Maynard v. State Farm Lloyds: Insurer Obtains Summary Judgment in Bad Faith Action Concerning Mold
October, 2002
On July 2, 2002, a Federal district court sitting in Texas granted State Farm’s motion for summary judgment and held that the insured party’s “allegations of State Farm’s failure to “timely investigate, cover, and remediate mold contamination in her family’s home” were baseless. Maynard v. State Farm Lloyds, No. 3:00-CV-2428-M, 2002 U.S. Dist. LEXIS 12026 (N.D. Tex. July 2, 2002). The Maynard court held that State Farm’s actions were not in bad faith, and that its decision to provide coverage after conducting an investigation was proper and did not violate the Texas Insurance Code.
Facts
Plaintiff filed two claims with State Farm. In 1998, plaintiff filed a claim “complaining of water leaks in the bathroom, plaster cracks, and mildew infestation in her home.” State Farm investigated the cause and origin of the damage and determined that the mildew and water damage were the result of “poor drainage” under her home and foundation movements. Plaintiff’s homeowner’s policy contained a clear exclusion for “wear and tear, deterioration or loss caused by any quality in the property that causes it to damage or destroy itself.” State Farm denied coverage for the 1998 claim under this exclusion.
In 1999, plaintiff filed another claim with State Farm “asserting that, while making repairs to her bathroom, she broke through a rotted floor, revealing extensive water damage.” The cause of this damage was confirmed to be a leak in the kitchen sink drain arm. An investigation also indicated that the plaintiff’s home had suffered additional foundation settlement. State Farm advised plaintiff that its investigation revealed that “although the plumbing leak did not cause or contribute to the home’s foundation movement, it did cause some rotting to the kitchen and bathroom subfloor” and that State Farm would provide insurance coverage pursuant to the homeowner’s policy provision covering damage caused by accidental leakage from a plumbing system. Shortly thereafter, State Farm advanced the plaintiff nearly $4,000 for the physical damage, as well as coverage for personal property items and Alternative Living Expenses during the repair process. The second claim was the subject of this lawsuit.
Plaintiff complained that during her absence from her home as repairs were being made for the damage that gave rise to the second claim, “rats entered the structure through the hole in the bathroom and littered the floor and furniture with feces. . . .Maynard’s children suffered respiratory problems and other illnesses due to mold infiltration and rat infestation in their home, and that Maynard repeatedly complained to State Farm about these problems and requested that it pay her family’s medical expenses.” Plaintiff eventually hired an investigator to assess the mold levels present in her home. State Farm then hired its own investigator to evaluate the alleged mold infestation. After determining that mold existed in plaintiff’s home, State Farm paid the balance of the plaintiff’s homeowner’s policy, and also advanced additional payments for personal property damage, ultimately paying plaintiff over $100,000 for her damage. Although State Farm provided coverage up to its limits of liability, plaintiff filed suit alleging that State Farm (1) misrepresented the homeowner’s policy; and (2) committed unfair settlement practices in its adjustment and investigation of the loss, in violation of the Texas Insurance Code.
Analysis
The court soundly rejected both plaintiff’s unsubstantiated claims, opining as follows:
This Court first finds that Plaintiffs have presented nothing more than blanket allegations that Defendant violated any provision of Article 21.21 [of the Texas Insurance Code] . . . failing to attempt in good faith to effectuate a prompt, fair, and equitable settlement of a claim with respect to which the insurer’s liability has become reasonably clear, and . . . refusing to pay a claim without conducting a reasonable investigation with respect to the claim. Plaintiffs did not state in their Response that Defendant misrepresented the insurance policy at issue in any way... Furthermore, Plaintiffs have not provided any basis for the Court to find that Defendant violated any subsections [of the Texas Insurance Code]... In fact, the evidence, even when viewed in a light most favorable to the non-movant, shows that Defendant paid Plaintiffs the full amount of the claim ...
Learning Point:
Even in the face of an aggressive plaintiff’s bar pursuing myriad mold claims, and heightened media focus on the alleged health hazards caused by mold, courts have not abandoned otherwise applicable pleading and proof requirements simply because mold is the subject of the litigation.
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