620 S.W.3d 702
Tex.2021Background
- In 2001–2002 Farmers withdrew its broad HO-B homeowners policy (approved by TDI) and replaced it with a narrower HO-A form after a wave of mold, water, and foundation claims caused statewide underwriting losses. TDI approved the change and required insurers to remove HO-B by end of 2002.
- Farmers mailed 30‑day nonrenewal notices to HO‑B policyholders (including Sandra Geter) stating HO‑B would not be renewed due to substantial statewide losses; Geter sued in Jefferson County seeking a declaratory judgment that Farmers breached the HO‑B policies by refusing to renew.
- Geter relied on paragraph 6 of the HO‑B form, which (a) bars refusal to renew “because of claims for losses resulting from natural causes” and (d) provides that failure to give “proper notice of our decision not to renew” permits the insured to require renewal.
- The trial court granted summary judgment for Geter and the class, ordering renewals; the court of appeals affirmed liability but remanded on remedy and affirmed fee awards; intervenors (Hooks, Nolen, and Joseph C. Blanks, P.C.) sought fees related to parallel Travis County litigation.
- The Texas Supreme Court held Farmers’ interpretation correct: paragraph 6(a) protects against refusal to renew based on the individual policyholder’s claims/losses, not insurer’s statewide underwriting losses; Farmers complied with the 30‑day statutory notice, so plaintiffs obtain nothing on the breach claim.
- The Court reversed the attorney‑fee award to class counsel and remanded the fee issues for reconsideration; it reinstated the trial court’s striking of Hooks and Nolen’s intervention and affirmed denial as to Joseph C. Blanks, P.C.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether paragraph 6(a) of HO‑B barred Farmers from nonrenewing policies statewide because of mold/water losses | Geter: “claims for losses resulting from natural causes” bars refusal to renew when nonrenewal is motivated by mold/water losses | Farmers: paragraph 6(a) applies to claims/losses under the individual insured’s policy, not statewide underwriting losses | Held for Farmers: phrase refers to the individual policyholder’s claims/losses, so statewide discontinuation permitted with proper notice |
| Whether Farmers’ 30‑day notice was “proper notice” under paragraph 6(d) | Geter: notice citing prohibited reason (mold/statewide losses) was improper, so insureds may require renewal | Farmers: notice complied with statute and paragraph 6(d); paragraph 6(a) does not bar statewide discontinuation | Held for Farmers: notice was proper; paragraph 6(d) does not entitle renewal because paragraph 6(a) was not violated |
| Award of attorney fees to class counsel under Declaratory Judgment Act | Geter/class: prevailing-party fees awarded by trial court were appropriate | Farmers: plaintiffs did not ultimately prevail on appeal; fee award must be reconsidered | Held: reversed fee award and remanded for trial court to reassess fees given plaintiffs obtained no favorable results on appeal |
| Intervenors’ (Hooks/Nolen; Joseph C. Blanks, P.C.) requests for fees and to intervene | Intervenors: their prior work in Travis County preserved claims and justifies fee recovery | Farmers: interventions were untimely, attenuated, and imposed undue burden; fees should be pursued in Travis County if appropriate | Held: trial court did not abuse discretion in striking Hooks/Nolen intervention (court of appeals erred); affirmed striking of Joseph C. Blanks, P.C. intervention |
Key Cases Cited
- Valence Operating Co. v. Dorsett, 164 S.W.3d 656 (de novo review of summary judgment)
- MCI Telecomm. Corp. v. Tex. Utils. Elec. Co., 995 S.W.2d 647 (contract interpretation is question of law)
- Heritage Res., Inc. v. NationsBank, 939 S.W.2d 118 (plain, ordinary meaning rule for contract terms)
- Fiess v. State Farm Lloyds, 202 S.W.3d 744 (interpretation of standardized insurance forms; insured/public meaning governs)
- Gonzalez v. Mission Am. Ins. Co., 795 S.W.2d 734 (consistent use of contract terms across provisions)
- RSUI Indem. Co. v. Lynd Co., 466 S.W.3d 113 (presumption that identical policy words bear same meaning)
- Am. Mfrs. Mut. Ins. Co. v. Schaefer, 124 S.W.3d 154 (read insurance policy in context; give effect to all provisions)
- Morath v. Tex. Taxpayer & Student Fairness Coalition, 490 S.W.3d 826 (remand for reconsideration of fees when appellate outcome alters prevailing-party status)
- Farrar v. Hobby, 506 U.S. 103 (degree of success is critical in fee awards)