United States District Court, E.D. Texas, Sherman Division
MEMORANDUM OPINION AND ORDER
L. MAZZANT UNITED STATES DISTRICT JUDGE.
before the Court is Plaintiff American Legend Homes's
Motion for Leave to File First Amended Complaint Adding
Parties and Updating Factual Allegations and Claims (Dkt.
reviewing the relevant pleadings and motions, the Court finds
the Motion should be GRANTED in part and
DENIED in part.
American Legend Homes (“Plaintiff”) is a
family-owned residential home builder that has built
thousands of homes in North Texas over the past fifteen
years. Plaintiff is a Texas limited liability company (LLC)
with its principal place of business in Lewisville, Texas.
Plaintiff's members are Bright Industries, LLC, American
Legend Services, Inc., and AmLegend Management, Inc.-all
Texas residents. Defendant Navigators Specialty Insurance
Company (“Defendant”) is an eligible surplus
lines insurance company with its principal place of business
in New York.
built over sixty homes in the Castle Hills Villas
development, a master-planned development in Lewisville,
Texas, utilizing an identical foundation design and
construction process on every home built. However, sometime
after completion of the project, certain homes that Plaintiff
built in Castle Hills Villas began to experience shifting
foundations. Plaintiff commenced an investigation into the
cause of the damage; the investigation concluded that the
Castle Hills Villas development had a naturally occurring
underground water source beneath it. The houses in the path
of that underground water source were the homes that
experienced foundation shifting.
October 1, 2014 and October 1, 2015, nineteen homeowners in
the Castle Hills Villas reported foundation issues.
Twenty-five other homeowners in Castle Hills Villas reported
similar issues between October 1, 2015 and October 1, 2016.
Five more homeowners reported foundation issues between
October 1, 2016 and December 1, 2017. Due to foundational
damage reported at the homes, Plaintiff has incurred over $2
million in expenses to repair the damage caused by the
underground water source.
issued and delivered Commercial General Liability policies to
Plaintiff in Lewisville, Texas. Such policies normally cover
sums that the insured becomes legally obligated to pay
because of “property damage” that occurs during
the policy period caused by an “occurrence” (Dkt.
#1). The policies define “property damage” to
include “physical injury to tangible property”
(Dkt. #1). The policies also define “occurrence”
to mean “an accident, including continuous or repeated
exposure to substantially the same general harmful
conditions” (Dkt. #1). The policies also contain an
Amendatory Endorsement providing that “[a]ll . . .
Property Damage arising out of substantially the same general
harmful conditions shall be deemed to be one
occurrence” (Dkt. #1).
Plaintiff became aware of the foundational issue with the
homes in the Castle Hills Villas development, it notified
Defendant of the issue and made an insurance claim. The claim
was for all sums Plaintiff was legally obligated to pay
arising from the property damage to the homes'
foundations caused by the underground water source. Defendant
has not paid the claim, contending that “each home
affected involves a separate occurrence” to which a
separate deductible applies (Dkt. #1). For the homes
sustaining property damage between October 1, 2014 and
October 1, 2015, Defendant would apply a $50, 000 deductible
to each home. For those sustaining damage after October 1,
2015, Navigator would apply a $500, 000 deductible to each.
This would amount to a $20 million total deductible for all
the property damage.
costs to repair each foundation allegedly would fall well
below the $500, 000 threshold and thus would not reach the
“per home” deductible claimed by Defendant.
Defendant contends that the separate deductible applies to
each individual home, and Defendant has paid no portion of
the damages in Plaintiff's claim thus far. Nor has
Defendant paid any amounts for the “per home”
deductible it claims is applicable.
specific legal claims are (1) breach of contract; (2)
Declaratory Judgment under Federal Rule of Civil Procedure 57
and 28 U.S.C. §§ 2201-2202; and (3) attorneys'
fees. Plaintiff seeks leave to amend to update factual
allegations and claims and add two additional defendants:
United Specialty Insurance Company (“USIC”), an
insurance company with its principal place of business in
Texas; and Knight Specialty Insurance Company
(“KSIC”), an insurance company with its principal
place of business in California.
January 16, 2019, Plaintiff filed a Complaint against
Defendant (Dkt. #1). On March 25, 2019, Defendant filed an
Answer (Dkt. #3). On July 3, 2019, Plaintiff moved for leave
to file First Amended Complaint adding parties and updating
factual allegations and claims (Dkt. #8). On July 17, 2019,
Defendant filed a Response (Dkt. #10). On July 24, 2019,
Plaintiff filed a Reply (Dkt. #11). ...