Texas Appellate Court Refuses to Recognize Claim for "Negligent Claims Handling"
Recently, the Houston Fourteenth Court of Appeals held State Farm did not breach a contract with its insured after it denied coverage for a mold claim. In Justice v. State Farm Lloyds Ins. Co., 2008 WL 123857 (Tex. App.—Houston [14th Dist.] January 15, 2008), the insureds made a claim under their State Farm homeowner’s insurance policy after a tree fell on their home. State Farm paid the claim. Later, the insureds discovered mold in the walls of their home and reported the claim to State Farm. After issuing a reservation of rights letter, State Farm contracted with a third-party vendor to remediate the home for $137,000. Thereafter, the insureds filed suit for additional mold damage. Both sides filed a motion for summary judgment.
State Farm argued the breach of contract claim was barred by the mold exclusion in the policy. The insureds allege the mold exclusion is trumped by a provision of the State Farm Adjuster’s Guide, purportedly stating if the original claim is covered, such as the damage from the wind blown tree, then any loss that proximately results is therefore covered. The insureds, however, failed to provide any legal authority for their position and, as a result, waived any basis for relief on that contention.
The appellate court also summarily dealt with the insureds’ other issues such as extra-contractual claims and negligence on the basis the insureds provided no basis to contradict the trial court’s ruling. Importantly, the court reiterated the principle that Texas does not recognize a claim for negligent claims handling. Lastly, to the extent the third-party contractor was hired by State Farm to identify mold damage that could be covered under the policy, the court ruled the insureds response does not articulate a duty owed to them by the contractor or how its failure to identify the mold could have caused them damage if it was not covered under the policy.
