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Serpikova’s Challenge to Application of Greene v. Farmers Ins. Exchange

The petition for review in American Risk Ins. Co., Inc. v. Serpikova, No. 14-14-00859-CV, 522 SW3d 497 (Tex. App.—Houston [14th] 2016, reh’g en banc overruled, Mar. 9, 2017, pet. filed Apr. 13, 2017), seeks review of the court of appeals’ reliance on Greene and its finding of no coverage under the policy for the fire damage to the insured property where Serpikova did not, and did not intend to, reside in the residence within 60 days of the policy’s effective date.

Overview of Greene: The Court in Greene v. Farmers Ins. Exchange, 446 S.W.3d 761 (Tex. 2014), noted both the definition of “residence premises” and the wording of the vacancy clause in the policy prescribed by the Texas Department of Insurance. Greene, 446 S.W.3d at 764-765. The Court focused on the vacancy clause relied upon by the insurer in denying coverage and by the insured who argued entitlement to coverage based on the anti-technicality statute and absence of a material breach by the insured. Reviewing the vacancy clause, the Court explained the clause does not operate as an exclusion but as defining the scope of coverage for the dwelling alone. Id. at 767. “That is because the clause does not limit Farmers’ liability as to, or carve out, a particular type of loss. Rather, it effectively expands coverage to encompass a sixty-day period beyond the time the homeowner no longer resides in the dwelling.” Id. Greene was not a case about whether the insured breached the policy by vacating the residence, but about what coverage was purchased and what the insurer agreed to provide. Id. at 768. Accordingly, the anti-technicality statute did not apply; there was no breach by the insured.

Serpikova’s Petition: According to Serpikovathe undisputed facts of the underlying action identify

  • American Risk Insurance homeowner’s policy covered the Serpikova house in 2012
  • Serpikova moved out of the house in May 2012
  • Serpikova leased the house to tenants
  • The homeowner’s policy covering the residence was renewed in September 2012
  • In November 2012, the home was severely damaged by a fire
  • ARI denied coverage because Serpikova was not living in the house at the time of the fire or within 60 days of the effective date of the policy
  • ARI did not cite or rely upon the vacancy clause but solely relied on the Coverage provisions and the definition of “residence premises.”

The language of the Serpikova policy states, “The policy defines ‘residence premises’ as ‘the residence premises shown on the declarations page. . . . where an insured resides or intends to reside within 60 days after the effective date of this policy [September 6, 2012].’” Serpikova, 522 S.W.3d at 502 (emphasis in the original). Serpikova specifically notes that ARI did not rely on the vacancy clause, yet makes much of the differences in the wording of the vacancy clauses between the Serpikova policy and the Greene policy. Serpikova argues that the court of appeals erroneously applied rules of contract construction and relied on dicta from Greene which discussed a policy involving a vacant “residence premises” with very different policy terms from Serpikova’s policy. Serpikova argues the court should have applied rules of construction to determine the parties’ intent and to determine coverage afforded under the policy, rather than relying on dicta in Greene which discussed “residence premises” under a different policy.

ARI’s Response: ARI notes that while Greene involved a HO-A policy and Serpikova had a HO-B policy, both policies were issued by TDI and contain identical definitions of “residence premises,” thus the parties’ intent was not relevant to the interpretation of the TDI form policy. ARI further notes that the discussion and holding in Greenesupported the court of appeals’ determination based on the definition of “residence premises,” which was identical to the definition of the policy in Greene. ARI thus urges affirmance of the court of appeal’s reliance on Greene which construed “residence premises” “to require residence or intended residence within 60 days after the effective date of the policy.” (Quoting American Risk Ins. Co. v. Serpikova, 522 S.W.3d 497, 504 (Tex. App.—Houston [14th] 2016) (citing Greene, at 763, 765-767).   ARI thus argues the court of appeals properly relied on Greene where “the dwelling never became the ‘residence premises’ under the policy issued” to Serpikova.

ARI also directs the court’s attention to the fact that differences between the vacancy clauses in the Serpikova and Greene policies are irrelevant because the vacancy clause was not the basis for the denial of coverage for Serpikova’s claim. Finally, ARI argues Serpikova fails to identify any basis for review of the court of appeals’ decision properly relying on the holding in Greene and the language of the TDI insurance form utilized in Serpikova’s policy.

The Texas Supreme Court has not requested brief on the merits to be filed.

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