Homeowners Insurance Claim – 3

This is a 2022, homeowners claim from the Eastern District of Texas, Tyler Division.  The opinion is styled, Meridian Security Insurance Company v. Curtis Murphy.

In this case, Meridian seeks a declaratory judgment that it is not liable for damage caused by by a fire at Murphy’s home.  Murphy asserted counter claims.  Meridian now moves for summary judgment.

Murphy’s counter claims were dismissed by the Court.

Meridian issued Homeowners Policy No. 1000677728 (the Policy) listing Murphy as the named insured.  The Policy covered the “dwelling on the ‘residence premises’ shown in the Declarations.  The Policy defined “residence premises” as “the onefamily dwelling where you reside . . . on the inception date of the policy period shown in the Declarations and which is
shown as the ‘residence premises’ in the Declarations.”  The Declarations in turn identified the “residence premises” as the dwelling and structures at 401 Davis St., Longview, Texas, 75602 (the “Property”).  The policy period was November 26, 2019, to November 26, 2020.

On January 23, 2020, a fire severely damaged the Property, resulting in a total loss.  The Longview Fire Marshal listed the cause of the fire as undetermined.

Murphy reported the claim four days after the fire.  Following an investigation, Meridian denied the claim in March 2021 on three grounds.  First, Meridian contended that Murphy did not “reside” at the Property on the Policy’s inception date.  Second, Meridian claimed that Murphy failed to properly substantiate his interest in the Property at the time of the fire.  Third, Meridian asserted that Murphy failed to adequately cooperate with its investigation, which “has been prejudicial to Meridian.”

As to the third claim – Meridian argues that it owes no liability because Murphy failed as a matter of law to cooperate with the subsequent investigation.  Under the Policy Meridian need not cover a loss if Murphy (1) fails to abide by prescribed duties after loss and (2) the failure to comply is prejudicial to Meridian.  And the Policy imposes on Murphy a duty to “cooperate with Meridian in the investigation of a claim.”

It is well established under Texas law that an insured’s breach of a cooperation provision relieves an insurer of liability on the policy.  But an insured’s failure to cooperate will not operate to discharge the insurer’s obligations under the policy unless the insurer is actually prejudiced.  Whether an insured materially breached a cooperation clause and whether there was resulting prejudice to the insurer are generally questions of fact.  A court may decide prejudice as a matter of law only if undisputed facts sufficiently establish prejudice.

Meridian contends that Murphy breached the duty to cooperate by failing to provide requested financial records and certain communications with relevant parties.  Meridian also argues that Murphy failed to comply with requests for information about witnesses, including Carol Aldridge, Mo Li, Jamia Murphy, Keyah Williams, and Michael McElroy.  But Murphy presents evidence that he (1) submitted three sworn statements to Meridian during the investigation, (2) timely provided a sworn proof of loss as requested by Meridian, (3) responded to various requests by Meridian with copies of the quitclaim deed, electric bills, his Commercial Driver’s License, work logs, bank statements, federal income tax returns, cell phone records, and tax statements for the Property and (4) provided the last known areas of residence for three of the
five individuals mentioned above.  The record also includes routine correspondence among Meridian and Murphy and his counsel, including standard objections to some of the requests submitted by Meridian.  While Murphy’s responses were sometimes lacking, the Court cannot conclude as a matter of law that Murphy breached his duty to cooperate.

Nor has Meridian demonstrated that any breach was prejudicial as a matter of law.  Although Meridian complains about the timeliness of some responses, the company does not argue that “‘having these documents in a more timely fashion would have protected it from fraud’ or that the ‘information in the documents is less accurate for being less fresh.’”   Meridian suggests that Murphy’s delays and incomplete responses prevented it from interviewing two witnesses, Carol Aldridge and Keyah Williams.  But Meridian fails to explain how the inability to contact these witnesses prejudiced its investigation.  Aldridge was apparently a friend of Murphy’s who merely helped him move a stove into the Property.  Murphy submitted a sworn statement and phone number from Williams, who allegedly acted as a real estate agent in Murphy’s purchase of the Property And even if Murphy had provided the requested contact information sooner, there is no indication that Meridian would have been successful in locating them.

Summary judgment on this final ground is therefore improper.

Contact Information