Majestic Oil, Inc. v. Underwriters at Lloyd's, London

CourtDistrict Court, S.D. Texas
DecidedMarch 27, 2025
Docket4:19-cv-03149
StatusUnknown

This text of Majestic Oil, Inc. v. Underwriters at Lloyd's, London (Majestic Oil, Inc. v. Underwriters at Lloyd's, London) is published on Counsel Stack Legal Research, covering District Court, S.D. Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Majestic Oil, Inc. v. Underwriters at Lloyd's, London, (S.D. Tex. 2025).

Opinion

UNITED STATES DISTRICT COURT March 27, 2025 SOUTHERN DISTRICT OF TEXAS Nathan Ochsner, Clerk HOUSTON DIVISION MAJESTIC OIL, INC., § § Plaintiff, § § v. § Civil Action No. 4:19-CV-03149 § UNDERWRITERS AT § LLOYD’S, LONDON, § § Defendant. § MEMORANDUM OPINON AND ORDER Plaintiff Majestic Oil, Inc. (“Majestic”) claims that wind and rain from Hurricane Harvey damaged its commercial warehouse in Pasadena, Texas. Majestic seeks coverage for repairs to the warehouse’s roof under its insurance policy with Defendant Underwriters at Lloyd’s, London (“Lloyd’s”). Lloyd’s denied the claim, citing evidence that excluded causes like pre-existing wear and tear contributed to the damage. Lloyd’s contends that, because of this evidence, Texas’s “concurrent-causation doctrine” requires Majestic to allocate its losses between covered and excluded causes. Majestic responds with evidence intended to show that Hurricane Harvey caused all of the losses. Before the Court is Defendant’s Motion for Summary Judgment. (Dkt. No. 84). For the reasons below, the Court DENIES the Motion. I. BACKGROUND1 A. FACTUAL BACKGROUND In 2014, Majestic purchased a commercial property in Pasadena, Texas. (Dkt. No. 84-3 at 13). The property had multiple structures that Majestic combined into a single

interconnected building for use as a warehouse, distribution center, and administrative office. (Dkt. No. 84-2 at 5). After buying the property, Majestic hired contractor Kim Hamel to renovate the interior. (Dkt. No. 88-1 at 8); (Dkt. No. 84-4 at 21). During this work, Hamel discovered leaks in the building’s roof. (Dkt. No. 84-4 at 32–33). So, she engaged roofers to inspect

the damage and prepare repair bids. (Id. at 33). Some roofers recommended that the roof be replaced. (Id. at 34–35). And Hamel even recognized that the pre-existing damage “probably should have [been] fixed.” (Id. at 39). But Majestic opted for more limited repairs, instructing Hamel to fix the existing leaks but not to replace the entire roof. (See id. at 35); (Dkt. No. 88-1 at 9); (Dkt. 84-6) (selected repair bid for $25,000); (Dkt. 84-5)

(rejected replacement bid for $91,875). Even so, Hamel and three other Majestic employees confirmed that the roof no longer leaked after the repairs. (Dkt. No. 88-1 at 11–13); (Dkt. No. 88-2 at 7–9, 11); (Dkt. No. 88-3 at 2); (Dkt. No. 88-4 at 2–3). In 2016, Majestic bought property insurance for the warehouse from Lloyd’s. (See Dkt. No. 88-5 at 15–16); (Dkt. No. 88-6); (Dkt. No. 88-7 at 10). Before issuing the policy,

1 Except where noted, this Section contains only undisputed facts, and all facts and reasonable inferences have been construed in favor of the nonmovant. Renfroe v. Parker, 974 F.3d 594, 599 (5th Cir. 2020). The Court has not weighed evidence or made credibility findings. Id. Lloyd’s sent an inspector to look at the building. (See Dkt. No. 88-6). The inspector found no “roof leakage evident” and noted no other problems with the roof. (See id. at 7, 11).

Majestic renewed its policy with Lloyd’s for April 2017 through April 2018. (See Dkt. No. 88-7 at 10). The policy is a standard-form commercial-property policy.2 It covers “direct physical loss of or damage to” the property “caused by or resulting from any Covered Cause of Loss,” (Dkt. No. 84-1 at 14), where covered cause of loss means “Risks Of Direct Physical Loss unless the loss” is excluded or limited in the policy, (id. at 28). Excluded

losses include losses caused by “wear and tear,” “[c]ontinuous or repeated seepage or leakage of water,” or “inadequate . . . [m]aintenance.” (Id. at 28–31). But “[n]otwithstanding any provision to the contrary,” the policy covers losses caused by “[r]ain or wind driven rain which enters the insured building or structure through an opening created by the force of a Named Storm.” (Id. at 50).

In August 2017, Hurricane Harvey struck the Houston–Pasadena area, bringing heavy rainfall and strong winds. (Dkt. No. 88-8 at 10–11). After Harvey, Majestic employees inspected the building and found water damage and leaks throughout. (Dkt. No. 88-3 at 3); (Dkt. No. 88-4 at 3). Majestic’s Operations Manager “saw significant leaks from the ceiling and damage in all of the rooms” that he says “only appeared after

Hurricane Harvey.” (Dkt. No. 88-4 at 3).

2 The policy’s coverage and cause-of-loss forms are standard forms created by the Insurance Services Office. (See Dkt. No. 84-1 at 14, 28) (“© ISO Properties, Inc., 2001”); see also Ins. Servs. Off., Building and Personal Property Coverage Form CP 00 10 04 02 (ISO Properties, Inc. 2001); Ins. Servs. Off., Causes of Loss—Special Form CP 10 30 04 02 (ISO Properties, Inc. 2001). After Majestic reported the loss in 2017, (Dkt. No. 88-5 at 4), Lloyd’s retained an adjuster and a structural-engineering expert to review the damage, (Dkt. No. 84-2); (Dkt.

No. 29 at 11–63). Both concluded that some or all of the damage was pre-existing or not caused by Harvey. (Dkt. No. 84-2 at 1, 11, 13); (Dkt. No. 29 at 13). Indeed, Lloyd’s engineering expert concluded that “Hurricane Harvey did not cause any physical damage to the roofs and exteriors at the Property.” (Dkt. No. 29 at 13). Lloyd’s denied Majestic’s claim in August 2018. (Dkt. No. 84-10); (Dkt. No. 88-12 at 2). In the denial letter, Lloyd’s explained that it “found no evidence of damage to the exterior of the

premises that could be attributable to Hurricane Harvey” and that the interior damage appeared to be “long-standing.” (Dkt. No. 88-12 at 2, 4). In February 2019, Majestic hired an engineer, Gregory Becker, to review the damage. (Dkt. No. 88-9 at 2). Becker eventually concluded that Majestic’s claimed losses were “caused solely by Hurricane Harvey” and recommended a total roof replacement.

(Dkt. No. 88-20 at 3). Majestic also engaged David Poynor to provide a cost estimate for the repairs. (Dkt. No. 88-13 at 4–5). Poynor said it would cost roughly $942,000 to replace the roof and fix the damage that Becker identified as caused by Harvey. (Id. at 6). B. PROCEDURAL HISTORY In August 2019, Majestic sued Lloyd’s for breach of contract, alleging that it wrongfully denied coverage. (Dkt. No. 1). Lloyd’s responded that Majestic could not

distinguish damage caused by Hurricane Harvey from damage caused by pre-existing wear and tear and other excluded causes. (See Dkt. No. 47 at 1–2, 15–22). Both Parties retained experts to evaluate causation. (Dkt. No. 29 at 11–63); (Dkt. No. 88-8). Majestic’s expert, Becker, produced his initial report in April 2019. (Dkt. No.

88-8 at 2). While Becker concluded that it was “more likely than not that the observed damage is a result of” Hurricane Harvey, (id. at 11), his initial report had an important qualification: Becker said that a January 2017 storm could not be “ruled out as initially contributing to the roof vulnerability” and “may have been a precursor to the observed damage and water intrusion during Hurricane Harvey,” (id. at 10). But after his deposition in April 2021, (Dkt. No. 47-14), Becker produced a second

report reaching the opposite conclusion, (see Dkt. No. 88-11 at 7). Becker reached this conclusion by reviewing new meteorological data showing wind speeds of up to 91 mph near Majestic’s property. (Id. at 3). Because “[o]ther high winds that showed in the data during January of 2017 [were] less[e]r and less prevalent,” Becker concluded that the 2017 storm could be “ruled out.” (Id. at 7). Becker submitted an affidavit confirming his

position that “the damage observed and documented at the Property was caused by Hurricane Harvey.” (Dkt. 88-9 at 5). The court, Judge Lynn Hughes then presiding, struck Becker’s second report and related affidavit. (Dkt. No. 53 at 2). The court found that Becker had improperly attempted to “change his opinion from there being multiple potential causes of the

damage to [Hurricane] Harvey as the sole cause.” (Id.).

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