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
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.