Court Opinion

ID: 5141389
Source: CourtListenerOpinion
Date Created: 2021-12-29 19:00:44.162028+00
Date Added: 2024-06-11T08:24:28.892234
License: Public Domain

Case: 21-10424     Document: 00516148082         Page: 1     Date Filed: 12/29/2021

              United States Court of Appeals
                   for the Fifth Circuit                          United States Court of Appeals
                                                                           Fifth Circuit

                                                                         FILED
                                                                 December 29, 2021
                                  No. 21-10424
                                Summary Calendar                    Lyle W. Cayce
                                                                         Clerk

   Methodist Hospitals of Dallas, doing business as
   Methodist Health System,

                                                           Plaintiff—Appellant,

                                       versus

   Affiliated FM Insurance Company,

                                                           Defendant—Appellee.

                  Appeal from the United States District Court
                      for the Northern District of Texas
                           USDC No. 3:20-CV-1504

   Before King, Costa, and Ho, Circuit Judges.
   Per Curiam:*
          This insurance dispute arose after Methodist Hospitals of Dallas
   (“Methodist”) lost $8 million in sterile medical supplies. The loss occurred
   after a thunderstorm cut off the power at a Methodist hospital, which in turn

          *
            Pursuant to 5th Circuit Rule 47.5, the court has determined that this
   opinion should not be published and is not precedent except under the limited
   circumstances set forth in 5th Circuit Rule 47.5.4.
Case: 21-10424      Document: 00516148082           Page: 2    Date Filed: 12/29/2021

                                     No. 21-10424

   caused two of the hospital’s chiller units to shut down. The resulting rise in
   temperature and humidity rendered certain medical supplies unfit for use.
          Methodist filed a claim with Affiliated FM Insurance Co. (“AFM”)
   for the damaged supplies. Under the insurance policy, AFM covered “all
   risks of physical loss or damage” to the hospital’s property, subject to certain
   exclusions. Among those exclusions: losses caused by or resulting from
   changes in temperature or humidity. AFM invoked this exclusion and denied
   Methodist’s claim. Methodist then sued, arguing that the exclusion applies
   only if a change in temperature or humidity is the sole cause of the loss, rather
   than one of several causes in a chain of events.
          The district court, sitting in diversity, granted AFM’s motion for
   summary judgment. In doing so, the court noted that Texas follows the
   concurrent-causation doctrine when covered and non-covered perils
   combine to cause a loss.       Under that doctrine, a policy exclusion is
   triggered—and the insurer owes nothing—when the covered and non-
   covered perils cannot be separated into independent causes. Dillon Gage, Inc.
   of Dallas v. Certain Underwriters at Lloyds Subscribing to Policy No. EE1701590,
   992 F.3d 401, 405 (5th Cir. 2021).
          Here, the covered and non-covered perils were interdependent—a
   storm caused the power surge, the power surge caused the chillers to shut
   down, and the disabled chillers caused the temperature and humidity to rise.
   The district court thus held that the concurrent-causation doctrine bars
   recovery. We affirm.
          On appeal, Methodist argues that the concurrent-causation doctrine
   does not apply, and it asks us to certify the question to the Texas Supreme
   Court. In Methodist’s view, Texas law is unsettled on whether the doctrine
   applies to an all-risk insurance policy like the one here. But the Texas
   Supreme Court has discussed concurrent causation in the context of all-risk

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Case: 21-10424        Document: 00516148082              Page: 3       Date Filed: 12/29/2021

                                          No. 21-10424

   policies. See JAW The Pointe, L.L.C. v. Lexington Ins. Co., 460 S.W.3d 597,
   608 (Tex. 2015); Dillon Gage, Inc. of Dallas v. Certain Underwriters at Lloyds
   Subscribing to Policy No. EE1701590, No. 21-0312, _ S.W.3d _, 2021 WL
   5750553, at *4 (Tex. Dec. 3, 2021). Texas appellate courts have likewise
   applied the doctrine to such policies. See All Saints Catholic Church v. United
   Nat’l Ins. Co., 257 S.W.3d 800, 802–04 (Tex.App.—Dallas 2008, no pet.);
   Wallis v. United Servs. Auto. Ass’n, 2 S.W.3d 300, 302–03 (Tex.App.—San
   Antonio 1999, pet. denied). And so have we. See Seahawk Liquidating
   Trust v. Certain Underwriters at Lloyds London, 810 F.3d 986, 994–96 (5th Cir.
   2016) (explaining that the concurrent-causation doctrine is a default rule
   under Texas law that “applies whenever a policy delineates covered and
   excluded perils and such perils combine to cause a loss”).
           Accordingly, this case does not present an unsettled question of state
   law meriting certification. We hold that the concurrent-causation doctrine
   applies, and under that doctrine, the temperature/humidity exclusion bars
   recovery, because the other events in the causal chain did not independently
   harm Methodist’s medical supplies. 1
           Affirmed.

           1
             A central theme of Methodist’s brief is that we would nullify the structure of the
   insurance policy by applying the concurrent-causation doctrine to the
   temperature/humidity exclusion. That is because the policy has another group of
   exclusions subject to an anti-concurrent-causation clause, and according to Methodist, this
   clause would be superfluous if we apply the default rule of concurrent causation elsewhere
   in the policy. Not so. As the name suggests, an anti-concurrent-causation clause displaces
   the default rule of concurrent causation where the clause applies. See JAW The Pointe, 460
   S.W.3d at 608. And here, the clause applies to one set of exclusions, but not to the
   temperature/humidity exclusion.

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