Summary
granting summary judgment for defendant on plaintiff's Insurance Code claims based on absence of evidence of reliance and causation
Summary of this case from Williams v. Progressive Cnty. Mut. Ins. Co.Opinion
Civil Action No. 301-CV1979-M
September 13, 2002
MEMORANDUM OPINION AND ORDER
Plaintiffs Howard and Carol Carper (the "Carpers") have brought suit against Defendant State Farm Lloyds ("State Farm") for recovery on contractual and extracontractual claims arising from State Farm's denial of coverage under the Carpers' homeowners s insurance policy (the "Policy"). State Farm moves for partial summary judgment on numerous grounds. The Court grants the Motion in part and denies the Motion in part.
State Farm provided insurance coverage for the Carpers' home for many years prior to the claim at issue in this lawsuit. During the period of coverage, the Carpers made numerous claims for losses caused by water damage to their home. State Farm made payments on many of these claims, the last of which State Farm paid on October 18, 1996. On December 22, 1999, the Carpers made the claim that is the basis of this suit. The Carpers alleged that water caused mold growth in their home that, in turn, resulted in property damage and personal injuries. As a part of their December 1999 claim, the Carpers also demanded additional payment on their prior claims for water damage. State Farm assigned its representative, Heather Brown ("Brown"), to begin an investigation of the December 1999 claim, and on January 4, 2000, Brown and her manager, Kristal King, inspected the Carper residence. State Farm hired several professionals to assist in the inspection. A representative of Texas Power Vac ("TPV") inspected the house for mold and water intrusion and prepared a report for State Farm detailing his observations ("TPV Report").
By letter dated February 29, 2000, State Farm denied the Carpers' December 1999 claim. On June 22, 2000, State Farm sent the Carpers another letter further detailing the reasons for the denial. Both letters state State Farm's belief that the Carpers' losses were not due to any peril covered by the Policy. On June 21, 2001, the Carpers filed their suit in state court, alleging that State Farm breached the contract embodied in the Policy, as well as its duty of good faith and fair dealing, and that it violated the Texas Insurance Code and the Deceptive Trade Practices Act ("DTPA"). On July 27, 2001, State Farm removed the action to federal court.
II.
Under Rule 56(c) of the Federal Rules of Civil Procedure, summary judgment is appropriate when the pleadings and record evidence show that no genuine issue of material fact exists and that, as a matter of law, the movant is entitled to judgment. "[T]he substantive law will identify which facts are material." Only disputes about those facts will preclude the granting of summary judgment. In a motion for summary judgment, the burden is on the movant to prove that no genuine issue of material fact exists. If the moving party meets this initial burden, the burden then shifts to the nonmovant, who must produce evidence establishing a genuine issue of material fact for trial. The record before the court must be considered in the light most favorable to the opposing party. However, bare allegations in briefs and pleadings are insufficient to withstand summary judgment.
Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994).
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).
Id.
Latimer v. Smithkline French Lab., 919 F.2d 301, 303 (5th Cir. 1990).
Celotex Corp. v. Catrett, 477 U.S. 317, 321-22 (1986).
Anderson 477 U.S. at 248; Harrison v. Byrd, 765 F.2d 501 (5th Cir. 1985).
Alizadeh v. Safety Stores, Inc., 802 F.2d 111, 113 (5th Cir. 1986).
III.
State Farm contends that several of the Carpers' causes of action are barred by the statute of limitations. A party moving for summary judgment based on an affirmative defense "must establish beyond peradventure all of the essential elements" of that defense. Thus, State Farm has the burden to prove that each of the Carpers' causes of action were brought after the running of the applicable limitations period.A.
As to the recovery the Carpers seek because they contend payments made by State Farm in 1996 and earlier turned out not to fully compensate them for their losses, State Farm seeks partial summary judgment on the Carpers' causes of action for breach of contract and the duty of good faith and fair dealing, for violations of the DTPA, and for unfair and/or deceptive acts or practices in violation of Article 21.21 of the Texas Insurance Code. As to each such claim, State Farm urges that these actions are barred in part by the statute of limitations because they contend the actions accrued, at the latest, on October 18, 1996, the date State Farm made payment on the last of the Carpers' pre-1999 claims. The Carpers respond that the causes of action accrued on February 29, 2000, the date of State Farm's initial letter of denial of the 1999 claim. The date a cause of action accrues is a matter of law.
Kuzniar v. State Farm Lloyds, 52 S.W.3d 759, 760 (Tex.App. — San Antonio 2001, pet. denied) (en banc).
The limitations period governing the Carpers' breach of contract claim is contained in the Policy, which states that an "[a]ction brought against [State Farm] must be started within two years and one day after the cause of action accrues." State Farm argues that the Carpers' breach of contract cause of action is barred, as it was filed after the two-year contractual limitations period. However, the Policy does not define the word "accrues." For limitations purposes, "a cause of action generally accrues at the time when facts come into existence which authorize a claimant to seek a judicial remedy." "Put another way, `a cause of action can generally be said to accrue when the wrongful act effects an injury." This is known as the legal injury rule.
Def.'s App. at 19. Texas law permits such contractual limitations of the period in which a party to a contract may bring a suit on the contract. See TEX. Civ. PRAC. REM. CODE ANN. § 16.070(a) (Vernon 1997).
Murray v. San Jacinto Agency, Inc., 800 S.W.2d 826, 828 (Tex. 1990) (citing Robinson v. Weaver, 550 S.W.2d 18, 19 (Tex. 1977)).
Id. (quoting Moreno v. Sterling Drug, Inc., 787 S.W.2d 348, 351 (Tex. 1990)).
In a case involving breach of an insurance contract, the San Antonio Court of Appeals held that the insured's legal injury occurred when the insurer unreasonably failed to pay the insured's claim. In that case, the insurer began an investigation of the insured's claim but failed to communicate to the insured the decision not to pay the claim. The court held that the insured's cause of action for breach of contract accrued on the date the insurer closed the claim file, noting that the closing of the claim file was "an objectively verifiable event that unambiguously demonstrated [the insurer's] intent not to pay the claim." In this case, State Farm did not fail to communicate its decision not to pay the Carpers' claim. Here, the date of State Farm's allegedly unreasonable failure to pay the Carpers' claim occurred on the date State Farm denied their claim. Thus, the Court holds that the Carper's cause of action for breach of contract accrued on the date State Farm denied the Carpers' claim. The dispute over the date on which denial occurred will be addressed below.
See Kuzniar, 52 S.W.3d at 760.
Id.
Id.
The statute of limitations governing the Carpers' cause of action for breach of the duty of good faith and fair dealing provides that suit must be brought within two years of the date on which the cause of action accrues. Under Texas law, a plaintiffs cause of action for bad-faith breach of a first-party insurance contract accrues at the time the insurer denies the insured's claim.
See TEXAS. Civ. PRAC. REM. CODE ANN. § 16.003(a) (Vernon Supp. 2002).
See Murray, 800 S.W.2d at 829 (Tex. 1990).
The statute of limitations governing the Carpers' cause of action for unfair claims settlement practices under the Article 21.21 of the Texas Insurance Code states that suit "must be commenced within two years after the date on which the unfair method of competition or unfair deceptive act or practice occurred or within two years after the person bringing the action discovered or, in the exercise of reasonable diligence, should have discovered the occurrence of the unfair method of competition or unfair or deceptive act or practice." The Texas Supreme Court has held that a plaintiffs cause of action under the Texas Insurance Code for unfair claims settlement practices accrues on the date that the insurer denies coverage.
TEX INS. CODE Art. 21.21 § 16(d) (West 2002).
See Celtic Life Ins. Co. v. Coats, 885 S.W.2d 96, 100 (Tex. 1994).
The statute of limitations governing the Carpers' cause of action under the DTPA provides that a cause of action must "be commenced within two years after the date on which the false, misleading, or deceptive act or practice occurred or within two years after the consumer discovered or in the exercise of reasonable diligence should have discovered the occurrence of the false, misleading, or deceptive act or practice." A plaintiff's DTPA claim based on denial of insurance coverage accrues on the date that the insurer denies coverage.
TEX. BUS. COM. CODE § 17.565 (West 2002).
See Long v. State Farm Fire and Cas. Co., 828 S.W.2d 125, 128 (Tex.App.-Houston [1st Dist.] 1992, writ denied).
All of the causes of action described above accrued on the date that State Farm denied coverage on the Carpers' claim. The Dallas Court of Appeals recently addressed the requirements for an effective denial by an insurer of an insured's claim. The insurer "must notify the insured in writing and state the reasons for the rejection," but there are no magic words that must be used to deny a claim." In Magnine, the court held that a "Building Estimate" provided by the insurer's claims adjuster to the insured parties constituted an effective denial of their asserted claim. The court noted that there was "nothing tentative or conditional about . . . the estimate" and that "[a]lthough the estimate did not use the word `denial,' it conveyed in writing State Farm's determination with respect to the insureds' claim." Although the Carpers reasserted in 1999 claims for damages caused by the prior water losses on which State Farm had made some payments, State Farm contends that it effectively denied the Carpers' claim for further damages on such losses when it made the payments it did in October 1996 and earlier.
See Mangine v. State Farm Lloyds, 73 S.W.3d 467, 470 (Tex.App. — Dallas 2002, pet. filed).
Id.
Id.
Id. at 471.
Id. at 470-71.
State Farm's summary judgment evidence relating to the payment of the Carpers' pre-1999 claims is contained in Brown's affidavit. In her affidavit, she mentions the prior water claims, but she does not explain whether State Farm denied any further payment on these claims when it made payment on them. Brown lists and describes the prior water claims, states when each claim was made and paid, and states the amount State Farm paid on each claim. However, State Farm has not provided evidence from which the Court can find that, when State Farm made payment on these pre-1999 claims, it also denied any future related claims. There is no showing of a written denial of such future claims for additional payment until the initial denial letter in February 2000. Since the record evidence indicates the statute of limitations on each of the claims described above began to run in February 2000, and each cause of action has a two year statute of limitations, State Farm has failed to meet its burden of proof that a statute of limitations bars any of these claims.
B.
State Farm also seeks summary judgment that limitations bars the Carpers' cause of action for unfair discrimination in violation of Article 21.21-8 of the Texas Insurance Code. The statute of limitations governing the Carpers' cause of action under Article 21.21-8 provides that the action must be commenced within twelve months after the date the plaintiff was denied insurance or the unfair act occurred. The Carpers filed this suit on June 21, 2001. State Farm argues that the Article 21.21-8 action is barred since it was filed more than fifteen months after State Farm sent its letter of denial on February 29, 2000. The Carpers respond that their cause of action accrued on June 22, 2000, when State Farm sent its second letter to the Carpers, further explaining the denial of their claim.
TEX INS. CODE Art. 21.21-8 § 3(c) (West 2002).
Analyzing the legal injury rule, the Texas Supreme Court has held that an action under the Texas Insurance Code for unfair claims settlement practices accrues on the date the insurer first denies the insured's claim. The Court finds that analysis persuasive here, and thus concludes that the Carpers' Article 21.21-8 action accrued no later than when State Farm first denied coverage of the Carpers' claim. In Mangine, the Dallas Court of Appeals held that an insurer effectively denies an insured's claim if it states the reasons for the denial in a writing directed to the insured. The Mangine court concluded, as does this Court, that there are no formal requisites of an effective denial other than it be in writing. State Farm's letter of February 29, 2000 quoted exclusions in the Policy and stated that "the conditions and exclusions cited above apply and coverage cannot be extended for your loss." This letter constituted an effective denial of the Carpers' 1999 claim, and since suit was filed more than a year thereafter, the Carpers' Article 21.21-8 action is barred.
See Celtic Life, 885 S.W.2d at 100.
Mangine, 73 S.W.3d at 470.
Id. at 470-471.
Pls.' App. at 46.
IV.
State Farm asserts two other grounds for summary judgment on the Carpers' cause of action for breach of contract.
A.
State Farm seeks to show that the Carpers have no evidence to prove that its denial of their 1999 claim constituted breach of the insurance contract. State Farm avers that the Carpers have no evidence showing (1) that covered water losses existing prior to their 1999 claim caused the Carpers' mold losses (2) that covered water losses existing at the time of the Carpers' 1999 claim caused their losses or (3) that leaks in the drain pipe under their slab existed at the time of their 1999 claim and that such leaks could have caused their mold losses. In response, the Carpers point to the TPV Report, arguing that it identifies several sources of moisture as causes of the Carpers' mold problem, and they contend that State Farm has admitted that the Policy covers losses due to some of those sources. State Farm takes the position that the TPV Report only lists potential sources for the mold contamination. Thus, State Farm argues that the TPV Report is not sufficient summary judgment evidence showing a fact issue as to whether a covered loss was a cause of the Carpers' mold problem.
The TPV Report states that TPV did not determine a single source of the mold problem in the Carpers' home; instead the report explains that a combination of sources contributed to the Carpers' mold problem. Rodney Harris ("Harris"), the TPV representative who completed the report, testified in his deposition that the report merely references possible sources of the mold contamination in the Carpers' home. State Farm admits that some of the sources referenced in the TPV Report would be covered by the Policy but argues that other sources identified in the TPV Report are not covered by the Policy. Although the TPV Report does not specifically indicate whether the pre-1999 water losses were additional possible sources of the 1999 mold problem, it lists some of these prior water losses in such a way as to imply that they could be sources. In viewing the evidence in the light most favorable to the nonmovant as the Court must do at the summary judgment stage, the Court concludes that the TPV Report creates a fact issue as to whether or not a covered water loss was a source of the Carpers' mold problem.
Def's Supplemental App. at 207.
B.
State Farm also seeks partial summary judgment on the Carpers' breach of contract claim, to the extent the claim is based on State Farm's denial of additional payment on the Carpers' prior water losses. State Farm cites Stevens v. State Farm Fire and Cas. Co. to support its assertion that the Carpers' demand for such additional payments was not timely.
929 S.W.2d 665 (Tex.App.-Texarkana 1996, writ denied).
In Stevens, the insured appealed from the trial court's grant of summary judgment in favor of the insurer. The insured suffered loss as a result of a fire at his residence. In February of 1991, the insured's contractor began repair work on the house, and, in March of 1991, the insured signed the insurer's proof of loss form. Thereafter, the contractor notified the insured that the damage was so extensive his house would have to be razed and rebuilt rather than repaired. The insured made a demand for excess costs on November 22, 1992. The insurer argued on appeal that since the insured waited more than a year to make an additional demand for payment on his original claim, his demand was untimely.
Id. at 671.
On appeal, the court noted that where "demand is a condition precedent to a suit, the injured party may not, by failing to make demand, postpone the running of the statute until he decides to make a demand." While "the injured party must make demand within a reasonable time after it may lawfully be made," the "reasonableness of the demand is normally a fact question." However, the court concluded that in "the absence of mitigating circumstances, the law will ordinarily consider a reasonable time as being coincident with the running of the statute." The court found that the insured had a claim for additional payments when the contractor began work on the house and notified the insured that the house would have to be razed. Although the plaintiff made his demand over a year after the evidence indicated he had a claim for additional payment, the court found that since his demand was within the two-year limitations period in the contract, it was made within a reasonable time.
Id.
Id.
Id.
Id.
Id.
Here, State Farm argues that the Carpers originally became aware of their mold claim in 1992. State Farm's summary judgment evidence indicates that Mrs. Carper became aware she had a mold allergy in 1992. At that time, her doctor requested she set out petri dishes in her home to collect samples, for laboratory analysis. Mrs. Carper was informed that the analysis would aid her doctor's determination of a proper prescription for her mold allergy. The doctor prescribed medication for Mrs. Carper's allergy in 1992. However, the evidence does not indicate when, if ever, Mrs. Carper became aware of the results of the laboratory analysis of the samples taken from her residence. Furthermore, Defendant admits in its Motion that "[w]hile Mrs. Carper placed petri dishes, in 1992, at various locations in the house . . . no measurements were made to ascertain whether these levels were above normal background levels." Viewing the evidence in the light most favorable to the nonmovants, the Court cannot summarily hold that the Carpers became aware in 1992 of their claim for mold losses or that their delay in making a demand for additional payment on the prior water claims was unreasonable.
Def.'s Br. at 29.
Additionally, State Farm argues that the Carpers had knowledge of their mold claim, at the latest, in March or April of 1999 when a workman brought Mrs. Carper a handful of mold. State Farm seems to argue that the Carpers' demand for additional payments on their prior water losses was untimely, since the Carpers became aware of their mold claim in March or April of 1999 but failed to make demand until December of 1999. The Stevens court rejected a similar argument by the insurer in that case. The court found that the insured had a claim for additional payment when he became aware that his contractor would incur additional expenses in connection with the post-fire work. However, since demand for such payment was made less than two years from the time that insured became aware of the extra expense, the court held that demand was timely, since limitations had not run. If the Carpers became aware of their mold problem in March or April of 1999 and they made their demand for additional payments on their prior water losses in December of 1999, their demand was within the Policy's two-year limitations period. This ground for summary judgment therefore fails.
Stevens, 929 S.W.2d at 671.
Id.
VI.
State Farm moves on several grounds that the Court should grant summary judgment on the Carpers' extra-contractual causes of action.
A.
State Farm asserts that the Carpers' causes of action for breach of the duty of good faith and fair dealing, violations of the Texas Insurance Code, and violations of the DTPA should be summarily dismissed because State Farm had reasonable bases to deny the Carpers' 1999 mold claim. Additionally, State Farm asserts that the Carpers have presented no evidence that State Farm denied their claim when State Farm's liability had become reasonably clear.
The Court will address these grounds for summary judgment together because they all relate to the same line of Texas Supreme Court cases. In Universe Life Ins. Co. v. Giles, the Texas Supreme Court held that an insurer is liable for breach of the duty of good faith and fair dealing "if the insurer knew or should have known that it was reasonably clear that the claim was covered." This is the same standard that plaintiffs must meet to prove unfair claims settlement violations under the Texas Insurance Code and the DTPA. Thus, the Carpers' actions for unfair claims settlement practices will succeed or fail along with their common law bad faith action, since each of these causes of action is based on the same underlying theory.
950 S.W.2d 48 (Tex. 1997).
Id. at 56. See also, State Farm Fire and Casualty Co. v. Simmons, 963 S.W.2d 42, 44 (Tex. 1998).
See Giles, 950 S.W.2d at 55 (stating that the new standard adopted by the Court in Giles "unifies the common law and statutory standards" for proving bad faith).
See Tucker v. State Farm Fire and Casualty Co., 981 F. Supp. 461, 465 (S.D.Tex. 1997); State Farm Fire and Cas. Co. v. Woods, 925 F. Supp. 1147, 180 (E.D. Tex. 1996); Saunders v. Commonwealth Lloyd's Ins. Co., 928 S.W.2d 322, 324 (Tex.App.-San Antonio 1996, no writ).
In Texas, a cause of action against an insurer for breach of an insurance contract is distinct from a cause of action in tort for bad faith breach. "Evidence establishing only a bona fide coverage dispute does not demonstrate bad faith." Additionally, the Texas Supreme Court has held that "whether an insurer acted in bad faith because it denied or delayed payment of a claim after its liability became reasonably clear is a question for the fact-finder" that can be decided by the court as a matter of law only "when there is no conflict in the evidence."
See Tucker, 981 F. Supp. at 465.
State Farm Fire and Cas. Co. v. Simmons, 963 S.W.2d 42, 44 (Tex. 1998).
Giles, 950 S.W.2d at 56; Id. at 81 (Enoch, J. concurring); Simmons, 963 S.W.2d at 44.
Giles, 950 S.W.2d at 56.
State Farm argues that the Carpers have presented no evidence that State Farm denied their 1999 mold claim without a reasonable basis or knowledge of a reasonable basis. In the alternative, State Farm argues that such a reasonable basis existed for its denial of the Carpers' claim. State Farm points to summary judgment evidence apparently indicating that sources other than perils covered under the Policy were the cause of the Carpers' mold problem. State Farm also argues that it was unaware of any covered water intrusions that contributed to the mold problem.
The Court believes Defendant has misapprehended what Plaintiffs must prove to prevail under the Giles standard. Defendant argues that the Plaintiffs must prove the absence of a reasonable basis for denying or delaying payments under the Policy in order to prevail at trial. In fact, the Giles Court rejected the "no reasonable basis" standard in favor of the "reasonably clear" standard. Id. at 56.
The plurality in Giles reasoned that the "no reasonable basis" standard was unnecessarily difficult to apply, because it required a plaintiff in a bad faith case to prove "the absence of a reasonable basis to deny the claim, a negative proposition." Id. at 51. Thus, the Court determined that a better standard was the "reasonably clear" standard found within the text of Article 21.21 § 4(10)(ii) of the Texas Insurance Code. Id. at 55-56. The court explained that the "reasonably clear" standard was superior to the "no reasonable basis" standard in that it "recasts the liability standard in positive terms, rather than the current negative formulation." Id. Thus, this Court will apply the "reasonably clear" standard in its determination of whether Plaintiffs' bad faith actions can survive summary judgment, i.e., had it become reasonably clear that State Farm had no liability when it denied the claim?
Additionally, State Farm asserts that the Carpers have produced no evidence showing (1) that State Farm failed to make additional payments on the Carpers' prior water losses when State Farm's liability on those losses was reasonably clear and (2) that any additional investigation of the Carpers' claims for additional payments would have resulted in a basis for additional coverage. In the alternative, State Farm asserts that the Carpers' failure to make a timely demand for additional payments on the prior water loss claims constitutes a reasonable basis for denial of that demand.
To these assertions, the Carpers respond that the TPV Report indicates several covered perils as sources of the mold contamination in the Carpers' home, that State Farm failed to reasonably rely on the TPV Report, and that State Farm failed to adequately investigate the Carpers' claim.
Under the Giles standard, the Court must first address whether there is a issue of material fact as to whether or not State Farm knew or should have known that its liability under the Policy had become reasonably clear at the time it denied the claim. In Texas, an insurer may reasonably rely on expert reports indicating that the insured's loss was not caused by a covered peril and, by doing so, avoid a claim for bad faith breach. However, an insurer cannot shield itself from bad faith liability by failing to reasonably investigate a claim.
See Lyons v. Millers Cas. Ins. Co. of Texas, 866 S.W.2d 597, 601 (Tex. 1993); Aranda v. Ins. Co. of North America, 748 S.W.2d 210, 213-14 (Tex. 1988).
See Giles, 950 S.W. at 56. See also, Simmons, 963 S.W.2d 42, 44 (Tex. 1998) ("an insurer cannot insulate itself from bad faith liability by investigating a claim in a manner calculated to construct a pretextual basis for denial").
State Farm would have the Court hold — on evidence indicating that some of the potential sources of the mold contamination in the Carpers' home were not perils covered under the Policy — that it was reasonably clear that State Farm had no liability on the Carpers' mold claim. The Court declines to so rule. Defendant cites no authority for the contention that summary judgment must be granted if evidence indicates that the insurer believed that some of the potential sources of the insured's loss were not covered under the Policy. The potential for no coverage does not establish as a matter of law that State Farm's lack of liability was reasonably clear. The TPV report does not constitute sufficient evidence for the Court to hold that State Farm's lack of liability had become reasonably clear.
State Farm presents evidence that the TPV representative testified in his deposition that mold " could have been caused by" a number of sources that State Farm argues were not covered under the policy, including condensation, missing tiles, and lack of housekeeping. Def.'s Reply Br. at 13-14.
The TPV Report explains that TPV's investigation of the Carpers' home did not reveal a single source of the mold contamination; however, it references several possible sources of water problems at the Carper residence, including water problems that existed during the investigation and prior water problems. State Farm admits that some of these potential sources constituted covered perils under the Policy. Thus, the Court finds that there is a fact issue as to whether State Farm's lack of liability had become reasonably clear based on the TPV Report. The Court denies State Farm's Motion on this ground.
B.
State Farm further urges that the Carpers have no evidence that State Farm's alleged breach of the duty of good faith and fair dealing was a proximate cause of their personal injury damages. The Carpers allege that State Farm breached its duty of good faith and fair dealing by allegedly failing to conduct a reasonable investigation of the Carpers' claim and failing to timely process and pay their claim. To prove such a breach at trial, the Carpers must establish that State Farm's breach proximately caused their damages. The Carpers allege that their damages include personal injuries.
Simmons, 963 S.W.2d at 44; Giles, 950 S.W.2d at 50-51.
The Carpers have failed to raise a fact issue on the question of whether State Farm's alleged bad faith breach proximately caused them personal injury damages. Plaintiffs have failed even to respond to this asserted ground for summary judgment. The Carpers made the pertinent claim on December 22, 1999. State Farm sent them a letter of denial just over two months later, on February 29, 2000. Mrs. Carper admits that, after the Carpers made the December 1999 claim, her family permanently moved from their residence and she spent only one night in the house after Christmas of 1999.
Plaintiffs do not provide any evidence that State Farm's alleged failure to investigate or to pay the Carpers' claim caused personal injury damages, and the timing of their claim, the investigation, and their move away from the residence makes the contention untenable as a matter of law. Therefore, the Court grants State Farm's Motion on this ground.
C.
State Farm's final no-evidence ground for summary judgment involves Plaintiffs' action for misrepresentations under the DTPA and Article 21.21 of the Texas Insurance Code. Specifically, the Carpers allege that State Farm represented that its goods or services were of a particular standard, quality or grade when they were of another. Plaintiffs have the burden to show that State Farm's misrepresentations were a producing cause of their damages. State Farm contends that the Carpers have no evidence revealing a fact issue on this element.
TEXAS BUS. COM. CODE §§ 17.41-17.63 (West 2002); Amstadt v. U.S. Brass Corp., 919 S.W.2d 644, 649 (Tex. 1996); Doe Boys Club v. Greater Dallas, Inc., 907 S.W.2d 472, 478 (Tex. 1995).
Plaintiffs have failed to respond to this ground for summary judgment. Indeed, Defendant notes the only evidence before the Court that a misrepresentation might have been made. In Mr. Carper's deposition, he identified several statements in the June 22, 2000 letter from State Farm which he believes were misrepresentations. Additionally, Mr. Carper mentioned that State Farm at one time represented that it no longer had files on the Carpers' claims for water losses made before the December 1999 claim. State Farm argues that any of State Farm's representations that the Policy did not cover the Carpers' 1999 claim are not actionable under the DTPA or the Texas Insurance Code. State Farm further points out the complete absence of evidence of the Carpers' reliance on such representations or evidence that such representations were the producing cause of damages. The Court concurs, and thus grants summary judgment as to the Carpers' misrepresentations claim.
Defendant argues that representations involving denial of coverage are not actionable as misrepresentations under the DTPA or Texas Insurance Code as a matter of law. See American Ins. Cos. v. Reed, 626 S.W.2d 898, 905 (Tex.App.-Eastland 1981) ("As a matter of law, denial of the claim did not give rise to treble damage liability under the DTPA or Art. 21.21 of the Texas Insurance Code."). In the alternative, Defendant contends that the Carpers have no evidence of their reliance on State Farm's statement that their claim was not covered, because they did not accept that representation but, instead, filed this lawsuit. See, e.g., Lone Star Life Ins. Co. v. Griffin, 574 S.W.2d 576, 581 (Tex.Civ.App.-Beaumont 1978, writ ref'd n.r.e.) (finding that plaintiff did not rely on defendant's statements where plaintiff sought reconsideration of defendant's decision that the benefit period of plaintiffs disability policy had ended).
VII.
State Farm argues three grounds for summary judgment on the Carpers' remaining claims for damages.
A.
State Farm seeks summary judgment that the Carpers' claim for damages caused by splashed or deflected water fails, because such damages are not covered under the Policy. Plaintiffs admit in their Response that they fail to state a claim for damages caused by splashed or deflected water. Thus, summary judgment is granted on this ground.
B.
State Farm also seeks summary judgment on the ground that the Carpers' claims for damages caused by condensation and dampness fail, because such damages are within a Policy exclusion. The Plaintiffs failed to respond to this assertion. In Texas, the initial burden is on the insured to show that the claim is potentially within the coverage of a policy; the burden then shifts to the insurer to prove that a policy exclusion applies; and, if the insurer proves the claim falls within an exclusion, the burden shifts back to the insured to show that the claim is within an exception to the exclusion. In Plaintiffs' Second Amended Complaint, Plaintiffs allege that their "losses and damages include, but are not limited to, damage and/or losses to the plumbing system, house/dwelling and its contents caused by covered water losses which in turn caused mold to develop."
Federated Mut. Ins. Co. v. Grapevine Excavation, Inc., 197 F.3d 720, 723 (5th Cir. 1999); Guaranty Nat'l Ins. Co. v. Vic Mfg. Co., 143 F.3d 192, 193 (5th Cir. 1998).
Pls.' Second Am. Compl. at 2.
Neither the Plaintiffs nor the Defendant point to any specific allegation in the complaint of losses due to condensation or dampness. Due to Plaintiffs' failure to respond to this ground for summary judgment, it is difficult for the Court to tell whether or not Plaintiffs are making such claims. However, to the extent that the Carpers' claim for damages does include these losses, the Court finds that they failed to meet their burden to show that such losses are potentially within the Policy's coverage, and the Court grants summary judgment on such claims.
C.
State Farm also urges that summary judgment should be granted on Plaintiffs' claims for damages related to plumbing leaks occurring after June 4, 2001. State Farm argues that because the Policy expired on June 4, 2001, the Policy could not cover damages due to plumbing leaks after that date. The Carpers respond that State Farm has failed to produce summary judgment evidence that certain of the claimed plumbing leaks occurred after June 4, 2001.
Neither the Plaintiffs nor the Defendant point to any specific allegation of damages due to leaks first occurring after the expiration of the Policy. If the Carpers are seeking damages due to plumbing leaks first occurring after June 4, 2001, the Policy does not cover such a claim. If, in contrast, Plaintiffs are suing for continuing losses caused by leaks existing during the Policy period, then there may very well be coverage for such damage. Thus, summary judgment is granted only as to leaks first occurring after June 4, 2001.
VIII.
Finally, State Farm also seeks summary judgment on the grounds that Plaintiffs' claims for negligence and for violations of the Consumer Bill of Rights are not actionable. Plaintiffs deny their intention to assert a negligence claim and withdraw their Consumer Bill of Rights claim. Thus, summary judgment for the Defendant on these claims is granted.
CONCLUSION
Defendant's Motion for Partial Summary Judgment is GRANTED as to Plaintiffs' claim for violations of Article 21.21-8 of the Texas Insurance Code, their claim for personal injury resulting from Defendant's alleged bad faith, their claim for misrepresentations under the Deceptive Trade Practices Act and the Texas Insurance Code, any claim for damages caused by splashed or deflected water and condensation or dampness, any claim for damages caused by leaks first occurring after June 4, 2001, and any claims for negligence and for violations of the Consumer Bill of Rights. Defendant's Motion for Partial Summary Judgment is, in all other respects, DENIED.