Farmers Insurance Exchange v. Greene ex rel. Greene
376 S.W.3d 278
Tex. App.2012Background
- FIE issued a homeowner’s policy to Greene covering dwelling, personal property, and liability, with a vacancy clause suspending dwelling coverage 60 days after vacancy.
- Greene notified FIE in July 2007 she would vacate the dwelling for a retirement community and put the house on the market.
- In November 2007 a fire damaged Greene’s dwelling; Greene claimed benefits under the policy for loss to the dwelling.
- FIE denied the claim relying on the vacancy clause; Greene sued for policy benefits, fees, penalties, and extra-contractual damages.
- The trial court granted Greene partial summary judgment on the breach of contract claim and severed remaining claims; on appeal FIE challenges the breach ruling and argues section 862.054 does not apply.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does vacancy clause apply as a defense without showing prejudice? | Greene argues no prejudice is required under the policy and section 862.054 applies. | FIE contends vacancy clause excludes coverage and does not require prejudice to deny. | Vacancy exclusion is a valid exclusion; no breach or prejudice requirement. |
| Does section 862.054 apply to a real-property vacancy in this context? | Greene relies on 862.054 to require prejudice before denying coverage. | FIE argues the statute does not apply to real property and the vacancy clause stands independent of prejudice. | Section 862.054 does not apply to Greene’s real-property loss; vacancy is a policy exclusion, not a breach. |
| Was the trial court's interpretation of the vacancy clause correct and does it sustain breach of contract on these facts? | Greene asserts no breach given the policy language and that vacancy does not render coverage void. | FIE contends the vacancy clause suspends coverage and Greene breached by vacating. | Trial court erred; vacancy does not constitute a breach; grant of breach damages reversed. |
Key Cases Cited
- Kelley-Coppedge, Inc. v. Highlands Ins. Co., 980 S.W.2d 462 (Tex. 1998) (plain meaning controls; no ambiguity misread)
- Mid-Continent Cas. Co. v. Global Enercom Mgmt., Inc., 323 S.W.3d 151 (Tex. 2010) (clear policy terms construed as written)
- National Union Fire Ins. Co. v. Crocker, 246 S.W.3d 603 (Tex. 2008) (give effect to policy language; avoid adding terms)
- Gilbert Texas Const., L.P. v. Underwriters at Lloyd’s London, 327 S.W.3d 118 (Tex. 2010) (interpret contract in light of intent and whole agreement)
- In re Texas Ass’n of School Boards, Inc., 169 S.W.3d 653 (Tex. 2005) (recodified statute’s purpose preserved; no substantive change)
- Puckett v. U.S. Fire Ins. Co., 678 S.W.2d 936 (Tex. 1984) (public policy against technical voids; anti-technical statute)
- Perez v. Los Fresnos State Bank, 512 S.W.2d 796 (Tex. Civ. App. (Corpus Christi) 1974) (application of statutorily protective provisions to breach)
- Holston v. Implement Dealers Mut. Fire Ins. Co., 206 F.2d 682 (5th Cir. 1953) (anti-technical interpretation in federal context)
- Catalina Enterprises, Inc. Pension Trust v. Hartford Fire Ins. Co., 67 F.3d 63 (4th Cir. 1995) (vacancy exclusions reflect higher risk in vacant buildings)