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In re United Services Automobile Association

Court of Appeals of Texas, First District

June 13, 2017

IN RE UNITED SERVICES AUTOMOBILE ASSOCIATION, Relator

         Original Proceeding on Petition for Writ of Mandamus

          Panel consists of Justices Keyes, Huddle, and Lloyd.

          OPINION

          Rebeca Huddle Justice

         In the underlying case, the trial court has twice entered an order granting a new trial-once in 2013 and again in 2016. In a published opinion, we granted mandamus relief and vacated the 2013 new trial order, see In re United Servs. Auto. Ass'n, 446 S.W.3d 162, 166 (Tex. App.-Houston [1st Dist.] 2014, orig. proceeding), mand. denied, 487 S.W.3d 170 (Tex. 2016), holding that the trial court's reasons for granting a new trial were unsupported by the record and improper. Yet the trial court cited in its 2016 new trial order the same reasons for granting another new trial as were articulated in the 2013 order.

         Our opinion in the earlier mandamus proceeding analyzed the merits of the 2013 order, and it held that none of the reasons articulated justified a new trial and that the trial court abused its discretion by entering the order. It became the law of the case, which the trial court was not free to disregard on remand, and it bars relitigation of the same issues in this subsequent proceeding. Accordingly, we hold that the law of the case doctrine applies and bars the trial court from granting a new trial based on reasons we previously rejected. We conditionally grant mandamus relief and direct the trial court to vacate its 2016 new trial order and enter judgment on the jury's verdict.

         Background A. The Bents' insurance policy

         In 2005, Mark and Stacey Bent bought a home in the City of Piney Point for $1 million. The Bents improved the home, and on September 5, 2008, an appraiser estimated its value at $1.6 million.

         The Bents purchased a homeowner's policy from USAA. The policy covered losses up to $1.34 million, but excluded losses caused by mold, microorganisms, or operation of ordinances or other law. One provision central to this dispute is the "loss payment" provision, which established a 5-day deadline for payment of claims in certain circumstances:

If we notify you that we will pay your claim, or part of your claim, we must pay within 5 business days after we notify you. If payment of your claim or part of your claim requires the performance of an act by you, we must pay within 5 business days after the date you perform the act.

         But a longer deadline applied to claims resulting from weather or major natural disasters: if a claim resulted "from a weather related catastrophe or a major natural disaster, each claim handling deadline . . . is extended for an additional 15 days."

         B. Hurricane Ike

         On September 13, 2008, Hurricane Ike damaged the home. Stacey reported a claim to USAA, which assigned an adjuster to investigate. After visiting the property, the adjuster evaluated the damages at approximately $7, 500, which he later revised upwards to $14, 302.33. USAA subtracted the Bents' deductible and mailed the Bents a letter approving their claim. On the same day, USAA issued a check for $1, 162.33 and marked the claim closed. According to Stacey, the cost of removing fallen trees was not included in this initial payment because the adjuster claimed those costs were not covered.

         In December 2008, the Bents obtained a $500, 000 home equity loan. At that time, they both acknowledged in writing that the home had a fair market value of $1.6 million and that they had "no knowledge of any condition, proceeding, defect, casualty or any other matter now or potentially existing that would affect the [fair market value]."

         C. The April 2009 flood

         In April 2009, the home was damaged by a flood, and Stacey reported the claim. While mitigating the flood damage, workers discovered mold in the walls. Stacey reported the mold to USAA, and USAA's adjusters informed the Bents that mold damage was not covered. The Bents signed a proof of loss stating that the flood caused an estimated $93, 288.27 in further damages to the home. The Bents took the position at trial, however, that at least some of the mold was attributable to leaks in the roof caused by the hurricane rather than the flood, which USAA had "missed" during its original inspection.

         After the flood, the Bents discovered additional damage to the roof, not included in USAA's initial damage appraisal, which they attributed to Hurricane Ike and reported to USAA. In May 2009, USAA conducted an inspection at which Stacey and a contractor hired by the Bents were present. USAA found water damage to the roof and interior of the house beyond that documented in the first inspection after the hurricane, hail damage to the roof, and damage from foot traffic. USAA's inspector determined that the roof's shingles were no longer available and therefore recommended a roof replacement instead of repair. At the same time, Stacey and the inspector discussed the cost of removing the fallen trees, and the inspector stated that the homeowner's policy covered the costs of removing trees from the driveway if the Bents could produce proper documentation. Accordingly, in June 2009, USAA revised the total estimate of the damages to the home attributable to Ike, notified the Bents that it would pay an additional amount, and issued a further payment on the same day.[1]

         D. The Bents' pursuit of their insurance claims

         In July 2009, after another inspection at which Stacey and a contractor were present, USAA further revised the total estimate of the damages to the home attributable to Ike to $98, 079.62. It notified the Bents of this estimate and made a corresponding payment. Also in July 2009, Stacey obtained an estimate of $162, 174.85 for the total cost of repairs attributable to Ike or the flood.

         In October 2009, the Bents submitted another estimate of additional damages, including items not previously identified during USAA's inspections of the home. Because the estimate was not fully itemized, USAA requested additional information and informed the Bents through a series of phone calls and written correspondence that it could not make further payments until it received additional information.

         In November 2009, USAA conducted a further inspection, again with Stacey and a contractor present, at which USAA's inspector explained the additional detail that USAA required. The Bents did not send further information until December 2009, when an attorney acting on their behalf wrote to USAA requesting that it direct all further correspondence to him. USAA corresponded with that attorney until he withdrew from representing the Bents, then corresponded with the Bents directly and with another attorney throughout late 2009 and the first half of 2010, but received no additional information supporting the Bents' claims under the homeowner's policy.

         In December 2009, USAA invoked the appraisal process referenced in the homeowner's policy. The Bents' attorney denied USAA's request to begin the appraisal process, arguing that USAA had breached the homeowner's policy.

         E. Piney Point Ordinances

         After Hurricane Ike struck, Stacey met at least 10 times with Annette Arriaga, the City of Piney Point's director of planning, development, and permits. Arriaga also serves as the secretary for the Planning and Zoning Commission and the Board of Adjustments, which oversees variances to the city's ordinances.

         In June 2010, Arriaga wrote the Bents, informing them that the city's estimate of damages to their home exceeded both 50 percent of the home's value and the amount of $300, 000. Repair costs of that magnitude triggered City of Piney Point ordinances requiring that any repairs bring the home in compliance with the city's building codes. To make their home comply with the building codes would have required the Bents to raise the home's foundation. Arriaga wrote that she was "apprehensive about the [overall] health and welfare of the structure, " and, "I would recommend that the structure be replaced, re-built."

         Arriaga testified that she has no discretion when notifying homeowners of potential code violations, but merely informs them of the relevant ordinances. She and others in her office review repair or improvement estimates provided by homeowners and determine whether the proposed costs exceed the greater of $150, 000 or 50% of the value of all improvements on the lot. In the case of the Bents' home, the applicable threshold was $194, 535 in 2009 and $150, 000 in 2010. Thus, if the Bents had repaired their hurricane damages in late 2008 and then repaired flood damages in 2009, neither alone would have triggered application of the city's ordinances. Arriaga testified that she informed Stacey that the Bents could seek a variance, but Stacey never asked a contractor to visit Arriaga with her regarding any variances or negotiations with the city, nor did the Bents request a variance of the city's ordinances.

         F. USAA's August 2010 letter

         In August 2010, USAA sent a letter to the Bents' attorney. The letter presented a "revised dwelling estimate, " which it asked the attorney to "review . . . with Mr. and Mrs. Bent." USAA wrote that it had revised the total estimate of the damages to the home attributable to Ike to $136, 539.41. Of that amount, after accounting for depreciation and the Bents' deductible, USAA stated that it was "prepared to send an additional actual cash value payment" in the amount of $27, 416.86, which would have brought the total payments made to $89, 123.64. The August 2010 letter described the latter amount as the "actual cash value settlement" and stated, "The Loss Settlement Provision stipulates that the loss to your covered property be settled at actual cash value."

         According to USAA's claims record and the testimony of its corporate representative, Leesa Tomsett, this amount was not payable until the Bents took action to accept it as a settlement of their claim. Therefore, unlike each of the prior payments, USAA did not issue a check at the time it sent the August 2010 letter. The Bents did not respond to this letter, but USAA nonetheless ...


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