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Guideone Specialty Mutual Insurance Co. v. Fellowship at Forest Creek

United States District Court, W.D. Texas, Austin Division

January 3, 2018




         BE IT REMEMBERED on this day the Court reviewed the file in the above-styled cause, and specifically, Defendant Fellowship at Forest Creek (FFC)'s Motion for Summary Judgment [#27], Plaintiffs GuideOne Specialty Mutual Insurance Company and GuideOne Lloyds Insurance Company (collectively, GuideOne)'s Response [#31] in opposition, FFC's Reply [#34] in support, and GuideOne's Surreply [#35] in opposition, as well as GuideOne's Motion for Summary Judgment [#28], FFC's Response [#30] in opposition, GuideOne's Reply [#33] in support, and FFC's Surreply [#37] in opposition. Having reviewed the documents, the arguments of counsel, the relevant law, and the case file as a whole, the Court now enters the following opinion and order.


         I. Introduction

         This is an insurance coverage dispute between FFC and GuideOne. The property at issue in this dispute (the Property) is owned by FFC and located in Round Rock, Texas. FFC Mot. Summ. J. [#27] at 2. The Property consists of three buildings: the Worship Center, the Children's Building, and the Student Center. Id.

         The insurance dispute centers on hail and wind damage which occurred to the Property sometime between 2007 and 2012. GuideOne Mot. Summ. J. [#28] at 5-7.[1]As explained below, the parties dispute when the hail damage to the Property occurred: FFC's expert estimates the damage should be traced to a May 2012 hail storm, while GuideOne's expert suggests at least some of the wind and hail damage occurred in 2007 and 2009. See FFC Mot. Summ. J. [#27-3] Exhibit C (Kettle Affidavit); GuideOne Mot. Summ. J. [#28-1] Exhibit A (Hoover Declaration) at 4. The date on which the damage occurred is relevant for two reasons.

         First, the date on which the damage occurred is relevant in determining which insurance policy covers FFC's claim. Between 1999 and 2017, the Property has been insured under three different insurance policies. GuideOne Lloyds insured the Property from 1999 to 2009 (the Lloyds Policy), while GuideOne Mutual insured the property from 2009 to 2013 (the Mutual Policy). FFC Mot. Summ. J. [#27] at 2. Around 2014, FFC switched insurance carriers, and as a result, the Property is now insured under a different carrier's policy. See FFC Mot. Summ. J. [#27-4] Exhibit D at 25-28. Thus, over the last ten years, the Property has been covered at various times by three different insurance policies, only two of which were issued by a GuideOne entity. The parties do not dispute the hail damage occurred while one of the two GuideOne policies was in effect.

         Second, the date on which the damage occurred is relevant in determining whether FFC fulfilled its contractual obligation to report its claim in a timely fashion. In general, both the Mutual Policy and the Lloyds Policy appear to contain substantively similar provisions, and in particular, the parties have identified two provisions which appear in both policies and which are central to the parties' coverage dispute. The first relevant provision is a "Common Policy Condition" which applies to all parts of the policy and states,

"It is understood and agreed that knowledge of an occurrence by your agent, or any servant or employee of yours, shall not in itself constitute knowledge by you, unless an executive officer of your corporation shall have received such notice from its agent, servant or employee."

         FFC Mot. Summ. J. [#27-2] Exhibit B (Mutual Policy) at 7-8 (Common Policy Condition H). The second relevant provision is a "Loss Condition" which applies "in addition to the "Common Policy Conditions" and which states in relevant part that, in the event of loss or damage to the insured property, FFC must give "prompt notice of the loss or damage." Mutual Policy at 57-58.

         II. Discovery and Investigation of the Damage

         Around 2014 or 2015, the hail damage to the Property began to manifest itself in the form of increasingly severe leaking within the Worship Center whenever it rained. The parties dispute when FFC first discovered this leaking, but it appears the first person to take note of the problem was FFC's sole maintenance employee, Jim Whitehead. Whitehead testified in his deposition that the Worship Center had experienced minor leaking on five or six occasions since the Worship Center was built in 2003, but began to experience significant leaking in either 2014 or 2015. GuideOne Mot. Summ. J. [#28-5] Exhibit B (Whitehead Deposition) at 26-27. At first, the leaking from the roof would merely puddle on the floor of the unoccupied second story of the Worship Center.[2] Id. at 26. However, as the leaking got worse, Whitehead began to notice water seeping through the ceiling and pooling on the first floor of the Worship Center.[3] Id.

         Whitehead did not inform the leadership that the Worship Center roof was leaking until August or September 2015. GuideOne Mot. Summ. J. [#28-6] Exhibit C (Kettle Deposition) at 6-7. Brent Kettle, the Vice-Chair of the Board of Elders for FFC, testified FFC leadership was unaware the Worship Center roof was leaking prior to this time. Kettle Deposition at 11.[4] Kettle and Smith also testified they were unaware of any hail storms occurring at the Property. See, e.g., Smith Deposition at 6; Kettle Deposition at 13-14.[5]

         In an attempt to diagnose the problem, FFC recruited a parishioner who worked in roofing to inspect the Worship Center roof and determine the cause of the leaking. It was at this point that FFC's leadership claims to have first learned of the hail damage to the Property's roofs. On September 15, 2015, FFC hired a public adjuster, Logan Rodgers, to assist in making an insurance claim. GuideOne Mot. Summ. J. [#28-9] Exhibit 15.[6] In turn, Rodgers hired Matt Phelps, an engineer, to inspect the property and help determine the date on which the storm damage occurred. Kettle Affidavit. Rodgers and Phelps eventually informed FFC the storm damage had occurred on May 7, 2012, and May 11, 2012, while the property was covered by the Mutual Policy. Id. With this information in hand, Rodgers reported the claim to GuideOne on January 27, 2016. Hoover Declaration. In total, it took roughly five months for FFC to investigate and form a judgment as to when the damage occurred.[7]

         After receiving notification of FFC's claim on January 27, 2016, GuideOne retained Scott Morrison, an engineer, and Dan Turpin, a construction and cost-estimation expert, to conduct an investigation into FFC's claim. Hoover Decl. at 3-4. GuideOne's investigation took between three and four months. Id. Following its investigation, GuideOne determined the storm occurred in May 2009, rather than May 2012 as determined by FFC's expert. Id. Based on this determination of likely date of the storm, GuideOne denied FFC's claim on May 16, 2016. Id.

         III. Procedural Posture

         On May 19, 2016-three days after denying FFC's claim- GuideOne filed this lawsuit seeking a declaratory judgment that FFC's claim is not covered by either of the two GuideOne policies. Compl. [#1] at 10. FFC subsequently counterclaimed, alleging breach of contract and violations of the Texas Insurance Code. Answer & Counterclaims [#6] at 7. Both parties have now filed motions for summary ...

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