The Southern District of Texas Reaffirms That an Insured has the Burden to Identify a Covered Loss During the Policy Period and Segregate Its Damages
The Zelle Lonestar LowdownJanuary 16, 2025
This seems like a simple concept; however, this is the exact question that the Honorable Judge Lee Rosenthal was asked to address in Cutchall v. Chubb Lloyd’s Ins. Co. of Texas, CIVIL ACTION NO. 23-3745, 2024 WL 5264707, (December 31, 2024).
Chubb Lloyd’s Insurance Company of Texas issued a property insurance policy to Kimberly and Michael Cutchall covering certain types of damage to their home occurring between May 29, 2021, to May 29, 2022. Id. at 1. The Cutchalls submitted a claim to Chubb claiming they sustained water damage to their home. The Cutchalls and their counsel lost sight of the real issue – probably because they had no evidence to support their claim. Instead of focusing on the evidence, the Cutchalls and their counsel complained about how many adjusters Chubb had involved over the life of the claim but did not have an expert that could definitively determine when the alleged damage to their home occurred. Id. at 2.
According to two of Chubb's experts, there were no hail or wind storms at the Cutchalls' address during the policy period that could have caused the damage they claimed to their home. Id. at 6.
Judge Rosenthal determined that the Cutchalls asserted that a hailstorm damaged their home on a specific date, but their evidence did not raise a genuine dispute about whether a storm capable of causing the alleged damage affected their neighborhood on that date or at another time during the policy period at issue. Id. at 7. Judge Rosenthal also determined that the Cutchalls' evidence contradicted itself as to when the alleged storm occurred. Id. Mrs. Cutchall reportedly testified that the damage occurred in “March o[r] April of 2021,” — which was before the policy period started in May 2021. Id. Mr. Cutchall reportedly testified that he could not identify the date of the storm allegedly causing damage to his home. Id.
The Cutchalls’ expert also testified that, between him and a professional meteorologist opining about whether a hailstorm hit at a particular date and time, the “Meteorologist is the expert.” Id. The Cutchalls did not retain a meteorologist and Chubb’s meteorology expert determined that there was no evidence there was a storm during the applicable policy period that could have caused the alleged damage to their home. Id.
Ultimately, Judge Rosenthal ruled that “No reasonable juror could believe the Cutchalls' evidence—or, really, lack thereof—over Chubb's. Because no genuine dispute exists over whether a covered loss occurred during the policy period, summary judgment on the Cutchalls' breach of contract claim is required.” Id. at 8.
But Judge Rosenthal did not stop her analysis there. Judge Rosenthal also determined that the Cutchalls also failed to segregate their alleged damages between covered and non-covered claims. Id. The Cutchalls admitted during their depositions that they suffered uncovered water damage to their home. Id. Judge Rosenthal reiterated Texas law on the issue that “[W]hen covered and excluded perils combine to cause an injury, the insured must present some evidence affording the jury a reasonable basis on which to allocate the damage.” Id. The Cutchalls initially claimed the segregation of damages argument fails because Chubb did not plead it as an affirmative defense. Id. Judge Rosenthal quickly disposed of that argument finding that “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.” Id. This argument by the Cutchalls’ counsel was clearly a desperate attempt to avoid the correct application of Texas law.
Finally, the Cutchalls asserted that their claim was covered because Chubb's experts found some water damage resulting from rainwater intrusion. Id. at 9. Judge Rosenthal recognized that this argument “misses the point. The evidence suggests that the Cutchalls had water damage in their house. Not all water damage is a covered loss under the Cutchalls' policy with Chubb. This case turns on what damages, if any, were covered by the policy.” Id. Judge Rosenthal again reiterated clear Texas law on the issue that “because the Cutchalls have provided no reasonable basis for distinguishing between” covered and non-covered damage, their breach of contract claim fails on summary judgment. Id.
While none of the concepts addressed in Cutchall v. Chubb Lloyd’s Insurance Company of Texas are novel, this case reminds us that the insured always has the burden to identify covered damage that occurred during the policy period and the burden to segregate its alleged damages between covered and non-covered damage.