5:24-cv-00050
N.D. Tex.Aug 29, 2025Background
- Ohio Casualty issued a builder’s risk policy covering construction at a Lubbock, Texas property from Aug. 27, 2018 to Aug. 27, 2019 for ten self-storage buildings. Construction completed Oct. 2019; later coverage by a different insurer (Starr) began Nov. 1, 2019.
- Hail/windstorms occurred May 5–24, 2019 (affecting eight buildings) and another on May 20, 2020. Starr denied a May 2020 claim submitted by Indiana Affordable Storage under the Starr policy.
- On May 20, 2021 Indiana Storage submitted a claim to Ohio Casualty asserting loss from the May 2019 storms and stated it first learned of the damage in May 2021. Ohio Casualty denied the claim for failure to give prompt written notice (among other reasons).
- Ohio Casualty reopened investigation under reservation of rights; an engineering inspection (Oct. 5, 2021) could not attribute damage to a specific storm because spatter marks had faded; Ohio Casualty again denied, citing prejudice from delayed notice (investigative difficulty and financial prejudice from increased repair costs/pricing).
- Ohio Casualty removed to federal court (diversity), moved for summary judgment; Magistrate Judge Burch recommended granting summary judgment for Ohio Casualty on breach and related extra-contractual claims; district court adopted the FCR, found diversity satisfied after supplemental evidence, overruled plaintiff’s objections (including a belated offer-to-cure), granted summary judgment, and dismissed with prejudice.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Subject-matter jurisdiction (diversity) | Parties’ citizenship is diverse; plaintiff concurred after supplemental showings | Ohio Casualty initially needed to prove its principal place of business; later supplied evidence | Court found complete diversity after Ohio Casualty’s supplemental evidence and retained jurisdiction |
| Compliance with policy notice requirement | Indiana Storage asserted it was unaware of May 2019 damage until May 2021 (implying notice was timely upon discovery) | Ohio Casualty argued policy required prompt written notice and plaintiff failed to give it | Court (adopting FCR) found as a matter of law plaintiff failed to give prompt notice |
| Prejudice from late notice (investigation & financial) | Plaintiff: Ohio Casualty’s initial denial without inspection shows no investigatory prejudice; later offered to stipulate to 2019 pricing to cure any prejudice (raised only after FCR) | Ohio Casualty: delayed notice impaired investigation and caused financial prejudice (increased repair costs and use of later price lists) | Court: undisputed financial prejudice (increased costs/pricing) entitled Ohio Casualty to summary judgment; plaintiff’s post-FCR offer-to-cure waived and rejected |
| Survival of extra-contractual claims | Extra-contractual claims should survive unless contract claim fails on other grounds | Extra-contractual claims are premised on an improper denial; if denial was proper, these claims fail | Court granted summary judgment on extra-contractual claims because they rest on the denied coverage claim |
Key Cases Cited
- Kreimerman v. Casa Veerkamp, S.A. de C.V., 22 F.3d 634 (5th Cir. 1994) (de novo review required for objections to magistrate recommendations)
- Megalomedia Inc. v. Phila. Indem. Ins. Co., 115 F.4th 657 (5th Cir. 2024) (burden at summary stage to supply evidence sufficient for a jury to find corporate citizenship)
- MidCap Media Fin., L.L.C. v. Pathway Data, Inc., 929 F.3d 310 (5th Cir. 2019) (corporation must identify state of incorporation and principal place of business for diversity)
- Hertz Corp. v. Friend, 559 U.S. 77 (2010) (principal place of business = corporation’s "nerve center")
- Celotex Corp. v. Catrett, 477 U.S. 317 (1986) (summary-judgment burden-shifting principles)
- Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (1986) (standard for genuine issue of material fact)
- Little v. Liquid Air Corp., 37 F.3d 1069 (5th Cir. 1994) (nonmovant cannot rely on pleadings alone to survive summary judgment)
- Cupit v. Whitley, 28 F.3d 532 (5th Cir. 1994) (arguments not presented to the magistrate are waived on objection)
- Firefighters’ Ret. Sys. v. EisnerAmper, L.L.P., 898 F.3d 553 (5th Cir. 2018) (further authority on waiver of arguments not raised before the magistrate)