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McClelland v. Chubb Lloyd's Insurance Company of Texas

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

September 6, 2017

KIRK MCCLELLAND and TAMRE MCCLELLAND, Plaintiffs,
v.
CHUBB LLOYD'S INSURANCE COMPANY OF TEXAS, and ROBERT LYNN PRITCHARD, Defendants.

          MEMORANDUM OPINION

          ROYCE C. LAMBERTH UNITED STATES DISTRICT JUDGE

         I. INTRODUCTION

         This case is a dispute over insurance policy coverage and the conduct of the defendant insurer, Chubb Lloyd's Insurance Company of Texas (Chubb Lloyd's), in its payments totaling $145, 290.72 to the plaintiff-insureds, Kirk and Tamre McClelland for a covered loss. The McClellands asserted that they were entitled to greater amounts and brought various causes of action against Chubb Lloyd's and claims adjuster Robert Pritchard, including breach of contract, violations of Sections 541 and 542 of the Texas Insurance Code, violations of the Texas Deceptive Trade Practices Act (DTP A), unfair insurance practices, and breach of the duty of good faith and fair dealing. This Court granted summary judgment and dismissed the case by order dated January 30, 2017. ECF No. 45.

         Plaintiffs now move to alter that judgment pursuant to Rule 59(e) of the Federal Rules of Civil Procedure. Upon consideration of the motion, ECF No. 46, the defendant's response, ECF No. 47, and plaintiffs' reply, ECF No. 48, the Court finds that the motion should be denied.

         II. BACKGROUND

         The facts of this case are set out in more detail in the Court's previous Memorandum Opinion dated January 30, 2017. ECF No. 44. To summarize, the McClelland's garage apartment at 502 Arcadia Place, San Antonio Texas was destroyed in a fire on September 8, 2014. The McClellands were policyholders of a Chubb Lloyd's "Texas Standard Homeowners Policy" covering that unit, as well as a "Texas Platinum Homeowner's Endorsement." Mot. Ex. 1 [ECF No. 37-1] pp. App. 1, 11, 32. Their extended policy limits allowed for "reconstruction cost even if this amount exceeds the limit of liability for your dwelling or other structures as shown on the declarations page." Mot Ex. 1 App. 46. The Platinum Endorsement defined "reconstruction cost":

"Reconstruction cost" means the amount required at the time of loss to repair, replace, or rebuild, whichever is less, at the same location, your dwelling or other structure, using like design, and the quality of materials and workmanship which existed at the time of the loss.
"Reconstruction cost" does not include any amount required for:
a. the excavation, replacement or stabilization of land under or around your dwelling or any other structure;
b. conforming to any law or ordinance that regulates the repair, replacement, rebuilding or demolition of your dwelling or any other structure; or
c. removing the debris of a covered loss or the property that caused a covered loss.

Mot. Ex. 1 App. 47.

         The McClellands' contractor, Truax Construction, submitted an estimate for the cost of repair at $211, 450.00, excluding the cost of the slab, demolition, and haul-off. Chubb Lloyd's rejected that estimate in favor of their own estimate, $213, 527.37, which includedthe cost of slab, removal, and the contents of the apartment. The cost of the rebuild itself was $106, 156.84. Some payments were made to third-party contractors, but the McClelland directly received $145, 290.72 towards the rebuild of the structure.

         The McClellands spent $349, 402.55 to rebuild the structure, increasing the size of the dwelling from 1, 204 square feet to 1, 584 square feet. The McClellands filed suit, claiming the failure to pay the full cost of reconstruction was a breach of the contractual terms of the policy. Further, the McClellands alleged that Chubb Lloyd's failure to pay ...


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