originally covered under an umbrella insurance policy through Hamilton Properties' hospitality management company. Id. at 6. However, on February 16, 2009 the Property was added to Hamilton Properties' insurance policy number S 67 MXX 80895731 (the "Policy"), whose coverage ended September 24, 2009. Id.; Def.'s Ex. A APP-217-18.
The Policy includes a section entitled Covered Causes of Loss, which indicates that the Policy insures "all risks of direct physical loss or damage, except as excluded or limited elsewhere" in the Coverage Section. Def.'s Ex. A at APP-66. Among the risks excluded from coverage are "[w]ear and tear, gradual deterioration, inherent vice, latent defect, depletion, erosion, corrosion, mold, wet or dry rot" and "[s]ettling, cracking, shrinkage, bulging, or expansion of pavements, foundations, walls,floors, roofs, or ceilings." Id. at APP-68-69.
In the event of a Covered Cause of Loss, the Policy indicates that the insured must give "prompt notice of the loss or damage." Id. at APP-82. In addition, the insured must provide "a description of how, when and where loss or damage occurred" as soon as possible, and "[t]ake all reasonable steps to protect the Covered Property from further damaged by a Covered Cause of Loss." Id.
On July 8, 2009 there was a hailstorm (the "July Hailstorm") in Dallas, Texas. According to Tom Coughlin, who was living at the Property and serving as its caretaker at the time, ping-pong-sized hailstones rained down. Defs.' Ex. E at APP-301. Within a month of the July Hailstorm, Coughlin started to notice a pattern of falling ceiling tiles and water dripping on the 12th floor of the Property. Defs.' Ex. E APP-305-07. "[P]robably after a week or two had gone by but before a couple months" after the storm Coughlin notified a manager for Hamilton Properties, Ashley Farha, of the problems he observed. Id. at APP-307; Defs.' Ex. K at APP-408. However, it was not until later that Larry Hamilton, corporate representative of Hamilton Properties, became aware of the water and ceiling issues.2 Defs.' Ex. D at APP-276-77.
The parties disagree when Plaintiffs notified AIC of the wind and hail damage from the July Hailstorm. Plaintiffs insist they provided notice on February 14, 2011, when Larry Hamilton emailed Plaintiffs' insurance agent about the loss. Pls.' Resp. 16 ; see also Def.'s Ex. D atAPP-272. AIC insists this did not count as notice because the agent was no longer Plaintiffs' broker of record and could not accept or report the claim on their behalf. Def.'s Br. 10; Def.'s Ex. D at APP-274. Thus, AIC argues Plaintiffs did not give notice until their claim was filed in October 2011—roughly eight months after Larry Hamilton's email. Def.'s Br. 10-11; Pl.s' Ex. B at APP-251; Defs.' Ex. G at APP-352.
On February 16, 2012, Defendants notified Hamilton Properties via letter (the "Denial Letter") that AIC investigated the claim and decided to disclaim coverage. Defs.' Ex. C at APP-257-61. The Denial Letter stated that an engineer previously inspected the Property on July 27, 2009—nineteen days after the July Hailstorm—and noted no obvious hail or water damage at the time. Id. at APP-257. In addition, AIC's roof consultant advised that the roof was about twelve to fifteen years old, that he saw no evidence of hail damage to its surface, and that the worst interior damage was over an area previously patched. Id. at APP-258. The Denial Letter also noted that AIC reviewed historical weather data for the area and confirmed that inch-sized hail was reported on the date of the July Hailstorm. Id. Further, there were three prior hail events between April 2007 and February 2008 that produced hail between 0.88 and 1.75 inches. Id. There also three hail events after the July Hailstorm during May 2011 that produced hail between 0.75 and 1.5 inches. Id. Ultimately, because Plaintiffs did not notice the damage until 2011, AIC could not determine if the damage occurred during the coverage period, which ended on September 24, 2009. Id. at APP-260. Consequently, AIC disclaimed the coverage and made no payment for the claim. Id. at APP-259.
Plaintiffs filed suit in the 192nd-K District Court of Dallas County, Texas, on October 15, 2012. Doc. 1-1. Defendants removed the matter to this Court on December 10, 2012. Doc. 1. OnFebruary 3, 2014, Defendant The American Insurance Company filed the present Motion for Summary Judgment (doc. 27). Plaintiffs responded (doc. 33) on March 10, 2014, and Defendant replied (doc. 40) on March 24, 2014. Defendant's Motion is ripe for the Court's review.
A. Summary Judgment
Under Rule 56(c) of the Federal Rules of Civil Procedure, summary judgment is appropriate when the pleadings and record evidence show that no genuine issue of material fact exists and that, as a matter of law, the movant is entitled to judgment. Hart v. Hairston, 343 F.3d 762, 764 (5th Cir. 2003). In a motion for summary judgment, the burden is on the movant to prove that no genuine issue of material fact exists. Provident Life & Accident Ins. C. v. Goel, 274 F.3d 984, 991 (5th Cir. 2001). To determine whether a genuine issue exists for trial, the Court must view all of the evidence in the light most favorable to the non-movant, and the evidence must be sufficient such that a reasonable jury could return a verdict for the non-movant. See Chaplin v. NationsCredit Corp., 307 F.3d 368, 371-72 (5th Cir. 2002).
When the party with the burden of proof is the movant, it must establish each element of its claim as a matter of law. Fontenot v. Upjohn Co., 780 F.2d 1190, 1194 (5th Cir. 1986). If the non-movant bears the burden of proof at trial, the summary judgment movant need not support its motion with evidence negating the non-movant's case. Latimer v. Smithkline & French Lab., 919 F.2d 301, 303 (5th Cir. 1990). Rather, the movant may satisfy its burden by pointing to the absence of evidence to support the non-movant's case. Id.; Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994).
Once the movant has met its burden, the non-movant must show that summary judgment is not appropriate. Little, 37, F.3d at 1075 (quoting Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986)). "This burden is not satisfied with some metaphysical doubt as to material facts, . . . by conclusory allegations, . . . by unsubstantiated assertions, or by only a scintilla of evidence." Id. (internal citations and quotations omitted). The non-moving party must "come forward with 'specific facts showing that there is a genuine issue for trial.'" Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986)(emphasis in original)(quoting Fed. R. Civ. P. 56(e)).
The district court does not have a duty to search the entire record to find evidence supporting the non-movant's opposition. Jones v. Sheehan, Young, & Culp, P.C., 82 F.3d 1334, 1338 (5th Cir. 1996). Rather, the non-movant must "identify specific evidence in the record, and [] articulate the 'precise manner' in which that evidence support[s] [her] claim." Bookman v. Shubzda, 945 F. Supp. 999, 1004 (N.D. Tex. 1996)(quoting Forsyth v. Barr, 19 F.3d 1527, 1537 (5th Cir. 1994)).
AIC moves for summary judgment with respect to all of Plaintiffs' claims. In particular, AIC avers that Plaintiffs cannot establish the causation element of any of their causes of action. In addition, AIC highlights deficiencies particular to each of Plaintiffs' claims. The Court reviews AIC's arguments and the claims in turn below.
The Court first considers Plaintiffs' breach of contract claim. Under Texas law, "[t]he elements of a breach of contract claim are: (1) the existence of a valid contract; (2) performancetendered by the plaintiff; (3) breach of the contract by defendant; and (4) damages to the plaintiff resulting from that breach." Wright v. Christian & Smith, 950 S.W.2d 411, 412 (Tex. App.—Houston [1st Dist.] 1997, no pet.). "[F]or an insurance company to be liable for a breach of its duty to satisfy a claim presented by its insured, the insured must prove that its claim falls within the insuring agreement of the policy." Data...
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