Court Opinion

ID: 9910034
Source: CourtListenerOpinion
Date Created: 2023-12-14 19:00:44.587459+00
Date Added: 2024-06-11T12:50:36.144987
License: Public Domain

Case: 23-40123        Document: 00517001635             Page: 1      Date Filed: 12/14/2023

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

                                                                                       FILED
                                       No. 23-40123                            December 14, 2023
                                     ____________
                                                                                     Lyle W. Cayce
   Shree Rama, LLC,                                                                       Clerk

                                                                    Plaintiff—Appellant,

                                            versus

   Mt. Hawley Insurance Company,

                                               Defendant—Appellee.
                     ______________________________

                     Appeal from the United States District Court
                         for the Southern District of Texas
                               USDC No. 1:21-CV-91
                     ______________________________

   Before Clement, Southwick, and Ho, Circuit Judges.
   Per Curiam:*
         Shree Rama, LLC owns a hotel in a city devastated by Hurricane
   Hanna in 2020. It submitted a claim for damage to its property insurer, Mt.
   Hawley Insurance Company. Mt. Hawley determined that the damage was
   caused by wear and tear, not the hurricane, and denied coverage. Shree Rama
   sued. A magistrate issued a report recommending summary judgment for
   Mt. Hawley, which the district court granted. We affirm.

         _____________________
         *
             This opinion is not designated for publication. See 5th Cir. R. 47.5.
Case: 23-40123     Document: 00517001635           Page: 2   Date Filed: 12/14/2023

                                    No. 23-40123

                                         I
          Shree Rama, LLC owns a hotel in Brownsville, Texas. The property
   is insured by Mt. Hawley Insurance Company. As relevant here, the
   insurance policy covers direct physical loss or damage to the hotel, including
   from wind. It explicitly disclaims coverage for damage from wear or tear.
          In 2019, Shree Rama submitted a claim for wind damage to the roof.
   An adjustor sent by Mt. Hawley found roof damage, but none attributable to
   wind. Instead, the adjustor traced the loss to wear and tear alone. Mt.
   Hawley, relying on the adjustor’s report, denied Shree Rama’s claim.
          Shree Rama filed another claim for roof damage in July 2020, after
   Hurricane Hanna devastated Brownsville. Mt. Hawley again sent an adjustor
   to inspect the hotel. This time, the adjustor found a minor amount of roof
   damage attributable to the hurricane. But because the amount of hurricane
   damage fell below Shree Rama’s deductible, Mt. Hawley did not issue a
   payment.    Shree Rama then commissioned its own inspection.             This
   inspection did not attribute any additional damage to Hurricane Hanna. It
   did, however, conclude that wear and tear had made the roof too brittle to
   spot repair and that it would need to be replaced in full. Shree Rama
   requested Mt. Hawley cover the cost of a new roof.
          Mt. Hawley forwarded the request to an adjustor who recognized the
   roof damage attributed to the hurricane as identical to the damage Shree
   Rama claimed in 2019. A second adjustor confirmed that Shree Rama was
   simply re-claiming damage from 2019. Because Mt. Hawley had already
   concluded that this damage came from wear and tear, not wind, it again
   denied Shree Rama’s claim.
          Believing it was entitled to a payout, Shree Rama sued Mt. Hawley in
   state court for breach of contract. Shree Rama also alleged fraud, bad faith,
   and violations of the Texas Insurance Code arising from breach. Mt. Hawley

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   removed the case to federal court and moved for summary judgment. A
   magistrate judge recommended granting Mt. Hawley’s motion, concluding
   that there were no disputes of material fact. The district court adopted the
   recommendation and closed the case.
          Shree Rama timely appealed, and we now affirm.
                                         II
          In this diversity case, we review the district court’s grant of summary
   judgment de novo. See Amerisure Mut. Ins. Co. v. Arch Specialty Ins. Co., 784
   F.3d 270, 273 (5th Cir. 2015) (citing Equal Emp. Opportunity Comm’n v.
   Chevron Phillips Chem. Co., 570 F.3d 606, 615 (5th Cir. 2009)). Summary
   judgment is warranted when, viewing the evidence in the light most favorable
   to the nonmovant, there is “no genuine dispute as to any material fact and
   the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P.
   56(a); Doe v. William Marsh Rice Univ., 67 F.4th 702, 707 (5th Cir. 2023).
                                        III
          The magistrate and district court correctly concluded that summary
   judgment was warranted for Mt. Hawley as to the breach of contract claim.
   Insurers are liable only for losses covered by an insurance policy. See Lyons
   v. Millers Cas. Ins. Co. of Tex., 866 S.W.2d 597, 601 (Tex. 1993). And under
   the concurrent causation doctrine, “[w]hen covered and excluded perils
   combine to cause an injury, the insured must present some evidence
   affording the jury a reasonable basis on which to allocate the damage.” Id.
          Shree Rama did not carry its burden under the concurrent causation
   doctrine. The policy issued by Mt. Hawley explicitly covers damage from
   wind and explicitly excludes damage from wear and tear. Viewing the facts
   in the light most favorable to Shree Rama, it is possible that some damage to
   the hotel roof came from Hurricane Hanna and some from wear and tear. But

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   the concurrent causation doctrine requires Shree Rama to provide the jury
   with “a reasonable basis” for allocating the damage between wind and wear
   and tear. See Millers, 866 S.W.2d at 601. Shree Rama provided no reasonable
   basis. To the contrary, Shree Rama admitted at the district court level that
   its causation expert “could not definitively attribute [specific damages to the
   roof] to Hurricane Hanna when deposed.” Shree Rama, LLC v. Mt. Hawley
   Ins. Co., No. 1:21-CV-00091, 2023 WL 375358, at *1 (S.D. Tex. Jan. 24,
   2023). Without a basis for allocating damages between covered and non-
   covered causes, Mt. Hawley was entitled to summary judgment.
           Shree Rama nevertheless argues that the concurrent causation
   doctrine does not apply. To support this contention, it points to two cases
   from our court where we certified to the Texas Supreme Court the question
   whether wear and tear triggers the concurrent causation doctrine. See
   Frymire Home Servs., Inc. v. Ohio Sec. Ins. Co., 12 F.4th 467, 472 (5th Cir.
   2021); Overstreet v. Allstate Vehicle & Prop. Ins. Co., 34 F.4th 496, 499 (5th
   Cir. 2022). But, as we acknowledged in Frymire, without evidence from the
   insured “suggesting that the particular covered . . . damage was the sole
   cause of the loss,” a case is “(at best) a concurrent cause case in which the
   insured ha[s] failed to attribute loss to the covered peril.” 12 F.4th at 472.
   In such cases, summary judgment is appropriate. Id. Shree Rama provided
   no evidence suggesting that Hanna was the sole cause of damage to the hotel
   roof. Nor could it. Shree Rama had filed an insurance claim for the same
   roof damage one year before the storm. As noted above, Shree Rama’s expert
   even testified that he could not definitively designate the storm the sole cause
   of damage.1

           _____________________
           1
           Shree Rama briefly renews its argument that Mt. Hawley’s first inspection report,
   which found a small amount of damage attributable to Hanna, provides the reasonable
   basis. An insurer may determine the source of some damage, only for a later report to

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                                           No. 23-40123

           Given the lack of evidence suggesting Hurricane Hanna was the sole
   cause of any damage to the hotel roof, the district court correctly concluded
   that Shree Rama had not met its burden to allocate damages between covered
   and non-covered causes and granted summary judgment to Mt. Hawley
   accordingly.
                                                IV
           The district court also correctly granted summary judgment to Mt.
   Hawley on Shree Rama’s remaining claims. “When the issue of coverage is
   resolved in the insurer’s favor, extra-contractual claims do not survive.”
   State Farm Lloyds v. Page, 315 S.W.3d 525, 532 (Tex. 2010); see also USAA
   Tex. Lloyds Co. v. Menchaca, 545 S.W.3d 479, 490 (Tex. 2018) (“The general
   rule is that an insured cannot recover policy benefits for an insurer’s statutory
   violation if the insured does not have a right to those benefits under the
   policy.”). Insurers can “commit some act, so extreme, that would cause
   injury independent of the policy claim,” id. at 499 (quoting Republic Ins. Co.
   v. Stoker, 903 S.W.2d 338, 341 (Tex. 1995)), but no act alleged by Shree Rama
   is so extreme.
           Finally, although a fraud claim may survive independent of a claim for
   breach of contract or right to receive benefits, Shree Rama has not provided
   evidence indicating that Mt. Hawley acted knowingly or recklessly. See
   Zorrilla v. Aypco Constr. II, LLC, 469 S.W.3d 143, 153 (Tex. 2015) (“A
   common-law fraud claim requires a material misrepresentation, which was
   false, and which was either known to be false when made or was asserted

           _____________________
   discredit that determination. When that happens, as it did here, the initial determination
   will not provide a sufficient basis for allocating damages. See Certain Underwriters at Lloyd’s
   of London v. Lowen Valley View, L.L.C., 892 F.3d 167, 171–72 (5th Cir. 2018).

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   without knowledge of its truth.”) (internal quotation marks omitted).
   Summary judgment was thus proper.
                                       V
         For the foregoing reasons, we affirm.

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