Richard Fiess and Stephanie Fiess v. State Farm Lloyds

Summary

The Supreme Court of Texas answered a certified question from the United States Court of Appeals for the Fifth Circuit concerning whether an ensuing-loss provision in a Texas HO-B homeowners insurance policy provided coverage for mold contamination caused by otherwise covered water damage. The court held that the policy's express exclusion for loss caused by mold was unambiguous and was not overridden by the ensuing-loss provision. Two justices dissented, concluding that the provision was reasonably susceptible to an interpretation restoring coverage for certain mold losses.

Holdings

1. The policy does not provide coverage for mold contamination merely because the mold resulted from water damage. The certified question was answered no.
2. The policy is unambiguous as to the mold exclusion; ambiguity cannot be created by differing interpretations, prior policies, an agency's nonformal interpretation, or a public policy concern.
3. The court declined to overrule Lambros and reaffirmed its construction of the ensuing-loss language.
4. The court did not decide the precise scope of the term 'water damage,' but held that mold coverage cannot be created by treating every leak or drip as water damage.

Questions Presented

1. Whether the HO-B policy's ensuing-loss provision provided coverage for mold contamination caused by water damage that was otherwise covered by the policy.
2. Whether the policy's mold exclusion was ambiguous when read together with the ensuing-loss provision.
3. Whether prior versions of the HO-B policy, the Texas Department of Insurance's interpretation, or extrinsic evidence could create an ambiguity in the current policy.

Disposition

other