Sunday, February 3, 2008

Justice v. State Farm Lloyds (Tex.App. - Houston, 2008)


Justice v. State Farm Lloyds Ins. Co. No. 14-06-00248-CV (Tex.App.- Houston [14th Dist.] Jan. 15, 2008)(Edelman) (Insurance coverage dispute, home owner litigation, falling tree mold damage)
Opinion by Justice Edelman
Before Justices Brock Yates, Edelman and Frost
Larry Justice, Beth Justice and Karen Justice v. State Farm Lloyds Insurance Company and FTI/SEA ConsultingAppeal from 127th District Court of Harris County (Judge Sharolyn P. Wood)
Disposition: Affirmed
Concurring Opinion by Justice Frost, 14-06-00248-CV Larry Justice, Beth Justice and Karen Justice v. State Farm Lloyds Insurance Company and FTI/SEA Consulting


In this insurance coverage dispute, Larry Justice, Beth Justice, and Karen Justice (Athe Justices") appeal a take-nothing summary judgment entered in favor of State Farm Lloyds Insurance Company ("State Farm") and FTI/SEA Consulting (AFTI") on the grounds that their summary judgment evidence raised fact issues on their claims against State Farm and FTI. We affirm.


A tree fell on the Justices’ house in 2000, the Justices made a claim under their State Farm homeowner’s insurance policy (the "policy"), and State Farm paid the claim. In 2001, the Justices discovered mold in the walls of their house and reported the claim to State Farm. State Farm sent the Justices a reservation of rights letter, hired FTI to conduct an industrial hygiene evaluation, and paid the Justices over $137,000 for remediation of their home, alternative living expenses, and cleaning costs on this claim. Thereafter, the Justices filed suit against State Farm and FTI for additional mold damage. State Farm and FTI each filed a motion for summary judgment, which the trial court granted.

Standard of Review

A traditional summary judgment may be granted if the motion and summary judgment evidence show that there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Tex. R. Civ. P. 166a(c). A no-evidence motion for summary judgment must be granted unless the nonmovant produces summary judgment evidence raising a genuine issue of material fact on each essential element of the claim for which the motion states there is no evidence. Id. 166a(I).

In reviewing a summary judgment, we review the entire record in the light most favorable to the nonmovant, indulging every reasonable inference and resolving any doubts against the motion. Yancy v. United Surgical Partners Int’l, Inc., 236 S.W.3d 778, 782 (Tex. 2007). Where, as here, the trial court does not specify on which grounds the summary judgment is based, the appealing party must show that it is error to base it on any ground asserted in the motion. Star-Telegram, Inc. v. Doe, 915 S.W.2d 471, 473 (Tex. 1996).

State Farm

Breach of Contract Claim

State Farm moved for summary judgment against the Justices’ claim for breach of contract on the ground, among others, that this claim was barred by the mold exclusion in the policy (the Amold exclusion"). See, e.g., Fiess v. State Farm Lloyds, 202 S.W.3d 744 (Tex. 2006). The Justices contend that the mold exclusion is somehow overcome by a provision of the State Farm Adjuster’s Guide, purportedly stating that if the original claim is covered, such as the damage from a wind blown tree, then any loss that proximately results is therefore covered.[1] However, the Justices’ brief provides no legal authority[2] suggesting that a provision of the Adjusters Guide could be controlling, relevant, or even admissible concerning the meaning or scope of coverage of the policy.[3] Nor does it indicate how such a provision, even if applicable, could overcome an express exclusion in the policy. Therefore, this contention affords no basis for relief, and the Justices’ challenge to the summary judgment against their breach of contract claim is overruled.

Extra-Contractual Claims

State Farm moved for summary judgment against the Justices’ extracontractual claims on the ground, among others, that the absence of policy coverage over a claim (as we concluded in the preceding section) generally precludes liability for common law and statutory bad faith claims. See, e.g., Progressive County Mut. Ins. Co. v. Boyd, 177 S.W.3d 919, 922 (Tex. 2005). Because the Justices’ brief fails to address this ground, we have no basis to conclude that the trial court erred in sustaining it, and the Justices’ challenge to the summary judgment against their extracontractual claims is overruled.


The Justices alleged that: (1) State Farm was negligent in failing to identify a part of their house that had been damaged by the tree; and (2) water from subsequent heavy rains entered the house through this damaged area, causing additional mold damage. State Farm moved for summary judgment against this negligence claim on the ground that Texas law does not recognize a cause of action for negligent claim handling. See, e.g., Higganbotham v. State Farm Mut. Auto. Ins. Co., 103 F.2d 456, 460 (5th Cir. 1997). The Justices’ brief asserts that the holding in Higganbotham does not apply to their claim because the adjuster assumed a duty to determine water leaks and the origin of water entry. However, their brief cites no legal authority or evidence supporting the existence of such a duty or explaining how any such negligence would fall outside the scope of claim handling for which Texas recognizes no negligence duty. Accordingly, this contention is without merit, and we overrule the Justices’ first issue, challenging the summary judgment in favor of State Farm.


FTI was hired by State Farm to perform an industrial hygiene test of the Justices’ house to determine the extent of any mold growth. As relevant to this appeal, the Justices’ sued FTI for negligence in failing to initially detect some of the areas containing mold, causing them to: (1) be without the use of their home and personal items stored there; and (2) incur additional expense.[4] FTI moved for summary judgment on the grounds, among others, that there was no evidence that FTI breached any duty it owed to the Justices or that any breach by FTI proximately caused any of the damages claimed by the Justices.

The Justices’ brief does not address what legal basis establishes that FTI owed a negligence duty to them, and agents of insurance companies generally have no duty to insureds for negligence in investigating claims.[5] In addition, to the extent that FTI was hired by State Farm to identify mold damage that could be covered by the policy, the Justices summary judgment response and brief on appeal do not explain how any negligence by FTI in failing to initially locate the full extent of the mold in their house could have caused them damage if the mold was not covered by the policy in any event, as we have concluded in the preceding section. Because the Justices’ second issue thus affords no basis for relief, it is overruled, and the judgment of the trial court is affirmed.

/s/ Richard H. Edelman
Senior Justice

Judgment rendered and Majority and Concurring Opinions filed January 15, 2008.
Panel consists of Justices Yates, Frost, and Edelman.[6] (Frost, J., concurring).
[1] The Justices do not assert coverage under any "ensuing loss" clause of the policy.
[2] See Tex. R. App. P. 38.1 (h) (requiring appellant’s brief to contain citations to legal authority in support of arguments).
[3] The Justices’ challenges to the summary judgment based on State Farm’s failure to specifically deny coverage and estoppel arising from State Farm’s payments of some of their claims are also unsupported by authority.
[4] Because the Justices do not assign error to the summary judgment against their deceptive trade practice claims against FTI, we do not address those claims.
[5] See Nitzsche v. Teams of Texas, No. 14-07-00876-CV, 2007 WL 925803 at *2 (Tex. App. - Houston [14th Dist.] March 19, 2007, no pet.); Dagley v. Haag Engineering Co., 18 S.W.3d 787, 791 (Tex. App. - Houston [14th Dist. 2000, no pet.); see also Natividad v. Alexsis, Inc., 875 S.W.2d 695, 698 (Tex. 1994).
[6] Senior Justice Richard H. Edelman, sitting by assignment.

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