For Presentation at the 20th Annual Advanced Insurance Law Course, June 1-2, 2023, Hyatt Regency Hill Country Resort, San Antonio, Texas
No Texas insurance practitioner disputes that an insured may only recover for damage covered by a property insurance policy and that the insured bears the burden to establish that coverage under the policy. This basic principle applies across the board. But when two or more causes of loss combine to cause the insured’s damage – some covered and some not covered – a question arises as to how the property insurance policy should respond. For the past five decades, when there are multiple causes of loss at issue, Texas courts have uniformly applied the concurrent causation doctrine. Specifically, under the concurrent causation doctrine, the Texas Supreme Court has held:
[W]hen “excluded and covered events combine to cause” a loss and “the two causes cannot be separated,” concurrent causation exists and “the exclusion is triggered” such that the insurer has no duty to provide the requested coverage. But when a covered event and an excluded event “each independently cause” the loss, “separate and independent causation exists, “and the insurer must provide coverage despite the exclusion.”1
Under the Texas Supreme Court’s guidance from JAW The Pointe, parties are instructed on the common law concerning concurrent causation and to focus on whether the causes of loss – i.e., the causes of the damage that is being claimed – would have separately and independently caused the damage or whether the causes are interdependent and concurrent. While this common-law doctrine may be contracted around through anti-concurrent causation provisions,2 the doctrine has been repeatedly reinforced by the Texas Supreme Court, Texas appellate courts, and federal courts applying Texas law as the default causation doctrine in Texas.
The concurrent causation doctrine, as succinctly defined by the Texas Supreme Court in JAW The Pointe, could be read to give the parties an all-or-nothing resolution. Namely, if there is evidence that covered and non-covered causes of loss combined to cause the insured’s claimed damage, the exclusion prevails and there is no coverage. But that is not the case. Courts have also recognized that if the insured can establish that the damage is capable of apportionment between the covered and non-covered causes of loss, the insured remains entitled to coverage for that portion of the damage caused by the covered cause of loss.3 Essentially, by segregating the damage and providing evidence to apportion that damage, an insured can meet its threshold burden to prove coverage by showing the portion of claimed damage that was caused by the covered cause of loss.
Despite repeated guidance from the Texas Supreme Court and countless cases over the past fifty years requiring insureds to apportion damage, the Texas policyholder attorney bar has recently tried to insert confusion into the application of the concurrent causation doctrine. From redefining the “cause of loss” to a “peril,” ignoring sequential causes of the same loss, and side- stepping the doctrine altogether through the allocation of all claimed damage to a specific event regardless of the factual evidence, the doctrine has been under attack in recent years. Despite these efforts, however, the concurrent causation doctrine remains well-defined in Texas. Repeatedly applied by numerous courts, including the Texas Supreme Court, the concurrent causation doctrine stands strong for the threshold proposition that the insured is entitled to recover only that which is covered under its policy and that the insured can prove is covered by the policy.
Concurrent Causation Overview
There are essentially two doctrines used to determine coverage when two or more causes of loss contribute to an insured’s property damage. Most states employ the efficient proximate cause doctrine. “Under the doctrine of efficient proximate cause, where covered and noncovered perils contribute to a loss, the peril that set in motion the chain of events leading to the loss or the ‘predominating cause’ is deemed the efficient proximate cause or legal cause of loss.”4 Conversely, a handful of other states, including Texas, follow the concurrent causation doctrine. Under Texas law, when covered and non-covered perils combine to create a loss, and the two causes cannot be separated, concurrent causation exists, and the insurer has no duty to provide the requested coverage.5
Notably, there are seemingly two definitions of concurrent causation in Texas jurisprudence – one set forth by the Texas Supreme Court in JAW The Pointe and the other as expressed by the San Antonio Court of Appeals in Wallis v. United Services Automobile Association. The JAW The Pointe definition focuses on whether the two causes of loss can be separated and mandates no coverage if the causes of damage, one not covered, are inseparable.6 Conversely, the Wallis court, and the many courts following that decision, defined the doctrine of concurrent causation as when “covered and non-covered perils combine to create a loss, the insured is entitled to recover only that portion of the damage caused solely by the covered peril(s).”7
These two definitions, however, are two sides of the same coin. Both acknowledge that when two causes of loss cannot be separated, the exclusion applies. But the Wallis line of cases further recognizes that when damage is capable of apportionment between the non-covered cause and the covered cause, and the insured can provide sufficient evidence to allow a factfinder to allocate its damage between those causes, then the exclusion will not preclude coverage for the loss portion allocated to the covered cause.8 This legal mechanism allows an insured to apportion, if possible, a jointly caused loss between covered and uncovered causes, allocating that part of the singular loss attributable to each.
Policyholder attorneys suggest that the concurrent causation doctrine unduly requires the insured to bear the burden of proof to refute an insurer’s exclusion. The Wallis court (and the many courts applying that analysis since) rejected that very argument. The Wallis court determined that the concurrent causation doctrine is “not an avoidance of coverage or an affirmative defense. Rather, it is a rule that embodies the basic principle that insureds are only entitled to recover that which is covered under their policy; that for which they paid premiums.”9 Quite simply, an insured’s recovery under an insurance policy is limited to covered damage.10
In this regard, it is important to consider that concurrent causation issues are not limited to covered and excluded causes of loss. A non-covered cause of loss or peril is something that is simply not covered by the policy, even though it may not be reflected in a policy exclusion. For example, although it is not “excluded,” damage that occurs outside of a policy period is not covered. It is indisputably the insured’s burden to provide proof that the loss occurred within the policy period. Courts recognize this “is a precondition to coverage and, thus, the insured’s responsibility.”11 Damage that fails to satisfy the insuring agreement of a named-peril policy is likewise not covered. Thus, it stands to reason that because an insured can recover only for a covered cause of loss, the insured bears the burden to prove its claimed damage was caused solely by a covered cause of loss, as opposed to an excluded or otherwise non-covered peril.12 And, accordingly, the insured’s failure to segregate damages caused by covered versus non-covered causes of loss is fatal to its ability to recover on the claim.13
Because the doctrine of concurrent causation limits an insured’s recovery to the amount of damage caused solely by the covered peril, “the burden of segregating the damage attributable solely to the covered event is a coverage issue for which the insured carries the burden of proof.”14 Texas courts recognize that an insured must do more than simply show some damage was caused by a covered peril. The insured must both (1) show that a covered cause of loss caused damage to the insured’s property during the policy period; and (2) provide some evidence indicating the extent to which the covered cause damaged the property. If damage by concurrent causes is tried, the insured bears the burden to present some evidence affording the jury a reasonable basis on which to allocate the damage.15
While this is a burden the insured bears, in applying this rule, the Texas Supreme Court has recognized that circumstantial evidence may constitute some evidence of the extent of damage attributable solely to a covered cause of loss.16 But the insured may not simply rely on conclusory allegations, conjecture, or other unsubstantiated guesses (including unreliable expert opinions) to meet its burden.17
A History of Concurrent Causation in Texas
To fully understand concurrent causation in Texas, including the parties’ respective burdens, it helps to understand the history behind the doctrine. The concurrent causation doctrine in the context of property insurance claims in Texas has developed largely because of weather events, including hurricanes, hailstorms, and freezes.
Texas’ modern concurrent causation doctrine was addressed in the 1971 Texas Supreme Court case Travelers Indemnity Co. v. McKillip when the Court specifically rejected the efficient proximate cause doctrine.18 In McKillip, turkey farm owners sought to recover damages to their turkey barn after a “tremendous wind” blew across their farm and “struck” a turkey barn.19 Six days after the windstorm, heavy snow hit the property, with five to six inches of snow accumulating on the barn roof and causing the barn to collapse. The policy at issue provided coverage for damage caused by windstorm but specifically excluded loss caused by snowstorm.20 The parties disputed whether the covered windstorm or the excluded snowstorm caused the damage.21 The trial court instructed the jury that if the windstorm was the “dominant efficient cause of the building’s collapse, although other causes may have contributed to the loss, the insurer was liable.”22
The Texas Supreme Court rejected that instruction. The Court held that the jury should have determined “whether damage to plaintiff’s building was caused by a combination of the wind and the weight of the snow, and if so, the percentage or the proportionate part of the damage caused by the snow.”23 The Court found that the insured was obligated to introduce evidence to prove that the damage was caused by the insured peril or apportion the damage caused by the insured peril from the damage caused by the excluded peril once the insurer pled that the exclusion applied to bar coverage.24 The Court explained that “[i]t is essential that the insured produce evidence which will afford a reasonable basis for estimating the amount of damage or the proportionate part of damage caused by a risk covered by the insurance policy.”25
McKillip was essentially the start of Texas’ modern concurrent causation journey. Since 1971, courts across Texas have relied on McKillip’s fundamental principle that an “insured cannot recover under an insurance policy unless facts are pleaded and proved showing that damages are covered by the policy.”26 Therefore, in order to recover damages “when a loss is caused by both covered and non-covered perils, an insured must present ‘some evidence’ to attribute the loss to just the covered peril.”27
McKillip and its progeny have consistently held that it is the insured’s burden to segregate damages caused by covered versus non-covered causes of loss. This is so despite the Texas Legislature’s adoption of article 21.58 of the Texas Insurance Code.28 Article 21.58 provides that “the insurer has the burden of proof as to any avoidance or affirmative defense that must be affirmatively pleaded under the Texas Rules of Civil Procedure. Any language of exclusion in the policy and any exception to coverage claimed by the insurer constitutes an avoidance or affirmative defense.”29
When article 21.58 was enacted, insureds argued that the insured’s burden to segregate damages under McKillip and other Texas Supreme Court cases was legislatively overruled. As evidenced by the paper “Anatomy of an Entrenched Error” submitted by Messrs. McBride and Gravely, this argument is still being propounded today. But the San Antonio Court of Appeals in Wallis v. United Services Auto Association rejected that argument and specifically reiterated the insured’s burden to prove coverage based on the universal rule that an insured bears the burden to demonstrate that the policy provides coverage.
In Wallis, the insureds sought coverage for foundation damage to their home arising from plumbing leaks. The insurer determined that the damage was caused by a combination of excluded and covered causes of loss.30 While the insurer found the covered plumbing leaks to be negligible, the insureds’ expert argued at trial that the plumbing leaks were a contributing cause of the damage.31 Even if the plumbing leaks contributed to the loss, the insureds’ expert did not refute that excluded perils had also contributed to the loss.32 Although the jury found that 35% of the insureds’ damage was caused by plumbing leaks, there was no testimony or evidence in the record supporting that allocation of damages.33 The San Antonio Court of Appeals held that the insured “failed to produce any evidence to demonstrate what portion of the loss was caused solely by the plumbing leak.”34 The court further noted:
Texas recognizes the doctrine of concurrent causes. This doctrine provides that when, as in the instant case, covered and non-covered perils combine to create a loss, the insured is entitled to recover only that portion of the damage caused solely by the covered peril(s). Travelers Indem. Co. v. McKillip, 469 S.W.2d 160, 163 (Tex.1971); Paulson v. Fire Ins. Exch., 393 S.W.2d 316, 319 (Tex.1965); Warrilow v. Norrell, 791 S.W.2d 515, 527 (Tex. App.—Corpus Christi 1989, writ denied). To this end, the insured must present some evidence upon which the jury can allocate the damage attributable to the covered peril. Lyons v. Millers Casualty Ins. Co. of Texas, 866 S.W.2d 597, 601 (Tex.1993) (citing Paulson, 393 S.W.2d at 319).35
The Wallises argued on appeal that the trial court had improperly shifted the burden of proof from the carrier to the insureds given the adoption of article 21.58 of the Texas Insurance Code.36 The Wallis court rejected the argument that the insured’s burden to segregate damages between covered and non-covered perils under the McKillip opinion and other Texas Supreme Court cases had been legislatively overruled.37 The court explained:
The Wallises’ argument regarding article 21.58 fails because the doctrine of concurrent-causation is not an affirmative defense or an avoidance issue. Rather, it is a rule which embodies the basic principle that insureds are entitled to recover only that which is covered under their policy; that for which they paid premiums. It is well established that insureds are not entitled to recover under an insurance policy unless they prove their damage is covered by the policy.38
Notably, the Wallises sought review by the Texas Supreme Court, but that review was denied.39
Since the Wallis opinion in 1999, numerous Texas courts have echoed the San Antonio appellate court’s analysis reinforcing that the insured bears the burden to produce some evidence to afford the jury an opportunity to allocate covered damages from those that are not covered. This merely requires the insured to meet its threshold burden to show that it is entitled to coverage under its policy.
More recently, in JAW The Pointe, the Texas Supreme Court again discussed the concurrent causation doctrine where wind and flood during Hurricane Ike combined to damage an insured’s property.40 The insured sought to recover costs to complete code upgrades required by the city after the insurer paid for the portion of damage solely caused by wind, the covered peril under the policy, because the covered wind damage alone would have required the insured to complete upgrades to comply with the city’s code.41 However, the permit for the insured’s hurricane-needed repairs failed to segregate damage caused by the covered wind or the excluded flood.42 The Court reaffirmed the common law concurrent causation doctrine in Texas, noting:
Under this doctrine, we have held that, when “excluded and covered events combine to cause” a loss and “the two causes cannot be separated,” concurrent causation exists and “the exclusion is triggered” such that the insurer has no duty to provide the requested coverage. But when a covered event and an excluded event “each independently cause” the loss, “separate and independent causation” exists, “and the insurer must provide coverage despite the exclusion.”43
The insured argued that the wind damage independently caused the city to require the damaged buildings to be brought up to code. The insured further argued that it merely had to show that damage to the covered property caused the enforcement of law and ordinances, thereby shifting the burden to the carrier to show the damage that caused the enforcement of the ordinances was damage that the policy excluded. The Court rejected both arguments.
The Court recognized, however, that there was an anti-concurrent causation clause in the policy, which precluded application of the concurrent causation doctrine.44 The Court held that even if there are two separate and independent causes of loss, when there is an anti-concurrent causation provision that applies, the exclusion still precludes coverage.45 It recognized that the property sustained both covered wind and excluded flood damage, and that the city based its decision to enforce the ordinances on the combined total of the two. “JAW’s November 2008 permit application is critical here because the record shows that the city relied on information provided with permit applications to determine whether to enforce its ordinances against a particular property.”46 The Court found that the permit application, which included damage from both wind and flood, was the touchstone for the city’s enforcement of the ordinances.47 And because the insured offered no evidence to support an argument the city’s determination was based solely on the independent damage caused by wind, the Court determined the insurer met its burden that the exclusion applied, and that there was no coverage.48
Although JAW The Pointe addressed the insured’s burden of proof in the context of a policy with an anti-concurrent causation clause, the Court implicitly recognized that the insured has the burden to segregate and support that portion of its claim that is covered when two causes combine to cause the loss (and no anti-concurrent causation provision applies). In fact, the briefing for the insured submitted by Messrs. Gravely and McBride’s law firm in JAW The Pointe raised many of the same arguments concerning Section 554.002 (formerly article 21.58) of the Texas Insurance Code now being asserted again. The Texas Supreme Court again had the opportunity to “correct” the Wallis line of cases in JAW The Pointe and clearly chose not to do so. One must ask why these issues are now being rehashed.
Despite the Texas Supreme Court’s guidance and fifty years of application of the concurrent causation doctrine, the policyholder attorney bar has recently sought to inject confusion into the doctrine. This has led to three certified questions from the Fifth Circuit to the Texas Supreme Court in two different cases.49
In Frymire Home Services, Inc. v. Ohio Security Insurance Co., the insureds sought to recover proceeds under a commercial property insurance policy after the insured property sustained wind and hail damage from a thunderstorm in June 2018.50 Despite evidence from a report that pre-dated the inception of the policy at issue, which stated that the roof was deteriorated and had sustained prior hail damage requiring its replacement, the insureds maintained that “the June 2018 hailstorm was the sole cause of [the insureds’] losses,” asserting that the hailstorm “caused the damage that requires the roof to be replaced.”51 The insurer denied the claim, however, after concluding that the damage was the result of pre-existing damage.52 The district court granted the summary judgment for the insurer, finding the insured did not satisfy its burden under the concurrent causation doctrine.53
On appeal, the insureds argued (among other things) that: (1) pre-existing damage and wear and tear were not “perils” and therefore should not be considered in a concurrent causation analysis; (2) the hailstorm was the direct cause of the roof damage, rather than pre-existing damage; and (3) the insureds met their burden to segregate and apportion damage by alleging the sole cause of its damage was the hailstorm.54 Based on the hypotheticals and arguments raised by the Frymire insureds, the Fifth Circuit certified three dubious questions to the Texas Supreme Court:
(1) Whether the concurrent cause doctrine applies where there is any non-covered damage, including “wear and tear” to an insured property, but such damage does not directly cause the particular loss eventually experienced by the plaintiffs?
(2) If so, whether plaintiffs alleging that their loss was entirely caused by a single, covered peril bear the burden of attributing losses between that peril and other, non-covered or excluded perils that plaintiffs contend did not cause the particular loss?
(3) If so, whether plaintiffs alleging that their loss was entirely caused by a single, covered peril bear the burden of attributing losses between that peril and other, non-covered or excluded perils that plaintiffs contend did not cause the particular loss?55
Despite applying the concurrent causation doctrine in its analysis of the case, the Fifth Circuit remarked that “aspects of the concurrent causation doctrine are unsettled.”56
Similarly, in Overstreet v. Allstate Vehicle & Property Insurance Co., the insured homeowner sought to recover damages for his leaky roof under his homeowners named-peril insurance policy.57 Overstreet asserted that the leaky roof was caused by a hailstorm after issuance of the policy, but Allstate denied the claim after its investigation revealed that the damage was caused by wear and tear and prior hailstorms.58 The district court granted the insurer summary judgment on the insured’s claims, finding that the insured failed to “prove what damages were solely attributable to the covered storm.”59 On appeal, however, the Fifth Circuit again noted that it was “unsure whether the doctrine applies if … the covered peril caused the entire loss,” and “unsure whether…attributing 100% of the damage to a covered peril satisfies an insured’s burden.”60 The Fifth Circuit seemed to ignore the fact that the policy at issue was a named-peril rather than an all risk policy.
The parties in Overstreet and Frymire settled before the Texas Supreme Court resolved the Fifth Circuit’s pending questions.61 But the questions are easily answered, as the concurrent causation doctrine is not “unsettled.” The questions are answered by the Texas Supreme Court’s analysis in JAW The Pointe and the Wallis line of cases. Specifically, the court needs to determine first whether the causes of loss at issue are concurrent or independent. If the covered cause (here, for example, hail in the policy period) would have damaged the roof and independently required the repair or replacement claimed, separate and apart from other non-covered causes (such as deterioration), then under JAW The Pointe, there is coverage.62
But if damage was caused by the combination of covered hail and the pre-existing deteriorated (and excluded) condition of the roof, then the causes of loss are concurrent and interdependent, and the concurrent causation doctrine applies to preclude coverage, unless the insured can apportion the covered from the non-covered damage. Merely alleging the entirety of the damage was caused by the covered cause of loss does not meet the insured’s burden under JAW The Pointe and the Wallis line of cases, as the insured bears the burden to either rebut the insurer’s showing that non-covered perils combined to cause the damage or segregate the covered damage from non-covered damage.
Recent Further Obfuscation of the Concurrent Causation Doctrine
Recently, the Fifth Circuit again addressed the concurrent causation doctrine in a Hurricane Harvey dispute in Advanced Indicator & Manufacturing Inc. v. Acadia Insurance Company.63 The insured, Advanced Indicator, claimed that its damage was caused solely by the hurricane, and it presented evidence at summary judgment that the roofing system and building were in “good shape” before the loss, as well as expert testimony that “the damage was ‘absolutely’ caused by the hurricane.”64 The insurer denied the claim, arguing that the claimed roof damage was caused by pre-existing conditions, including long-term leaks from deterioration and poor workmanship, which are excluded from the policy.65 The district court granted summary judgment to Acadia, holding that the concurrent causation doctrine barred the insured’s claim, because the asserted covered losses were not segregated from non-covered losses.66
On appeal, however, the Fifth Circuit questioned whether the insured had submitted sufficient summary judgment evidence to create a disputed issue of material fact regarding whether the damage to the building resulted from a covered cause – wind from Hurricane Harvey.67 Nevertheless, the Fifth Circuit determined that the evidence presented was sufficient to meet the insured’s evidentiary burden to show damage from a covered cause of loss.
The Fifth Circuit next turned to whether the concurrent causation doctrine barred the insured’s claims “because it cannot segregate covered losses from non-covered losses.”68 The Court reiterated the rules from Wallis and its progeny but noted that an “insured may carry its burden by putting forth evidence demonstrating that the loss came solely from a covered cause or by putting forth evidence by which a jury may reasonably segregate covered and non-covered losses.”69 The Fifth Circuit determined that the insured met its burden, noting:
Here, the same evidence that supports [the insured’s] argument that Hurricane Harvey caused some of its damage supports its argument that Hurricane Harvey caused all of the damage. Indeed, both [the public adjuster] and [the insured’s expert] testified that the hurricane was the sole cause of [the insured’s] loss. Accordingly, because a jury could reasonably find that all of [the insured’s] loss comes from a covered cause, the concurrent causation doctrine does not bar recovery.70
The Fifth Circuit acknowledged that its certified questions from Overstreet and Frymire remained unanswered. But the court also noted that any purportedly unresolved questions were “of no import … because [its] conclusion [did] not exclusively rest on the application of the concurrent causation doctrine.”71
Similarly, the lack of answers to the Fifth Circuit’s prior certified questions has not stymied various other courts’ efforts to apply the concurrent causation doctrine. Texas federal district courts have recently both granted72 summary judgment on the basis of the concurrent causation doctrine and also denied summary judgment.73 These cases demonstrate that courts still require the insureds to meet their burden to show the claimed damage was caused by a covered cause of loss. And insureds have taken the risky move to avoid summary judgment by arguing that the entirety of the claimed damage was due to the covered event. It remains to be seen whether a jury will agree with the all-or-nothing positions taken by the insureds.
A Brief Rebuttal to "Anatomy of An Entrenched Error"
In their paper “Anatomy of An Entrenched Error: ‘Concurrent Causation’ in Texas Coverage Litigation,” Messrs. Gravely and McBride argue at length that the concurrent causation doctrine in Texas is rooted in an error. Tellingly, the authors barely mention the Texas Supreme Court’s most recent application of the doctrine in JAW The Pointe, a case in which their law firm represented the insured, nor do they address the Court’s analysis of the concurrent causation doctrine in that decision.
The authors do, however, attempt to re-write the parameters of the concurrent causation doctrine by arguing that concurrent causation must concern the same “event of loss.” Similarly, plaintiffs’ counsel argue that there must be an involved “peril” (i.e. there has to be a risk of loss), as opposed to a condition of the property, such as wear and tear or deterioration. But the Supreme Court has never restricted the concurrent causation doctrine to either of those scenarios. Rather, the focus is always on whether a cause of the loss claimed is covered or not. There is no support for these restrictive applications of the doctrine.
Messrs. McBride and Gravely also argue that Texas Insurance Code Article 21.58 (now Insurance Code 554.002) shifted the burden of proof from the insured regarding allocation of damage when concurrent causation applies. It did not. Article 21.58 merely requires an insurer to plead and prove that an excluded or non-covered peril was at least a partial cause of the loss:
In any suit to recover under an insurance contract, the insurer has the burden of proof as to any avoidance or affirmative defense that must be affirmatively pleaded under the Texas Rules of Civil Procedure. Any language of exclusion in the policy and any exception to coverage claimed by the insurer constitutes an avoidance or an affirmative defense.74
Importantly, the statute does not require the insurer to allocate the loss or apportion the insured’s claimed damages once the insurer has established that at least some of the loss resulted from the non-covered peril. It certainly does not change the insured’s threshold burden to show that its claim is covered, especially when covered and non-covered causes combine to cause the claimed loss. In the concurrent causation context, Section 554.002 merely requires the insurer to bear the burden to prove that an excluded cause of loss inseparably combined with a covered cause of the loss claimed. Once the insurer has met that burden, the insured must either show that the loss was independently caused by the covered cause or provide evidence to segregate the covered from non-covered damage.
Because the plain text of the statute does not support their argument, the authors pivot to legislative history, citing a sole legislative subcommittee comment as the basis for their argument that Article 21.58 somehow shifted the burden of apportionment away from the insured when the concurrent causation doctrine applies:
Under the Rules of Civil Procedure, Rule 94, insurance carriers, unlike other defendants, do not have the burden of proof for affirmative defenses. This [statute] would require insurers who assert affirmative defenses to plead and prove those defenses as required by every other party in Texas. This brings Texas in line with the rest of the nation.75
This legislative comment does not even suggest, much less articulate, that Article 21.58 changed the burden of proof on loss apportionment. At most, the comment serves only to explain why the subcommittee sought to enact the statute.
Statutes can only abrogate common law rules when that was what the legislature clearly intended.76 The statute’s plain language is considered before all else, because it is the surest guide to the legislature’s intent.77 Because neither the text of the statute (i.e., the best expression of the legislature’s intent) nor the legislative comment cited by the authors supports their legislative intent argument, the argument is meritless on its face.
Importantly, as discussed previously, the San Antonio Court of Appeals in Wallis expressly considered whether Article 21.58 legislatively overruled the common law burden of proof. The court ruled on the plain language of the statute, correctly observing that the doctrine of concurrent causation is not an affirmative defense or avoidance issue to which Article 21.58 applied:
Rather, [the concurrent causation doctrine] is a rule which embodies the basic principle that insureds are entitled to recover only that which is covered under their policy; that for which they paid premiums. It is well established that insureds are not entitled to recover under an insurance policy unless they prove their damage is covered by the policy.78
This concept is best reflected when the insured’s claimed loss is concurrently caused by pre-existing damage combined with new damage caused by a hailstorm. An insurer does not bear the burden to demonstrate pre-existing damage, although, practically speaking, it should introduce such evidence. It is black letter law that a property insurer is only liable for damage occurring during the policy period.79 It is the insured’s burden to show the damage claimed occurred during the pendency of the policy.80 If there is evidence of pre-existing damage contributing to the claimed loss, then the insured must segregate that damage accordingly.
The authors further argue that Article 21.58 must have shifted the insured’s concurrent causation burden, because an insurer cannot meet its burden of showing the applicability of the exclusion or non-covered peril to the claimed loss without also quantifying the portion of the loss resulting from it. This is nonsensical. Courts have been requiring insureds to meet their burdens of proof under the concurrent causation doctrine for fifty years without issue – both before and after the statute was enacted. Five decades of successful judicial dispositions on these issues dispels the authors’ assertion that the courts’ logic in applying the burdens “is suspect on its face.”
No one disputes that an insured should be provided the insurer’s position on coverage and concurrent causes of loss. During adjustment, the insurer will provide the insured with its coverage position and try to work with the insured in determining whether damage caused by concurrent causes of loss may be apportioned. If the insured seeks recovery through litigation, the insurer’s pleadings and discovery will identify the non-covered perils that the insurer contends caused the loss and the extent of same.
Like the insureds in Advanced Indicator, an insured is free to take the risky position that 100% of the loss resulted from the covered peril. Assuming the insured meets its threshold burden to prove the damage is covered and occurred during the pendency of the policy period, the factfinder can find either that (1) the insurer did not prove by a preponderance of the evidence that the loss was at least concurrently caused by a non-covered peril, negating the applicability of concurrent causation and the insured’s duty to apportion the loss; or (2) that it did, and, ostensibly, reject the insured’s 100% causation theory. In the latter circumstance, the court will necessarily have to hold that the insured failed to meet its burden to apportion the loss between covered and uncovered perils. The insured can mitigate this risk by genuinely attempting to apportion the loss, rather than relying on the “100% covered” all-or-nothing strategy.
Finally, the authors pose the question: Who has the burden of proof to demonstrate that an excluded peril was not a concurrent cause of an otherwise covered loss? On its face, this question makes no sense. Under Section 554.002, the insurer bears the burden to prove that an excluded cause of loss was a concurrent cause of claimed damage. Under the doctrine as set out by the Court in JAW The Pointe, if covered and non-covered causes combine to cause a loss, the exclusion applies, and there is no coverage. Therefore, if the insured does not address the concurrent causation doctrine by presenting evidence to either allocate the loss or demonstrate that the covered cause was an independent and separate cause of the loss claimed, then the insured cannot and will not prevail.
Concurrent causation under Texas law is not unsettled or based on a legal error. It is well- established and has been re-affirmed time and again by Texas courts, including the Texas Supreme Court. If there is evidence that covered and non-covered causes combined to cause the insured’s claimed loss, and those causes cannot be separated, then concurrent causation applies, and the insured must provide sufficient evidence to segregate the loss to recover on its claim.
1 JAW The Pointe, LLC v. Lexington Ins. Co., 460 S.W.3d 597, 608 (Tex. 2015).
3 Wallis v. United Services Auto. Ass’n, 2 S.W.3d 300, 302-03 (Tex. App.—San Antonio 1999, pet. denied) (when “covered and non-covered perils combine to create a loss, the insured is entitled to recover only that portion of the damage caused solely by the covered peril(s)”).
4 Fourth St. Place v. Travelers Indem. Co., 270 P.3d 1235, 1243 (Nev. 2011), as modified on reh’g (May 23, 2012).
5 JAW The Pointe, 460 S.W.3d at 608.
7 Wallis, 2 S.W.3d at 303. See also Travelers Indem. Co. v. McKillip, 469 S.W.2d 160, 162 (Tex.1971).
8 See e.g. All Saints Catholic Church v. United Nat’l Ins. Co., 257 S.W.3d 800, 802 (Tex. App.—Dallas 2008, no pet.); Wallis, 2 S.W.3d at 303; Prime Time Family Entertainment Center v. Axis Ins. Co., No. 11-18-00241-CV, 2020 WL 6108263 (Tex. App.—Eastland Oct. 16, 2020); Hamilton Properties v. Am. Ins. Co., 643 Fed. Appx. 437, 441-42 (5th Cir. 2016); State Farm Lloyds v. Kaip, No. 05-99-01363-CV, 2001 WL 670497, *1, 3 (Tex. App.—Dallas June 15, 2001, pet. denied) (mem. op); Starco Impex, Inc. v. Landmark Am. Ins. Co., No. 1:19-CV- 39, 2020 WL 3442842, at *5 (E.D. Tex. June 3, 2020), report and recommendation adopted, No. 1:19-CV-39, 2020 WL 3440575 (E.D. Tex. June 23, 2020); Seahawk Liquidating Trust v. Certain Underwriters at Lloyds London, 810 F.3d 986 (5th Cir. 2016).
9 Wallis, 2 S.W.3d at 303.
10 See id.; JAW The Pointe, 460 S.W.3d at 603.
11 New Hampshire Ins. Co. v. Martech USA, Inc., 993 F.2d 1195, 1199 (5th Cir. 1993). See also Stagliano v. Cincinnati Ins. Co., 633 Fed. Appx. 217, 219 (5th Cir. 2015) (affirming summary judgment in favor of the insurer because a conclusory expert affidavit did not establish that hail damage to the insured’s commercial property occurred from a particular hailstorm within the policy period. The Fifth Circuit specifically recognized that the insured had to come forward with some evidence or indication that the damage to property was caused by a specific hailstorm within the policy period); 343 W. Sunset, LLC v. Seneca Ins. Co., Inc., No. 5-19-CV-01375- FB-RBF, 2021 WL 5227086, at *3 (W.D. Tex. July 27, 2021), report and recommendation adopted, No. SA-19- CV-1375-FB, 2021 WL 5195799 (W.D. Tex. Aug. 11, 2021) (granting summary judgment due to the insured’s failure to demonstrate hail damage occurred during the policy period).
12 See Wallis, 2 S.W.3d at 303.
13 Id. at 304 (affirming the judgment notwithstanding verdict because the evidence was not legally sufficient to support the jury's finding on the amount of damages caused solely by the covered peril); Hamilton Properties v. Am. Ins. Co., Civil Action No. 3:12-CV-5046-B, 2014 WL 3055801 at *4 (N.D. Tex. July 7, 2014), aff'd, 643 Fed. Appx. 437 (5th Cir. April 14, 2016) (per curiam); U.S. Fire Ins. Co. v. Matchoolian, 583 S.W.2d 692, 694 (Tex. Civ. App.—Houston [14th Dist.] 1979, writ ref'd n.r.e.) (reversing and rendering a take-nothing judgment where the insured did not attempt to segregate damage caused by the covered peril from the uncovered peril).
14 Wallis, 2 S.W.3d at 303 (emphasis added).
15 See e.g., Hamilton Properties, 643 Fed. Appx. at 442 (affirming summary judgment in favor of the insurer because the insured could not, as a matter of law, meet its burden to segregate property damage caused by covered and non-covered causes of loss).
16 See One Way Investments, Inc. v. Century Surety Co., 2016 WL 5122124, Civ. A. No. 3:14-CV-2839 (N.D. Tex. Sept. 21, 2016) (granting summary judgment because the insured failed to provide any evidence that would enable a reasonable jury to estimate or allocate the amount of damage or the proportionate part of damage caused by a covered cause of loss).
17 See e.g., Elizondo v. Krist, 415 S.W.3d 259, 264 (Tex. 2013) (citations omitted) (“Bare, baseless opinions will not support a judgment even if there is no objection to their admission in evidence,” and we have “often held that such conclusory testimony cannot support a judgment.” “A conclusory statement of an expert witness is insufficient to create a question of fact to defeat summary judgment.” Further, “a claim will not stand or fall on the mere ipse dixit of a credentialed witness.” Expert testimony fails if there is “simply too great an analytical gap between the data and the opinion proffered.” Courts are not required “to ignore fatal gaps in an expert’s analysis or assertions.”). See also Eason v. Thaler, 73 F.3d 1322, 1325 (5th Cir. 1996) (holding that mere conclusory allegations are not competent summary judgment evidence, and thus are insufficient to defeat a motion for summary judgment”).
18 McKillip, 469 S.W.2d 160, 161 (Tex.1971).
20 Id. at 162.
24 Id. at 163.
26 Employers Cas, Co. v. Block, 744 S.W.2d 940, 944 (Tex. 1988) (citing Royal Indem. Co. v. Marshall, 388 S.W.2d 176, 181 (Tex. 1965) (affirming that “the burden was on plaintiff to plead and prove facts showing that the damages done to his [property] was within the coverage provided in the insurance policy”)), overruled in part on other grounds by State Farm Fire & Cas. Co. v. Gandy, 925 S.W.2d 696, 714 (Tex. 1996). See also Bethea v. Nat’l Cas. Co., 307 S.W.2d 323, 325 (Tex. App.—Beaumont 1957, writ ref’d) (holding that “the burden rested on appellant to plead and prove facts showing that” the policy afforded coverage); Reserve Life Ins. Co. v. Crager, 421 S.W.2d 697, 698 (Tex. App.—Beaumont 1967) (recognizing the “burden was upon plaintiff to allege and prove facts showing the loss sustained was covered by the policy”); JAW The Pointe, 460 S.W.3d at 603 (Tex. 2015) (recognizing that “[i]nitially, the insured has the burden of establishing coverage under the terms of the policy”); Hamilton Properties, 643 Fed. Appx. at 441 (recognizing that under “Texas law, to recover under an insurance policy, the insured must show that its claimed damages are covered by the policy”); Martech USA, Inc., 993 F.2d at 1199 (recognizing that under Texas law, even after the Texas legislature’s amendment requiring the insurer to plead and prove an exclusion applies, “proof that the loss occurred within the policy period is a precondition to coverage and thus the insured’s responsibility”) (emphasis in original); Certain Underwriters at Lloyd’s of London v. Lowen Valley View, LLC, 892 F.3d 167, 170 (5th Cir. 2018) (recognizing the “insured bears the burden of establishing that its claim is covered by the policy”).
27 Frymire Home Services, Inc. v. Ohio Sec. Ins. Co., 12 F.4th 467, 471 (5th Cir. 2021), certified questions accepted (Sept. 10, 2021), certified questions dismissed (Dec. 3, 2021); Lyons v. Millers Casualty Ins. Co. of Texas, 866 S.W.2d 597, 601 (Tex.1993).
28 Article 21.58 is a prior version of section 554.002 of the Texas Insurance Code, which currently governs insurers and insureds. The two provisions are essentially the same.
29 TEX. INS. CODE ANN. Art. 21.58 (Vernon Supp. 1998).
30 Wallis, 2 S.W.3d at 301–02.
31 Id. at 302.
36 Id. at 303.
39 In “Anatomy of an Entrenched Error: ‘Concurrent Causation’ in Texas Coverage Litigation,” the authors repeatedly cite Wallis with an incorrect petition history. It is instructive that the Texas Supreme Court had the opportunity to review Wallis in 1999 and chose not to.
40 JAW The Pointe, 460 S.W.3d at 600.
43 Id. at 608 (citations omitted).
45 Id. at 609-10.
46 Id. at 609.
48 Id. at 609-10.
49 See Overstreet v. Allstate Vehicle & Prop. Ins. Co., 34 F.4th 496, 499 (5th Cir. 2022), certified questions accepted
(May 27, 2022); Frymire Home Services, Inc., 12 F.4th at 472.
50 Frymire Home Services, Inc., 12 F.4th at 470.
54 See id. at 471.
57 Overstreet v. Allstate Vehicle & Prop. Ins. Co., 34 F.4th at 497.
59 Id. at 498.
60 Id. at 499.
61 In their paper, Messrs. Gravely and McBride state that “[b]oth times the defendant insurer has settled shortly before oral arguments were scheduled to occur, effectively ending each case.” (emphasis added). Curiously, they appear to forget that it takes two parties to settle a lawsuit.
62 Of course, if the damage pre-existed the policy period and the roof already required replacement, then under the fortuity doctrine, there also should be no coverage.
63 Advanced Indicator & Mfg., Inc. v. Acadia Ins. Co., 50 F.4th 469, 472 (5th Cir. 2022).
64 Id. at 476.
65 Id. at 472.
66 Id. at 476. The Fifth Circuit reversed the district court’s grant of summary judgment for the insured’s breach of contract, bad faith, and TPPCA claims on other grounds after finding that a factual dispute involving whether the cause of loss was covered under the policy existed to defeat summary judgment.
69 Id. at 477.
71 Id. at n. 4.
72 See e.g., Hilltop Church of Nazarene v. Church Mut. Ins. Co., No. 6:21-CV-00322, 2022 WL 17823931, at *4 (E.D. Tex. Dec. 20, 2022); Shree Rama, LLC v. Mt. Hawley Ins. Co., No. 1:21-CV-91, 2022 WL 18456616, at *1 (S.D. Tex. Dec. 6, 2022), report and recommendation adopted, No. 1:21-CV-00091, 2023 WL 375358 (S.D. Tex. Jan. 24, 2023); Bagheri v. State Farm Lloyds, No. 3:21-CV-1269-D, 2022 WL 16964753, at *4 (N.D. Tex. Nov. 15, 2022); Smiley Team II, Inc. v. Gen. Star Ins. Co., No. 3:21-CV-103, 2022 WL 18909496, at *5 (S.D. Tex. Oct. 28, 2022).
73 See e.g., Marina Club Condo. Ass’n v. Philadelphia Indem. Ins. Co., No. 1:21-CV-429-DAE, 2022 WL 18046475, at *1 (W.D. Tex. Nov. 7, 2022).
74 TEX. INS. CODE ANN. Art. 21.58(b) (recodified, as amended, at TEX. INS. CODE 554.002).
75 “Anatomy of An Entrenched Error” at p. 8 (citing the 72nd Tex. Leg., Reg. Sess., Economic Dev. Comm., Subcommittee on Insurance, May 20, 1991, Tape 0588 Side 1).
76 Baylor Scott & White v. Peyton, 549 S.W3d 242, 252 (Tex. App. – Ft. Worth 2018, no pet.).
77 Terra XXI, Ltd. v. Harmon, 279 S.W.3d 781, 785 (Tex. App.—Amarillo 2007, pet. denied) (citing Fitzgerald v. Advanced Spine Fixation Sys., Inc., 996 S.W.2d 864, 865-66 (Tex. 1999)).
78 Wallis, 2 S.W.3d at 303.
79 Martech USA, Inc., 993 F.2d at 1199 (Texas law is clear that “[p]roof that the claimed losses occurred during the policy period is an essential element of [an insured’s] coverage claim on which it bears the burden of proof.”). See also Stagliano, 633 Fed. Appx. at 219; Block, 744 S.W.2d at 944. The Fifth Circuit in Martech specifically rejected the argument that article 21.58 changed the burden of proving when damage occurred. The Court noted, “Article 21.58 applies to language of exceptions to coverage. As the court in Block pointed out timing of loss is a precondition to coverage, not an exception.” (emphasis in original).