The U.S. Court of Appeals for the Fifth Circuit has affirmed a lower court ruling in favor of a Texas condominium association holding that the association is entitled to damages for boat slips destroyed during Hurricane Harvey. The case is Playa Vista Conroe v. Ins. Co., No. 20-20307, 2021 U.S. App. LEXIS 6695 (5th Cir. Mar. 5, 2021).
Hurricane Harvey made landfall in Texas during August of 2017, and caused unprecedented rainfall and flooding in Texas. In order to prevent the Lake Conroe Dam from overflowing and failing, the San Jacinto River Authority released water from the dam at a rate of nearly twice the flow rate of Niagara Falls. During that release, the twenty-two boat slips of the Playa Vista condominium community were destroyed.
The condominium association's insurer, Insurance Co. of the West, denied coverage on the basis that the policy did not cover flooding caused by a hurricane or tropical storm. The association filed suit against the insurer. The U.S. District Court in Houston ruled that Playa Vista was entitled to $190,828 in damages and $50,000 in attorney's fees.
The three-judge appeals court panel unanimously upheld the ruling, finding that the three exclusions the insurer pointed to did not apply to the losses that occurred.
Insurance Co. of the West also argued, after the district court entered final judgment, that because Playa Vista stipulated its losses were caused by the decision of a governmental body, the San Jacinto River Authority, another exclusion for acts by a governmental body, was triggered. The ruling found that the attempt to apply this exclusion was too little too late, and that if the insurer wanted to rely on the governmental-body exclusion it was obligated to raise that exclusion at summary judgment at the latest.
Editor's Note: Prior to the release of the dam waters, the boat slips were undamaged. Because the slips were not damaged by a flood of natural water, but instead were damaged when the River Authority released water from the dam. The great rate at which the waters were released caused a suction effect, which caused a drop in water levels that destroyed the boat slips. Had the insurer argued the governmental-body exclusion earlier in the proceedings, it would likely have succeeded with that argument. This serves as a reminder to bring forth every argument from the beginning of a case.