Silo Rest. Inc. v. Allied Prop. & Cas. Ins. Co.

CourtUnited States District Courts. 5th Circuit. Western District of Texas
Citation420 F.Supp.3d 562
Docket NumberCase No. 5:18-CV-1176-JKP
Decision Date12 November 2019

420 F.Supp.3d 562

SILO RESTAURANT INC., et al., Plaintiffs,

Case No. 5:18-CV-1176-JKP

United States District Court, W.D. Texas, San Antonio Division.

Signed November 12, 2019

420 F.Supp.3d 566

Michelle Lorraine Enyart, William Lee Calhoun, III, Calhoun Law Firm, San Antonio, TX, for Plaintiffs.

Katherine M. Gonyea, Robert Glen Wall, Patrick M. Kemp, Segal McCambridge Singer & Mahoney Ltd, Austin, TX, for Defendant.



In this first party insurance action, a tenant/insured, Silo Restaurants, Inc. ("Silo"), and the owner of the property, Phil Dyer, who the applicable insurance policy also lists as mortgagee and payee, have sued the insurance company, Allied

420 F.Supp.3d 567

Property and Casualty Insurance Company ("Allied"), under various theories for hail damage to the insured property's roof in 2016. The Court has three motions under consideration: (1) Defendant Allied Property and Casualty Insurance Company's Motion for Summary Judgment (ECF No. 10); (2) Plaintiffs' Written Objections to Defendant's Summary Judgment Evidence, Exhibit B and Motion to Strike Defendant's Summary Judgment Evidence, Exhibit B (ECF No. 19); and (3) Plaintiffs' Motion for Leave to File Plaintiffs' Surreply to Defendant's Reply in Support of its Motion for Summary Judgment (ECF No. 22). The summary judgment motion is fully briefed, including evidence submitted by both sides.1 Defendant has responded to the motion to strike, but Plaintiffs have not filed a reply brief. Defendant has not responded to the motion for leave to file surreply. Regardless of the briefing filed, all motions are ready for ruling.


The factual background is essentially undisputed. Allied issued an insurance policy, with effective dates March 17, 2016 to March 17, 2017, to Silo to cover a restaurant located at 1133 Austin Highway in San Antonio, Texas. See Premier Businessowners Policy No. ACP BPFC 7245584525 [hereinafter "Policy"]. Silo is the named insured. Id. at 2, 13.2 Dyer owns the property, leases it to Silo who "has a duty to maintain fire and casualty insurance on the property for [Dyer's] benefit," and Dyer is "included in that policy as a mortgagee and loss payee." Decl. Dyer ¶ 2; see also Policy at 16 (showing Dyer listed as mortgagee). Patrick Richardson is President of Silo and handles all daily operations, including obtaining insurance to comply with the lease obligations with Dyer. Richardson Decl. ¶¶ 2-3. Silo engaged Insurance One Agency to act on its behalf and Ryan Hutchinson of that entity was "the writing agent for Silo." See Ex. B-8. The policy contains a limitations provision that applies to the contractual claims of Plaintiffs. See Policy at 157.

During the period of coverage, a hailstorm affected the insured property. On August 25, 2016, Delia Willis, an insurance agent with Insurance One Agency, L.C., acting on behalf of Silo and as agent for Richardson, submitted a Property Loss Notice to Defendant alleging hail damage to the roof and air-conditioning ("AC") unit of the property. See Ex. B-1; Richardson Decl. ¶ 9. Defendant assigned Terry Nichols as the adjuster on the claim. Decl. Bailey ¶ 3. Following an initial inspection, Nichols engaged EFI Global to inspect and report on possible hail damage to the property. Id. ¶ 4; Ex. B-3. Following the engineer's inspection, Defendant agreed to pay Silo and Dyer (as a mortgagee) for covered damages to an AC unit. Ex. B-4.

EFI sent its report to Nichols on September 28, 2016. Ex. B-5. Relying on that

420 F.Supp.3d 568

report, Nichols sent the following email to Richardson and his Insurance One Agent, Ryan Hutchinson:

Please see attached letter and engineer's report. Based on the engineer's findings I am unable to help you on the roof as no hail damage was found to the flat roof, rather it is leaking due to wear and tear at seams, penetrations, etc. Let me know if you have any questions.

Ex. B-6. The attached letter informed Richardson and Hutchinson that coverage was denied for hail damage to the roof and provided reasons for the denial. See Ex. B-7. The report from EFI concluded that (1) the property was exposed to hail resulting in visible "spatter marks on the sheet metal roofing panels over the silo, distress to AC fins, dents to light gauge metal roof vents, and spatter marks on mechanical equipment," but "[o]therwise the roof and associated components were found to be free of hail related damage"; (2) the "[s]patter marks to the sheet metal roofing panels are cosmetic in nature and does [sic] not constitute functional damage"; and (3) there were observed "potential sources of water infiltration" but they were "not storm related damage." Ex. A-1 at 7.

The day he received the claim denial, Hutchinson sought clarification from Nichols, but did not include either Plaintiff on the email. See Ex. B-8. Nichols explained:

There is a lot of difference in thin aluminum a/c fins and commercial roofing material made of tar and gravel and rubber compounds. I did not see hail damage to the roof and that is why I had the engineer look at it. If they think differently, they can get their own expert and submit it to us to consider. Basically, what I saw was an old roof that needs to be replaced.

Ex. B-9.

Defendant closed the case file on November 3, 2016. See Ex. B-2 at 167. Nichols noted: "Kept claim open for a period of time in case of further actions ... regarding roof. I am closing claim at this time." Id.

Because leaks later began to appear in the same areas of the roof, Richardson contacted another roofer for repairs with approval from Dyer. Richardson Decl. ¶ 20; Decl. Dyer ¶ 7. On October 5, 2018, Richardson informed Dyer that the newly hired roofer disagreed with the prior denial of hail damage claim. Richardson Decl. ¶¶ 21-22; Decl. Dyer ¶ 8.

Plaintiffs commenced this action by filing an Original Petition in state court on October 8, 2018. See Orig. Pet. (ECF No. 1-1). Defendant timely removed the action to this Court the next month based upon diversity of citizenship. See Notice of Removal, (ECF No. 1).

On April 30, 2019, Defendant filed its motion for summary judgment on grounds that Plaintiffs untimely commenced this action under the insurance policy and applicable statutes of limitations. Plaintiffs first responded with an unopposed motion for leave to amend their complaint and filed the amendment with court permission. In their amended complaint, Plaintiffs assert five theories of liability and two defenses to the asserted limitations bar. See Pls.' First Am. Compl. (ECF No. 13) at 7-16. Following the filing of the amended complaint, Plaintiffs responded directly to the motion for summary judgment and the parties filed the other motions and briefing currently before the Court. All motions are ripe for ruling.


"Under the Erie doctrine, federal courts sitting in diversity apply state substantive law and federal procedural law." Gasperini v. Ctr. for Humanities, Inc. , 518 U.S. 415, 427, 116 S.Ct. 2211, 135 L.Ed.2d 659 (1996) ; accord

420 F.Supp.3d 569

Erie R.R. Co. v. Tompkins , 304 U.S. 64, 78, 58 S.Ct. 817, 82 L.Ed. 1188 (1938). Because jurisdiction in this case is based on diversity of citizenship, the Court must "apply Texas law," including its law regarding statutes of limitations. Ocwen Loan Servicing, L.L.C. v. Berry , 852 F.3d 469, 473 (5th Cir. 2017) ; accord West v. Conrail , 481 U.S. 35, 39 n.4, 107 S.Ct. 1538, 95 L.Ed.2d 32 (1987) ; Walker v. Armco Steel Corp. , 446 U.S. 740, 752-53, 100 S.Ct. 1978, 64 L.Ed.2d 659 (1980) ; Hensgens v. Deere & Co. , 869 F.2d 879, 880 (5th Cir. 1989). Accrual of a claim or cause of action is also governed by state law. See Milton v. Stryker Corp. , 551 F. App'x 125, 127 (5th Cir. 2014) (per curiam) (applying Texas law on accrual in diversity case).

Although "federal law, rather than state law, invariably governs procedural matters in federal courts," Camacho v. Tex. Workforce Comm'n , 445 F.3d 407, 409 (5th Cir. 2006), classifying "law as ‘substantive’ or ‘procedural’ for Erie purposes is sometimes a challenging endeavor," Gasperini , 518 U.S. at 427, 116 S.Ct. 2211. But when a matter is "covered by the Federal Rules of Civil Procedure, the characterization question is usually unproblematic," because "if the Rule in point is consonant with the Rules Enabling Act, 28 U.S.C. § 2072, and the Constitution, the Federal Rule applies regardless of contrary state law." Id. at 427 n.7, 116 S.Ct. 2211 (citing Hanna v. Plumer , 380 U.S. 460, 469-74, 85 S.Ct. 1136, 14 L.Ed.2d 8 (1965) ; Burlington N. R. Co. v. Woods , 480 U.S. 1, 4-5, 107 S.Ct. 967, 94 L.Ed.2d 1 (1987) ). As will be discussed in more detail later in this memorandum opinion, one such procedural rule that is governed by federal law is "the federal rule of summary judgment procedure." FDIC v. Shrader & York , 991 F.2d 216, 220 (5th Cir. 1993).

"When reviewing issues of state law, federal courts look to the law of that state's highest court." ...

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