A legal dispute over home insurance coverage in Travis County has been sent back to court after a state appeals court ruled that an insurance company must provide evidence about what caused a major backyard landslide before refusing to pay a claim under its standard policy exclusions. According to legal documents published by Justia Law, the Texas Third Court of Appeal in Austin overturned a trial court’s summary judgment in _Privilege Underwriters Reciprocal Exchange v. Michael MacDougall and William Heyer_. The appeals court issued its ruling on 30 October. The decision sends insurer PURE back to court to determine whether human activity helped cause two residential backyards to collapse down an 80-foot slope. The dispute began when the rear sections of neighbouring properties owned by Michael MacDougall and the estate of the late George S. Heyer Jr. suddenly collapsed. Large sections of land broke away and slid down a steep slope towards a local creek. The damage left both homes unsafe, with the buildings sitting dangerously close to the edge of the cliff.
Insurer denied claims under standard earth movement exclusion
After the slope collapsed, MacDougall and the Heyer estate filed insurance claims under their high-end homeowners policies with Privilege Underwriters Reciprocal Exchange (PURE). They asked the insurer to cover structural repairs, work to stabilise the land and other related losses. PURE rejected the claims, pointing to the policy’s standard exclusion for earth movement and landslides. The insurer argued that natural movement of the land and damage to the slope caused the collapse. It said the policy clearly excluded this type of damage, even if other factors had also played a role. The homeowners then sued PURE for breach of contract and for failing to pay their claims on time under the Texas Insurance Code. The Travis County 250th District Court granted summary judgment in favour of the homeowners on the question of liability, making the insurer responsible for the loss. PURE later challenged that decision in the appeals court.
Appellate court defines scope of landslide exclusions
In its decision, the Third Court of Appeal considered whether the policy’s landslide exclusion also applies when human activity or man-made conditions help cause land to move. The appeals court explained that, under established rules for interpreting insurance contracts, exclusion clauses must be read strictly against the insurance company. The judges found that PURE’s policy did not specifically exclude landslides caused by a combination of natural and human-related events. Therefore, the exclusion only applies when natural events alone cause the landslide. The judges also pointed out that some other standard insurance policies clearly exclude earth movement caused by any combination of natural and man-made forces. However, PURE’s policy did not contain such wide-ranging wording.
Fact issues remain over human causation and site conditions
The appeals court reviewed expert statements submitted during the earlier court proceedings. These included reports from geotechnical engineers Terrance Zich and Andrew Davidoff. PURE argued that their reports showed that natural environmental conditions were the main cause of the slope collapse. However, the three-judge panel found that the different expert opinions raised an important question that still needed to be answered. There was not enough agreement to determine whether the collapse was caused only by natural erosion or whether human activities also played a part. Possible human causes included construction work, changes to drainage systems and land management activities. Because the exact cause of the land movement remains disputed, the appeals court ruled that neither side was entitled to summary judgment on liability as a matter of law.
Lower court judgment reversed for trial proceedings
The Third Court of Appeal overturned the district court’s summary judgment ruling that had held PURE responsible for the loss. It also reversed a related award of statutory interest under the Texas Prompt Payment of Claims Act. The appeals court sent the case back to the 250th District Court of Travis County for further hearings and the presentation of more evidence. The lower court will now examine the facts to establish the exact cause of the landslide.
