Reported / Citable
Background
Hal and Cheryl Bunyard submitted a homeowners-insurance claim after a June 2023 storm damaged their property. State Farm acknowledged hail damage to the metal roof but concluded that the policy’s Metal Roof Exclusion barred coverage because the hail had not created an opening completely penetrating a metal roofing component. After revising its estimate several times, State Farm assessed covered losses at $10,189.66—an amount exceeding the deductible—and paid $2,500.17. It later increased the estimate to $10,735.06 and made a supplemental payment of $349.16.
The Bunyards’ engineer reported cracks, holes, moisture, and water intrusion associated with the roof, while State Farm’s engineer characterized the hail damage as cosmetic and not harmful to the roof’s water-shedding function. After replacing the roof, the Bunyards sued for breach of contract, common-law bad faith and fraud, and violations of the Texas Insurance Code and Deceptive Trade Practices Act. State Farm sought summary judgment on all claims except portions of the contract claim unrelated to the roof-replacement cost.
The Court’s Holding
In a report and recommendation, Magistrate Judge Henry J. Bemporad recommended denying summary judgment on the breach-of-contract claim. He construed the policy to require a hail-created opening passing entirely through an individual metal roof component. Evidence of rust beneath roof panels, attic water damage, roof leaks, and water intrusion could permit a reasonable jury to find that hail-created cracks penetrated completely through the panels.
The magistrate judge also recommended allowing the claims under the Texas Prompt Payment of Claims Act to proceed because their viability could depend on whether State Farm is ultimately liable for breach of contract. He recommended summary judgment for State Farm on all other extra-contractual claims, finding no triable evidence of bad faith, actionable misrepresentation, fraud, untimely explanation, breach of warranty, or unconscionable conduct. The opinion is a recommendation subject to objections and review by the district judge, not a final judgment.
Key Takeaways
- The metal-roof exclusion required an opening that passed completely through a roofing component, but such an opening could be microscopic.
- Evidence of moisture passing through the roof created a factual dispute over whether hail damage satisfied the policy’s penetration requirement.
- A genuine contract dispute preserved the prompt-payment claims, while the record supported dismissal of the bad-faith, fraud, misrepresentation, warranty, and other DTPA claims.
Why It Matters
The recommendation illustrates that indirect evidence—including rust on panel undersides and water intrusion inside a home—may create a jury question under a policy requiring complete penetration of a metal roof component. Insurers cannot obtain summary judgment merely because the alleged openings are too small to be readily visible.
At the same time, a viable coverage dispute does not automatically establish bad faith. State Farm’s investigation, reliance on an engineering report, and willingness to reconsider its estimates supported dismissal of the extra-contractual claims even though the contract and prompt-payment claims remained for trial.