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Texas Affirms Statute of Limitations Ruling Barring Homeowner's Subsequent Damage Claim
Insurance Law Update
Texas Court of Appeals, Houston
In Sheppard v. Travelers Lloyds of Texas Ins. Co., 2009 WL 3294997 (Tex. App. – Houston October 15, 2009), the Texas Court of Appeals, 14th District, enforced the statute of limitations provision within a homeowners’ policy to bar the homeowners’ subsequent claim for additional damage.
In the summer of 2001, Anthony Sheppard submitted a claim to Travelers for damages suffered to his home as a result of tropical storm Allison. Travelers’ independent adjuster inspected the home and informed Sheppard that the estimated recovery on his claim would total $4,890.60 after deductions for depreciation and the deductible. Soon thereafter, Travelers issued its check for $4,890.60 to Sheppard and closed its claim file. Sheppard did not communicate with Travelers again until May 2003, when Travelers received correspondence from Sheppard’s attorney noting the recent discovery that the home had suffered severe water and mold damage. After an investigation, Travelers denied Sheppard’s new damage claims.
Sheppard sued Travelers in November 2006, alleging breaches of the insurance policy and violations of the Texas Insurance Code. Travelers moved for summary judgment on the partial grounds that Sheppard failed to file suit within two years and one day from the date on which his causes of action accrued, as required by the policy. The trial court granted summary judgment for Travelers.
The primary question addressed by the Texas Court of Appeals was the date of accrual for Sheppard’s causes of action. Travelers argued Sheppard’s causes of action accrued in 2001 when Travelers’ independent adjuster paid the loss and closed his file. Sheppard contended his causes of action accrued in March 2005 when Travelers sent its denial letter after reopening its file. After reviewing Texas law on the issue of claim accrual, the court concluded that the date Travelers closed its claim file established “an objectively verifiable event that unambiguously demonstrated [the insurer’s] intent not to pay the claim.” Because Sheppard offered no evidence that Travelers later (1) withdrew or changed its 2001 denial, or (2) made further payments beyond the initial $4,890.60 check issued in July 2001, “Travelers' subsequent actions in response to Sheppard's inquiry some 20 months after denial did not affect Sheppard's already-accrued causes of action.”
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