Court Opinion

ID: 4686743
Source: CourtListenerOpinion
Date Created: 2021-05-14 00:00:35.038368+00
Date Added: 2024-06-11T08:04:35.461193
License: Public Domain

Case: 20-20507     Document: 00515861400         Page: 1     Date Filed: 05/13/2021

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

                                                                            FILED
                                                                        May 13, 2021
                                  No. 20-20507
                                                                       Lyle W. Cayce
                                                                            Clerk
   Beatrice Stewart,

                                                           Plaintiff—Appellant,

                                       versus

   Metropolitan Lloyds Insurance Company of Texas,

                                                           Defendant—Appellee.

                  Appeal from the United States District Court
                      for the Southern District of Texas
                           USDC No. 4:19-CV-5008

   Before Jones, Costa, and Duncan, Circuit Judges.
   Per Curiam:*
          Beatrice Stewart filed an insurance claim after observing damage to
   her walls and floors. She says that her policy covers this damage; her insurer
   disagrees. To determine who is right, we must decide whether Stewart
   experienced an “entire collapse” of part of her home.

          *
            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   opinion should not be published and is not precedent except under the limited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: 20-20507         Document: 00515861400                Page: 2        Date Filed: 05/13/2021

                                           No. 20-20507

                                                  I.
            One evening in late 2017 or early 2018, Stewart was awakened by “a
   loud bang” that shook her house, as if “a bomb had gone off in the
   neighborhood.” The next morning, she noticed the damage to her home:
   cracked sheetrock and sunken floors. A few days later, she cut a hole through
   her floor and discovered that a couple of joists below her subfloor had broken
   and fallen away. After performing some short-term repairs, Stewart filed a
   claim with her home insurer Metropolitan Lloyds Insurance Company of
   Texas.
            Both Stewart and Metropolitan engaged experts to review the
   damage. Metropolitan hired Donan Engineering, which found “broken and
   deteriorated floor joists, deteriorated floor decking, walls not plumb, and
   gaps in the wall-to-ceiling interface.” By the time of the inspection, Stewart
   had already “removed and replaced the soft subfloor decking and reinforced
   the floor joist.” The Donan report also described “insect tunnels in the
   subfloor decking and floor joists,” as well as “no vapor barrier above the soil
   under the house.” 1 It concluded that “rot [in the] floor joists and subfloor
   decking [were] caused by a combination of termite damage and exposure to
   moisture over the lifespan of the structure,” resulting in the broken floor
   joists and unlevel floor. Stewart’s own expert, Pfister Pier & Beam Leveling,
   agreed with Donan that “termite damage and wood rot was the cause of the
   foundation collapse/failure.”

            1
               Vapor barriers are meant to prevent the build-up of moisture inside floors and
   walls, which can damage a home’s structure. See Moisture Control: Utilizing Vapor
   Retarders, N. Am. Insulation Mfg. Ass’n, https://insulationinstitute.org/im-a-building-
   or-facility-professional/residential/installation-guidance-2/moisture-management/vapor-retarders/
   (last visited May 7, 2021).

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                                    No. 20-20507

          The inspectors took numerous photos that are part of the record. We
   use just one (which includes markings made by Donan Engineering) to give a
   sense of the damage:

          Metropolitan denied Stewart’s claim, determining based on the
   Donan report that her policy did not cover the damage. Stewart then sued
   for breach of contract in Texas state court. She also brought several other
   claims: breach of the duty of good faith and fair dealing, state insurance code
   violations, and violations of the Texas Deceptive Trade Practices and
   Consumer Protection Act.
          Metropolitan removed the case to federal court and moved for
   summary judgment on all claims. Stewart sought partial summary judgment
   on her breach of contract claim. The district court concluded that Stewart’s
   policy did not cover the damage because she did not experience a collapse at
   all, much less an “entire collapse,” as the policy required. And because
   Stewart’s bad-faith and statutory claims could not go forward “without

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                                    No. 20-20507

   coverage or a contract breach,” the district court granted Metropolitan’s
   motion and dismissed the case with prejudice.
                                         II.
          This court reviews the district court’s grant of summary judgment de
   novo. Lawyers Title Ins. Corp. v. Doubletree Partners, L.P., 739 F.3d 848, 856
   (5th Cir. 2014). Summary judgment is proper when, viewing the evidence in
   the light most favorable to the nonmoving party, “the movant shows that
   there is no genuine dispute as to any material fact and the movant is entitled
   to judgment as a matter of law.” Id. (quoting Fed. R. Civ. P. 56(a)).
                                         A.
          Texas law governs this insurance dispute. See Lawyers Title Ins., 739
   F.3d at 856. Under Texas law, insurance contracts are subject to “the same
   rules of construction that apply to contracts generally.” Don’s Bldg. Supply,
   Inc. v. OneBeacon Ins. Co., 267 S.W.3d 20, 23 (Tex. 2008). The policy’s
   “words and phrases . . . should be given their plain and ordinary meaning.”
   Aggreko, L.L.C. v. Chartis Specialty Ins. Co., 942 F.3d 682, 688 (5th Cir.
   2019). “An interpretation that gives each word meaning is preferable to one
   that renders one surplusage.” U.S. Metals, Inc. v. Liberty Mut. Grp., Inc., 490
   S.W.3d 20, 23–24 (Tex. 2015). If a contract is unambiguous, it will be
   enforced as written. Don’s Bldg. Supply, 267 S.W.3d at 23. A contract is not
   ambiguous, though, just because the parties disagree about the scope of its
   coverage. ACE Am. Ins. Co. v. Freeport Welding & Fabricating, Inc., 699 F.3d
   832, 842 (5th Cir. 2012). Only when “a contract is susceptible to more than
   one reasonable interpretation” must the court “resolve any ambiguity in
   favor of coverage.” Don’s Bldg. Supply, 267 S.W.3d at 23. As the insured,
   Stewart bears the initial burden of proving that her policy covers the damage.
   Guar. Nat’l Ins. Co. v. Vic Mfg. Co., 143 F.3d 192, 193 (5th Cir. 1998).

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                                      No. 20-20507

          The dispute hinges on whether Stewart’s losses fall under the policy’s
   provision covering damage involving an “entire collapse.” The policy
   defines collapse as “an abrupt falling down or caving in of a building or any
   part of a building.” This definition excludes “settling, cracking, sagging,
   bowing, bending, leaning, shrinking, bulging, or expansion” as well as the
   mere “danger of falling down or caving in.”
          Stewart’s policy does not, however, cover every collapse.
   Metropolitan “will pay for sudden and accidental direct physical loss to
   covered property involving the entire collapse of a building or any part of a
   building caused only by one or more” specified causes, which include
   “hidden decay of the structure” and “hidden insect or hidden vermin
   damage.” 2     No other damage resulting from collapse is covered.
   Additionally, “[l]oss to . . . foundation” is excluded from coverage “unless
   the loss is a direct result of the collapse of a building.”
          In sum, Stewart’s losses are only covered if (1) they involved an
   “entire collapse” of all or part of a building, (2) that collapse was solely
   caused by an enumerated peril such as hidden structural decay or insect
   damage, and (3) any damage to Stewart’s foundation was directly attributable
   to “the collapse of a building.” Unfortunately for Stewart, she cannot meet
   her burden under the first requirement because no “entire collapse”
   occurred.
                                           B.
          While Stewart’s policy defines “collapse,” it does not separately
   explain what it means by “entire collapse.” The word “entire,” however,
   should not be read out of Stewart’s policy. See U.S. Metals, 490 S.W.3d at

          2
             The collapse provisions are central to this case because Stewart’s policy
   otherwise excludes coverage for damage caused by “wear and tear” or “insects.”

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                                    No. 20-20507

   23–24 (expressing preference against surplusage). It should instead be given
   effect according to its plain meaning. Aggreko, 942 F.3d at 688.
          “Entire” means “with no element or part excepted” or “complete in
   degree.”      Entire, Webster’s Third New International
   Dictionary (2002); see also Entire, Black’s Law Dictionary (9th
   ed. 2009) (“Whole; complete in all its parts.”). Courts from California to
   Connecticut interpreting similar insurance provisions have therefore held
   that an “entire collapse” unambiguously refers to a collapse that is total or
   complete. See, e.g., Jordan v. Allstate Ins. Co., 11 Cal. Rptr. 3d 169, 181 (Ct.
   App. 2004) (“For a building or a portion thereof to sustain an ‘entire
   collapse’ must mean that it has entirely collapsed, that is ‘wholly,’
   ‘completely,’ or ‘fully.’” (citing Entirely, Webster’s Third New
   International Dictionary (1966)); Agosti v. Merrimack Mut. Fire
   Ins. Co., 279 F. Supp. 3d 370, 379 (D. Conn. 2017) (same).
          Whether a structure has “entirely” collapsed depends on the extent
   to which it has fallen down or caved in. A structure merely in danger of future
   collapse has not yet fallen down or caved in at all, so it has not suffered an
   entire collapse. Jordan, 11 Cal. Rptr. 3d at 181 (“It seems self-evident that
   the policy’s use of the term ‘entire’ collapse necessarily must refer to an
   actual, not an imminent collapse.”); Agosti, 279 F. Supp. 3d at 378–79
   (“[T]he gradual deterioration of the basement walls cannot yet be
   characterized as an ‘entire collapse.’”). An entire collapse must also go
   beyond the deterioration of just one small piece of a larger structural
   component. See Ass’n of Unit Owners of Nestani v. State Farm Fire & Cas. Co.,
   670 F. Supp. 2d 1156, 1161–64 (D. Or. 2009) (holding that decay of “stud
   ends [or] four-by-four bottom plates” did not amount to “the collapse of an
   entire structural member”). A contrary interpretation “would render the
   term ‘entire’ meaningless.” Id. at 1164.

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                                    No. 20-20507

          The damage Stewart describes does not rise to level of an entire
   collapse. She contends that part of her home entirely collapsed because the
   floor “caved in.” She points to her testimony that in the days after hearing
   a loud bang, she found that her floors were sunken, joists beneath her subfloor
   had broken and fallen away, and the frame underneath her home sat several
   feet lower than before. But the undisputed evidence shows that the floor did
   not entirely cave in. While the floor was “unlevel,” Stewart continued to
   live in her house and walk its hallways after the damage occurred. As the
   district court noted, there was “no hole or gap in the floor” until Stewart cut
   into it herself. Though the floor sagged, “sagging” is one of those gerunds
   excluded from her policy’s definition of collapse.
          Stewart relies on an Illinois state court decision to support her
   argument that she experienced a covered collapse. In Gulino v. Economy Fire
   & Casualty Co., a portion of the insured’s basement ceiling sagged eight
   inches, disabling the heating system and damaging pipes. 971 N.E.2d 522,
   525–28 (Ill. Ct. App. 2012). Much like Stewart’s policy, the insurance
   agreement in Gulino covered “the entire collapse of a building or any part of
   a building,” defining “collapse” as “an abrupt falling down or caving in of a
   building or part of a building,” and excluding “settling, cracking, sagging,
   [and] bowing,” among other things. Id. at 524. Still, the Gulino court found
   that “a portion of the basement ceiling did cave in,” providing the insured
   with coverage even though “the facts undeniably show[ed] that [his] house
   or any part of it had not completely fallen down.” Id. at 528. But the Gulino
   court never analyzed whether an entire collapse occurred; it instead leapt
   from the determination that the insured experienced a cave-in to the

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                                      No. 20-20507

   conclusion that there was a covered collapse. 3 We are not, therefore,
   convinced that Gulino sheds light on how this court must interpret the
   “entire collapse” language of Stewart’s policy.
          The conclusion that Stewart urges us to draw from Gulino fares no
   better. She argues that her policy covers her damage even though there was
   “something less than a complete falling down” because it involved the
   undermining of her home’s structure. Gulino, 971 N.E.2d at 528. This
   reading of her policy, however, overlooks the word “entire.” When the word
   “entire” is missing from an insurance agreement, courts may find coverage
   for only partial collapses because the policy is “not written in terms of how
   far a building must fall down or to what degree a building must cave in to
   constitute collapse.” See, e.g., Malbco Holdings, LLC v. AMCO Ins. Co., 629
   F. Supp. 2d 1185, 1196 (D. Or. 2009). Here, by contrast, the extent to which
   part of Stewart’s home has fallen down (or caved in) is the whole ball game—
   it must have suffered an entire collapse. “Something less than a complete
   falling down” is not enough.
                                           III.
          Because Stewart’s breach of contract claim fails, her allegations of
   bad-faith and statutory violations based on the coverage denial cannot go
   forward. See USAA Tex. Lloyds Co. v. Menchaca, 545 S.W.3d 479, 490 (Tex.
   2018) (“[T]here can be no claim for bad faith denial of an insured’s claim for
   policy benefits when an insurer has promptly denied a claim that is in fact not
   covered.” (cleaned up)); id. at 490–91 (same for statutory claims arising out
   of the denial of coverage); State Farm Lloyds v. Page, 315 S.W.3d 525, 532

          3
              The decision also failed to explain why damage it repeatedly described as
   “sagging” warranted coverage despite the explicit exclusion of “sagging” from the
   definition of collapse. See Gulino, 971 N.E. 2d at 532 (Quinn, P.J., dissenting).

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                                     No. 20-20507

   (Tex. 2010) (“When the issue of coverage is resolved in the insurer’s favor,
   extra-contractual claims do not survive.”).
                                        ***
         As the district court recognized, Stewart “has conscientiously
   obtained and maintained [her] policy and there is damage that must be
   repaired at considerable cost.” But her policy is inflexible. To recover,
   Stewart must show that part of her home wholly, completely, or totally
   collapsed. She has not done so.
         The judgment of the district court is therefore AFFIRMED.

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