[author: Lisa Henderson]
In an August ruling from the Texas Court of Appeal, the court held that factual statements on a proof of loss form constitute admissions by the insured that signed the form. In United States Fire Ins. Co. v. The Lynd Co., No. 04-11-00347-CV (Tex. App.—San Antonio, Aug. 15, 2012), hail had caused property damage to two apartment complexes in Austin, Texas in two separate storms. U.S. Fire underwrote primary insurance for the property manager, The Lynd Company. RSUI Indemnity Company provided excess insurance coverage for the damaged property.
Based upon its investigation, U.S. Fire concluded that the two apartment complexes in Austin were damaged by a single storm that occurred in early May 2006. U.S. Fire paid its policy limit of $5,000,000 for the damage to the two complexes. Lynd then sought coverage from RSUI, which took the position that two storms had caused the damage, thereby triggering two limits of liability. U.S. Fire argued that there was only one storm and, therefore, one occurrence. Lynd sued U.S. Fire and RSUI, asserting breach of contract and extra-contractual claims.
The trial court granted summary judgment for Lynd on its breach of contract claim against U.S. Fire. On appeal, U.S. Fire argued that it was error for the trial court to grant summary judgment as there was sufficient evidence to create a fact issue as to whether the complexes were damaged by a single storm or two storms. The Court of Appeals reversed, agreeing with U.S. Fire and reasoning that the court “need look no further than the Proofs of Loss for Mandalay and Oak Hollow, which were sworn to by Michael Lynd, Sr. on behalf of The Lynd Company,” and which stated that the complexes were also damaged by the May 2006 storm.
Lynd contended that the proofs of loss did not constitute evidence because the U.S. Fire adjuster had filled out the form. Therefore, Lynd argued that the forms merely repeated the “baseless and conclusory opinion” that the May 2006 storm was the cause of the damage. The court, rejecting this argument, held that after Lynd signed the forms he was charged with knowledge of their contents and the factual statements constituted his admissions regardless of who filled in the blanks on the form. Accordingly, the court held that Lynd did not conclusively establish, as a matter of law, that two separate hailstorms caused the damage to the complexes, and summary judgment on the breach of contract claim was not warranted as a matter of law.