Case Watch

Exclusions

Yates Carpet Inc. v. The Travelers Lloyds Insurance Co.
Texas Appeals 7th Circuit, June 19, 2008

Breach of contract exclusion precludes coverage for all claims bearing even an incidental relationship to alleged breach of contract. The claimant alleged that the policyholder breached its contract with the claimant. The claimant further alleged that the policyholder’s continued unauthorized use of proprietary marks amounted to trademark infringement and unfair competition. The policy contained a breach of contract exclusion. The court held that the policyholder was not entitled to coverage because the trademark infringement and unfair competition claims arose out of breach of contract.

Homeowners Insurance

Page v. State Farm Lloyds
Texas Appeals 10th Circuit, June 11, 2008

Texas homeowners form B (HO-B) provides coverage for mold damage resulting from plumbing leakage. The insurance policy at issue provided coverage for “physical loss … caused by a peril listed,” including a loss caused by the “accidental discharge, leakage or overflow of water or stream from within a plumbing, heating or air condition system or household appliance.” The insurer argued that mold damage was not covered, because mold was not a named peril in the policy. The court disagreed and held that the policy provided coverage for mold damage to personal property caused by a plumbing leak.

Property Insurance

All Saints Catholic Church v. United National Insurance Co.
Texas Appeals 5th Circuit, June 17, 2008

Policy only provides coverage for portion of roof damaged by covered peril. The policy provided coverage for property damage caused by hail, but excluded damage caused by wear and tear or by latent defects in property. The policyholder’s roof was made with defective tiles. A hailstorm caused damage to some tiles. Because of the defective tiles used to construct the roof, the tile damaged by hail could not be “spot” repaired, but, rather, the entire roof needed to be replaced. The court determined that part of the loss to the roof was caused by the hailstorm which was a covered peril, while the remaining damage to the roof was caused by wear and tear and latent defects. It further held that the policyholder was only entitled to recover that portion of the damage caused solely by the hailstorm.

The information for Case Watch is provided by the law firm of Goldberg Segalla LLP (www.goldbergsegalla.com). Editors are Richard J. Cohen, Daniel W. Gerber and Sarah J. Delaney.

Topics Texas