Court Opinion

ID: 3121280
Source: CourtListenerOpinion
Date Created: 2015-10-16 14:06:25.705905+00
Date Added: 2024-06-11T11:53:07.428909
License: Public Domain

DISSENTING OPINION
                                       No. 04-11-00193-CV

                                    THE LYND COMPANY,
                                          Appellant

                                                 v.

                                  RSUI INDEMNITY COMPANY,
                                           Appellee

                   From the 407th Judicial District Court, Bexar County, Texas
                                Trial Court No. 2010-CI-20466
                          Honorable Karen H. Pozza, Judge Presiding

     DISSENTING OPINION TO DENIAL OF APPELLEE’S MOTION FOR EN BANC
                            RECONSIDERATION
Sitting en banc:        Catherine Stone, Chief Justice
                        Karen Angelini, Justice
                        Sandee Bryan Marion, Justice
                        Phylis J. Speedlin, Justice
                        Rebecca Simmons, Justice
                        Steven C. Hilbig, Justice
                        Marialyn Barnard, Justice

Concurring opinion by:      Marialyn Barnard, Justice
Dissenting opinion by:      Rebecca Simmons, Justice, joined by Phylis J. Speedlin, Justice and
                            Steven C. Hilbig, Justice

Delivered and Filed: December 28, 2012

        This case involves the interpretation of an insurance policy that provided excess property

coverage for a number of apartment complexes that were damaged by Hurricane Rita. Because I

disagree with the majority’s interpretation and believe that the policy is a “scheduled” insurance

policy, I respectfully dissent.

        This court must “avoid strictly construing [a contract’s] language if it would lead to

absurd results.” See Kourosh Hemyari v. Stephens, 355 S.W.3d 623, 626 (Tex. 2011) (per

curiam); accord Lane v. Travelers Indem. Co., 391 S.W.2d 399, 402 (Tex. 1965) (rejecting a
Dissenting Opinion                                                                   04-11-00193-CV

contract construction that “could lead to absurd results”). The error in the majority’s conclusion

can be traced to its avoidance of the contract construction question that must be resolved: Is the

policy at issue a blanket or scheduled policy? By ignoring this crucial question, the court fails to

address both the absurd results that come from treating the policy as a blanket policy and the

overwhelming majority of case law that shows this policy is a scheduled policy. See, e.g., RSUI

Indem. Co. v. Benderson Dev. Co., No. 2:09-cv-88-FtM-29DNF, 2011 WL 32318, at *5 (M.D.

Fla. Jan. 5, 2011); Axis Specialty Ins. Corp. v. Simborg Dev., Inc., 2009 WL 765298, at *4–5

(N.D. Ill. Mar. 20, 2009); Gulfport-Brittany, LLC v. RSUI Indem. Co., 2008 WL 4951468, at *3–

4 (S.D. Miss. Nov. 7, 2008), aff’d, 339 F. App’x 413 (5th Cir. Jul. 30, 2009) (per curiam);

Reliance Nat’l Indem. Co. v. Lexington Ins. Co., No. 01 C 3369, 2002 WL 31409576, at *8 (N.D.

Ill. Oct. 23, 2002); Fair Grounds Corp. v. Travelers Indem. Co. of Ill., 742 So. 2d 1069, 1071

(La. Ct. App. 1999); Anderson Mattress Co. v. First State Ins. Co., 617 N.E.2d 932, 935 (Ind. Ct.

App. 1993). Clearly the parties did not ignore this question because the policy provides the

answer: “[T]he premium for this policy is based upon the Statement of Values on file with this

Company or attached to this policy . . . .” Lynd paid its premium based on the scheduled

property values, not on blanket coverage for all property.

        The majority opinion uses the term “occurrence” to turn this scheduled policy into a

blanket policy thereby ignoring the intent of the parties expressed in the policy. Viewed as a

scheduled policy, the policy’s plain language is logical. In the event of an occurrence, the

property owner recovers the lesser of (a) the actual adjusted amount of the loss; (b) 115% of the

stated value of the scheduled property; or (c) the limit of liability if the cumulative loss for the

occurrence reaches policy limits. The use of the word “or” does not mean that RSUI has to

select one method and apply it to all of the losses. Rather, it means that, for each scheduled item,

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Dissenting Opinion                                                                  04-11-00193-CV

RSUI pays either (a) the actual adjusted amount or (b) 115% of the stated value, with the total

payment for all losses to scheduled items capped by the policy limit.

        The court’s flawed contract construction is clearly revealed by the absurd result not only

in this case, but also by the promise of more such results in future cases. Here, Lynd paid

premiums based on items whose values were required to be listed. The liability limit for each of

these scheduled items was 115% of the stated value. Under the court’s flawed interpretation,

because two properties were undervalued, RSUI will pay more than 115% of the stated value for

the damaged properties. Furthermore, in future cases, if some properties are minimally damaged

but others are damaged in excess of 115% of their stated value, the insurer will have to pay

115% of the stated value of scheduled items that were minimally damaged. This absurd result

can be avoided if the essential question is addressed: Is the policy at issue a blanket or a

scheduled policy? The overwhelming majority of case law shows that this policy is a scheduled

policy, and when viewed as such, the result is logical. The insured receives either the actual

adjusted amount of the loss to his scheduled property or 115% of the stated value for the

scheduled property if the damage exceeded the stated value. Thus, the insured receives what he

bargained for—and more importantly—what he paid for.

        Because the court rejects the proper policy interpretation in favor of a construction that

produces an absurd result in this case, and will produce like results in the future, I respectfully

dissent.

                                                 Rebecca Simmons, Justice

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