Dallas Fort Worth Insurance Lawyer Blog

Insurance lawyers in Brock Texas need to understand what a homeowners policy covers and what it does not cover.  A 1997, United States 5th Circuit opinion lets us know one of the occurrences not covered.  The style of the opinion is, State Farm Fire & Casualty Company v. Fullerton.

Fullerton killed his wife and step daughter.  His motive was never explained.  He immediately called to the sheriff’s department and turned himself in.  Based on advice of his attorney, Fullerton pleaded guilty to the lesser offense of simple murder.  The Court sentenced him to life in prison.  The heirs of two of the victims brought a wrongful death action against Fullerton in state court.  At the time of the shooting, Fullerton held a homeowners policy that provided coverage for, among other things, personal liability for bodily injuries.  In general, the policy covered injuries “caused by an occurrence” and defined an “occurrence” as “an accident, including exposure to conditions, which results in bodily injury … during the policy period.”  It excluded, however, injuries caused intentionally by or at the direction of the insured.

State Farm provided Fullerton with a defense under a reservation of rights and filed a declaratory judgment action.  Fullerton himself did not answer the suit.  He stated by affidavit:  “I do not believe that insurance coverage exists for these claims because any action taken by me was intentional and intended to cause harm” to his wife and step daughter.  The Court granted the defendant’s motion to appoint a guardian ad litem.  State Farm moved for summary judgment on the theory that Fullerton’s conviction collaterally estopped the heirs from litigating Fullerton’s intent and that the evidence that Fullerton shot his wife and Jones intentionally left no genuine issue of material fact.  The trial court denied the motion for summary judgment.  At trial, the jury found that the killings were unintentional.  State Farm appealed.

When a Texas homeowner is being sued by someone, will the homeowner’s policy defend against the lawsuit.  This is a good question and a 1998, Houston Court of Appeals [1st Dist.] opinion gives some insight to the answer.  The case is styled, Freedman v. Cigna Insurance Company.

The Freedmans sold their house in 1990 to Marx.  After buying the house, Marx noticed the roof leaked.  In 1992, a portion of the roof collapsed.  Marx sued the Freedmans for not disclosing the problems with the roof asserting causes of action for fraud, DTPA violations, negligence and fraud in a real estate transaction.  The Freedmans asked their insurers, Cigna and ICNA, to defend them.  The insurers refused to defend the Freedmans.  The Freedmans eventually settle with Marx and then sued Cigna and ICNA claiming the insurers breached their contracts by not defending the Freedmans and not indemnifying the Freedmans from the resulting liability.  The Freedmans also asserted a cause of action for violations of the Tex.  Ins. Code.  The trial court granted Cigna and ICNA a summary judgement.  The Freedmans appealed.

The judgment of the trial court was affirmed by this Court of Appeals.  An “occurrence” is defined as an accident, including exposure to conditions, resulting in the bodily injury or property damage during the policy period.  As a matter of law, fraudulent promises, misrepresentations, and untrue statements do not fall within the plain meaning of the definition of occurrence.  Marx sued the Freedmans not for the roof collapse, but rather for the Freedmans misrepresentations about the condition of the roof.  Marx alleged the Freedmans represented that the roof was seven years old and needed no repairs, and that they took affirmative steps to conceal the roof’s defects.  On the face of the pleadings, Marx was suing the Freedmans for intentional acts, not an “accident.”  The trial court correctly granted the insurers’ summary judgement.

Graford insurance attorneys will eventually see something that happened in an Eastland Court of Appeals opinion.  It is a 2005 opinion, styled Curb v. Texas Farmers Insurance Company.

A high school sophomore and a friend strung fishing line ankle-high across a courtyard area of the school.  They intended to lure their friends to the area but became distracted and allegedly “forgot” about the fishing line.  The following evening a teacher walked through the area, tripped over the line, was injured in the resulting fall, and then subsequently filed suit against the pranksters.  She was awarded $55,000 in damages “resulting from Defendants’ negligent acts.”  The insurer initially provided a defense but later withdrew it believing the claims were not covered under one prankster’s parent’s homeowner’s policy.  The student filed this suit against his father’s homeowner’s insurer, alleging that the insurer’s refusal to defend the insured in the underlying tort action violated the Texas DTPA and constituted a breach of contract.  The insurer counterclaimed, seeking a declaration that it had no duty to defend or indemnify the insured.  The trail court held that because the underlying suit was based on intentional acts, which were excluded from coverage under the insured’s homeowner’s policy, the insurer’s duty to defend was not triggered.  The court granted summary judgment in favor of the insurer and appeal followed.

The Eastland Court of Appeals affirmed, finding that a homeowner’s insurer had no duty to provide coverage for a personal injury lawsuit arising from a misdirected high school prank.  The court addressed the duty to defend under an “eight corners” analysis noting that the petition expressly claimed that the boys “intentionally” strung the fishing line.  While the petition also alleged “negligence,” the court ruled that factual allegations rather than legal theories were the focus in determining whether the duty to defend existed.  Here, “the origin of the damages was the intentional behavior” and not an “accident” and, thus, not an “occurrence” under the policy.  Addressing the duty to indemnify, and despite the underlying negligence finding, the court noted that the actions resulting in the damages were intentional:  “When a result is the natural and probable consequence of an act or course of action, it is not produced by accidental means.  The natural result of an act is the result that ordinarily follows, maybe reasonably anticipated, and ought to be expected.”  Therefore, the insurer had no duty to defend or to indemnify the insured.

Insurance attorneys in the Dallas and Fort Worth area will eventually find themselves in a situation like that presented in a 1999, Texas Supreme Court case.  The case is styled, Texas Farmers Insurance Company v. Murphy.

Mr. Murphy obtained homeowners insurance with Texas Farmers in 1993.  Seven days later the home was ransacked and intentionally burned down.  Mr. Murphy submitted a proof of loss claiming $115,000 for damage to the structure and $69,000 for damage to personal property.

Texas Farmers filed a declaratory judgment action seeking a determination that it need not pay the insurance because Mr. Murphy had set or caused the fire to be set.  While the action was pending, Mrs. Murphy filed for divorce and obtained a partition of one-half interest in claims against Texas Farmers.