Debora Caddell v. Travelers Lloyds of Texas Insurance Company ( 2007 )

In The Court of Appeals Sixth Appellate District of Texas at Texarkana

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No. 06-06-00063-CV ______________________________



DEBORA CADDELL, Appellant

V.

TRAVELERS LLOYDS OF TEXAS

INSURANCE COMPANY, Appellee

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On Appeal from the 191st Judicial District Court Dallas County, Texas Trial Court No. 04-06543-L

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Before Morriss, C.J., Carter and Moseley, JJ. Memorandum Opinion by Justice Moseley

MEMORANDUM OPINION

Debora Caddell suffered hail damage to her home in April 2002. After a lengthy dispute with her insurer, Travelers Lloyds of Texas Insurance Company (Travelers), Caddell, joined by her parents (who resided in the home with her), ⁽¹⁾ brought suit against Travelers on July 13, 2004. Travelers filed a traditional motion for summary judgment on May 27, 2005, alleging (1) that Caddell had failed to comply with the terms of the policy by not filing a written timely notice of loss, (2) that Caddell had violated an obligation to mitigate the loss, and (3) that Caddell's claim included uninsured losses. By order dated February 17, 2006, the trial court granted a take-nothing summary judgment on all of Caddell's claims except that it "shall not preclude Debra [sic] Caddell from asking Defendant [Travelers] to reissue the check in the amount of $3,057.64, or affect Defendant's obligation to reissue it upon such request." ⁽²⁾ It is from this final summary judgment that Caddell has appealed.

FACTUAL BACKGROUND

Caddell suffered damage to her roof in a hailstorm during April 2002. On July 19, 2002, Caddell availed herself of a toll-free number provided by Travelers to make a claim for the damages incurred by her. Caddell also claimed that leakage of the roof had caused other damages, including the growth of mold within the house, which Caddell maintains came about as a result of damage to the roof. Caddell never filed a written notice of loss.

In response to the telephone claim, an inspector came to Caddell's residence. Caddell and Travelers each maintain that the other failed to thereafter properly communicate with the other. Illustrative of this breakdown of communication is that Travelers claimed that it had mailed Caddell a letter on October 4, 2002, indicating that it would be sending a check in the sum of $3,057.64, the letter stating, in part, "If for any reason you do not receive this payment, please call me and I will look into it for you." Caddell said that, although she received the letter indicating that the check was being transmitted, no check was ever received by her and Travelers never received a report that she did not receive the check.

Caddell and her parents filed suit against Travelers July 13, 2004. In the pleadings, Caddell maintains that the unrepaired leaky roof caused the growth of dangerous mold throughout the house and that the existence of the mold caused her and her parents' health problems, along with emotional trauma. Caddell also maintains bad faith on the part of Travelers.

Travelers responded by alleging a failure of Caddell to mitigate damages, a failure of Caddell to cooperate in the investigation of the loss and repair of damages, limitations, boundaries of coverage, failure to comply with provisions of the policy, and damages occurring outside the termination date of the policy. ⁽³⁾

STANDARD OF REVIEW

The standards for reviewing a motion for summary judgment are well established: (1) the movant for summary judgment has the burden of showing that no genuine issue of material fact exists and that it is entitled to judgment as a matter of law; (2) in deciding whether there is a disputed material fact issue precluding summary judgment, evidence favorable to the nonmovant will be taken as true; and (3) every reasonable inference must be indulged in favor of the nonmovant and any doubts resolved in its favor. See Nixon v. Mr. Prop. Mgmt. Co., 690 S.W.2d 546, 548-49 (Tex. 1985). The function of summary judgment is not to deprive litigants of the right to trial by jury, but to eliminate "patently unmeritorious claims or untenable defenses." Swilley v. Hughes, 488 S.W.2d 64, 68 (Tex. 1972). The propriety of summary judgment is a question of law; therefore, we review de novo the trial court's decision. See Tex. Dep't of Ins. v. Am. Home Assurance Co., 998 S.W.2d 344, 347 (Tex. App.--Austin 1999, no pet.). To prevail on a motion for summary judgment, a movant must establish that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law. Tex. R. Civ. P. 166a(c). Summary judgment for a defendant is proper when the defendant negates at least one element of each of the plaintiff's theories of recovery or pleads and conclusively establishes each element of an affirmative defense. Sci. Spectrum, Inc. v. Martinez, 941 S.W.2d 910, 911 (Tex. 1997); Wornick Co. v. Casas, 856 S.W.2d 732, 733 (Tex. 1993). All doubts about the existence of a genuine issue of a material fact must be resolved against the movant. Johnson County Sheriff's Posse, Inc. v. Endsley, 926 S.W.2d 284, 285 (Tex. 1996).

ANALYSIS

Caddell's response to the motion for summary judgment contains no summary judgment evidence itself, but incorporates by reference some of the summary judgment evidence contained in the motion for summary judgment filed by Travelers. However, Caddell's response is marred in many respects by her apparent assumption that Travelers's motion incorporates the full text of Caddell's deposition and that of her mother, Eva. It does not. Therefore, if the reader of Caddell's response is able to figure out the rather arcane code employed in the motion for summary judgment to decipher the references to summary judgment proof to which Caddell makes reference, it becomes plain that the summary judgment evidence to which Caddell refers is often unavailable to sustain many of her points.

Travelers's motion for summary judgment was based upon two primary points: (1) that Caddell failed to comply with the contractual obligation to provide Travelers with prompt written notice of loss, and (2) that Caddell violated her duty to mitigate damages.

Caddell pointed out that July 2002 was when she first became aware that a hailstorm in April 2002 had damaged her roof. The insurance policy she had purchased from Travelers contained instructions to the insured. In a double-lined inset box on the contents page of the policy is the heading, "Your Duties After A Loss" under which it directs the policyholder to "Give prompt written notice to the company." Page 6 of the policy provides, "In case of a loss to covered property caused by a Peril Insured Against, you must: (1) give prompt written notice to us of the facts relating to the claim." On page 12 of the policy, under the heading of "Duties After Loss," it requires the policyholder to "Give written notice to us or our agent as soon as is practical" information concerning the policy, the circumstances of the loss, and other information. (In other words, proof of loss.) There is nothing in the insurance policy which restricts this notice requirement to circumstances in which the insurer is prejudiced by a delay in making the claim. On the other hand, the letter of transmittal of the policy says, "For Claim Service call 1-800-CLAIM33." Caddell never gave Travelers any written notice at all but, instead, called the claim service number.

Caddell cites Duzich v. Marine Office of Am. Corp., 980 S.W.2d 857 (Tex. App.--Corpus Christi 1998, pet. denied), as authority that, although there was no substantial compliance with the written notice provision of an insurance contract, failure to comply is not fatal to the insured's claim unless the insurer is unduly prejudiced. Duzich is not the only case which holds that the insurer must show prejudice if it chooses to invoke timely notice as a condition precedent to coverage. It is possible to cite a litany of cases similar to this, such as Harwell v. State Farm Mut. Auto. Ins. Co., 896 S.W.2d 170, 173-74 (Tex. 1995); Liberty Mut. Ins. Co. v. Cruz, 883 S.W.2d 164, 165 (Tex. 1993).

However, those cases are not controlling here. Each of those cases involves liability policies of insurance, not casualty insurance. As a group, they also come subsequent to the case of Members Mut. Ins. Co. v. Cutaia, 476 S.W.2d 278 (Tex. 1972). In it, the Texas Supreme Court acknowledged the situation of this seemingly-harsh treatment of notice being a condition precedent to coverage, stating that, "While an injustice has apparently resulted in this particular case, the matter of rewriting the insurance provisions in question is properly within the prerogative of the State Board of Insurance or the Legislature." Id. The State Board of Insurance partially responded to this observation by making something of an edict ⁽⁴⁾ which applied to bodily injury liability and property damage liability policies only; this order restricted the ability of insurers under that kind of insurance policy to raise the defense of failure of proper notice only when such failure to notify prejudiced the insurer. It did not choose to address this same issue with regard to casualty insurance policies. Therefore, this order does not apply to casualty claims such as the one before us. As a result, due to inaction on the part of those who are able to change it, the apparent injustice recognized by the Texas Supreme Court in 1972 in the Cutaia case remains the law as to this kind of insurance policy.

The position of Travelers is that set out in Broussard v. Lumbermens Mut. Cas. Co., 582 S.W.2d 261 (Tex. Civ. App.--Beaumont 1979, no writ), which states:

Compliance with the provision that notice be given "as soon as practicable" is a condition precedent, the breach of which voids policy coverage. Dairyland Mutual Ins. Co. of Texas v. Roman, 498 S.W.2d 154 (Tex. 1973); Members Mutual Insurance Co. v. Cutaia, 476 S.W.2d 278 (Tex. 1972); New Amsterdam Casualty Co. v. Hamblen, 144 Tex. 306, 190 S.W.2d 56 (1945); Klein v. Century Lloyds, 154 Tex. 160, 275 S.W.2d 95 (1955); Latham v. Mountain States Mutual Casualty Co., 482 S.W.2d 655 (Tex. Civ. App.--Houston [1st Dist.] 1972, writ ref'd n.r.e.); Carroll v. Employers Casualty Co., 475 S.W.2d 390 (Tex. Civ. App.--Beaumont 1971, writ ref'd n.r.e.).

The facts not being in dispute as to whether notice was given "as soon as practicable," the question becomes one of law for the determination by the court. Commercial Standard Ins. Co. v. Harper, 129 Tex. 249, 103 S.W.2d 143, 146, 110 A.L.R. 529 (1937); Klein v. Century Lloyds, supra; Carroll v. Employers Casualty Company, supra; Norman v. St. Paul Fire & Marine Insurance Co., 431 S.W.2d 391 (Tex. Civ. App.--Beaumont 1968, no writ).

Id. at 262.

Conditions precedent are stipulations that call for the performance of some act or the occurrence of some event before an agreement is enforceable. Examples of conditions precedent in insurance contracts are the giving of notice of claim or loss, the timely filing of proof of loss, reporting the loss to proper authorities, filing suit within a specified time, timely forwarding suit papers to a liability insurer, and the like.

Love of God Holiness Temple Church v. Union Standard Ins. Co., 860 S.W.2d 179, 180 (Tex. App.--Texarkana 1993, writ denied). Whether the outcome is harsh or not, "Compliance with the provision that prompt written notice be given by the insured is a condition precedent, the breach of which voids policy coverage." Stonewall Ins. Co. v. Modern Exploration, Inc., 757 S.W.2d 432, 435 (Tex. App.--Dallas 1988, no writ).

The trial court properly found that Caddell failed to comply with the contractual provision that she file a written proof of loss and that the filing of such a proof of loss was a condition precedent to coverage under the policy.

Did the fact that Travelers provided a toll-free telephone number for its policyholders to use to call in oral claims or the fact that Travelers responded promptly to a called-in claim from Caddell raise a question of waiver under the policy it issued to Caddell? Could it have been estopped to deny that its actions in responding to a telephonic notice precluded it from raising this defense at trial? Since neither waiver nor estoppel was pled or pursued pursuant to Rule 94 of the Texas Rules of Civil Procedure, Caddell raised neither issue and we do not explore what might have been if she had. See Tex. R. Civ. P. 94.

The issue of mitigation of damages is not addressed here. If Travelers is not liable under the policy of insurance due to the violation of the condition precedent to coverage, neither the amount of damages sustained nor the question of whether the damages could have been mitigated is pertinent.

We affirm the judgment.

Bailey C. Moseley

Justice

Date Submitted: January 24, 2007

Date Decided: June 1, 2007

1. The parents' claims were restricted to ancillary damages with regard to the mold issue, but are not part of this appeal.

2.

This unusual wording begs the question as to what enforcement remedies would be available to Caddell if she "asks" Travelers to reissue the check and Travelers then refuses to honor that "obligation." However, Caddell does not complain of this oddity and we do not address it.

3. Travelers's coverage under the insurance policy terminated July 19, 2002.

4. State Board of Insurance Order 23080 states the following:

As respects bodily injury liability coverage and property damage liability coverage, unless the company is prejudiced by the insured's failure to comply with the requirement, any provision of this policy requiring the insured to give notice of action, occurrence or loss, or requiring the insured to forward demands, notices, summons or other legal process, shall not bar liability under this policy.

Available at http://www.tdi.state.tx.us/company/pcck23080.html.