Seahawk Liquidating Trust Ex Rel. Seahawk Drilling, Inc. v. Certain Underwriters at Lloyds London ( 2016 )

Case: 15-30324 Document: 00513347548 Page: 1 Date Filed: 01/19/2016
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
United States Court of Appeals
Fifth Circuit
No. 15-30324 FILED
January 19, 2016
Lyle W. Cayce
Clerk
SEAHAWK LIQUIDATING TRUST,
as Trustee of Seahawk Drilling, Incorporated,
Plaintiff–Appellant,
versus
CERTAIN UNDERWRITERS AT LLOYDS LONDON;
ACE EUROPEAN GROUP LIMITED;
NATIONAL UNION FIRE INSURANCE COMPANY
OF PITTSBURGH, PENNSYLVANIA;
AXIS SPECIALTY EUROPE, LIMITED;
LANCASHIRE INSURANCE COMPANY, LIMITED;
SWISS RE INTERNATIONAL SE;
ASPEN INSURANCE U.K. LIMITED; BERKLEY INSURANCE COMPANY;
ARCH INSURANCE COMPANY;
INTERNATIONAL INSURANCE COMPANY OF HANNOVER, LIMITED;
HUDSON SPECIALTY INSURANCE COMPANY;
NAVIGATORS INSURANCE COMPANY;
NEW YORK MARINE & GENERAL INSURANCE COMPANY;
TORUS INSURANCE,
Defendants–Appellees.
Appeal from the United States District Court
for the Middle District of Louisiana
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No. 15-30324
Before SMITH, WIENER, and GRAVES, Circuit Judges.
JERRY E. SMITH, Circuit Judge:
This appeal follows a bench trial and judgment for the defendant insur-
ers on the claims of Seahawk Liquidating Trust (“Seahawk”) for payment of
insurance proceeds. There is no error, so we affirm.
I.
Seahawk 1 operated a fleet of drilling rigs, one of which was the
J/U SEAHAWK 3000 (the “Rig”), a three-legged, mat-supported jack-up drill-
ing rig with 375-foot legs used to perform drilling contracts in the Gulf of Mex-
ico beginning in 1974. 2 In February 2010, while moving between drilling loca-
tions, the Rig encountered severe weather and jacked up out of the water for
several days to avoid the harsh seas. Despite those efforts, the rough seas still
caused the legs to become misaligned.
Between February and April, Seahawk repaired the hydraulic-jacking
system on several occasions, actions that were consistent with the Rig’s his-
tory: It had had consistent wear-and-tear problems with, and required repairs
to, its hydraulic-jacking system for more than twenty years. In April, the Rig
traveled to perform a drilling contract for Hilcorp Drilling Company (“Hil-
corp”), but Seahawk still did not know that the legs were misaligned. The Rig
1Seahawk Drilling, Inc. filed for bankruptcy, and its trustee pursued these claims
against Lloyds. We refer to both as “Seahawk.”
2 A jack-up drilling rig drills for oil offshore at exploratory and developmental wells.
These rigs must be towed between drilling locations. Mat-supported jack-up rigs have a hull
that usually floats on the surface and connects to three or four legs that attach to a mat that
must be extended to the sea floor to raise the hull out of the water in order for the rig to drill.
A hydraulic-jacking system extends the legs and mat down and elevates the hull using a
mechanism by which pins that are attached to the hull enter the legs, push the legs down,
come out of the legs, re-enter, and push down again. The hydraulic-jacking system repeats
this process until the hull reaches the necessary height.
2
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failed to jack up to a sufficient height to perform the Hilcorp contract because
of other problems with the hydraulic-jacking system, leading Hilcorp to request
that Seahawk provide a replacement rig, which it did at a cost of $1,092,000.
Though Seahawk brought in a replacement, the Rig became stuck for
several days at the Hilcorp location after an incident during the jacking-down
process caused further damage to the hydraulic-jacking system. That incident
required temporary repairs to the jacking system while the Rig was stuck and
further such repairs once it successfully jacked down and moved to a dry dock.
At some point in May, while the Rig was in dry dock, Seahawk learned the legs
were misaligned but did not fix them because doing so would be too expensive.
After that dry-dock period, the Rig departed in early July to perform
another drilling contract, which it completed in calm weather, though the crew
used an unorthodox method to jack it up—the Rig essentially jacked up one
side of the hull at a time, rather than jacking up the entire hull uniformly.
Seahawk’s expert, Crane Zumwalt, testified that the crew developed that pro-
cedure to compensate for the misaligned legs and that the Rig always suc-
ceeded in jacking up if—as with this drilling contract—the weather and seas
were calm.
On July 21, 2010, the weather and seas were not calm as the Rig arrived
to perform a drilling contract at East Cameron Island. In those conditions, the
Rig’s operating manual forbade its crew from jacking it into or out of the water,
but the crew attempted to jack it out of the water nonetheless. The hydraulic-
jacking system became disengaged when the Rig attempted to jack up, causing
the hull to slide down the legs and float in the sea. The crew, before evacuating,
attempted to jack the Rig back up to no avail, and the Rig floated in the rough
seas, sustaining further damage, for nearly thirty hours. Zumwalt testified
that the Rig would have been able to jack up—and jack back up after sliding
3
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down—without incident if the weather had been calm.
After the July 21 storm, the Rig went to dry dock for further repairs until
December 2010. The repairs again focused on the hydraulic-jacking system
instead of the misaligned legs; Seahawk never repaired the legs. While the Rig
was in dry dock, Seahawk submitted a claim to the insurers to cover the cost
of repairs, alleged to be $16,969,860. The insurers rejected the claim.
II.
Seahawk sued the insurers for proceeds covering the physical damage to
the Rig and the loss on the Hilcorp contract. Seahawk’s insurance policy (the
“Policy”) 3 included several key provisions:
• The general-coverage provision: “This insurance is against all risks of
direct physical loss of or physical damage to the property insured, subject
to the terms, conditions, and exclusions contained herein . . . . This In-
surance covers all the hull and machinery of the drilling unit(s) . . . .”
• The $10,000,000-deductible provision: “For the purpose of this [Deducti-
ble] Clause, each occurrence shall be treated separately, but it is agreed
that a sequence of losses or damages arising from the same occurrence
shall be treated as one occurrence.”
• The wear-and-tear exclusion: “There shall be no recovery under this In-
surance in respect of . . . [the] Cost of repairing or replacing any part
which may be lost, damaged or condemned solely due to . . . wear and
tear . . . .”
• The loss-of-contract provision (the “Contract Provision”): “[C]overage
hereunder shall include the loss of charter hire resulting from the ter-
mination and/or cancellation of [Seahawk’s] drilling contract(s) caused
by the insured drilling units being unable to operate following a claim
recoverable under [the general-coverage provision] if the deductible were
nil.”
3Each incident took place during one of two separate policy periods; one ended and
the other began on June 30, 2010. The content of the policies is identical; Swiss Re Interna-
tional SE was an underwriter of the first policy only, and Hudson Specialty Insurance Com-
pany, Navigators Insurance Company, New York Marine & General Insurance Company,
and Torus Insurance were underwriters on the second policy only.
4
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Seahawk sought to recover the nearly $17 million for repairs made
between February and December 2010. After a three-day bench trial, the dis-
trict court determined that the insurers had properly rejected the claim
because they found that there were two occurrences, meaning two $10 million
deductibles had to be met, so Seahawk could recover nothing. 4 There were two
occurrences, the court reasoned, because the sequence of losses (i.e., the dam-
ages and subsequent repairs) between February and July was proximately
caused by the February storm, but the sequence of losses after the July storm
was proximately caused by that latter storm. There were two separate proxi-
mate causes of two different series of losses, so there were two occurrences.
Seahawk also sought to recover under the Contract Provision. It main-
tained that the misalignment of the legs caused the Rig to be unable to operate
and thereby occasioned the loss of the Hilcorp contract; the misalignment was
caused by a severe weather event and would have been recoverable if the
deductible were nil; thus, the loss on the Hilcorp contract was recoverable.
The district court found, to the contrary, that the misaligned legs (a the-
oretically covered loss) at most contributed to the defective hydraulic-jacking
system (an excluded loss, as it was caused by wear-and-tear) in causing the
loss of the contract. That finding required that the court apply the concurrent-
cause doctrine.
III.
The Policy provides that it is governed by Texas law, under which the
interpretation of an insurance policy is a question of law, which we review
de novo. Ran-Nan Inc. v. Gen. Accident Ins. Co. of Am., 252 F.3d 738, 739 (5th
4 The parties stipulated after trial that Seahawk could not recover if there was more
than one occurrence.
5
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Cir. 2001). The parties agree that Texas substantive law applies. We review
any underlying factual findings for clear error. Theriot v. United States, 245
F.3d 388, 394–95 (5th Cir. 1998). A factual finding, such as a causation deter-
mination, is clearly erroneous only “when the appellate court, viewing the evi-
dence in its entirety, is left with the definite and firm conviction that a mistake
has been made.” Manderson v. Chet Morrison Contractors, Inc., 666 F.3d 373,
376 (5th Cir. 2012). “Re-stated, our court may not find clear error if the district
court’s finding is plausible in light of the record as a whole, even if this court
would have weighed the evidence differently.” Id. at 376–77 (alterations
omitted).
IV.
Because there were two occurrences, the district court properly denied
Seahawk’s claim for the cost of repairs between February and December 2010.
That court’s proximate-cause analysis was the correct legal standard for deter-
mining the number of occurrences, and the court did not clearly err in finding
that the February storm was not the proximate cause of the sequence of losses
following the July storm.
A.
Under Texas law, we must construe the Policy according to the general
rules of contract construction to give effect to the intent. Gilbert Tex. Constr.,
L.P. v. Underwriters at Lloyd’s London, 327 S.W.3d 118, 126 (Tex. 2010). 5 We
begin with the policy language, giving the terms their “ordinary and generally-
accepted meaning unless the policy shows the words are meant in a technical
or different sense.” Id. When an issue of state law is unclear, a federal court
5 Our decisions often refer to Certain Underwriters at Lloyd’s as “Lloyd’s.” In their
briefs, however, these parties use “Lloyds.”
6
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must make an “Erie guess” as to what the state’s highest court would decide. 6
Seahawk’s first claim turns entirely on the meaning of “occurrence,”
which, according to its ordinary and generally-accepted meaning, is “some-
thing that occurs” 7 or “something that takes place; esp: something that hap-
pens unexpectedly and without design.” 8 The parties appear not to contest
that the February storm was an occurrence; under that ordinary meaning, the
July storm would appear to be an occurrence too.
Seahawk, however, contends that the Policy gives “occurrence” a techni-
cal meaning by defining it to include “a sequence of losses or damages arising
from the same occurrence.” The February storm, according to Seahawk, was
an occurrence that damaged the Rig’s legs and was a but-for cause of the
damages suffered after the July storm because the damaged legs slowed down
the jacking-up process. Because the Rig’s damaged legs contributed to the
damages after the July storm, Seahawk characterizes all of the losses between
February and December as “arising from the same [February] occurrence.”
The insurers maintain, to the contrary, that any damages after the July
storm arose from that storm, not the February storm. Like the district court,
the insurers interpret the phrase “arising from” to require that the occurrence
be the proximate cause of the “sequence of losses or damages.” Thus, even if
the February storm damaged the legs and thereby contributed to the losses
after July, the July storm would be the proximate cause of—and the occurrence
giving rise to—the sequence of losses thereafter.
The real issue, then, is how to interpret the term “arising from” when
6Farm Credit Bank v. Guidry, 110 F.3d 1147, 1149 (5th Cir. 1997), overruled on other
grounds by Canfield v. Orso (In re Orso), 283 F.3d 686 (5th Cir. 2002).
7 “Occurrence,” WEBSTER’S NINTH NEW COLLEGIATE DICTIONARY (1984).
8 “Occurrence,” WEBSTER’S THIRD NEW INTERNATIONAL DICTIONARY (1986).
7
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used to determine the number of occurrences under the Policy. Seahawk
claims the term requires only a causal link between the occurrence and sub-
sequent losses because Texas law construes “arising from” broadly in favor of
coverage. The Texas Supreme Court has stated that “arise out of” requires
“simply a causal connection or relation, which is interpreted to mean that there
is but for causation, though not necessarily direct or proximate causation.” 9
But the court broadly interpreted “arising from”—or relied on cases broadly
interpreting that term—only in different contexts in which a broad interpre-
tation would increase coverage. 10 The court seems not to have addressed the
term when used to determine the number of occurrences, so we must make an
Erie guess as to how the court would interpret “arising from” in this context.
For two reasons, that court likely would adopt the proximate-cause anal-
ysis applied by the district court. First, as the insurers point out, interpreting
“arising from” broadly to require only a causal link when determining the num-
ber of occurrences can expand coverage in one case while contracting it in
another. For example, Seahawk desires a recognition of only one occurrence
to avoid the application of multiple deductibles—a broad construction would
increase coverage. But in another case with identical facts but a slightly dif-
ferent insurance policy, an insured may desire multiple occurrences to avoid
9 Utica Nat’l Ins. Co. of Tex. v. Am. Indem. Co., 141 S.W.3d 198, 203 (Tex. 2004). We
interpret identically the terms “arising out of” and “arising from.” Am. States. Ins. Co. v.
Bailey, 133 F.3d 363, 370 n.7 (5th Cir. 1998).
10 See, e.g., Utica Nat’l Ins., 141 S.W.3d at 203 (interpreting “arising out of” broadly to
reduce the scope of a policy’s exclusionary provision); Mid-Century Ins. Co. of Tex. v. Lindsey,
997 S.W.2d 153, 156–59 (Tex. 1999) (broadly interpreting the term “arise out of” with regard
to the use of a motor vehicle to cover the accidental discharge of a weapon after an attempt
to enter the vehicle); Amerisure Ins. Co. v. Navigators Ins. Co., 611 F.3d 299, 312–13 (5th Cir.
2010) (interpreting “arise out of” broadly to find that a conditional exclusion did not apply);
Red Ball Motor Freight, Inc. v. Emp’rs Mut. Liab. Ins. Co. of Wis., 189 F.2d 374, 378 (5th Cir.
1951) (interpreting “arising out of” the use of a truck broadly to provide coverage for damages
from the driver’s negligent refueling).
8
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the application of a single policy limit—a narrow construction would increase
coverage. Although Texas favors broadly construing policies to provide for cov-
erage, there is no reason to predict―given the conflicting effects on
coverage―that the Texas Supreme Court would broadly construe “arising
from” in this context.
Second, the proximate-cause analysis is at least implicitly consistent
with our and Texas’s precedent. Three cases in particular illustrate this
point. 11 In each, the policy defined an occurrence as losses “arising out of” a
single event or continuous exposure to a condition. And, in each, the court
ignored a but-for cause and focused on the direct, immediate, and proximate
cause of the losses to determine the number of occurrences.
In Goose Creek, an arsonist set fire to two schools in the same school
district. Although the same arsonist was the but-for cause of both fires, the
fires occurred several blocks and at least two hours apart, and neither caused
the other. The school district claimed there was one occurrence and thus one
deductible. According to the court, though, there were two occurrences because
the “two fires [were] distinguishable in space and time [and] one did not cause
the other.” Goose Creek, 658 S.W.2d at 341. Though the fires were traced back
to the same but-for cause, there were two occurrences because the damages
directly arose from two separate fires.
In U.E. Texas, nineteen buildings in an apartment complex suffered
damage from plumbing leaks. Hoping to pay one deductible, the owner con-
tended there was only one occurrence because the leaks allegedly arose from
11 Goose Creek Consol. Indep. Sch. Dist. v. Cont’l Cas. Co., 658 S.W.2d 338 (Tex.
App.―Houston [1st Dist.] 1983, no writ); U.E. Tex. One-Barrington, Ltd. v. Gen. Star Indem.
Co., 332 F.3d 274 (5th Cir. 2003); H.E. Butt Grocery Co. v. Nat’l Union Fire Ins. Co., 150 F.3d
526 (5th Cir. 1998).
9
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one defective installation of plumbing. The parties stipulated, however, that
each leak affected only the specific building under which it occurred. Although
there was ostensibly one “overarching cause”—the installation—the court in-
stead focused on the “specific event[s] that caused the loss,” U.E. Tex., 332 F.3d
at 278—the individual leaks—to conclude there were nineteen occurrences:
To point to the installation of the pipes as a single event which gave
rise to the damage to the nineteen buildings proves too much. Of course
it is true that had the plumbing system never been installed the leaks
would not have occurred. In this sense, it is true that the leaks which
independently damaged the nineteen buildings arose from the same
event. However, to look this far back would render any damage to the
complex occurring at any time related to the plumbing as arising from
the same event.
Id.
In H.E. Butt, one employee sexually abused two children in the same
bathroom at the same grocery store but on different occasions. Hoping to limit
liability under its self-insurance, the insured claimed there was only one occur-
rence because both incidents arose from its negligent supervision of the em-
ployee. The court said that “[t]he question under Texas law becomes whether
HEB’s negligent employment relationship with its pedophilic employee, rather
than the two acts of sexual abuse, ‘caused’ the injuries to the two children and
gave rise to HEB’s liability.” H.E. Butt, 150 F.3d at 530. Although negligent
supervision plainly was a but-for cause of the children’s injuries, there would
be no injury or exposure to liability without the intervening sexual abuse. Id.
at 531. There were two occurrences because
[w]hile a single occurrence may result in multiple injuries to multiple
parties over a period of time . . . [,] if one cause is interrupted and
replaced by another intervening cause, the chain of causation is broken
and more than one occurrence has taken place. Here, it is clear that
each child’s injuries are independent and caused by the separate acts of
sexual abuse.
Id. at 534 (alterations in original) (emphasis added) (internal citations
10
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omitted). 12 The court discounted a but-for cause and explicitly used the
proximate-cause analysis to determine the number of occurrences.
The proper conclusion here follows naturally from the three above-cited
decisions: When an occurrence is technically defined to include a series of
losses arising from the same event, it includes only those losses proximately
caused by that event. The Policy defines an occurrence as a series of losses
“arising from” the same occurrence and thereby incorporates the proximate-
cause analysis. 13 Thus, the district court applied the correct legal standard in
determining the number of occurrences by analyzing whether the February
storm was the proximate cause—not just a contributing or but-for cause—of
the sequence of losses between February and December 2010.
B.
The task remains to review the district court’s factual finding that the
July storm—rather than the February storm—was the proximate cause of the
sequence of losses after July. Again, we review the district court’s causation
determinations only for clear error and uphold the same if plausible in light of
the record as whole. Manderson, 666 F.3d at 376–77.
12 The court relied on Appalachian Insurance Co. v. Liberty Mutual Insurance Co., 676
F.2d 56, 61 (3d Cir. 1982), which held that to determine the number of occurrences “the court
asks if there was but one proximate, uninterrupted, and continuing cause which resulted in
all of the injuries and damage.” (Alteration and internal quotation marks omitted.)
13 Seahawk points to All Metals, Inc. v. Liberty Mutual Fire Insurance Co., No. 3-09-
CV-0846-BD, 2010 WL 3027045, at *1 (N.D. Tex. 2010), for the proposition that we none-
theless might broadly interpret “arising from.” All Metals does not support Seahawk’s argu-
ment, because the policy there defined “occurrence” to include all damages at least indirectly
stemming from the same event. By explicitly defining “occurrence” to include indirect causes,
the parties had rejected the proximate-cause analysis. Cf. Fed. Ins. Co. v. Bock, 382 S.W.2d
305, 307 (Tex. App.—Corpus Christi 1964, writ ref’d n.r.e.) (“A proper definition of direct loss
is loss proximately caused by the peril insured against.” (emphasis added)); Utica Nat’l, 141
S.W.3d at 203 (equating direct causation with proximate causation). Unlike the parties in
All Metals, Seahawk and the insurers did not expressly reject the proximate-cause analysis,
so we apply it.
11
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The court noted that a proximate cause is “that cause which in a natural
and continuous sequence unbroken by any new and intervening cause, pro-
duces a loss, and without which the loss would not have occurred.” Bock,
382 S.W.2d at 307. There was significant evidence to support the determina-
tion that the July storm, not the February storm, was the proximate cause of
the sequence of losses after July. Zumwalt testified that the misaligned legs,
caused by the February storm, did not prevent the Rig from jacking up in calm
weather—testimony that was further bolstered by the Rig’s successful comple-
tion of a contract in calm weather in early July despite its misaligned legs.
Moreover, Zumwalt testified that the Rig continued to jack up without incident
for at least three and one-half years after the events at issue, despite Sea-
hawk’s never having repaired the legs. The evidence also showed that the
weather was severe on July 21 before the crew attempted to jack up in violation
of the operating manual. Finally, the court noted that five months elapsed
between the February and July storms, and Seahawk knew of the misaligned
legs for at least two months before the July storm yet did not repair them.
We cannot say that, given this evidence, the court clearly erred by find-
ing the February storm alone, “in a natural and continuous sequence unbroken
by any new and intervening cause,” would not have produced the sequence of
losses after the July storm. See id. The July storm was thus an intervening
and proximate cause of the losses.
V.
The district court did not err in rejecting Seahawk’s claim under the Con-
tract Provision. The concurrent-cause doctrine applies, and Seahawk could not
recover because it failed to comply with the requirements of that doctrine.
Under Texas law, the concurrent-cause doctrine applies any time “cov-
ered and non-covered perils combine to create a loss” and limits an insured’s
12
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recovery to the “portion of the damage caused solely by the covered peril(s).”
Wallis v. United Servs. Auto. Ass’n, 2 S.W.3d 300, 302–03 (Tex. App.―San
Antonio 1999, pet. denied). The doctrine is “a rule which embodies the basic
principle that insureds are entitled to recover only that which is covered under
their policy . . . .” Id. at 303. Therefore, “[i]t is essential that the insured
produce evidence which will afford a reasonable basis for estimating . . . the
proportionate part of damage caused by a risk covered by the insurance policy.”
Travelers Indem. Co. v. McKillip, 469 S.W.2d 160, 163 (Tex. 1971). “[A]n in-
sured’s . . . burden of proof on allocation . . . is central to the claim for coverage.”
Wallis, 2 S.W.3d at 303. “Where a loss, however, is caused by a covered peril
and an excluded peril that are independent causes of the loss, the insurer is
liable.” Guar. Nat’l Ins. Co. v. N. River Ins. Co., 909 F.2d 133, 137 (5th Cir.
1990) (emphasis added). Thus, the concurrent-cause doctrine applies to limit
recovery only when the loss is caused by two concurrent causes instead of two
independent causes.
The district court made a factual finding that the misaligned legs (a cov-
ered peril) at most combined with the defective hydraulic-jacking system (an
excluded peril) 14 to cause the loss of the Hilcorp contract. We review that fac-
tual finding only for clear error, Manderson, 666 F.3d at 376–77, and conclude
there was sufficient evidence to support it. For example, Hilcorp requested
that Seahawk replace the Rig specifically because malfunctions with the
hydraulic-jacking system were visible; Hilcorp, apparently, did not notice the
misaligned legs. Further, Zumwalt testified that nobody at Seahawk even
knew the legs were misaligned at this point and that the Rig had experienced
problems with its hydraulic-jacking system continuously for over twenty years.
14Seahawk does not challenge the finding that the hydraulic-jacking system’s prob-
lems were caused by wear-and-tear and were thus excluded from coverage.
13
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Additionally, the court noted that the Rig continued to complete drilling con-
tracts over the next three and one-half years without Seahawk’s ever repairing
its misaligned legs. Given that evidence, the court did not clearly err by finding
the misaligned legs were at most a contributing cause—and certainly not an
independent cause—of the loss of the Hilcorp contract.
Seahawk advances several unpersuasive theories that even if the mis-
aligned legs and defective hydraulic-jacking system combined to cause the loss
of the contract, the concurrent-cause doctrine should not apply. First, accord-
ing to Seahawk, the doctrine should not apply because the Contract Provision
does not explicitly invoke it. That is a non-starter, because the concurrent-
cause doctrine applies whenever a policy delineates covered and excluded per-
ils and such perils combine to cause a loss.
Second, Seahawk avers that the loss of a contract is different from physi-
cal damages to which the doctrine typically applies. That notion, for which no
caselaw is cited, overlooks the fact that the Contract Provision requires that
the loss of contract be the result of physical damages that are recoverable
under the general-coverage provision. It would be entirely consistent with the
concurrent-cause doctrine for Seahawk to prove what proportion of the physi-
cal damages that led to the loss of contract are attributable to a covered peril
and for the insurers to pay out the Contract Provision according to that
proportion.
Finally, Seahawk avers that the concurrent-cause doctrine would re-
quire it to prove a claim “payable” under the Policy’s general coverage provision
rather than one “recoverable . . . if the deductible were nil.” Seahawk contends
that all it must show to recover is some theoretically covered physical damage
that contributed to a loss of contract. Seahawk elides the principle that com-
pliance with the concurrent-cause doctrine, under Texas law, is a prerequisite
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to any recovery whatsoever. See Wallis, 2 S.W.3d at 303 (noting that allocation
of damages is central to the insured’s claim). When, as here, a covered peril
and excluded peril combine to cause a loss, no amount of damages is even recov-
erable 15—let alone payable—until the insured complies with the concurrent-
cause doctrine. Id. at 302–03 (“[T]he insured is entitled to recover only that
portion of the damage caused solely by the covered peril(s).” (emphasis added)).
The district court properly applied the concurrent-cause doctrine to the Con-
tract Provision.
The final point, that Seahawk did not meet its burden under the
concurrent-cause doctrine, is without controversy. Seahawk presented no evi-
dence to segregate the damage attributable solely to the misaligned legs (the
covered peril) as compared to the defective hydraulic-jacking system (the
excluded peril). “Although [an insured] is not required to establish the amount
of his damages with mathematical precision, there must be some reasonable
basis upon which the [fact finder’s] finding rests.” Id. at 304. Seahawk failed
to meet its burden under the concurrent-cause doctrine because it presented
no evidence to apportion damages between covered and excluded perils, so the
district court properly denied the claim under the Contract Provision.
AFFIRMED.
15See BRYAN A. GARNER, DICTIONARY OF LEGAL USAGE 758 (3d ed. 2011) (“recoverable
= compensable. . . . ‘capable of being legally obtained.’”). Seahawk’s reference to California
Insurance Guarantee Association v. Liemsakul, 193 Cal. App. 3d 433 (Cal. Ct. App. 1987),
does not change this conclusion; it stands for the uncontroversial proposition that “recovera-
ble” means “recovery that might have been possible” rather than that which is “actually
recovered.” Agreeing as we do with that proposition, a claim for damages under Texas law,
where a covered peril and excluded peril combine to cause the loss, is not even recoverable
unless and until the insured complies with the concurrent-cause doctrine.
15