Page v. State Farm Lloyds

• Court: Texas Court of Appeals
• Writing for the Court: Felipe Reyna
• Citation: Page v. State Farm Lloyds, 259 S.W.3d 257 (Tex. App. 2008)
• Decision Date: 11 June 2008
• Docket Number: No. 10-07-00228-CV.,10-07-00228-CV.
• Parties: Wanda M. PAGE, Appellant, v. STATE FARM LLOYDS and Erin Strachman, Appellees.

259 S.W.3d 257

Wanda M. PAGE, Appellant, v. STATE FARM LLOYDS and Erin Strachman, Appellees.

No. 10-07-00228-CV.

Court of Appeals of Texas, Waco.

June 11, 2008.

Rehearing Overruled August 12, 2008.

John F. Melton, Ross Melton PC, Austin, for Appellant.

William A. Kendall, Jr., Dallas, Sydney Hewlett, Shannon Grace Ratliff & Miller LLP, Fort Worth, Levon G. Hovnatanian, Martin Disiere Jefferson Wisdom LLP, Houston, for Appellees.

Before Chief Justice GRAY, Justice VANCE, and Justice REYNA.

OPINION

FELIPE REYNA, Justice.

The primary issue presented in this appeal is whether the Texas Homeowners Form B (HO-B) insurance policy provides coverage for mold damage resulting from plumbing leakage or similar accidental discharge. The trial court held that no such coverage is provided. We disagree and will reverse and remand.

Background

Wanda Page discovered mold and water damage in her home in June 2001 and reported it to State Farm. The claim was assigned to State Farm claim specialist Erin Strachan. Strachan had a plumber test Page's plumbing system, which revealed several leaks in the sanitary sewer lines. Strachan retained Industrial Hygiene & Safety Technology, Inc. to perform an indoor environmental quality assessment. Industrial Hygiene found several forms of mold and recommended that both the structure and contents be remediated and some of the contents discarded. After Page provided a remediation estimate, State Farm issued a draft in the amount of $12,644 for remediation and repair of the structure and a separate draft in the amount of $13,631 for remediation of the contents ($12,206) and three months' living expenses ($475 per month) while the work was completed.¹

In May 2002, Page requested additional funds to replace the carpet because of mold damage, but State Farm refused. The parties exchanged correspondence in which Page continued to claim that State Farm had not paid sufficient funds to completely remediate the mold. State Farm declined to pay any additional funds without supporting documentation showing that the amounts paid were insufficient to cover the loss.

Page filed suit in September 2004. She alleged claims against State Farm for breach of contract, breach of the duty of good faith and fair dealing, fraudulent misrepresentation, DTPA violations, and Insurance Code violations. She alleged claims against Strachan for DTPA and Insurance Code violations.

One year later, her attorney submitted an additional estimate indicating that the cost for remediation of the attic was $13,042. State Farm tendered payment for this amount a few weeks later.

State Farm and Strachan filed a summary-judgment motion asserting both no-evidence and traditional grounds. State Farm argued that it is entitled to judgment as a matter of law on Page's contract claim because: (1) coverage for mold damage is specifically excluded under the policy; (2) there is no evidence that a covered peril caused the alleged mold damage; and (3) there is no evidence that State Farm owes additional sums under the policy. State Farm argued that Page cannot recover on her extra-contractual claims because she has no viable claim for breach of contract. State Farm and Strachan also urged more specific grounds for summary judgment with regard to the merits of Page's extra-contractual claims. However, because the trial court did not reach the merits of these contentions, we do not address them here.

The court initially denied the defendants' summary judgment motion by written order in May 2006. After the August 2006 decision of the Supreme Court in Fiess v. State Farm Lloyds, 202 S.W.3d 744 (Tex.2006), State Farm and Strachan filed a motion asking the trial court to reconsider. On reconsideration, the court granted the motion "regarding any and all claims for mold damage" and rendered a take-nothing judgment in favor of the defendants "for any and all claims for mold damage."

Several months later, the court signed an "Order of Final Judgment" and ordered that, "in accordance with the grant of Defendants' Motion for Summary Judgment, this judgment finally disposes of all parties and all claims in this matter."

Appellate Issues

Page presents two points of error. The first point includes the following six subpoints by which she challenges the summary judgment:

(1) the Supreme Court's decision in Fiess does not universally exclude coverage for mold damage;

(2) there is evidence that damage to the contents of Page's home was caused by accidental discharge from a plumbing, heating, or air-conditioning system and is thus covered by the policy;

(3) there is evidence that State Farm has not fully paid for damages to the contents of Page's home;

(4) there is evidence that damage to the structure was caused by accidental discharge from a plumbing, heating, or air-conditioning system and is thus covered by the policy;

(5) there is evidence that State Farm has not fully paid for damages to the structure; and

(6) because Page's contract claims are viable, State Farm and Strachan were not entitled to summary judgment on her extra-contractual claims.

Page contends in her second point that the court erred by failing to sustain her objection to the defendants' motion for reconsideration of the court's initial summary-judgment ruling.

Standard of Review

We review a trial court's summary judgment de novo. Provident Life & Accident Ins. Co. v. Knott, 128 S.W.3d 211, 215 (Tex.2003). In reviewing a traditional summary judgment, we must consider whether reasonable and fair-minded jurors could differ in their conclusions in light of all of the evidence presented. See Goodyear Tire & Rubber Co. v. Mayes, 236 S.W.3d 754, 755 (Tex.2007) (per curiam) (citing Wal-Mart Stores, Inc. v. Spates, 186 S.W.3d 566, 568 (Tex.2006) (per curiam); City of Keller v. Wilson, 168 S.W.3d 802, 822-24 (Tex.2005)). We must consider all the evidence in the light most favorable to the nonmovant, indulging every reasonable inference in favor of the nonmovant and resolving any doubts against the motion. See Goodyear Tire, 236 S.W.3d at 756 (citing Sudan v. Sudan, 199 S.W.3d 291, 292 (Tex.2006) (per curiam); Spates, 186 S.W.3d at 568).

We apply the same standard in reviewing a no-evidence summary judgment as we would in reviewing a directed verdict. See Mack Trucks, Inc. v. Tamez, 206 S.W.3d 572, 581 (Tex.2006). "We review the evidence presented by the motion and response in the light most favorable to the party against whom the summary judgment was rendered, crediting evidence favorable to that party if reasonable jurors could, and disregarding contrary evidence unless reasonable jurors could not." Id. at 582. A no-evidence summary judgment will be defeated if the non-movant produces some evidence "raising an issue of material fact" on the elements challenged by the movant. Id.

The Policy

There are two sections of the policy which are pertinent to the parties' dispute. The first is "Section I — Perils Insured Against" which reads as follows:

COVERAGE A (DWELLING)

We insure against all risks of physical loss to the property described in Section I Property Coverage, Coverage A (Dwelling) unless the loss is excluded in Section I Exclusions.

COVERAGE B (PERSONAL PROPERTY)

We insure against physical loss to the property described in Section I Property Coverage, Coverage B (Personal Property) caused by a peril listed below, unless the loss is excluded in Section I Exclusions.

1. Fire and Lightning.

2. Sudden and Accidental Damage from Smoke.

3. Windstorm, Hurricane and Hail.

4. Explosion.

5. Aircraft and Vehicles.

6. Vandalism and Malicious Mischief.

7. Riot and Civil Commotion.

8. Collapse of Building or any part of the building.

9. Accidental Discharge, Leakage or Overflow of Water or Steam from within a plumbing, heating or air conditioning system or household appliance.

A loss resulting from this peril includes the cost of tearing out and replacing any part of the building necessary to repair or replace the system or appliance. But this does not include loss to the system or appliance from which the water or steam escaped. Exclusions 1.a. through 1.h. under Section I Exclusions do not apply to loss caused by this peril.

10. Falling Objects.

This peril does not include loss to property contained in a building unless the roof or outside wall of the building is first damaged by the falling object.

11. Freezing of household appliances.

12. Theft, including attempted theft and loss of property from a known place when it is likely that the property has been stolen.

The second pertinent section of the policy is "Section I — Exclusions," which provides in pertinent part:

1. The following exclusions apply to loss to property described under Coverage A (Dwelling) or Coverage B (Personal Property), but they do not apply to an ensuing loss caused by fire, smoke or explosion.

....

f. We do not cover loss caused by:

(1) wear and tear, deterioration or loss caused by any quality in property that causes it to damage or destroy itself.

(2) rust, rot, mold or other fungi.

(3) dampness of atmosphere, extremes of temperature.

(4) contamination.

(5) rats, mice, termites, moths or other insects.

We do cover ensuing loss caused by collapse of building or any part of the building, water damage or breakage of glass which is part of the building if the loss would otherwise be covered under this policy.

Coverage for Mold Damage

Page contends in point 1(a) that State Farm failed to conclusively establish its entitlement to judgment on her contract claims because the Supreme Court's decision in Fiess does not universally exclude coverage for mold damage to a dwelling or its contents.

In Fiess, the Supreme Court answered a question certified to it by the Fifth Circuit asking whether the ensuing loss provision in Exclusion 1.f (quoted above) "when read in conjunction with the remainder of the policy, provide[s] coverage for mold contamination caused by water damage that...