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Texas Supreme Court Denies Petition Challenging Greene v. Farmers Ins. Exchange

Insurance Coverage

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On March 16, 2018, the Texas Supreme Court denied 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. denied), which sought 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.

Left un-touched, the Court’s opinion 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 [HO-A] 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 and neither did the argument that the insurer was not excused from performance because the insured did not commit a material breach.

The court in American Risk Insurance Company, Inc. v. Serpikova, 522 S.W.3d 497, 504 (2016), relied upon Greene in the construction of the definition of “residence premises” in the TDI approved HO-B policy issued to Serpikova.  Thus, where “Serpikova never resided on the Property during the term of the Policy nor did she intend to reside on the Property during the 60 days after the Policy’s effective date,” there was no coverage for the property damaged by a fire.  Id.

The court also noted the holding in Greene concluding that facts leading to a lack of coverage determination by an insurer is not a breach that triggers the anti-technicality statute.  Id. at 505.  Where the facts established Serpikova did not reside, nor intend to reside, in the residence as required by the policy, the insurer was not prohibited from denying coverage under the policy. Id.  The insurer’s issues on appeal were sustained; summary judgment in favor of Serpikova was reversed.  Id. at 505.

The Serpikova decision remains intact with the Supreme Court’s denial of the petition for review.

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