Metro Hospitality Partners, Ltd. v. Lexington Insurance
84 F. Supp. 3d 553
S.D. Tex.2015Background
- Metro Hospitality (owner/operator of a Crowne Plaza in Houston) experienced a chiller breakdown on August 15, 2010; it contracted replacement units and later submitted replacement invoices totaling $115,077.43.
- Lexington (insurer) / HSB (equipment-breakdown reinsurer) accepted liability for the property loss and paid $90,077.43 (invoices less $25,000 deductible); Metro accepted payment but reserved rights and then sued.
- Metro’s original submissions and its June 2011 demand did not assert or document a business-interruption claim; the first clear assertion of business-interruption losses came in litigation and in an amended complaint.
- Metro failed to timely designate experts and de-designated damages experts by stipulation; its sole damages witness at summary judgment was William Daniel Parra (HR Director / Executive Housekeeper), who had limited accounting/financial knowledge and did not prepare or have foundation for the damages spreadsheet.
- Lexington moved for summary judgment arguing Metro had no competent evidence of business-interruption (net) losses, that all contract and extracontractual claims failed as a matter of law, and alternatively sought attorney’s fees; the court granted summary judgment for Lexington and denied its fee request.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Admissibility of Parra’s damages testimony under Fed. R. Evid. 701/702 | Parra can testify from personal knowledge about lost revenue and accommodations given during AC outage | Parra lacks personal knowledge and specialized qualifications to opine on net business-interruption losses or foundation for the spreadsheet | Court: Parra inadmissible under Rule 701 (and not a qualified Rule 702 expert); testimony insufficient to prove damages |
| Sufficiency of evidence for business-interruption damages | Metro relies on Parra’s spreadsheet and Lexington’s forensic report (which used Metro’s spreadsheet) to prove lost business income | No competent witness or authenticated records establish net income loss as required by policy; spreadsheet lacks foundation | Court: No competent record evidence of business-interruption losses; Metro cannot prove an essential element of breach claim |
| Breach of contract / failure to pay business-interruption claim | Metro contends insurer should have investigated or asked about business-interruption after notice mentioning customer walkouts | Lexington promptly acknowledged and accepted property loss, repeatedly requested supporting documentation, and promptly paid covered invoices once produced; Metro never timely submitted a business-interruption claim | Court: Breach claim fails — Metro did not present evidence of coverage or damages for business-interruption losses |
| Extracontractual statutory and common-law claims (bad faith, prompt-payment, unfair settlement, DTPA, fraud) | Metro alleges unfair/untimely handling, misrepresentations, and failure to investigate/pay business-interruption losses | Lexington acted reasonably given Metro’s failure to present or support a business-interruption claim; statutory prerequisites (liability on underlying claim, timely submission) not met | Court: All extracontractual claims fail as a matter of law on the summary judgment record |
Key Cases Cited
- Celotex Corp. v. Catrett, 477 U.S. 317 (summary-judgment standard and movant’s initial burden)
- Anderson v. Liberty Lobby, 477 U.S. 242 (drawing inferences at summary judgment)
- Lincoln Gen. Ins. Co. v. Reyna, 401 F.3d 347 (movant’s burden to point to absence of evidence)
- Miss. Chem. Corp. v. Dresser-Rand Co., 287 F.3d 359 (Rule 701 lay-opinion by corporate representative)
- DIJO, Inc. v. Hilton Hotels Corp., 351 F.3d 679 (inadmissibility of lay lost-profits testimony lacking first-hand knowledge)
- Lamar Homes, Inc. v. Mid-Continent Cas. Co., 242 S.W.3d 1 (Tex. 2007) (Texas prompt-payment statute requires an underlying covered claim to trigger penalties)
- LifeWise Master Funding v. Telebank, 374 F.3d 917 (limits on lay testimony where calculations rely on technical methods beyond personal knowledge)