One of the first cases the Texas Supreme Court will hear when the term begins this month has industry groups weighing in, arguing a state insurance law has been consistently misapplied to put policyholders who make claims in an often unwinnable position.
At the heart of the case that pits policyholder Harold Overstreet against Allstate Vehicle and Property Insurance Company is Texas’ “concurrent causation doctrine,” which comes into play when insured property is damaged by a combination of covered and uncovered causes, and requires policyholders prove what portion of damage is attributable to the covered cause.
As hurricane season approaches its traditional peak in the state, the Texas Supreme Court will hear oral arguments on Sept. 21 in the dispute that could have major implications for policyholders.
In late August an amicus brief was filed with the court by seven industry groups — the Texas Hospital Association, Texas Hotel and Lodging Association, Texas League of Community Charter Schools, Texas Community Association Advocates, Texas Automobile Dealers Association, Texas Independent Automobile Association and the Texas Organization of Rural and Community Hospitals
Specifically, the amicus groups are asking the court to follow section 554.002 of the Texas Insurance Code, which they argue was enacted in 1991 to clarify the issue courts are still getting wrong when it comes to which party bears the burden to prove what caused the damage under the claim.
“Every other state follows the well-worn rule — reiterated over and over in all the major academic treatises on insurance law for decades — that the insurer bears the burden of proving when a loss falls within the exclusionary language of a policy,” the brief argues.
Texas is the only state in the nation that places policyholders in such a position, the groups told the court, and placing the burden on insurers to prove a loss falls within an exclusion is the approach taken in every other state.
“No other state in the United States has this problem,” the amici argue. “It is only in Texas where this mistake has been perpetuated — made more troubling by the fact there was a deliberate legislative action to override this common law doctrine, and courts have consistently ignored it.”
The case made its way to the state’s high court after the Fifth Circuit asked it for clarification on the concurrent causation doctrine on May 19.
Circuit Judge Don Willett, who formerly sat on the Texas Supreme Court, wrote the Fifth Circuit’s request for clarification, telling the Texas justices that “courts have sent mixed signals about when the concurrent causation doctrine applies, and what the doctrine requires when it does.”
Overstreet filed a claim for coverage, alleging his leaky roof was caused by a June 2018 hailstorm that occurred soon after he bought his Allstate policy. Allstate disagreed, finding that most of the damage was caused by wear-and-tear and hailstorms that occurred before Overstreet purchased the policy.
A trial court sided with Allstate and dismissed Overstreet’s lawsuit after finding he failed to prove what damages were solely attributable to the covered storm.
The court accepted the question, agreeing to weigh in on the case, on May 27, according to the docket.
This case marks the second time the Fifth Circuit has asked the Texas Supreme Court for clarity on the doctrine. Less than a year ago, the appellate court sent the same verbatim questions to the Texas court in Frymire Home Services v. Ohio Security Insurance Co., but the parties in that dispute settled soon after the questions were certified, denying the Texas Supreme Court an opportunity to weigh in.
Allstate is represented by Susan E. Egeland, Sara E. Inman, S. Vance Wittie and D. Alexander Harrell of Faegre Drinker Biddle & Reath.
Overstreet is represented by Melissa Waden Wray of Daly & Black.
The amici are represented by Marc E. Gravely, Brendan K. McBride and Jonathan C. Lisenby of Gravely PC.
The cause number is 22-0414.