De Laurentis v. United Services Auto. Ass'n

• Decision Date: 31 March 2005
• Docket Number: No. 14-03-00164-CV.,14-03-00164-CV.
• Citation: 162 S.W.3d 714
• Parties: Christine H. DE LAURENTIS, Appellant, v. UNITED SERVICES AUTOMOBILE ASSOCIATION a/k/a USAA, Appellee.
• Court: Texas Supreme Court

162 S.W.3d 714

Christine H. DE LAURENTIS, Appellant, v. UNITED SERVICES AUTOMOBILE ASSOCIATION a/k/a USAA, Appellee.

No. 14-03-00164-CV.

Court of Appeals of Texas, Houston (14th Dist.).

March 31, 2005.

COPYRIGHT MATERIAL OMITTED

Sheila Lee Haddock, Roger A. Rider, Houston, for appellant.

Bruce E. Ramage, Dana T. Williams, Levon G. Hovnatanian, Houston, for appellee.

Panel consists of Justices HUDSON, FOWLER, and FROST.

OPINION ON MOTION FOR REHEARING

KEM THOMPSON FROST, Justice.

We overrule appellant Christine de Laurentis's motion for rehearing. We withdraw the opinion issued in this case on September 30, 2004, and we issue the following opinion in its place.

This case arises from an insurance-coverage dispute between a policyholder who suffered mold damage to her apartment and an insurer who denied coverage under a renter's insurance policy. The policyholder sued the insurer asserting a breach-of-contract claim as well as various extracontractual claims. The trial court granted summary judgment in favor of the insurer. At issue is whether the policyholder's claim for mold damage that purportedly resulted from a leaking air conditioning unit in her apartment is covered under her renter's insurance policy. We find coverage for any such damage for which causation is ultimately established, and reverse and remand in part on this issue. However, we affirm the trial court's judgment as to the extracontractual claims.

I. FACTUAL AND PROCEDURAL BACKGROUND

In August of 2000, appellant/plaintiff Christine H. de Laurentis ("Policyholder") purchased a renter's insurance policy from United Services Automobile Association a/k/a USAA ("Insurer"). The Insurer used a Texas Homeowner's Policy Form B-T ("HOB-T") in issuing the policy. The following month, the Policyholder discovered the air conditioning unit in her apartment was leaking water into the closet of her bedroom, and black mold was growing on one wall of the closet. The apartment complex purportedly repaired the leak and the damage.

In June of 2001, the Policyholder concluded that the mold had not been remediated and, in fact, had spread throughout her apartment. She filed a claim with the Insurer, seeking compensation under her renter's insurance policy for temporary residence and for remediation of her furniture, art work, clothing, and other personal belongings.

The Policyholder asked the City of Houston to test her apartment for mold in July of 2001. The ambient air in the Policyholder's apartment tested within the normal acceptable range. However, swab samples taken throughout the apartment isolated two fungal items: stachybotrys and penicillium. The Policyholder's belongings and the wall of her closet, which previously had exhibited mold, were not tested. A swab sample taken from another wall of the same closet showed no indications of mold.

In pursuing her claim, the Policyholder spoke to Brenda Essex, a representative of the Insurer, on two occasions before Essex sent a claims investigator to the Policyholder's apartment. Essex informed the Policyholder during both telephone conversations that her claim would be denied, stating as a basis for the denial that mold is not a named peril in the Policyholder's HOB-T policy. Candace Shook, a claims investigator for the Insurer, went to the Policyholder's apartment on July 19, 2001, and determined from the apartment complex that there had been a leak in the air conditioning system. While at the Policyholder's apartment, Shook acknowledged the claim, and on behalf of the Insurer, she offered to pay for what had been damaged by the water. Shook told the Policyholder during the inspection that the mold damage was specifically excluded by the HOB-T policy. That same day, Shook sent the Policyholder a letter reiterating that mold was specifically excluded by the HOB-T policy. However, in the letter Shook informed the Policyholder that the Insurer would pay for damage to any items that had gotten wet from the leak. Additionally, Shook's letter stated that, because the apartment complex had requested the Policyholder to move to another unit so that workers could make additional repairs necessitated by the water damage, the Insurer would cover the expenses associated with a move to another apartment. Shook subsequently sent another letter to the Policyholder's attorney, advising that the Insurer did not believe the HOB-T policy covered any damage that may have been caused by the mold. In order to process the Policyholder's claim, Shook sent a letter on August 30, 2001, requesting the Policyholder to provide an inventory of personal property damaged by water. The Policyholder did not provide an inventory.

The Policyholder sued the Insurer for breach of the insurance policy and asserted various extracontractual claims, including a claim for bad faith handling of her insurance claim. The parties filed cross-motions for summary judgment, each asking the trial court to interpret the relevant policy provisions as a matter of law. The Policyholder sought partial summary judgment on the issue of coverage; the Insurer sought dismissal of the Policyholder's breach-of-contract and extracontractual claims. The Insurer asserted the following grounds in its motion for final summary judgment:

(1) The Policyholder's failure to comply with the HOB-T policy conditions precludes coverage.

(2) The Policyholder's breach-of-contract claim fails as a matter of law because there is no coverage under the HOB-T policy for mold damage to the Policyholder's personal property.

(3) The Policyholder's deposition testimony shows that her extracontractual claims fail as a matter of law.

(4) The Policyholder's extracontractual claims are barred as a matter of law because a bona fide coverage dispute exists.

The trial court denied the Policyholder's motion, granted the parts of the Insurer's motion seeking dismissal of the extracontractual claims, and denied the parts of the Insurer's motion seeking dismissal of the breach-of-contract claim. Both parties filed motions for reconsideration. In her motion for reconsideration, the Policyholder asked the trial court to set aside its dismissal of her extracontractual claims and to grant her prior motion for partial summary judgment as to her breach-of-contract claim. In its motion for reconsideration, the Insurer asked the trial court to stand by its dismissal of the extracontractual claims and to reverse its denial of the Insurer's motion for summary judgment as to the breach-of-contract claim, so as to grant final summary judgment in favor of the Insurer as to the Policyholder's claims. Upon reconsideration, the trial court vacated its previous order, granted the Insurer's motion for final summary judgment, and entered a final judgment dismissing all of the Policyholder's claims.¹

II. ISSUES PRESENTED

On appeal, the Policyholder presents the following issues:

1. Contract Interpretation. The Policyholder's insurance contract provides coverage for a "physical loss" that is "caused by" the "accidental discharge, leakage or overflow of water" from an "air conditioning system" unless "the loss is specifically excluded." Did the trial court err in refusing to find coverage as a matter of law for mold damage the Policyholder claims was caused by an air conditioner water leak?

2. Waiver of Condition Precedent. May the Insurer avoid liability for wrongfully denying the Policyholder's claim simply because the Policyholder did not present an itemized list of damaged property when the Insurer rejected the Policyholder's claim immediately and without investigation, contending that mold was not a covered peril under the HOB-T policy?

3. Extracontractual Claims. If this court construes the policy language at issue to provide coverage for the Policyholder's claimed loss, is the Policyholder entitled to have her extracontractual claims considered by a jury because the issue presented — whether an insurer is liable in damages for denying a claim after its liability has become reasonably clear — is a question of fact rather than law?²

III. STANDARD OF REVIEW

Although the Policyholder asks this court to review the trial court's denial of her motion for partial summary judgment, this ruling is not before us because that motion did not seek a final judgment. See CU Lloyd's of Tex. v. Feldman, 977 S.W.2d 568, 569 (Tex.1998) (stating that, before a court of appeals may review an order denying a cross-motion for summary judgment not covered by an interlocutory appeal statute, both parties must have sought final judgment in their cross-motions for summary judgment, unless an exception applies that is not applicable to the instant case).

In reviewing the Insurer's motion for summary judgment, we take as true all evidence favorable to the Policyholder, and we make all reasonable inferences in her favor. See Dolcefino v. Randolph, 19 S.W.3d 906, 916 (Tex.App.-Houston [14th Dist.] 2000, pet. denied). If the Insurer's motion and summary-judgment evidence facially establish its right to judgment as a matter of law, the burden shifts to the Policyholder to raise a genuine, material fact issue sufficient to defeat summary judgment. See id. Because the trial court's order granting summary judgment does not specify the grounds for its ruling, we must affirm summary judgment if any of the summary-judgment grounds are meritorious. See FM Props. Operating Co. v. City of Austin, 22 S.W.3d 868, 872 (Tex.2000).

IV. NON-WAIVER OF CONDITION PRECEDENT

In her second issue, the Policyholder asserts the trial court erred in granting summary judgment based on the Insurer's argument that, because the Policyholder failed to comply with a condition precedent in her HOB-T policy, she is precluded from suing for breach of the insurance contract. Specifically, the Insurer states that the Policyholder failed to provide the company with a written inventory of the damaged personal property. The Insurer claims the Policyholder's failure...