Elie Nassar and Rhonda Nassar v. Liberty Mutual Fire Insurance Company, Liberty Mutual Group, Dave Baker, Mary Hamilton, and Marcus Smith
508 S.W.3d 254
| Tex. | 2017Background
- Elie and Rhonda Nassar owned a residence on six acres with multiple barns and a ~4,000‑foot system of fences; Hurricane Ike damaged the property.
- The Nassars purchased a Texas Standard Homeowners Policy (Form A) with Coverage A (Dwelling) and a separate limit for Other Structures (10% of Coverage A or listed limit).
- Coverage A(1) covers “the dwelling … including structures attached to the dwelling.” A(2) covers “other structures … set apart from the dwelling by clear space” and adds: “This includes structures connected to the dwelling by only a fence, utility line or similar connection.”
- Liberty Mutual classified the fencing as an “other structure,” paid up to the other‑structures limit, and the Nassars sued seeking coverage under the dwelling limit and asserted extra‑contractual claims.
- Trial court granted Liberty Mutual summary judgment; the court of appeals affirmed. The Texas Supreme Court reviewed whether the fencing is covered as a structure “attached to the dwelling” (Coverage A(1)) or as an “other structure” (A(2)).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether fencing qualifies as a “structure attached to the dwelling” under Coverage A(1) | The fence is an ordinary “structure” (constructed of joined parts) and is fastened/bolted/cemented to the house, so it falls under A(1) | A fence should be treated as a “connection,” not a dwelling structure; the policy’s A(2) sentence treating structures connected "by only a fence" shows fences operate to make items "other structures" | Court held the Nassars’ interpretation reasonable; fencing that is attached to the dwelling is covered by A(1) as a matter of law on the undisputed facts |
| Whether the policy is ambiguous | The policy language unambiguously covers a fence attached to the dwelling under A(1) | The interplay of A(1) and A(2) makes the policy unambiguous in Liberty Mutual’s favor because treating a fence as a structure would render A(2) meaningless | Court rejected Liberty Mutual’s reading as unreasonable and held the policy unambiguous in favor of the Nassars’ interpretation |
| Whether treating fence as dwelling component would nullify A(2) (internal inconsistency) | Even if some fence sections attach, other fence segments or other structures may still be “other structures”; factual allocation can resolve line‑drawing | If a fence attached to the dwelling is itself a structure, then anything connected to that fence would erroneously become part of the dwelling, nullifying A(2) | Court found Liberty Mutual’s concern speculative; factual distinctions (e.g., which fence segments are attached) are for the trial court on remand |
| Standard for construing insurance policy and resolving uncertainties | Policy words have ordinary meanings; if insured’s reading is reasonable, adopt it; ambiguities construed for insured | Insurer urged a contextual reading that treats fence as connection to preserve A(2) | Court applied Texas contract/insurance rules: adopt insured’s reasonable interpretation; here Nassars’ reading controls and remand for further proceedings |
Key Cases Cited
- Provident Life & Accident Ins. Co. v. Knott, 128 S.W.3d 211 (Tex. 2003) (standard of review for summary judgment)
- Tanner v. Nationwide Mut. Fire Ins. Co., 289 S.W.3d 828 (Tex. 2009) (use ordinary contract rules to construe insurance policies)
- Gilbert Tex. Constr., L.P. v. Underwriters at Lloyd’s London, 327 S.W.3d 118 (Tex. 2010) (harmonize all contract provisions so none are meaningless)
- Forbau v. Aetna Life Ins. Co., 876 S.W.2d 132 (Tex. 1994) (avoid isolating contract phrases from context)
- RSUI Indem. Co. v. The Lynd Co., 466 S.W.3d 113 (Tex. 2015) (give words ordinary meaning; insured‑favorable rule when ambiguous)
- Grain Dealers Mut. Ins. Co. v. McKee, 943 S.W.2d 455 (Tex. 1997) (if only one reasonable interpretation exists, adopt it)
- Nat’l Union Fire Ins. Co. of Pittsburgh, Pa. v. Hudson Energy Co., 811 S.W.2d 552 (Tex. 1991) (ambiguities in coverage construed for the insured)