Global Claims – Are They Worth The Paper They Are Written On?

Clive Holloway | FTI Consulting

This article considers the following questions: What is a global claim? How and why do global claims arise? What are the strengths and weaknesses of a global claim? In what situations are global claims appropriate? and can global claims succeed?

What Is a Global Claim?

As an accomplished construction professional expert with over 45 years of experience, who has worked exclusively in the field of planning and programming, and in the analysis of delay, and in dealing with time related issues on construction projects, it is the author’s understanding that global claims arise where contractors do not attempt to establish and link the cause and effect of the delay for each specific event that has occurred on the construction project. Instead, contractors group together all of the delay events and present the claim as a ‘total cost claim’ or ‘global claim’ typically where the actual costs that are alleged to have been incurred are claimed in total, less tender budget costs. And, by submitting ‘total cost claims’ or ‘global claims’, contractors are effectively attempting to convert Lump-Sum Fixed Price Contracts into Cost-Plus Contracts, usually without any valid contractual basis for doing so.

In the author’s experience, typically the starting point for the preparation of a claim by contractors is to collate it globally in the first instance, then to subsequently particularise it with details as the claim is developed. However, all too often contractors do not seek to further particularise claims with details, and so they remain global in nature.

How And Why Do The Global Claims Arise?

As noted above, all too often contractors stop at the global stage of the development of a claim and so present claims to employers in a global format. This is sometimes done so as not to draw attention to the contractor’s own default and culpable delay, in an attempt to recover all of the contractor’s costs and losses resulting from all of the delay (and disruption) events, regardless of whether such events are excusable and/or compensable.

Contractors might do this in order to attempt to conceal inherent shortcomings and insufficiencies with their tender programme and/or bid price. For example, inadequate tender allowances, or overly competitive rates in the Bills of Quantities (BoQ) resulting from intrinsic deficiencies in the tender and general ‘under-bidding’ of the project from the outset.

Contractors are tempted to take advantage of the claims process, by seeking to recover the shortfall in their tender bid pricing, by submitting global claims, which are poorly particularised and often inflated or exaggerated, and so have little chance of success when subjected to scrutiny.

This global approach is often presented by merely claiming the difference between the planned and actual man-hours, resources, costs and the like, which does not take account of, nor make any adjustment for, any culpability on the part of the contractor.

Global claims are often premised on unparticularised assertions, and in the author’s experience, in the review of many global claims submitted by contractors, examples typically include:

  • The need to re-rate the items in the BoQ on the pretext that the work carried out has changed dramatically from what was measured and priced at tender stage;
  • That the design of the works was incomplete, inaccurate and contained errors which had to be corrected;
  • That the work scope significantly changed, varied, increased, and that the additional works were substantial;
  • That there was negligible ability to mitigate the delay; and
  • That the actual site conditions encountered were worse than expected.

The above list is by no means exhaustive, but illustrates the common, generalised, and often un-substantiated assertions that are made against the employer and its consultants.

What Are The Strengths And Weaknesses of a Global Claim?

A global claim is usually advanced on the pretext that each and every event collectively caused all of the delay and/or disruption that was experienced on the project, and that all such delay events are both excusable and compensable.

Such an approach infers that the contractor ‘has done nothing wrong’ and therein is the underlying and fundamental weakness of the typical global claim.

In the author’s experience, it is usual for contractors to argue that the global costs and losses incurred by the contractor (and often also its sub-contractors), predominantly relate to the alleged disruption and the resulting loss of productivity.

In other words, that the execution of the works required significantly more labour resources than was planned or priced in the tender bid.

In this respect, contractors often assert that the planned output rates on which the tender bid was priced, were not achievable due to various unparticularised reasons and generalised complaints set out in the contractor’s claim submission.

This ‘broad-brush’ approach is usually adopted because otherwise it would take considerable time and effort on the part of the contractor to fully establish causation and the resulting impact of each and every event on the contractor’s programme and costs.

Contractors are invariably reluctant to attempt to distinguish how much of the reduced productivity was caused by employer responsible events (excusable) and how much was due to contractor responsible events (inexcusable), such as tender inefficiencies, optimistic or aggressive planned activity durations, inadequate resource allocation, poor workmanship, use of unskilled resources, and the like.

If these contractor-responsible events (inexcusable), which might have occurred concurrently with the legitimate excusable events, are taken into account, then this would be likely to significantly reduce the quantum of the contractor’s global claim.

Given the above, it is perhaps not surprising that contractors are reluctant to properly separate or apportion costs and losses between excusable events and inexcusable events.

In the author’s experience, global claims are usually prepared retrospectively after the works are complete by external claims consultants who will not have any first-hand knowledge of the events, but instead rely on historical site records, to the extent that such records exist and can be retrieved.

This often means that the consultants, when preparing the claim, have no real idea of what actually transpired, why events occurred, when or where the events took place, or which events were responsible for causing the delay and/or disruption. Therefore, the consultants merely collate and list as many general and unspecific complaints as possible with the objective of globally claiming that the contractor spent more time and money to complete the work than had been originally allowed in its tender. This is the typical ‘total cost’ claim.

In the author’s experience, the failure by the contractor to raise complaints contemporaneously is usually indicative that the global claim is an afterthought, sometimes raised years after the events occurred, and so will lack the required supporting evidence, and is unlikely to be credible. The advancement of such global claims is invariably an indication of a weak, exaggerated, or a non-existent case.

Whilst it is acknowledged that the validity of claims has to be considered based on the specific contract conditions, for the most part, global claims are unlikely to be contractually compliant and therefore are more likely to be rejected by both contract administrators and arbitral tribunals for want of particularisation.

In summary, the principal failing of the ‘actual less planned’ global approach is that contractors are inclined to ignore the many reasons why the works took longer and cost more to complete, and so do not account for their own culpability for delay, disruption and the resulting additional costs.

Global claims are often prone to fail as soon as they are issued, and the author understands that, some may consider that global claims should not be allowed, whereas others consider they might be allowed, if certain conditions are met, as explained further below.

In What Situations Are Global Claims Appropriate?

As a pre-requisite for a global claim to succeed, the author understands that the contractor must eliminate from the causes of the costs and losses, all matters that are not the responsibility of the employer. However, that position might be mitigated by three key considerations:1

  • It may be possible to identify a causal link between specific events for which the employer is responsible, together with particular items of a related delay, cost or loss. By such an approach, parts of the claim can be extracted from the overall global claim and separately allocated to specific individual events.
  • If an event, or events, for which the employer is responsible are considered as the dominant or primary cause of the delay, cost or loss, that would be sufficient to establish liability, notwithstanding the existence of other causes that are, to some extent concurrent, or secondary events.
  • Even if events for which the employer is not responsible are the dominant cause of the delay, cost or loss, it may be possible to apportion the delay, cost or loss between the causes for which the employer is responsible and the other causes. This apportionment is likely to be more readily achieved where the delay, cost or loss was being calculated by reference to delay in the works, as the cost and loss could be apportioned on the basis of the time during which each of the causes was operative, or the responsibility could be divided on an equal basis.

However, it must be noted that where a concurrent cause of delay is the contractor’s responsibility, it is usually appropriate to deny the contractor any cost recovery for such period of default.

This undoubtedly places greater incentive on contractors to avoid apportionment where they can, and instead aim to demonstrate that the employer events upon which they rely, are the dominant causes of the delay, cost or loss.

It is recognised that delay and disruption to the contractor’s works, can be considerably complex, however, dependant on the circumstances, apportionment might still be possible, albeit this would probably be carried out in a somewhat ‘rough and ready’ manner.

What Does The Contract Say?

In the Author’s experience, it is understood that, under most construction contracts the contractor has the burden of proving that the relevant delay events actually occurred, that they are the responsibility of the employer, and that the cost and loss that was suffered, was in the amount claimed.

The contractor must also establish and demonstrate the causal linkage between the relevant delay events and the costs and losses claimed.

Typically, in accordance with the terms of the contract, the contractor has the obligation to prove that the costs and losses flowed from the delay and/or disruption.

However, global claims, by their very nature do not adhere to this process, as they do not adduce sufficiently particularised evidence to prove the essential elements required of the claim, to satisfy the contract.

In other words, the connections between the matters that contractors complain of, and the consequences, in terms of time and money, are not fully particularised, or are often not particularised at all.

In general terms, there is limited opportunity to submit global claims under most forms of contract, which restrict the submission of global or total time and cost claims on the basis that there is usually a requirement for contractors to link the relevant events giving rise to the alleged delay and/or disruption to the resultant time and cost effects, with the further requirement for contractors to properly address and particularise their claims accordingly.

Despite this, contractors will often aver that it is impossible and/or impracticable to sub-divide the effects of each of the individual excusable events that they allege caused delay and/or disruption, for which they claim recompense.

Invariably, contractors do not attempt to identify and isolate individual elements of the delay caused by excusable events so that the associated costs and losses can be assessed accordingly.

It is appreciated that on more complex projects, delay and/or disruption may occur continuously and concurrently, whereby the works are impacted and affected by a combination of both excusable and inexcusable events, the consequences of which are subject to a complicated interaction, which results in a cumulative and combined delaying effect.

As such, understandably, it is difficult to assess and evaluate the costs and losses caused by any of the individual delay and/or disruption events in isolation.

Since, by their nature, global claims do not articulate the precise case to be met, it can be particularly difficult, or in some cases impossible, for an employer to unravel the issues and their impacts in order to properly evaluate the claim.

Contractors often do not set out their claims clearly with the requisite level of particularisation, despite it usually being a stipulated requirement of the contract for the contractor to keep sufficiently detailed records of the causal events and the resulting delay and/or disruption suffered.

The issuance of a global claim is not in itself proof and/or evidence of a contractual entitlement, and so contractors will still have to convince employers that the costs and losses claimed were entirely caused by events for which the employer is contractually liable. Based on the author’s experience there are usually many other inexcusable (or neutral) reasons that explain why, the works took longer than planned and why the contractor’s costs exceed its tender price.

Can a Global Claim Succeed?

The author understands that global claims can legitimately be put forward by contractors where it is impossible and/or impracticable to breakdown and/or sub-divide the loss claimed between the various relevant delay and/or disruption events.

A global claim is also likely to be permissible when there is no material causative factor for which the contractor is liable, that is, if there are no contractor defaults or culpable delay events that need to be considered and the delay is entirely due to excusable and compensable events, the liability for which rests with the employer.

However, where it is evident that a global claim incorporates both contractor and employer events, the author understands that it will be necessary to identify, separate, remove and account for each of the events, in order for the claim to succeed.

It is suggested by the author that the advancing of claims in a global format is a high-risk strategy, however the author, based on his experience, is of the opinion that, the following criteria (as a minimum) for the consideration of global claims should be met:

  • The nature of the delay and disruption/disturbance to the works should mean that there is no viable alternative method of analysis/presentation;
  • The original planned programme must be demonstrably feasible; and
  • There should be no concurrent contractor culpable causes of delay.

For a global claim to be credible, the author, based on his experience, is of the opinion that, the following conditions need to be satisfied:

  • The contractor should not be responsible for the losses, the increased costs, or the delay claimed;
  • The employer should be responsible for all of the losses, the increased costs and the delays; and
  • It should be impossible to identify positive links between the causes of delay and disruption, and loss and/or expense claimed.

In Summary

It seems that global claims are not completely ‘out-lawed’ as there may be certain situations, albeit limited, where global claims can be satisfactorily compiled and presented to enable their success, at least in part.

However, there are strict rules that should be followed when embarking on this risky approach and care must be taken in their preparation and quantification to ensure the right steps are adopted, so as to ensure that such an approach is acceptable.

With respect to the over-arching question posed by this article-whether global claims are worth the paper they are written on-it seems that under certain circumstances, where it is particularly difficult to unravel the complex interaction of numerous delay and disruption events, it is recognised that there may be situations where global claims might have a degree of success, one being the application of apportionment of the claimed costs to employer and contractor causal events, even where this is only a ‘rough and ready’ exercise.

Footnote

1: Ref. Case Law: John Doyle Construction Limited v Laing Management (Scotland) Limited, Inner House Court of Session, 11 June 2004, Lord Drummond Young


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Payment Bond Surety Entitled to Award of Attorneys’ Fees Although Defended by Principal

Garret Murai | California Construction Law Blog

For contractors involved in California public works projects the scenario is not uncommon: The general contractor awarded the public works project is required to obtain a payment bond for the benefit of subcontractors and suppliers and the payment bond surety issuing the payment bond requires the general contractor to defend and indemnify the surety from and against any claims against the payment bond.

In Cell-Crete Corporation v. Federal Insurance Company, 82 Cal.App.5th 1090 (2022), the 4th District Court of Appeal examined  whether a payment bond surety, who prevails in a claim against the payment bond, is entitled to statutory attorneys’ fees when the party actually incurring the attorneys’ fees was the general contractor, pursuant to its defense and indemnity obligations, as opposed to the surety itself.

The Cell-Crete Case

General contractor Granite Construction Company was awarded a public works contract issued by the City of Thermal known as the Airport Boulevard at Grapefruit Boulevard and Union Pacific Railroad Grade Separation Project. We’ll just call it the “Project.” Subcontractor Cell-Crete Corporation entered into a subcontract with Granite for lightweight concrete and related work.

As required under Civil Code section 9554, Granite furnished a payment bond on the Project. The payment bond was issued by Federal Insurance Company. Federal, as a condition of issuing the payment bond, required Granite to defend and indemnify Federal from and against any claims against the payment bond “including court costs and attorneys’ fees, which it shall at any time incur by reason of its execution and/or delivery of said bond or bonds or its payment of any claim or liability thereunder.”

The subcontract between Cell-Crete and Granite included an arbitration clause, and when a dispute arose on the Project, Cell-Crete and Granite arbitrated the dispute over seven days starting October 8, 2018 and ending on January 23, 2019. During the arbitration, Cell-Crete sought $309,557 for work performed and delay costs. Federal was not a party to the arbitration. At the conclusion of the arbitration, the arbitrator awarded damages to both Cell-Crete and Granite with Granite eking out a net positive award of $130.82. The arbitrator declined to award attorneys’ fees or costs to either party.

Prior to arbitrating the dispute, Cell-Crete had filed a lawsuit against Granite in the Riverside Superior Court. In its lawsuit, Cell-Crete, in addition to suing Granite, also sued Federal under the payment bond. The same law firm that represented Granite in the arbitration also represented Federal in the superior court action.

After the arbitration award, Grant petitioned the trial court to confirm the arbitration award. After the arbitration award was confirmed and Cell-Crete’s action was dismissed, Federal filed a motion for attorneys’ fees and costs. The trial court, however, denied Federal’s motion. Although the trial court recognized Federal as the “prevailing party” and that Federal would otherwise wise be entitled to recovery of its attorneys fees under Civil Code section 9564, the trial court found that “Federal incurred no such expenses. Instead all such costs and fees were borne by Granite” and “[h]aving paid nothing in fees and costs, Federal has suffered not loss, and thus may not collect any compensation for the non-existent loss.”

Federal appealed.

The Appeal

On appeal, Federal argued that it was entitled to recover its costs under the plain language of Code of Civil Procedure section 1032(b) which provides that a prevailing party is “entitled as a matter of right to recover costs in any action of proceeding” and under Code of Civil Procedure section 1033.5(c)(1) which provides that “[c]osts are allowable if incurred, whether or not paid.”

Citing to a decision by the 1st District Court of Appeal in Litt v. Eisenhower Medical Center, 237 Cal.App.4th 1217 (2015), in which the 1st District reversed a trial court’s denial of costs and expert fees because those costs were paid by another party pursuant to an indemnity provision, the Court of Appeal held that “Federal incurred the legal liability to pay the litigation costs even though Granite agreed to indemnify them for their expense” and that “[w]e see no reason to depart from the plain meaning of the statute or the construction given it by our sister court.”

As to attorneys’ fees, the Court of Appeal explained that, “[u]nlike in the case of costs, there’s no separate statute specifying [that] it doesn’t matter whether the prevailing party paid the litigation expenses.” Nevertheless, held the Court of Appeal, “we conclude there’s no need to add that belt to the suspenders of section 9564(c).” “The general rule with respect to fee-shifting statutes,” explained the Court of Appeal, “is that the judge must award reasonable attorney fees to the prevailing party regardless of whether the prevailing party ultimately is responsible to pay the fees.”

Finally, responding to Cell-Crete’s argument that Federal would be obligated to pay any attorneys’ fees awarded to Granite, and therefore should not be awarded attorneys’ fees as at all because it was Granite rather than Federal that incurred those fees, the Court of Appeal held that the “issue is not properly before us, but we would not be dissuaded from our interpretation should it turn out to be true” since “[t]he right of a party to seek an award of statutory attorney fees is not equivalent to a right to retain such fees.”

Conclusion

For payment bond sureties and their principals, the Cell-Crete decision clarifies that prevailing payment bond sureties, even if defended by their principals pursuant to a defense and indemnity agreement, are entitled to recover the attorneys’ fees incurred in defending against claims against the payment bond. For principals, the case also suggests that sureties are likely required to pass along any attorneys’ fees awarded by a court to offset attorneys’ fees actually incurred by the principal in defending the surety.


When one of your cases is in need of a construction expert, estimates, insurance appraisal or umpire services in defect or insurance disputes – please call Advise & Consult, Inc. at 888.684.8305, or email experts@adviseandconsult.net.

Smoke Damage a Source of Friction for ‘Standing Home Survivors’

Jim Sams | Claims Journal

The lingering impact of smoke and soot is complicating insurers’ efforts to resolve homeowners claims from the Marshall Fire, which destroyed 1,084 homes in Boulder County, Colorado last December.

An in-depth report posted online this week by the nonprofit Boulder Reporting Lab told the story of “standing home survivors,” homeowners who did not suffer fire damage but have not returned to their homes because of concern about toxic particulates left behind from wildfire smoke. A county official told the Reporting Lab that 13,000 to 14,000 houses within the burn area were not destroyed, giving an indication of the potential extent of smoke damage.

The Marshall Fire ripped through 6,000 acres in the communities of Superior, Louisville and Marshall outside of Boulder on Dec. 30, 2021. Catastrophe modeler Karen Clark & Co. estimated insured loss amounted to $1 billion.

Amy Bach, executive director of United Policyholders, said about 600 standing home survivors are sharing information on Facebook or attending weekly support group meetings held at the Louisville Recreation Center in an effort to get their homes properly remediated, cleaned and restored and secure fair insurance payouts to cover the costs, according to the report.

Bach told the Reporting Lab that a lack of standards for indoor air quality is exacerbating disputes and delays for homeowners who filed insurance claims. Homeowners are left feeling like the process is arbitrary and up to individual adjusters, she said.

Researchers with Colorado University Boulder measured the air quality in standing homes within the fire area within two to three weeks of the fire. Joost de Gouw, a chemist with the university, said samples showed that volatile organic compounds, including toxic chemicals such as benzene and formaldehyde, lingered in the houses up to four weeks after the fire.

But researchers are also concerned about particulates that settled on surfaces. They told the Reporting Lab that those particles can release gaseous compounds over time. CU Professor Colleen Reid said researchers don’t know how concentrated those emissions are, or how long they will last.

As a result, many standing home survivors are choosing to stay out of their homes, the report says.

The quality of work by remediation companies hired to clean smoke-damaged homes varies greatly, according to the owner of an environmental testing firm in Lafayette, Colorado. Judith Sawitsky, co-owner of Weecycle Environmental Consulting, said her company tested 75 to 80 smoke-damaged homes after the Marshall Fire.

Sawistsky told the Claims Journal Thursday that she found most local remediation companies did a good job, but many of the out-of-town vendors that swarmed in after the disaster did not. She said a large portion of the homes that her company tested after cleanup “were inadequately cleaned.”

Frequently, soot was left clinging in corners, Sawistsky said. Also, some homeowners are sensitive to the chemicals that restoration companies use to remove odors.

Sawitsky said she often has to butt heads with industrial hygienists appointed by insurance carriers.

“The pushback from some of the insurance companies is unwarranted, is my feeling about it,” she said. “If you have something that is not right and your client is getting sick and the property isn’t back to its pre-loss condition, there shouldn’t be any pushback.”

Chip Merlin, owner of a law firm that represented policyholders headquartered in Tampa, Florida, chimed in to voice his support for the “standing home survivors” in a blog post on Thursday. He noted that he had previously written a blog post about insurers giving the runaround to homeowners with smoke damage claims after the Marshall Fire.

“It does not take a genius to figure out that some insurers want to remediate less and pay less, while the policyholder customers want assurance that their homes are safe to return, which will cost more,” Merlin wrote.


When one of your cases is in need of a construction expert, estimates, insurance appraisal or umpire services in defect or insurance disputes – please call Advise & Consult, Inc. at 888.684.8305, or email experts@adviseandconsult.net.

‘Wrongful Acts’ Includes Both Negligent and Intentional Acts

Ysabelle Reyes | Wiley Rein

The United States District Court for the Northern District of Illinois, applying Illinois law, has held that an insurer had a duty to defend an insured condominium association and its board members against an underlying lawsuit because the association’s board members allegedly committed “Wrongful Acts” under the directors and officers coverage part of a business liability policy. Cambridge Mut. Fire Ins. Co. v. Bell & Arthur Condo. Ass’n, et al., 2022 WL 13827758 (N.D. Ill. Oct. 21, 2022). In doing so, the court interpreted “Wrongful Acts” to include both negligent and intentional acts. The court also held that the policy’s conduct exclusion did not preclude coverage because the underlying lawsuit did not allege any intent to mislead or defraud on the part of the insureds.

Owners of an insured association’s condominiums brought a lawsuit in state court for multiple torts, accusing the association and its board members of mismanagement. Among other things, the association and board members allegedly violated the municipal code, caused property damage and bodily injury, failed to allow a records inspection, and breached their fiduciary duty by adopting rules and regulations through procedures that violated Illinois law. After receiving notice of the underlying lawsuit, the association’s business liability insurer sought a declaratory judgment that it owed no duty to defend under the directors and officers coverage of its policy.

The court held that the duty to defend applied to both the board members and the association. The duty to defend provision in the directors and officers coverage section stated that the insurer has “the right and duty to defend the insured against any ‘suit’[.]” “Suit,” in turn, was defined as a “civil proceeding in which damages because of ‘Wrongful Acts’ to which this insurance applies are alleged.” The court held that the insurer’s duty to defend extended to claims against the association arising from the board members’ “Wrongful Acts.” Because “insured” was not defined in the directors and officers coverage section, the court looked to the business liability coverage form, which defined “insured” to mean the association and its board members. The court further held that, even if the insurer only had a duty to indemnify the board members for their “Wrongful Acts,” the insurer had to defend both the board members and the association from suits premised upon those acts.

The court held that the insurer had a duty to defend because the complaint alleged “Wrongful Acts” by the association’s board members. The policy defined “Wrongful Acts” to mean “any negligent act, any error, omission or breach of duty of directors or officers of the ‘Named Insured’ while acting in their capacity as such.” In doing so, the court determined that two of the underlying claims satisfied the policy definition of “Wrongful Acts” – a count asserting the board members’ failure to allow a records inspection and a count for breach of fiduciary duty.

The court rejected the insurer’s argument that the policy excluded any intentional conduct as well as “dishonest, fraudulent, criminal, or malicious acts.” First, the court opined that intentional acts could be construed as errors, omissions, or breaches of duty within the policy definition of “Wrongful Acts.” The court noted that the phrase “any negligent act, any error, omission or breach of duty” was ambiguous as it was “either missing a conjunction before the second ‘any’ or the second ‘any’ was surplusage,” such that if “negligent” was meant to modify the other terms in the definition, the second “any” would have no meaning. The court resolved the ambiguity in favor of the insured, noting that the policy language showed that the insurer knew how to exclude and could have excluded intentional conduct from coverage. Second, the court determined that, even if the policy covered only negligent errors, omissions, or breaches, the underlying conduct was plausibly negligent or careless because there was no indication that the association and the board members intended to mislead or defraud the underlying plaintiffs, noting that “failure to follow rigidly certain procedures and laws in [adopting rules] also potentially encompasses negligent conduct.” Further, the court noted that the complaint “allege[d], in the alternative, that the defendants failed to follow the rules and caused injury even ‘[a]ssuming there was no misrepresentation.’”


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Insured’s Failure to Challenge Trial Court’s Application of Exclusion Makes Appeal Futile

Tred R. Eyerly | Insurance Law Hawaii

    The Texas Court of Appeals affirmed the trial court’s granting of summary judgment to the insurer because the appeal failed to challenge the exclusion under which the insurer found no coverage. Sosa v. Auto Club Indemn. Co., 2022 Tex. App. LEXIS 6520 (Tex. Ct. App. Aug. 30, 2022).

    Sosa’s house was damaged during Hurricane Harry on August 26, 2017. Sosa filed a claim with Auto Club. She reported that two feet of floodwater had entered her home, her roof was missing shingles and was leaking, and she had sustained interior damage. An adjuster estimated the cost to prepare the roof damage was $1,191.96, less that her deductible. Auto Club determined that any remaining damage was caused by flood water, which was expressly excluded from coverage. 

    On November 11, 2020, Sosa filed suit against Auto Club for breach of the policy. Among other things, she argued the adjuster spent minimal time at her home inspecting and was inexperienced. In its answer, Auto Club asserted Sosa’s claim was time-barred by the statute of limitations. Sosa then filed an amended complaint and changed the date of the loss from August 26, 2017, to June 28, 2019. 

    Auto Club filed a motion for summary judgment, primarily arguing the suit was time-barred by both the statute of limitations and the two-year limitations period in the policy. The trial court granted summary judgment to Auto Club.

    On appeal, Sosa primarily agued hat her loss occurred in June 2019, not during Hurricane Harvey in 2017. Therefore, the lawsuit filed in November 2017 was not time-barred. She did not challenge the summary judgment order on the ground that her claimed damages were covered under the policy. Her appellate brief did not mention flood or surface water.  

    Sosa did not ague that the trial court erred by granting summary judgment on the ground that her policy excluded coverage for her damages because they resulted from flood or surface water. This ground independently supported summary judgment in Auto Club’s favor because Auto Club was not liable for damages expressly excluded under Sosa’s homeowner’s policy. Therefore, any other error about which Sosa complained on appeal was harmless in light of the unchallenged ground. 


When one of your cases is in need of a construction expert, estimates, insurance appraisal or umpire services in defect or insurance disputes – please call Advise & Consult, Inc. at 888.684.8305, or email experts@adviseandconsult.net.