Summary
**Key Legal Topics:** Insurance coverage; flood exclusion; burden of proof under Texas law; Hurricane Harvey property damage; condominium association boat slips; difference in conditions form; flood endorsement; specified flood exclusion; governmental acts exclusion; summary judgment; stipulation. **Holdings:** The Fifth Circuit affirmed summary judgment for the insured condominium association, holding that the insurer failed to prove any applicable exclusion. The flood exclusion did not apply because the boat slips were located on water, not dry land, and the insured presented uncontroverted evidence that damage was caused by a suction effect from dam water release, not inundation. The insurer's attempt to raise a new governmental-acts exclusion via a post-judgment stipulation was untimely. **Key Provisions:** Under Texas law, the insured bears the initial burden to establish coverage; once met, the insurer must prove an exclusion applies. Ambiguous insurance policies are construed against the insurer, and exclusions are strictly interpreted. The court rejected the insurer's argument that combining coverage and exclusion provisions in the same contractual section shifted the burden to the insured.
Topics
Practice areas
Questions Presented
- Whether the district court correctly granted summary judgment to Playa Vista on its breach of contract claim, specifically whether Playa Vista established coverage under the policy and whether ICW proved any applicable exclusion.
Holdings
- The district court correctly granted summary judgment because Playa Vista established coverage for the boat slips under the policy, and ICW failed to prove that any exclusion applied.
Key quotations
“It is undisputed that the FE's definition of 'flood' does not apply to Playa Vista's boat slips; they obviously existed on water, not two or more acres of normally dry land.” (at 7)
“Copes testified that he personally observed the boat slips at 10:00 pm on the night before the San Jacinto River Authority 'released the water from Lake Conroe Dam, and neither the dock nor any of the Boat Slips were damaged or destroyed at that time.'” (at 7)
“Thus, Copes testified, it was this 'suction effect' and the drop of water levels—not an 'inundation' or 'flood' or rise of water levels—that destroyed Playa Vista's boat slips.” (at 8)
Factual background
Playa Vista Conroe, a condominium association, owned a dock with 22 boat slips on Lake Conroe. In May 2017, it purchased insurance from ICW covering the dock and boat slips under a policy that included a difference in conditions form, a limited coverage flood endorsement, and a specified flood exclusion for boat slips. During Hurricane Harvey, the San Jacinto River Authority released water from the Lake Conroe Dam at an unprecedented rate to prevent overflow, creating a suction effect that destroyed the boat slips. Playa Vista filed a claim, which ICW denied, asserting that the policy did not cover flooding caused by a hurricane or tropical storm.
Procedural history
Playa Vista sued ICW in Texas state court for breach of contract after ICW denied coverage for damage to boat slips from Hurricane Harvey. ICW removed to federal court. The parties filed cross-motions for summary judgment. The district court granted Playa Vista's motion and denied ICW's, finding coverage and no applicable exclusion. The parties then stipulated to damages and attorney's fees, and the district court entered final judgment. ICW appealed.