Daily Development for Monday, December 6, 2004
by: Patrick A. Randolph, Jr.
Elmer F. Pierson Professor of Law
UMKC School of Law
Of Counsel: Blackwell Sanders Peper Martin Kansas City, Missouri dirt@umkc.edu

INSURANCE; CLAIMS: Where insurer has an obligation to replace a damaged roof with one of “like kind and quality,” insured may make a claim for full cost of similar, but more expensive roof.

Republic Underwriters Ins. Co. v. Mex-Tex, Inc. , No. 033-0662 (Tex. 11/19/04)

Insured owned a shopping center with a roof that apparently needed replacement. The roof had leaked for a long time and insured had already obtained estimate to replace it. The, the good Lord intervened on insured’s behalf, and the big hailstorm hit. Insured filed its claim. Insurer was still evaluating the claim when it learned that insured had proceeded with construction of a new roof. Insured at first attempted to assert that it was liable only for minor repairs in the range of $22,000, but later agreed that it was responsible for roof replacement. Nevertheless, Insurer insisted that Insured was not entitled to the total cost of the roof it installed because it replace a roof that had been bound to the building by “ballast” (boulders) with a roof that was mechanically tied to the building. The difference in cost exceed $33,000.

The trial court had ruled that Insurer was not limited to replacing the roof in exactly the same style as its predecessor:

“[Insurer] argues that it could not have breached the policy by offering to replace [Insured’s] roof with an identical one and refusing to pay for a more expensive one. But the trial court held that “comparable does not mean “identical,” and found that the roof [Insured] installed was comparable to the one it replaced, differing only in the way it was attached to the building. We agree that the plain language of the policy neither restricted nor required [Insurer] to pay for the cost to replaced the roof with an identical one. The policy clearly allows more leeway that that. There was evidence to support the court’s finding that [Insured’s] new roof was within that leeway.”

In the balance of the opinion, the court found, 5-2, that the insurer was no liable to pay interest on the bulk of the unpaid claim (at 22%) as required by Texas statute, because it had tendered to the insured the cost of a “ballast held roof,” and the circumstances did not suggest that Insured would have created an “accord and satisfaction” had it accepted.

Comment: The editor thinks the case is valuable as a state supreme court ruling that “like kind and quality” does not mean identical, but that the insured has the ability to upgrade a replacement element when given the opportunity to replace it following casualty damage.

WORDS AND PHRASES; “LIKE KIND AND QUALITY: Where insurer has an obligation to replace a damaged roof with one of “like kind and quality,” insured may make a claim for full cost of similar, but more expensive, roof. Republic Underwriters Ins. Co. v. Mex-Tex, Inc., No. 033-0662 (Tex. 11/19/04) discussed under the heading: “Insurance; Claims.”

Items reported here and in the ABA publications are for general information purposes only and should not be relied upon in the course of representation or in the forming of decisions in legal matters. The same is true of all commentary provided by contributors to the DIRT list. Accuracy of data and opinions expressed are the sole responsibility of the DIRT editor and are in no sense the publication of the ABA.


Parties posting messages to DIRT are posting to a source that is readily accessible by members of the general public, and should take that fact into account in evaluating confidentiality issues.

ABOUT DIRT:

DIRT is an internet discussion group for serious real estate professionals. Message volume varies, but commonly runs 5 15 messages per work day.

Daily Developments are posted every work day. To subscribe, send the message

subscribe Dirt [your name]

to

listserv@listserv.umkc.edu

To cancel your subscription, send the message signoff DIRT to the address:

listserv@listserv.umkc.edu

for information on other commands, send the message Help to the listserv address.

DIRT has an alternate, more extensive coverage that includes not only commercial and general real estate matters but also focuses specifically upon residential real estate matters. Because real estate brokers generally find this service more valuable, it is named “BrokerDIRT.” But residential specialist attorneys, title insurers, lenders and others interested in the residential market will want to subscribe to this alternative list. If you subscribe to BrokerDIRT, it is not necessary also to subscribe to DIRT, as BrokerDIRT carries all DIRT traffic in addition to the residential discussions.

To subscribe to BrokerDIRT, send the message

subscribe BrokerDIRT [your name]

to

listserv@listserv.umkc.edu

To cancel your subscription to BrokerDIRT, send the message signoff BrokerDIRT to the address:

listserv@listserv.umkc.edu

DIRT is a service of the American Bar Association Section on Real Property, Probate & Trust Law and the University of Missouri, Kansas City, School of Law. Daily Developments are copyrighted by Patrick A. Randolph, Jr., Professor of Law, UMKC School of Law, but Professor Randolph grants permission for copying or distribution of Daily Developments for educational purposes, including professional continuing education, provided that no charge is imposed for such distribution and that appropriate credit is given to Professor Randolph, DIRT, and its sponsors.

DIRT has a WebPage at:
http://cctr.umkc.edu/dept/dirt/