Claim Denial Lawyer – Segregating Damages

Here is an opinion from the Northern District of Texas, Dallas Division, that concerns hail damage and segregating damages.  The opinion is styled, Frymire Home Services, Inc. and Whitfield Capital, LLC v. Ohio Security Insurance Co.

This is a summary judgement opinion in filed by Ohio and the Court granted the summary judgment in favor of Ohio.

This is a hail damage insurance dispute.  Ohio insured Property owed by Plaintiffs.  The policy was in effect from March 23, 2018, until March 23, 2019.

In 2017, prior to the start of the policy period, the Property appraised in connection with a bankruptcy proceeding of the prior owner.  The appraisal report noted that the roof “appeared to be in fair overall condition” and contained “two areas of significant roof leads.”  The appraiser recommended “immediate repair” of these areas and that the roof be replaced within two years.

Plaintiffs allege that in June 2018, a severe thunderstorm producing hail damaged the Property.  A claim for alleged damage was presented to Ohio.

The Plaintiffs experts allege the damage was the result of the June 2018 storm.  Ohio’s experts concluded that hail did not cause damage to the asphalt roof surface of the Property.

Ohio seeks summary judgment on Plaintiffs’ breach-of-contract claim based on Plaintiffs’ failure to satisfy their burden of segregating damages based on covered and uncovered losses under the policy.  Plaintiffs, however, contend that the burden is on Ohio, as the insurer, to segregate the losses.

The Court agrees with Ohio.  An insured cannot recover under an insurance policy unless facts are pleaded and proved showing that damages are covered by his policy.   To be sure, an insured that suffers damage from both covered and excluded perils is not precluded from recovering for the covered loss,but when covered and excluded perils combine to cause an injury, the insured must present some evidence affording the jury a reasonable basis on which to allocate the damage.  The burden of segregating the damage attributable solely to the covered event is a coverage issue for which the insured carries the burden of proof.  If the insured falls short of meeting this burden, the insurer is entitled to summary judgment.

In contesting their burden to segregate damages, Plaintiffs do not grapple with applicable case law.  Rather, they contend that to recover on their claim, they need not prove that the June 2018 storm was the “sole cause”of the damage at issue.  But this argument misses the point: Ohio offers evidence that the Property incurred damage prior to the policy period, meaning such damage would be a non-covered loss under the policy.  Consequently, under Texas law, Plaintiffs have the burden of providing “some evidence” permitting a fact finder to distinguish between damages arising prior to the June 2018 storm and those arising as a result of the June 2018 storm.

Plaintiffs have not done so.  Despite acknowledging that “the roof may have possibly had some [preexisting] damage” when the June 2018 storm occurred, Plaintiffs fail to submit any evidence enabling a jury to estimate the amount of damage caused by the June 2018 storm versus a non-covered loss.  Plaintiffs do not offer any evidence pertaining to the segregation of damages.

This case re-illustrates the importance of segregating damages in a hail damage claim.

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