For two weeks in September 2008, Hurricane Ike wreaked havoc throughout the Caribbean and Texas, causing over $25 billion in property damage for homeowners and businesses alike. One of those families, our clients, had their home and property severely damaged by the storm—including costly damage to a fence that was attached to the house itself.
Luckily (so they believed), they had a homeowner’s policy with Liberty Mutual Insurance. However, Liberty Mutual took issue with their evaluation of the fence as part of the structure and refused to honor their policy with our clients. For 9 years, Liberty Mutual delayed payout of their policy—and even won the initial case against them in a summary judgment, before a jury could hear our case.
Attorney Caj Boatright, one of the senior lawyers at Arnold & Itkin, filed an appeal to try the case before the Fourteenth District Court of Appeals, who upheld the summary judgment. Caj appealed it further, and the Supreme Court agreed to hear our case.
On January 27th, the Supreme Court sided with our clients, overturning the previous two decisions and changing the insurance landscape for a long time to come. Their decision hinged on the language of the insurance policy itself. Caj argued that a straightforward, “plain language” interpretation of the policy made it reasonable to assume the fence was covered in case of damage—the court agreed.
Their opinion states, “Our task…is not to find new meaning in relatively common words or to make difficult what is actually simple.”
How This Affects Property Owners Throughout Texas
“Plain language” interpretation of a policy means that if a policyholder has a reasonable interpretation of the way a policy states its coverage, it should have weight in court in a claims dispute. It’s a massive victory for homeowners, as it potentially increases coverage for current policyholders and gives them more power to dispute a bad faith claim. It also puts insurers on notice who drown the terms of their policies in confusing and unclear legal language.
The Supreme Court’s decision may have other legal implications as well—it may discourage lower court judges from making summary judgments against policyholders in insurance claims disputes, as “plain language” issues could be better decided by a jury. That’s another victory for homeowners: it means potentially faster settlements or more jury decisions.
As Caj put it: “Who else is better suited to interpret the ‘plain language’ of an insurance policy than a jury of your peers.”
This decision is exactly what Arnold & Itkin LLP was founded for: changing the legal landscape to favor the individual’s rights, to benefit people in need, and to ensure that large companies are doing what’s best for their customers.