GALVESTON - While the language in insurance policies can overwhelm even the savviest of consumers, a Galveston County jury was able to digest a week’s worth of testimony and conclude the extensive storm damage a company suffered was not actually covered by its providers.
Through the Mostyn Law Firm, GYB Investors and its subsidiaries sued the Texas Windstorm Insurance Association, Landmark American Insurance Company and the Victory Insurance Agency.
The suit arose after the remnants of Hurricane Patricia rained down upon the Galveston area in October 2015. The storm triggered damage to the electrical system at D Dock at Galveston Yacht Basin.
The electricity had gone out in the area and when power was restored, one of the transformers on D Dock arced and caused a surge of electricity that cascaded through all six transformers, causing significant damage to the entire electrical system.
The owners of the dock, GYB, had a windstorm and hail policy with TWIA. The company also had an all-risk commercial property policy with Landmark. The policies were purchased through Victory.
Records show GYB submitted claims to both TWIA and Landmark and in response both carriers sent electrical engineers out to investigate. The engineers agreed the arcing event was caused by rainwater entering the transformers.
Landmark’s engineer determined the rainwater was driven by wind and entered through ventilation holes on the sides of the transformers, while TWIA’s engineer concluded the rainwater crept through rust-worn holes in the roof and dripped down into the transformers.
Both TWIA and Landmark denied the claim in December 2015. Nearly a year later, GYB filed suit against TWIA and Victory in October 2016. Landmark was added as a defendant in April 2017.
The case was called up for trial late last month and on May 29 the jury unanimously found that both TWIA and Landmark did not fail to comply with their insurance policies with GYB.
Landmark’s attorney, Lindsey Bruning of Zelle LLP in Dallas, told The Record that the result was a welcomed one and made possible because jurors took their “jobs seriously.”
“We were very fortunate to have a fair judge and an attentive jury,” Bruning said. “The jury clearly understood that the insurance policies at issue were contracts that had to be interpreted and applied in accordance with their terms, rather than based merely on sympathy.”
Jurors were asked to determine if TWIA’s denial of coverage was improper, specifically if there was damage to the electrical system on Dock D caused by rain entering from a wind-created opening in the roof.
When denying coverage, TWIA cited its rain exclusion, maintaining that there was no wind-created opening.
Though GYB claimed a 300-sq. ft. hole in the roof was caused by wind that allowed water to enter the system, there was evidence to support that this hole was part of an ongoing maintenance project.
In support of its denial, Landmark had cited the windstorm exclusion and an electrical arcing exclusion in the policy.
Based on the evidence offered, the jury determined that both exclusions applied to the damage claimed.
For Victory, jurors were asked if the company and its agent, Roger Montemayor, breached their contract with GYB by failing to procure the insurance it requested – insurance that would have covered the damage caused by the storm.
Jurors unanimously found that neither Victory nor Montemayor breached the contract.
The jury also determined that Victory and Montemayor did not engage in any deceptive practices that GYB relied on to its detriment.
No damages were awarded.
GYB was seeking actual damages, plus trebled from TWIA and/or Landmark in an amount totaling more than $1.2 million. The company also sought $3.3 million from the agent, which included actual damages, four years of paid premiums, and then trebled.
Landmark is represented by Bruning, Alex Fernandez, and Michael Upshaw with the Dallas office of Zelle LLP.
TWIA is represented by Tory Taylor and Peter Zavodnyik, attorneys for the Houston law firm Litchfield Cavo.
GYB is represented by Mostyn Law attorney Michael Downey and Mark Sparks of The Ferguson Law Firm in Beaumont.
Filed in Galveston County District Court, cause No. 16-CV-0656