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TOTAL DESTRUCTION OF PROPERTY DOES NOT PREVENT A RECOVERY FOR LOSS-OF-USE DAMAGES OR LOST PROFITS

It has long been considered the law in Texas that recoverable damages for total destruction of property would not include loss-of-use damages. But in January, the Supreme Court of Texas held that there are instances in which a property owner with total destruction of its property can recover loss-of-use damages in addition to the fair-market-value damages otherwise recoverable. In J&D Towing, LLC v. American Alternative Ins. Corp., No. 14-0574 (Tex. Jan. 8, 2016), the plaintiff, a tow truck company whose only truck had been totally damaged in a car accident, sought lost profits during the period of time that the company was without a tow truck because the tortfeasor’s insurer refused to timely pay on the clear liability claim. The Court held that under the circumstances presented, the lost profit damages were not barred as a matter of law simply because the damage was a total loss; the tow truck company was entitled to seek the lost profits damages for the time the company was without a truck in the same way that it would … Continue reading

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STAY TUNED: A FIFTH CIRCUIT U.S. COURT OF APPEALS PANEL……..

STAY TUNED:   A Fifth Circuit U.S. Court of Appeals panel on Nov. 19 certified a question for the Texas Supreme Court as to whether an insured can pursue a private cause of action under Texas Insurance Code Chapter 541  if it is denied coverage by an insurer, holding that decisions from the state Supreme Court and its appellate courts have cast doubt on the vitality of the ruling in Vail v. Texas Farm Bureau Mutual Insurance Co.

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APPLICATION OF WATER-DAMAGE EXCLUSION IN ALL-RISK HOMEOWNER’S POLICY

In Peter Tsai and Barbara Tsai v. Liberty Mutual Insurance Company, 2015 Tex. App. LEXIS 11147, the First Court of Appeals addressed the applicability of the surface water exclusion.  The Tsais do not argue that the term “surface water” is patently ambiguous.  Instead, the Tsais indicated that exclusionary language became ambiguous when viewed in the context of the undisputed determination that the loss was caused when water migrated from the neighbor’s planter to underneath their hardwood floors. The court noted that surface water has been defined as “water or natural precipitation diffused over the surface of the ground until it either evaporates, is absorbed by the land, or reaches channels where water naturally flows.”  The water that migrated under the Tsais’ flooring derived from rain and sprinkler water that had fallen onto the surface of the planter.  After falling on the planter’s surface, the water did not follow a defined path or channel.  Instead, it passed freely, moving through the upper two to three inches of mulch.  It was not until the planter was “overwhelmed” … Continue reading

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MEDICAL SERVICES EXCLUSION PRECLUDES COVERAGE

In LCS Corrections Services, Inc. v. Lexington Insurance Company, No. 14-40494 (5th Cir. 9/2/2015), the court concluded that Lexington was not required to defend LCS if the allegations in the complaint fell within the meaning of subpart (a) of the medical services exclusion.  Relevant here, the medical services exclusion denied coverage of “any liability of the Insured arising out of the . . . failure to render ‘Medical Services.’”  Thus, the court looked to whether the injury related to the failure to render “medical services” where “services” are defined as “medical, surgical, dental or nursing treatment.”  Although LCS argued that Garcia died as a result of LCS’s adhering to its administrative policy, and not from a failure to render medical services, the court found the distinction proved unavailing.  The court concluded that Garcia’s death was caused by the failure to provide a prescribed drug, which was a failure to render a professional service.  “It may be true that no professional decision was made in denying medicine”, but “providing and administering medicine to an inmate in … Continue reading

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ACKNOWLEDGMENT OF NAMED DRIVER EXCLUSION

The Eleventh Court of Appeals addressed the acknowledgment of a Named Driver Exclusion in Allied North America Ins. Brokerage of Texas, L.L.C. v. Diamond Pump & Transport, LLC and the Insurance Company of the State of Pennsylvania, No. 11-13-00249-CV (Tex. App. – Eastland 8/31/2015).  Allied, the insurance agent that procured a policy for Diamond from Insurance Company of the State of Pennsylvania (ICSOP), asserted that the named driver exclusion was ineffective because Diamond had not signed the endorsement.   The court disagreed finding that the signature line on the endorsement was an “acknowledgement” of the fact that Diamond was bound by the terms of the endorsement.  Even if the court were to agree with Allied’s claims that the endorsement was unapproved, the endorsement was not void, but voidable.  The court found that Diamond had accepted the benefits of the policy as written, with the endorsement attached. Allied also asserted that the trial court erred in concluding that Diamond was not negligent in failing to review its policy.  However, the court found that the record supported the … Continue reading

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