Different Policy? Same Coverages?

Dallas area insurance attorneys need to be aware of the opinion issued by the Houston Court of Appeals, First District of Texas, in August of 2013. The style of this case is Houstoun, et al v. Escalante’s Comida Fina, Inc.
Here is some background information.
Between 2003 and 2008, Escalante’s owned and operated four restaurants in the Houston area. Between 2003 and 2006 the property and casualty insurance policy on the restaurants was through Ohio Casualty Group, which provided coverage, with certain exceptions, in the event of loss of business income caused by an off-premises power or utilities outage. After Hurricane Rita hit Houston in 2005, Escalante’s claimed against the policy and Ohio Casualty paid.
Patrick Torres, Escalante’s’ President, testified that during this same time period, Insurance Alliance’s principal, Kirk Gentle, was seeking to add Escalante’s as a client. Toward this end, Escalante’s provided Alliance a copy of its then- current Ohio Casualty policy and agreed to purchase the Alliance coverage if it matched the Ohio Casualty coverage but cost less. Alliance told Escalante’s that it had such a policy. Torres testified that he specifically reminded Alliance about the Escalante’s experience with Hurricane Rita and emphasized that the coverage had to be the same as Ohio Casualty’s. In fact, when Torres asked if the Alliance coverage matched the Ohio Casualty policy “apples to apples,” he was assured it was the same.
In reliance upon Alliance’s assurances, Torres testified that Escalante’s declined to renew with Ohio Casualty and purchased an Allied Property & Casualty Insurance Company policy issued in 2006. Escalante’s made no claims on the Allied policy during the first year and renewed the policy for 2007-2008.
In September 2008, Hurricane Ike caused a temporary loss of electrical power at all four restaurants–from which business interruption Escalante’s lost revenue. Apart from minor damage suffered at one location, none of the other restaurant locations suffered physical damage, but all locations experienced food spoilage and business interruption losses. Escalante’s complains that it never recovered for these losses under the Allied Policy because losses caused by an off-premises power failure were expressly excluded.
After discussions with its prior insurance agent, Meeks, Escalante’s terminated its relationship with Insurance Alliance and once again retained Meeks as its insurance agent. Escalante’s alleges that had the Allied coverage been identical to its prior Ohio Casualty policy, its business interruption losses would have been covered. Escalante’s sued Alliance for its failure to obtain insurance that matched the prior coverage “apples to apples.”
In reviewing this case, the court recited the relevant policy provisions.
The parties agree that to establish causation for its DTPA, Insurance Code, and breach of contract claims, Escalante’s had the burden to show that its business interruption losses from Hurricane Ike–not covered by its Allied Policy–would have been covered by its Ohio Casualty policy. The parties disagree, however, about which side had the burden as to the applicability of the Ohio Casualty coverage. Nevertheless, it was unnecessary for the Court to reach that issue because the evidence at trial conclusively established the applicability of the policy exclusion and no evidence was admitted in support of the jury’s contrary finding.
The court then spent a few pages going over the testimony at trial to justify it’s conclusion that the evidence was not sufficient to support the jury finding in favor of Escalante.
The outcome was a reversal of the judgment and a finding in favor of the insurer.

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