United Neurology, P.A. v. Hartford Lloyd's Ins. Co.

Decision Date31 March 2015
Docket NumberCivil Action No. H–10–4248.
Citation101 F.Supp.3d 584
PartiesUNITED NEUROLOGY, P.A. and Athari Real Estate Ltd., Plaintiffs, v. HARTFORD LLOYD'S INSURANCE CO., Defendant.
CourtU.S. District Court — Southern District of Texas

Robert D. Green, Attorney at Law, Houston, TX, for Plaintiff.

Lynne M. Jurek, The Jurek Law Group PLLC, Martin R. Sadler, Lugenbuhl, Wheaton, Peck, Rankin & Hubbard, Houston, TX, for Defendant.


MELINDA HARMON, District Judge.

The above referenced cause alleges breach of contract, breach of duty of good faith and fair dealing, and violations of §§ 541.006(a) (unfair settlement practices) and 542.051 et seq. (prompt payment of claims) of the Texas Insurance Code and of the Deceptive Trade Practices Act (“DTPA”) §§ 17.41 et seq. (engaging in “false, misleading or deceptive acts or practices”) in Defendant Hartford Lloyd's Insurance Company's (Hartford's) denial of adequate reimbursement for damage purportedly caused by Hurricane Ike to the roofs and interiors of two of Plaintiffs' commercial properties, located at 2315 and 2321 Southwest Freeway, Harris County, Texas, under an insurance policy1 issued to Plaintiff United Neurology, P.A. (United Neurology) by Hartford. Pending before the Court are (1) Hartford's motion for partial summary judgment (instrument # 20)2 on Plaintiff Athari Real Estate Ltd.'s (“Athari's”) claims against Hartford for loss of business rental income at the 2315 Southwest Freeway property; and (2) Hartford's motion for summary judgment (instrument # 48) on United Neurology's claims against Hartford under the Policy.

Standard of Review

Summary judgment under Federal Rule of Civil Procedure 56(c) is appropriate when, viewing the evidence in the light most favorable to the nonmovant, the court determines that “the pleadings, depositions, answers to interrogatories and admissions on file, together with the affidavits, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.” A dispute of material fact is “genuine” if the evidence would allow a reasonable jury to find in favor of the nonmovant. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).

Initially the movant bears the burden of identifying those portions of the pleadings and discovery in the record that it finds demonstrate the absence of a genuine issue of material fact on which the nonmovant bears the burden of proof at trial; a “complete failure of proof concerning an essential element of the nonmoving party's case necessarily renders all other facts immaterial.” Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); Lujan v. National Wildlife Federation, 497 U.S. 871, 885, 110 S.Ct. 3177, 111 L.Ed.2d 695 (1990); Edwards v. Your Credit, Inc., 148 F.3d 427, 431 (5th Cir.1998).

If the movant meets its burden and points out an absence of evidence to prove an essential element of the nonmovant's case on which the nonmovant bears the burden of proof at trial, the nonmovant must then present competent summary judgment evidence to support the essential elements of its claim and to demonstrate that there is a genuine issue of material fact for trial. National Ass'n of Gov't Employees v. City Pub. Serv. Board, 40 F.3d 698, 712 (5th Cir.1994). [A] complete failure of proof concerning an essential element of the nonmoving party's case renders all other facts immaterial.” Celotex, 477 U.S. at 323, 106 S.Ct. 2548. The nonmovant may not rely merely on allegations, denials in a pleading or unsubstantiated assertions that a fact issue exists, but must set forth specific facts showing the existence of a genuine issue of material fact concerning every element of its cause(s) of action. Morris v. Covan World Wide Moving, Inc., 144 F.3d 377, 380 (5th Cir.1998).

Conclusory allegations unsupported by evidence will not preclude summary judgment. National Ass'n of Gov't Employees v. City Pub. Serv. Board, 40 F.3d at 713; Eason v. Thaler, 73 F.3d 1322, 1325 (5th Cir.1996). Allegations in a plaintiff's complaint are not evidence. Wallace v. Texas Tech Univ., 80 F.3d 1042, 1047 (5th Cir.1996) ([P]leadings are not summary judgment evidence.”); Johnston v. City of Houston, Tex., 14 F.3d 1056, 1060 (5th Cir.1994) (for the party opposing the motion for summary judgment, “only evidence—not argument, not facts in the complaint-will satisfy' the burden.”), citing Solo Serve Corp. v. Westowne Assoc., 929 F.2d 160, 164 (5th Cir.1991). The nonmovant must “go beyond the pleadings and by [his] own affidavits, or by depositions, answers to interrogatories and admissions on file, designate specific facts showing that there is a genuine issue of material fact for trial.” Giles v. General Elec. Co., 245 F.3d 474, 493 (5th Cir.2001), citing Celotex, 477 U.S. at 324, 106 S.Ct. 2548.

The court must consider all evidence and draw all inferences from the factual record in the light most favorable to the nonmovant. Matsushita Elec. Indus. Co. v. Zenith Radio, 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986); National Ass'n of Gov't Employees v. City Pub. Serv. Board, 40 F.3d at 712–13.

The party asserting an affirmative defense, such as the statute of limitations or estoppel, bears the burden of proof on it. F.T.C. v. National Business Consultants, Inc., 376 F.3d 317, 322 (5th Cir.2004), cert denied, 544 U.S. 904, 125 S.Ct. 1590, 161 L.Ed.2d 277 (2005). See Fed. R. of Civ. P. 8(c) ( “In responding to a pleading, a party must affirmatively state any avoidance or affirmative defense including” estoppel and statute of limitations.). Nevertheless, a “technical failure to comply precisely with Rule 8(c) is not fatal” and does not “result[ ] in a waiver” as long as the defendant raises the defense “in a manner that does not result in unfair surprise” and “at a pragmatically sufficient time,” and “the plaintiff was not prejudiced in its ability to respond.” Lucas v. United States, 807 F.2d 414, 417 (5th Cir.1986); Vanhoy v. United States, 514 F.3d 447, 450 (5th Cir.2008); Lee v. U.S., 765 F.3d 521, 523–24 (5th Cir.2014). The party without the burden of proof on the affirmative defense moving for summary judgment on it needs only to demonstrate an absence of evidence on an essential element of the affirmative defense, and then the burden shifts to the nonmoving party to support its affirmative defense by affidavits, depositions, answers to interrogatories and admissions on file that evidence specific facts showing a genuine issue of material fact for trial. United Farmers Agents Ass'n, Inc. v. Farmers Ins. Exchange, 892 F.Supp. 890, 898 (W.D.Tex.1995), citing Celotex, 477 U.S. at 323–24, 106 S.Ct. 2548. If no such evidence is produced, the movant is entitled to judgment as a matter of law. Id.

Applicable Law

Because this case was removed from Texas state court on diversity jurisdiction, Texas substantive law applies. Erie R.R. Co. v. Tompkins, 304 U.S. 64, 78–80, 58 S.Ct. 817, 82 L.Ed. 1188 (1938). Therefore the Court looks to final decisions by the Texas Supreme Court or, where there are none, attempts to determine as best as it can what that high court would decide about an issue by examining decisions of intermediate appellate state courts. James v. State Farm Mutual Auto. Ins. Co., 719 F.3d 447, 451 (5th Cir.2013), citing Westlake Petrochems., L.L.C. v. United Polychem, Inc., 688 F.3d 232, 238 n. 5 (5th Cir.2012), and Howe ex rel. Howe v. Scottsdale Ins. Co., 204 F.3d 624, 627 (5th Cir.2000).

1234567 Under Texas law, insurance policies are construed under the usual principles of contract law. American States Ins. Co. v. Bailey, 133 F.3d 363, 369 (5th Cir.1998), citing Canutillo Indep. Sch. Dist. v. Nat'l Union Fire Ins. Co., 99 F.3d 695, 700 (5th Cir.1996); Progressive County Mut. Ins. Co. v. Sink, 107 S.W.3d 547, 551 (Tex.2003). The court's primary role is to give effect to the written expression of the parties' intent. Balandran v. Safeco Ins. Co. of America, 972 S.W.2d 738, 741 (Tex.1998), citing State Farm Life Ins. Co. v. Beaston, 907 S.W.2d 430, 433 (Tex.1995). In defining the scope of coverage, the court examines the entire policy to determine the true intent of the parties. Utica Nat'l Ins. Co. of Texas v. Am. Indem. Co., 141 S.W.3d 198, 202 (Tex.2004). The court must read the policy as a whole and give effect to each of its contractual provisions so that none is rendered meaningless. American Mfrs. Mut. Ins. Co. v. Schaefer, 124 S.W.3d 154, 157 (Tex.2003). The terms of a contract are given their plain, ordinary, generally accepted meaning unless the contract itself redefines those terms or indicates that the parties used the terms in a technical or different sense. Bituminous Cas. Corp. v. Maxey, 110 S.W.3d 203, 208–09 (Tex.App.-Houston [1st Dist.] 2003, pet. denied), citing W. Reserve Life Ins. v. Meadows, 152 Tex. 559, 261 S.W.2d 554, 557 (1953); Heritage Res., Inc. v. NationsBank, 939 S.W.2d 118, 121 (Tex.1996). When a contract is clear and unambiguous, i.e., when it can be given a definite or certain legal meaning, the court enforces it as written. Nat'l Union Fire Ins. Co. of Pittsburgh, Pa. v. CBI Industries, Inc., 907 S.W.2d 517, 520 (Tex.1995). Where the contract's language can be given two or more reasonable interpretations, it is ambiguous. Id. In an insurance policy, if a provision, especially an exclusionary clause, is ambiguous, the court must resolve the ambiguity in favor of the insured. Sink, 107 S.W.3d at 551; see also Mid–Continent Cas. Co. v. Swift Energy Co., 206 F.3d 487, 491 (5th Cir.2000) (“In Texas, when an insurance policy is ambiguous or inconsistent, the construction that would afford coverage to the insured must govern.”). “Where an ambiguity involves an exclusionary provision of an insurance policy, [the court] ‘must adopt the construction ... urged by the insured as long as that construction is not unreasonable, even if the construction urged by the...

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