DALLAS – State Farm Lloyds recently shut down another Mostyn Law lawsuit, obtaining summary judgment in litigation brought after the insurer denied a couple’s claim for foundation damage.
Seeking up to $1 million in damages, John and Barbara Thomas filed suit against State Farm and adjuster Maegan Stronger last April in a Texas district court, alleging breach of contract and Texas Insurance Code violations.
State Farm had the case removed to federal court in June 2015, records show.
A year later, the insurer moved for summary judgment, arguing that although John and Barbara Thomas could have, they “did not purchase dwelling foundation coverage from State Farm and their alleged damage is, therefore, not covered under the applicable insurance policy.”
The couple, on the other hand, maintained their policy with State Farm contained a Water Damage endorsement (WDE), which extends to foundation damage caused by a leak in their Dallas home’s plumbing system; or, at the very least, renders the policy ambiguous to the point that it must be construed in their favor.
On Nov. 2, U.S. District Judge Jane Boyle granted State Farm’s motion, finding that the policy is not ambiguous and that the WDE excludes coverage for loss caused by foundation movement, even when the movement is related to plumbing leaks.
“Overall, the WDE’s impact on the Policy’s coverage is rather limited. It just adds coverage for wet rot, dry rot, and deterioration caused by plumbing leaks,” wrote Judge Boyle.
“What it does not do—and what is clear from its terms—is cover damage to the leaky system itself or extend coverage to include damage caused by excluded perils such as foundation movement or earth shifting.
“And those are the exact damages for which Plaintiffs seek to recover.”
A final judgment was entered on Nov. 3, dismissing the case with prejudice.
Case history
After they began noticing cracks and slopping floors in their home, John and Barbara Thomas hired an engineer, who determined foundation movement caused by soil erosion was to blame. A plumber later discovered five leaks in the home’s plumbing system.
However, despite the leaks, the couple admitted there was no noticeable water damage, aside from the foundation’s shifting, court records show.
John and Barbara Thomas paid for the repairs out of pocket, spending more than $55,000, and then submitted a claim to State Farm.
Stronger, the State Farm adjuster, informed them their claim would be denied because the damage to their home was not the type of visible water damage covered in the policy.
In turn, the couple filed suit.
Houston attorney Steve Mostyn represents the plaintiffs.
State Farm is represented by Sedgwick LLP attorneys Neil Rambin, Kimberly Steele and Scott Brinkerhoff.
Mostyn and his firm have filed thousands upon thousands of lawsuits against Texas insurers.
Northern District of Texas case No. 315-cv-01937-B