McMillin v. State Farm Lloyds

• Decision Date: 02 December 2005
• Docket Number: No. 03-04-00171-CV.,03-04-00171-CV.
• Citation: 180 S.W.3d 183
• Parties: Appellants, William McMILLIN and Mary Furse//Cross-Appellant, State Farm Lloyds, v. Appellee, STATE FARM LLOYDS//Cross-Appellees, William McMillin and Mary Furse.
• Court: Texas Supreme Court

180 S.W.3d 183

Appellants, William McMILLIN and Mary Furse//Cross-Appellant, State Farm Lloyds, v. Appellee, STATE FARM LLOYDS//Cross-Appellees, William McMillin and Mary Furse.

No. 03-04-00171-CV.

Court of Appeals of Texas, Austin.

August 26, 2005.

Rehearing Overruled December 2, 2005.

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Blair Dancy, Michael S. Hull, Hull Henricks & MacRae LLP, Austin, TX, for Appellants.

Linda J. Burgess, Peter A. Nolan, Craig T. Enoch and Melissa Anne Prentice, Winstead Sechrest & Minick, P.C., Austin, TX, for Appellee.

Before Justices B.A. SMITH, PURYEAR and PEMBERTON.

OPINION

BOB PEMBERTON, Justice.

Both parties appeal from a judgment based on a jury verdict awarding William McMillin and Mary Furse ("McMillins"¹) $1000 for the breach of an insurance contract by State Farm Lloyds ("State Farm"), but rejecting several other damage claims by the McMillins. The McMillins complain about the district court's failure to strike six jurors for cause. They also complain that they are entitled to recover additional damages and attorney's fees. State Farm challenges the $1000 award and the award of statutory interest penalties. We will affirm the judgment in part, reverse the judgment in part, render judgment in part, and remand part of the cause for further proceedings.

BACKGROUND

The claims underlying this appeal arose while the McMillins were renovating their house. The McMillins had removed a portion of the roof and covered the opening with tarp. On October 6, 2000, a storm hit and the tarp failed to prevent water from entering the house. The McMillins filed a claim with their homeowners' insurance carrier, State Farm, and, within a few days, State Farm made a payment of $2508.35 for viewable damage. Later that same month, after additional inclement weather, the McMillins reported additional water damage, along with mold growth throughout the house. Unlike the case with the McMillins' initial claim, several months passed before State Farm paid the second claims. On March 1, 2001, a mold remediator sent a fax to State Farm opining that remediation was so expensive that it was no longer cost-effective; State Farm did not share that estimate with the McMillins. On August 7, 2001, a week after getting another estimate from the mold remediator, State Farm paid $344,367.27 to the McMillins on their claim of water damage resulting in mold; thus, State Farm paid $346,875.62 to compensate the McMillins for their covered losses, an amount that excludes the $1000 deductible. By August 2001, the McMillins had purchased another home and moved there, partly in order to enable their planned adoption of a child to move forward.

The McMillins sued State Farm, asserting causes of action including breach of the insurance agreement, false, misleading or deceptive acts or practices and unconscionable acts in violation of the Deceptive Trade Practices Act ("DTPA"), see Tex. Bus. & Com.Code Ann. §§ 17.45(5) (West 2002), 17.46(a) (West Supp.2004-05); unfair and deceptive acts or practices in violation of the insurance code, see Tex. Ins.Code Ann. art. 21.21 (West Supp.2004-05); violation of the "prompt pay" requirements of the insurance code, see id. art. 21.55, § 2; and breach of its common-law duty of good faith and fair dealing. The McMillins sought $5 million in damages, exemplary damages, attorney's fees, costs, and interest.

Both parties filed motions for partial summary judgment. State Farm moved for judgment that its policy expressly excluded coverage for remediation or repair of a home for damages caused by mold. The McMillins filed a cross-motion for partial summary judgment that the policy did not exclude coverage for remediation or repair of a home for damages caused by mold if that damage resulted from damages caused by water. The court granted the McMillins' motion and denied State Farm's motion.

The McMillins' claims were tried to a jury, which found that State Farm had failed to comply with its policy, but failed to find State Farm liable on any of the McMillins' other claims. The jury found that State Farm received all items, statements, and forms requested and required from the McMillins on July 31, 2001, which served as the trigger date for the deadlines for State Farm's duty to investigate, resolve, and pay claims promptly. See id. As damages for breach of the policy, the jury awarded the McMillins $1000 representing the amount, less amounts actually paid, that should have been paid under Coverage A Dwelling coverage; the court awarded $76.44 in prejudgment interest on this claim. However, the jury found zero damages for additional amounts that should have been paid under the policy's loss of use coverage and for reasonable and necessary expenses incurred in attempting to prevent further damage to the house.

DISCUSSION

Both parties appeal. In what they term their "Primary Issue," the McMillins urge that the district court abused its discretion in failing to strike six jurors for cause and that we should accordingly remand this case for a new trial. The McMillins also contend that the district court abused its discretion in failing to give a spoilation instruction as sanctions against State Farm for discovery abuse and spoilation of evidence that they claim prevented them from attacking State Farm's interpretation of their homeowners' policy at trial. The McMillins also present legal and factual sufficiency challenges to (1) the jury's award of zero additional living expenses under the loss of use provision of the insurance contract; (2) the jury's award of zero expenses incurred by the McMillins to prevent further damage; (3) the jury's finding that State Farm had received all items, statements, and forms requested and required from the McMillins on July 31, 2001; and (4) the jury's award of zero attorney's fees under the McMillins' breach of contract and Article 21.55 theories.

State Farm brings four issues, three of which attack the underpinnings of the jury's $1000 award on the McMillins's breach of contract claim relating to Coverage A. It first challenges the legal sufficiency of the evidence supporting the jury's decision to award the amount of $1000. In its second issue, State Farm contends that the district court erred in granting the McMillins summary judgment that mold damage was not excluded under Coverage A, and in denying State Farm summary judgment that such damage was excluded. In its third issue, State Farm argues that because mold damage was excluded from Coverage A, its payments to the McMillins for water damage were adequate and, thus, there was no evidence that it breached the policy contract. In its fourth issue, State Farm urges that the district court erred by awarding statutory interest penalties under article 21.55 because the McMillins failed to offer evidence that they ever gave written notice, which State Farm contends was required by the statute.

Challenges for cause

The McMillins complain that the trial court abused its discretion by overruling their challenges for cause of six veniremembers who were seated on the jury.² State Farm argues that the McMillins neither preserved their complaints nor showed that the court abused its discretion by refusing to strike these jurors for cause.

Preservation

To preserve a complaint that the court abused its discretion in refusing to strike a juror for cause, a party must not only obtain an adverse ruling on their motion to strike, but must also "use a peremptory challenge against the veniremember involved," exhaust its remaining peremptory challenges, and notify the trial court that one or more specific objectionable veniremembers will remain on the jury list. Cortez v. HCCI-San Antonio, Inc., 159 S.W.3d 87, 90-91 (Tex.2005); Hallett v. Houston Northwest Medical Ctr., 689 S.W.2d 888, 890 (Tex.1985). These requirements derive from harmless error principles. Any error in a trial court's denial of a challenge for cause may be cured by the aggrieved party's using a peremptory challenge to strike the veniremember in question. See Cortez, 159 S.W.3d at 90 ("When a challenge for cause is denied, that error can be corrected by striking the venireperson peremptorily."). For this reason, the trial court's error would be harmful to the aggrieved party only if it forced the party to accept an objectionable juror; i.e., the party's use of a peremptory challenge to cure error leaves it without a sufficient number of peremptory challenges to strike a specific additional veniremember it finds objectionable. See id. at 90.³ Consistent with general error preservation principles, see Tex.R.App. P. 33.1, the aggrieved party is required, before exercising its peremptory challenges, to alert the trial court that the court's ruling on challenges for cause was erroneous and harmful, thus affording the trial court the opportunity to consider the merits of that claim and to cure any error by such measures as granting additional peremptory strikes. See Hallett, 689 S.W.2d at 889-90;⁴ see also Texas Gen. Indem. Co. v. Moreno, 638 S.W.2d 908, 912 (Tex.App.-Houston [1st Dist.] 1982, no writ) ("Prior to the time the peremptory challenges are made the complaining party has not been harmed by any unfavorable ruling. The harmful effect occurs only when an improper ruling forces the complaining party to accept undesirable jurors and no avenue of relief is available.") (cited with approval in Hallett, 689 S.W.2d at 889).

In this case, the McMillins made challenges for cause to several veniremembers that were overruled by the district court. Subsequently, before presenting their list of peremptory challenges to the district court, the McMillins' attorney reiterated some of these challenges while making the following statement on the record:

Your Honor, because the Court refused to remove certain jurors for cause, the...