Concurrent-Cause Doctrine

The concurrent-cause doctrine is a source of much litigation as it relates to storm damage to roofs and structures.  This was the issue in a 2020, Western District of Texas, San Antonia Division, opinion styled, Ironwood Building II, LTD. and Principle Auto Management, LTD. v. Axis Surplus Insurance Company.

This is an opinion issued on competing motions for summary judgment.  The Court denied both motions.

The Plaintiffs suffered a hailstorm in 2016, and were paid money related to the damages by the insurance company who provided coverage at the time of the loss.  Only minor repairs were made and there were no leaks occurring on the property.  After this, Plaintiffs purchased another insurance policy with Axis.

Later, a tornado hit the property and severely damaged Plaintiffs roof, which immediately began to leak, causing extensive interior damage.  A claim was filed.  Axis learned of the 2016 hailstorm and only made partial payment based on the assertion that all the repairs from the hailstorm had not been completed.

Plaintiffs and Axis present to the Court issues related to contract interpretation.  What the arguments miss is that the record before the Court presents a strikingly simple dispute as to a material fact: which storm caused which damage, and without an answer to that question, the Court cannot rule on the respective motions.  In short, the record does not reveal with any precision which storm caused which damage, and without that knowledge, summary judgment is inappropriate.

An insured may still recover even if he or she suffers damages from both a covered and non-covered peril.  Under the doctrine of concurrent causes, when covered and non-covered perils combine to create a loss, the insured is entitled to recover that portion of the damage caused solely by the covered peril.  The insured must produce evidence that will afford a reasonable basis for estimating the amount of damages or proportionate part of damage caused by a risk covered by the insurance policy.  Where a loss is cause by a covered peril and an excluded peril that are independent causes of the loss, the insurer is liable.  The concurrent-cause doctrine applies to limit recovery only when the loss is caused by two concurrent causes instead of two independent causes.

Here, there is a genuine dispute as to whether there are two concurrent or independent causes.  Axis’s position is that a covered (2017 tornado) and uncovered (2016 hailstorm) peril combined to create a loss and, as such, Plaintiff as the insured must segregate those costs to afford a reasonable basis for estimating the proportion of damage caused by the 2017 tornado.  Axis automatically deducted $188,275 while admitting that a “significant portion” (implying not all) of the 2017 damage estimate was for damages from 2016.  But the concurrent-cause doctrine limits recovery “only when the loss is caused by two concurrent causes instead of two independent causes” and here, the Court has no basis to conclude that precisely $188,275 worth of damage was concurrently caused by both the 2016 and 2017 storms such that Plaintiffs’ failure to segregate the costs allows Axis to deduct that amount.  Indeed, Plaintiffs have raised a fact issue as to whether the causes were independent by proffering evidence that the roof did not leak after the 2016 hailstorm but did leak after the 2017 tornado, to the point of requiring replacement.  This may ultimately show that replacing the roof was necessary as a result of an entirely independent cause, the 2017 tornado.  Did the 2017 damage subsume any 2016 damage such that the damage would have occurred even without the 2016 damage, meaning the two are independent?  Axis says it does not; Plaintiffs say it does, and the record at this time does not resolve that dispute.

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