the court the central issue in this appeal is the interpretation of a building ordinance or law rider in a state farm homeowners policy the rider provides that state farm will pay for legally required changes caused by enforcement of an ordinance or law that is in effect at the time of the loss mr tony lives in south texas and his dog go county and city of mission storm in march of two thousand and twelve damages his damages his would shake roof he files a claim state farm and here unable to agree on the amount of the loss he invokes appraisal november of two thousand and twelve we get an appraisal of war for approximately sixty seven thousand state farm pays the award but withholds approximately nine thousand that was allocated by the appraisers for the replacement of the decking underneath the would shake roof with solid decking pursuant to the i c c state farm since mr tony a letter that is very important because it contradicts what state farm is now claiming the b o l rider means in other words state farm is now said in the district court in the district court agreed and is arguing to this court that because the city of mission never denied a building permit to mr tony or sanctioned him for having a non compliant roof there was no enforcement of any building ordinance or law against him and therefore the b o b o l rider does not bring the decking within coverage but in november of two thousand and twelve after the appraisal award was issued state farm since mr tony a letter saying here's your payment we're withholding nine thousand dollars and then explained that they're withholding nine thousand dollars because they are continuing to investigate the decking requirements for replacement of would shake roofs under the mission code of ordinances so in other words in november of two thousand and twelve state farm is investigating what's currently affect what was in effect at the time of the l the letter appears to indicate that that that's exactly what they're looking at it doesn't say we're not paying for your decking because you haven't applied for a building permit and been denied it doesn't say we're not paying for your decking because the city hasn't sanctioned you for having a non compliant roof it simply says we're looking into what the requirements are and if in force that means what they now say that it means there would have been no investigation necessary because that was readily apparent that there had been no building permit denial there had been no affirmative action taken by the city against mr tony but that's not what they say that now they say that there was some sort of affirmative action required against mr tony what do we know about what was required at the time of the loss well we don't know if mr tony had walked into the city of mission on the day of loss or on the day after the last and said i'm applying for a building permit we don't know what the city of mission was said because as a practical matter that's not how it works the way it works is you file your claim your insurance company pays and then you go get your building permit but in this case state farm didn't pay so mr tony never had an opportunity to go to the city and apply for a building permit and be denied their interpretation of the policy simply puts an onus on the insured is not supported by the policy it says you don't get coverage unless you go and have some affirmative action taken against you and it raises the question what if mr tony had gone and gotten had a boat building permit denied with state farm then be able to say well you should've applied for a variance we don't know if the code was being enforced against your op because you didn't apply for a variance or if you did apply for a variance and it was denied why didn't you file an appeal so that's just simply not a reasonable construction of the policy and what we know about what was in effect at the time is that the city says as of october twenty fourth two thousand and twelve right before the appraisal award is issued they say the city of mission texas requires diaphragm bracing for all wood frame construction as per the i r c minimum what exactly would have happened had mr tony walked into the city in march of two thousand and twelve the day after the storm we have another letter from the city from the same individual of the city dated january that says well now we're we're tracting what we said in our october letter and now we're no longer requiring plywood decking solid plywood decking on a roof state farm i mean that's what they rely on that's  the basis for their a now for they say for their denial of coverage under the b l l rider but the problem is that tells us what the city of mission was doing in january two thousand and thirteen and that's not the question  we know that is certainly in january two thousand and thirteen perhaps they want requiring solid decking but the letter explicitly says that we are retracting our prior letter we're changing our prior position they do a one eighty that there is not a fact question because there is only one reasonable interpretation of the policy alternatively though at best the policy is ambiguous if there is more than one reasonable construction whether it's state farm's that there has to be some affirmative action  or toni's that the question is simply what was there at the time of the loss and what was being done at the time of the loss let me just play devil's advocate for saying is it the possible language to talks about in force moment and the laws in effect at the time  the law that it was being enforced on the date of the laws well we have other than the letter we have a declaration from a roofer who has received hundreds replaced out from the city from the city what what letter what the letter sa exactly that says the city is going to enforce this we don't have a letter from the city because we've never applied for a permit but what evidence is there from the city that or anybody else that they were the city was actually enforcing that law on the date what we the best evidence that we have is the october the october twentieth out using the october two thousand and twelve letter that's the best evidence we have because we're we're simply not going to know what would have happened if mr tony had walked in in march and asked for a building permit we have the letter from the city we also have the declaration of mr i'm sorry his name just escaped me we also have the declaration mr black i was thinking blake mr black we also have the declaration mr black and the district court found that that was conclusory that i disagree with that conclusion i don't believe it i'm clearly that's that's a big standard credo overcome  i don't understand why that was not some evidence well and i believe also that even if you look at the portion of mr black's declaration that that is purported to be a legal conclusion where he says the city was enforcing it at the time there are still other facts within the declaration that are clearly within his personal knowledge that would be some evidence that could lead a reasonable fact finder to believe that the city was enforcing the requirement at the time of the loss he says he did hundreds of as a result of that storm and that he didn't recall installing a single one without solid plywood deck and now while that that is certainly not the city of mission saying we were enforcing it on that day and we would have enforced it against you but it is some evidence that even if the even if the court found that his legal claim that his conclusion that it was being inforced was and inadmissible legal conclusion that still some evidence from his declaration that could lead a reasonable jury to believe that there was and for of that because that's his business to be formed of that and i agree judge l ron and i believe that's it that's exactly what is what is that his declaration says i think that perhaps you know perhaps the court and state farm were somewhat hung up on his use of the word enforcing because we were looking at his attire as a term of art in the b o r right or he uses the term enforcing and i think they have in the court certainly looked at that as a legal conclusion i don't believe it's a legal conclusion i think that his personal knowledge is well laid out in his declaration and it's certainly reasonable that as a roofer who's been working in that area for a number of years and deals with the city on these issues all the time that he would know that but state farm appears to argue that even assuming that the corps had admitted that affidavit or had considered did the affidavit or the declaration state farm seems to contin that it still wouldn't matter because there was no affirmative enforcement and that's simply not a realistic view of the policy mean state farm that they talk about mr tony not being entitle to a windfall will state farm is not entitled to a windfall when they don't pay a claim for six months and then the law changes are there some change in the enforcement why should state farm be entitled to the windfall of not having paid the claim in a timely manner manner all during the appraisal process this was not an issue right correct because there was no there was no award they had declined coverage at that time they weren't there was no indication that you needed to be gathering information contemporaneous no there was not we are our client invoked appraisal actually in this case our client invoked appraisal i believe the process took around three or four months and then when the award comes the letter from state farm certainly appears to contradict what their position is now because at the time they acknowledge that what they're looking into is what the requirement is and the case law is clear and they've cited in their brief in the st luke's case that the court points out because there's some disagreement between our position and state farm's position about exactly what the r c says but the question according to the st luke's opinion is not what the code says but what the city was actually doing local were they actually carrying out and we believe the evidence shows that they were that they were enforcing the solid decking requirement there is no evidence to the contrary and while i do believe that it's conclusive that there is only one reasonable interpretation of the contract and that the evidence is conclusive that it was being enforced in the alternative if the court finds that that there were more than is more than one reasonable conclusion that certainly leaves a fact issue it may doesn't entitle tony what the city was doing generally at the time of the last there's still a fact issue we have the evidence for mr black we have the declaration from mr black that talks about his experience with the city during that time period and while not conclusive that is at least some evidence that could lead a reasonable jury to believe that there was some enforcement or that there would have been an forsman had he applied for a permit and i think as a practical matter the way that this b l rider often comes into play is you have a claim they pay the claim you're making your repairs and the city comes in and says oh here's this you got to do these code upgrades or we have this ordinance that requires you to do something different you've got a state farm and state farm says ok well since this is being enforced against you here's what your policy covers here's the extent to which we cover it we didn't have a chance to do that here because he never was able to make an application because they didn't pay the claim and it just cannot be the law that in order to trigger coverage under the insurance policy the insured has to go take the affirmative act either of applying for a building permit when they have no when they don't have the funds to actually do the project and be denied apply for a non compliant building permit and be denied or somehow make noncompliant repairs and wait for the city to sanction them it's simply not realistic and it's not supported by the policy it puts a requirement on the insured that's simply not there and i would submit to the court that if the shoe were on the other foot and this were more like to be a properties case where the requirement was not in the in the in effect at the time of the loss they were in requirements that were enacted subsequent to the loss and in that case the court said you look at replacement cost at the time of the loss not what happens later you look at the replacement cost at the time of the loss and what was in effect at the time of the loss i submit to you if there had been additional requirements that had been put on that had been enacted in between that storm and appraisal and one state farm today that state farm would be here saying will those morning affect at the time of the loss and here's what the policy says it says they have to be in effect at the time of the loss thank you my name's robert on here on behalf of state farm the tonys are or are focused exclusively on the enforcement term of the building ordinance or low rider that's not the only requirement to trigger coverage under the the organiser law writer they have to establish that there is a legally required change to an undamaged portion of the dwelling that's caused by the  the of an ordinance and that that ordinance is in effect at the time of the loss there is no evidence of causation in this case the tonys did not install solid decking and they can't show that the city mission ever required them to do so so even if you would even assuming there was and would be enforce  well actually let me step back once for the policy generally covers the cost to repair or replace a dwelling with a similar construction so that would be a replacement of the what mr black says is that in two thousand and twelve the city was in foreseen generally an ordinance that required solid decking and he says that he installed so all the decking on and on each of his roofs but he has no he says nothing as to what the city required mr tony to do and there was there's no evidence that the city required the tellings to do to do anything why are you saying that that he would he would have to go all the way through in trying to get a variance in you know agel with the with the city and if you didn't do that then you can't say a with the city would require i think no what i'm saying is that if you look at the facts of this case it retract our earlier statement if so i thought i would say that's actually some evidence that the city had the contrary position rather than some evidence that the city all along didn't require you don't retract an earlier position if it's well it's this the statement of the refers to the rivers understanding of what the city requires there's there's no evidence in the record that the city actually did require that well isn't that consistent with them retracting their position that is some circumstantial evidence that they had the opposite position so i don't disagree that there's no evidence in the record well that the if you look at the october two thousand and twelve letter that the city issued it it doesn't speak specifically to the roofing projects and it's consistent with the the january letter when and that it's when it speaks to new construction that certainly new there was an actual enforcement was as a legal question whether there was some facts showing that the city was in forcing at the relevant time that's the question at issue here well that's that's one that's one question that the other question is whether there that upgrade to solid decking and a roof in situation that the ordinance doesn't speak to it the city now says we agree there's no requirement to upgrade to solid she thinks so if that's the case then the the ordinance writer is never triggered in the first  certainly that some would have to go back our position in the trial court was that since there was no breach of contract there is no independent injury from for any extra contractual issues and so we went on and opened all claims we also moved for summary judgment the misrepresentation claims we said we said we were but our statement was that we are investigating investigating whether the city admission requires an upgrade of solid deck in the city of michigan after we said that the city admissions as we don't require we don't require an upgrade so there was never i think that i think that it would go back concerned different policy language and also a different factual situation and be a property's there was a hurricane in the virgin islands with which damaged after that hurricane hit the hotel the virgin islands passed a new ordinance that required various upgrades to the hotel and the insurer denied coverage for the cost of the upgrades because they said that the the ordinance was came into effect after after the hurricane the the court there in my opinion properly said that when the ordinance is it comes into effect after the loss that there is no coverage under the ordinance writer and you see that in the policy language as at issue there which says the policy covers replacement cost at the time and place of loss whether or not a building is rebuilt or replaced including the increased cost occasioned by the enforcement of a city ordinance so all that they were looking at n b a properties was the time of the was that's not what state farm's policy requires in state farm's policy again want to legally require changes caused by the enforcement but then the policy also provides that we will not pay the increased cost of construction under this coverage until the dwelling is actually repaired or replaced so that the policy contemplates that it will only pay the increased cost of construction that is actually performed again this is going back to the causation issue that we discussed earlier but here since there was there was no upgrade performed there the coverage is not triggered and i'd also like to address something else that miss ray brought up which she seemed to suggest or the way that i heard it was that state farm is waived it's an enforcement argument because it didn't it didn't specifically state it was investigating whether there was in force meant in its november two thousand and twelve letter the november two thousand and twelve letter said there's a coverage question regarding the ordinance or law coverage cites the entire it's states the entire  provision and says state farm's investigating whether any upgrade is required under the city missions law it's the case under texas law that even if you assume that's a waiver that a waiver can't create coverage under insurance policy that said i don't think that there is a waiver because what state farm said is there's a coverage question as to this ordinance to that that would mean that when we come to court later you would have to establish each element of of coverage under that provision is it your position enforcement must be directed specifically at the policyholder i think that's correct and your basis for that is what it's the policy language itself it says that we will only pay for legally required changes to the undamaged portion of the dwelling caused by the enforcement of a building ordinance so if we only pay for changes that are caused by enforcement that would specifically require that some unfortunate go to the the insured itself and here there there was no enforcement they they didn't they the city hasn't required them to to do anything what would be so so in effect you would require them to get tagged on their job or regain some kind of letter that well if you go forward we'll hold you you know will sanction fine you with hundred dollars a day or whatever it is well i think what the city with any other say ok go ahead and if they did that then there's no coverage issue because there's no required upgrade or it would say no we are requiring you to the to install the solid she thing them you're required to do this i think that would be an enforcement is the city the site looks opinion seems to be somewhat stingier than that the st luke's opinion is somewhat stingy i would agree with that with no positive action with a hospital sanction actually perceive you going out defying the city in a word they're not dealing with a city warner here but right actually in the institution and getting sanctioned risking that in order to contractual damages it's significantly higher believe it it's something over one hundred thousand to be honest your honor i'm not i'm not positive what they are i believe they're that they were just bad faith damages and bad faith but that's not been something that i've been focused on to go back to gerard to your question about st luke's that what happened in that case is the i can't but it was a believe it was this i'm not sure if it was a city but that there were two letters issued to the hospital that said state law requires that you bring your electrical system up to up to up to code judge you said it is just because you get a letter that says you bring your system up to code that doesn't constitute enforcement because enforcing means that there's some act compelling you to bring the system up to code that's forwarded different though than what you just said because you said getting a letter saying that you can't do this you need to do something else would be enough well what i similar to the letter that you said wasn't good enough but what i said was that if you applied for a permit in the cities the city rejects your permit and says we are requiring you to to install solid she thing then i think i think at that point there is an enforcement because you know of that you are not going to be permitted to reinstall your roof as it is on the specie thing that's not what happened in st luke's because all they got was a general letter saying the electrical system has to perform up to code similarly here all there is is a general letter saying that the city mission requires diaphragm bracing and it i mean in st luke's we do it does seem much more specific than what we have in this case and perhaps st luke's perhaps that wasn't in foresman in st luke's judge hughes found that it was and i mean it's not it's not particularly relevant to this court because judges judge whose opinions obviously not winding on you but that's not what we have in this case  l we have is a general letter saying that the city requires diaphragm bracing for wood construction and then it says later that our code doesn't require solid she thing on every roof in project so again i think would say that there is no there is no evidence i don't think that that is evidence of enforcement i don't think there is any evidence of a legally required change because there's there's no evidence in the record that says the ordinance requires solid cheating and again i don't think there's any evidence of causation because there's there's no evidence that the city required the police court the reason that the townies did not install solid decking on their new roof is that they couldn't go back with a would shake roof because they couldn't afford to because state farm didn't pay the complete appraisal award they went back with a cheaper composition raise that does not require solid decking under the city's code certainly as mr owen acknowledged had state farm paid for the solid decking of course they would have installed it but that is that matter if the contract term  only it's actually done or installed you do you have a problem with the contract well i don't i don't think the contract says that i believe actually in the b a properties case the contract did say that said regardless of whether it's done or it's not did say that explicitly that they're entitled to coverage for the upgrades regardless of whether or not the work is done we don't have that here we didn't have an opportunity to see whether the work would be done or not because they simply didn't pay it was adequate to support it presumably yes the composition roof under the city code does not require solid decking and there's no there's no dispute about that at all about what the code says about that but you know we can affirm on any ground and what about the ground that the i r c itself doesn't require it and we should just stop there well if you look at judge his opinion in st lukes he says in that case and other cases say you look at when you're looking at the enforcement you look not at what the code actually says but that what the city is doing at the time now but i thought you have to go you have to prove both things you have to improve force meant and you have to improve prove that it's the that the law requires it under this particular insurance contract actually i believe that the judge is huge judge his comment was in discussing what is legally required and he says you look to what the city is actually doing or what the governing body is actually doing not to what the contract at the ordinance says seeming that that's not persuasive authority just for the sake of argument why wouldn't we look at the terms of the c and say does it require this or not is a first principle decide whether it's legally required and if it's not legally required then why wouldn't you lose well because what matters is what the city was doing at the time what was he entitled to at the time under the regulations that were in effect and being enforced however the city was it was enforcing them at the time of the loss i thought it's have to both be legally required and caused subject to interpretation and legally required is whatever the city says it is when somebody goes to apply for a permit were any evidence that anybody was denied a permit to just replace  never applied for one because him anybody i don't in this case know i don't have any we don't have any evidence of other individuals being denied to address have evidence of other individuals putting in great absolutely yes we yes we have other we have evidence of other people putting in the upgrade hundreds of other people putting in the upgrade to address briefly judge l rods question about sending the whole case back if we send the contract claim back we have to send the whole case back if the court finds that they wrongfully withheld the payment for the decking or there's a fact question about whether or not they wrongfully withheld the payment for decking goes back to the core they don't have the a stop a defense on the breach of contract claim that keeps the extra contractual claims alive and the prompt pay claim regardless goes back there's a recent decision from judge i believe from judge boyle the graybar case out of the northern district where she says that it goes back even if they do pay the appraisal ward prompt pay goes back because it's punitive in nature and it's intended the fact that they might have paid it later doesn't release them from the statutory interest there well i'm failure to complete a resolution of the investigation and their failure to provide coverage but under a lot has to be something more than just failure to comply well that's if that's for extreme conduct and though the law generally i mean we would contend that the line of cases that says that you have to have a breach of contract in order to have bad faith in it i think the texas supreme court is about to consider it we would contend and there are some intermediate court opinions that agree with us that you don't have to have a breach of contract those cases that hold that deal with cases where there is found to be no coverage where you're not talking about a covered claim that's the rule to which the extreme conduct exception applies and the corpus christi court of appeals has explicitly addressed that question within the last year and i believe that's what the texas supreme court is about to take up so i guess we'll see where they come out on that but we would contend that it goes backward guard less they have a statutory duty to perform a reasonable investigation and to pay all damages that are reasonable investigation would have discovered we would contend that they did not perform a reasonable investigation because had they performed a reasonable investigation they would have paid all the damages in the first instance they would pay the damages that were owed under the policy in the first instance that's a do that separate apart and apart from the duty and the inch from any duty of good faith in the insurance